Turpentine & Rosin Factors v. Travelers Ins. Co.

• Decision Date: 08 May 1942
• Docket Number: Civil Action No. 2.
• Citation: 45 F. Supp. 310
• Parties: TURPENTINE & ROSIN FACTORS, Inc., v. TRAVELERS INS. CO.
• Court: U.S. District Court — Southern District of Georgia

45 F. Supp. 310

TURPENTINE & ROSIN FACTORS, Inc., v. TRAVELERS INS. CO.

Civil Action No. 2.

District Court, S. D. Georgia, Waycross Division.

May 8, 1942.

Blalock & Blalock, by J. D. Blalock, all of Waycross, Ga., for plaintiff.

Wilson, Bennett & Pedrick, by L. E. Pedrick, all of Waycross, Ga., for defendant.

LOVETT, District Judge.

The questions for decision in this case arise under a motion filed by defendant for summary judgment and for judgment on the pleadings pursuant to Rules 56 and 12(c) of the Rules of Civil Procedure, 28 U.S.C.A. following section 723c.

The suit grows out of a life insurance contract containing benefits for permanent and total disability. It is a group policy. The insured persons are employees and customers of a naval stores factor.

Before considering the motion, I am constrained to comment on the size of the record. In essence, the suit is a simple one at law. The original petition consists of 57 pages of typewritten matter, containing 37 paragraphs and 23 exhibits. The case originated in the state court and was removed before amendment. Two amendments have been filed. The first contains 59 pages, with 23 new paragraphs and 24 exhibits, many of which are duplications of the exhibits attached to the original petition. The second amendment adds 9 new paragraphs and is 11 pages long. It has been necessary therefore to read, study and attempt to digest 127 pages of pleadings, which, in passing, it should be noted contain much more than a short and plain statement of the claim for relief contemplated by the new Federal Rules of Civil Procedure. See Rules 8(a) and 81(c). The briefs of counsel contain 162 pages. If this opinion seems long, in part at least it is provoked by the prolixity of counsel.

The allegations of the petition as originally drafted will be first considered.

The defendant issued a policy of group life insurance, which ordinarily insures the employees of an employer as a group, to Baldwin-Lewis-Pace Company and its affiliate, the Pace-Lewis Company, Florida corporations, to become effective on October 30, 1930, and to continue of force for a term of one year, reciting that it might be renewed from year to year. These companies were naval stores factors. Dennis F. Britt was a naval stores producer or operator, in Georgia, financed by these companies. Technically he was not an "employee"; he was a debtor and a holder of equities in certain naval stores producing property and naval stores products, the legal title to which was held by his factors as security for his debt, the debtor remaining in possession. The business was operated under the name of D. F. Britt & Son, a partnership, composed of Dennis F. Britt and Ethel L. Britt, a widow of a son of Dennis F. Britt.

The contract of insurance provided for payments upon death or upon permanent and total disability, as provided in the policy, of "operators", divided into certain classes. The class into which Dennis F. Britt fell gave insurance in the amount of $10,000. The "operators" correspond to the employees in the conventional policy of this nature; the "factors" to the employer.

The master policy of insurance is attached to the petition as an exhibit. Its obligations should be examined. It begins by saying that the defendant agrees to pay at the home office of the company in Hartford, Connecticut, certain death and permanent total disability benefits, in the one case upon due proofs of the death of any employee of Baldwin-Lewis-Pace Company and/or its affiliate company, Pace-Lewis Company (thereinafter called the employer), insured under the plan of insurance specified in the application for the policy, "in accordance with the provisions hereinafter contained, provided such death shall occur during the term of this policy or any renewal thereof", and, in the other case, the amount determined by the plan as permanent total disability benefit, when and as any such employee shall become entitled thereto in accordance with the paragraph entitled "Permanent Total Disability Benefit".

The application is also attached to the petition, states the plan of insurance, and, as heretofore stated, classified Dennis F. Britt as an "operator" entitled to insurance in the amount of $10,000.

