375 F.2d 992 (5th Cir. 1967), 22761, Alvarez v. Pan Am. Life Ins. Co.

Docket Nº:22761, 22902.
Citation:375 F.2d 992
Party Name:Jose Aramis ALVAREZ, Individually, and in behalf of all those similarly situated, Appellant, v. PAN AMERICAN LIFE INSURANCE COMPANY, Appellee. Augustin Goytisolo RECIO, Individually, and in behalf of all those similarlysituated, Appellant, v. PAN AMERICAN LIFE INSURANCE COMPANY, Appellee.
Case Date:March 27, 1967
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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Page 992

375 F.2d 992 (5th Cir. 1967)

Jose Aramis ALVAREZ, Individually, and in behalf of all those similarly situated, Appellant,

v.

PAN AMERICAN LIFE INSURANCE COMPANY, Appellee.

Augustin Goytisolo RECIO, Individually, and in behalf of all those similarlysituated, Appellant,

v.

PAN AMERICAN LIFE INSURANCE COMPANY, Appellee.

Nos. 22761, 22902.

United States Court of Appeals, Fifth Circuit.

March 27, 1967

Joseph A. McGowan, Carey, Terry, Dwyer, Austin, Cole & Stephens, Miami, Fla., for appellants.

Sam Daniels, James A. Dixon, Dixon, DeJarnette, Bradford, Williams, McKay & Kimbrell, Miami, Fla., for appellee.

Before WISDOM, BELL and GODBOLD, Circuit Judges.

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BELL, Circuit Judge.

These diversity cases, consolidated for appeal, were brought as class actions under old Rule 23, F.R.Civ.Procedure. Alvarez and Recio claimed relief for themselves and other Cuban refugees similarly situated against appellee, a mutual insurance company. Both actions were dismissed under the diversity statute for lack of the jurisdictional amount. 28 U.S.C.A. 1332. These appeals followed.

We affirm. In so doing we conclude that new Rule 23, adopted July 1, 1966, is applicable to these cases. However, we hold further that this rule is of no avail to appellants as it does not abrogate the well settled principle that separate and distinct claims may not be aggregated to make the jurisdictional amount even in a class action.

Although the cases differ factually, the aggregation principle is dispositive in both cases. Recio owned an insurance contract issued by appellee in the amount of $1,000.00. The Castro government expropriated appellee's assets in Cuba and, for this reason, payment on the contract in question was refused. Recio sued appellee in the Florida state courts and recovered all benefits then due under the contract. His federal suit is based on a claim that a perseverance bonus accrued later under the contract. His suit was for the amount due him, less than three hundred dollars, and such sums as were due other Cuban Nationals holding contracts with similar bonus provisions. The class was said to include more than five thousand such contract holders. The bonus clause required an annual payment of from two to six dollars into a fund to be paid only to those who lived for twenty years, i.e., those who persevered.

Alvarez was the holder of an insurance contract with appellee in the amount of $5,000.00. He sought his contract rights and those of all other Cuban National policyholders similarly situated. He alleged that appellee had denied him all benefits due under the contract including loan and cash surrender values.

Apparently aware of the principle that separate claims may not be aggregated, the tenor of the complaint was directed toward the insurance company assets from which the bonus payments would be made, in the case of Recio; and toward the assets as well as other contract rights such as voting, in the case of Alvarez. Recio alleged a conversion of the perseverance fund, sought the appointment of a receiver, an accounting, and to impress the fund with a trust. He did not specifically seek the sum due him but the record shows without dispute that he had never requested anything more of the insurance company than such sum as might be due him under the bonus plan. We hold that he was seeking the sum due him and such sums as may have been due others of the asserted class similarly situated.

Alvarez alleged a conversion of the total of the sums due all Cuban Nationals in the class, and a refusal to extend voting privileges due under a mutual insurance contract to him and his class. He sought an accounting, and an injunction requiring that appellee re-establish his interest and that of the class on its books, and that all claims be honored. This too was nothing more than a claim on behalf of each contract holder in the class for whatever might be due under the respective contracts.

The separateness of the claims of each contract holder is established by the case of Troup v. McCart, 5 Cir., 1956, 238 F.2d 289, a class action, where prayers substantially as these were treated, by giving effect to substance over form, as a prayer for payment of sums due under individual insurance contracts. That case, in turn, rested on Eberhard v. Northwestern Mutual Life Ins. Co., 6 Cir., 1917, 241 F. 353; and Andrews v. Equitable Life Assur. Soc., 7 Cir., 1941, 124 F.2d 788, both of which involved prayers of the same nature. These cases all stand for the proposition that rights due under an insurance contract are those of creditor and debtor, and are several and distinct from claims which other contract holders may have against the

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same insurance company. The claims of the separate contract holders are not related to or dependent upon each other. Each case holds that the separate claims may not be aggregated to make the jurisdictional amount required under the diversity statute, 1332, supra. See also Matlaw Corporation v. War Damage Corporation, 7 Cir., 1947, 164 F.2d 281; and Knowles v. War Damage Corporation, 1948, 83 U.S.App.D.C. 388, 171 F.2d 15.

These holdings are in accord with the long line of Supreme Court decisions to the effect that separate and distinct demands of two or more plaintiffs, unlike several plaintiffs uniting to enforce a right or title which they hold in common, may not be aggregated to make the jurisdictional amount. Lion Bonding & Surety Co. v. Karatz, 1923, 262 U.S. 77, 43 S.Ct. 480, 67 L.Ed. 871; Pinel v. Pinel, 1916, 240 U.S. 594, 36 S.Ct. 416, 60 L.Ed. 817; Troy Bank of Troy, Ind. v. G.A. Whitehead & Company, 1911, 222 U.S. 39, 32 S.Ct. 9, 56 L.Ed. 81; Clay v. Field, 1891, 138 U.S. 464, 11 S.Ct. 419, 34 L.Ed. 1044; Stratton v. Jarvis & Brown, 1834, 8 Peters (33 U.S.) 4, 8 L.Ed. 846. See also Alfonso v. Hillsborough County Aviation Authority, 5 Cir., 1962, 308 F.2d 724; and 1 Moore's Federal Practice (2nd ed.), pp. 889-893; 1 Barron & Holtzoff, Federal Practice and Procedure (Wright ed.), pp. 114-117; and 2 Barron & Holtzoff, Federal Practice and Procedure (Wright ed.), pp. 321-324.

Appellants would avoid this jurisdictional obstacle by asserting Rule 23, F.R.Civ.P., as a jurisdictional base in each case. They properly read old Rule 23 as permitting aggregation if there is a true class action but their contentions that these were such actions were overruled in the District Court. Alfonso v. Hillsborough County Aviation Authority; Troop v. McCart; and Knowles v. War Damage Corporation, all supra, support the District Court in this respect. Each teaches that these were spurious class actions under 23(a)(3); hence aggregation was not in order. We need not dwell on this problem, however, since we are of the view that it would not be inappropriate to apply new Rule 23 and we will apply it arguendo. The new rule has discarded the trichotomy developed under the old rule of treating class actions as either true, hybrid, or spurious.

There is a sound basis for applying new Rule 23. On February 28, 1966, the Supreme Court...

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