The paragraph of the policy entitled "Permanent Total Disability Benefit" reads as follows: "Permanent Total Disability Benefit:—If any employee shall furnish the Company with due proof that while insured under this policy and before having attained the age of sixty, he has become wholly disabled by bodily injuries or disease, and will be permanently, continuously and wholly prevented thereby for life from engaging in any occupation or employment for wage or profit, the Company will waive further payment of premium as to such Employee and pay in full settlement of all obligations to him under this policy the amount of insurance in force hereunder upon his life at the time of the receipt of due proofs of such disability, in a fixed number of installments chosen by the Employer from the table in the paragraph entitled `Modes of Settlement', the first installment to be paid immediately upon receipt of due proofs of such disability. Any installments remaining unpaid at the death of the Employee shall be payable as they become due to the beneficiary designated by such Employee. Such remaining installments may be computed into one sum on the basis of interest at the rate of three and one-half per cent. per annum". Further recitals in the policy are to the effect that the insurance ends when the employment of any insured person ends or the employee notifies the employer to make no further deductions from his pay for the payment of premiums, except "in a case where at the time of such termination the employee shall be wholly disabled and prevented by bodily injury or disease from engaging in any occupation or employment for wage or profit. In such case the insurance will remain in force as to such employee during the continuance of such disability for the period of three months from the date upon which the employee ceased to work and thereafter during the continuance of such disability and while this policy shall remain in force until the employer shall notify the company to terminate the insurance as to such employee. Nothing in this paragraph contained shall limit or extend the Permanent Total Disability Benefit to which an employee shall become entitled under this policy".

There was a conversion privilege in the policy under the terms of which any employee (operator) referred to under the group policy, upon termination of employment for any reason, should be entitled to have issued to him without further evidence of insurability, and upon application made to the company within 31 days after such termination and upon payment of the premium applicable to the class of risks to which he belongs and to the form and amount of the policy at his then attained age, a policy of life insurance in any one of the forms customarily issued by the company, except term insurance, with permanent total disability benefit equivalent to that provided under the group life policy, in an amount equal to the amount of the employee's protection under the group policy at the time of the termination of his employment.

By the terms of the policy the employer was required to furnish the company monthly with the names of all employees eligible for insurance, together with the names of the beneficiaries, and also such data as might be necessary to determine the amount of insurance and the premium, and the employer was likewise required to furnish the company with the names of employees whose insurance should be terminated with the date of the termination of the insurance.

The clause relating to the change of beneficiary reads as follows: "Change of Beneficiary:—Any employee insured hereunder may designate a new beneficiary at any time by filing with the Employer a written request for such change on forms furnished by the Company, but such change shall become effective only upon receipt of such request at the Home Office of the Company".

The paragraph relating to the renewal of the policy is in this language: "Renewal Privilege: — This policy may be renewed from year to year at premiums to be computed by the Company in accordance with the paragraph entitled `Premium Computation and Adjustment' and payable in the same manner as the premium for the first year. The schedule of rates hereinafter contained shall be used in such computation of renewal premiums for the number of years designated in the application of the Employer. Thereafter the renewal premiums shall be computed upon the basis of the schedule of rates then determined by the Company upon the basis of its experience".

After stating the facts already mentioned, the declaration recites that the premiums on the insurance assigned by Dennis F. Britt were paid by the factors to October 30, 1932; that during the years 1931 and 1932 the operator owed his factors an amount in excess of $12,000 at all times, owed them exceeding $10,000 when the insurance contract was made, and upon the filing of the suit owed them (or their assignees) more than $15,000.

The plaintiff, Turpentine & Rosin Factors, was also a Florida corporation created by the factors and others, and, under a trust agreement set out in the pleadings, became their trustee for the liquidation of their properties. As such trustee it held title to all the assets of the two factors, including an assignment, dated December 6, 1930, by Dennis F. Britt to the two factors of his certificate under the policy of group life insurance. This assignment conveyed all of the assignor's "right, title, interest and benefit in and to" his insurance, and provides "any claim hereunder shall be subject to proof by assignee of interest and extent thereof".

In the latter part of the year 1931 the relations between Mr. Britt, the operator, and the Lewis companies, his...