MUTUAL BEN. HEALTH & ACCIDENT ASS'N v. Fortenberry

• Court: U.S. Court of Appeals — Fifth Circuit
• Writing for the Court: FOSTER, SIBLEY, and HUTCHESON, Circuit
• Citation: MUTUAL BEN. HEALTH & ACCIDENT ASS'N v. Fortenberry, 98 F.2d 570 (5th Cir. 1938)
• Decision Date: 23 August 1938
• Docket Number: No. 8512.,8512.
• Parties: MUTUAL BEN. HEALTH & ACCIDENT ASS'N v. FORTENBERRY et al.

98 F.2d 570 (1938)

MUTUAL BEN. HEALTH & ACCIDENT ASS'N v. FORTENBERRY et al.

No. 8512.

Circuit Court of Appeals, Fifth Circuit.

August 23, 1938.

W. H. Watkins, Jr., of Jackson, Miss., for appellant.

J. Ed. Franklin, of Jackson, Miss., for appellees.

Before FOSTER, SIBLEY, and HUTCHESON, Circuit Judges.

FOSTER, Circuit Judge.

Appellant brought this suit to rescind and cancel a policy of life, accident and health insurance, issued to Adolphus N. Fortenberry, in which his wife was named as beneficiary. Appellees moved to dismiss the suit on the grounds that the amount in controversy does not exceed $3000, exclusive of interest and costs and the bill is without equity. The District Court sustained the motion and dismissed the suit without written opinion. The appeal is from that judgment.

The suit was filed April 1, 1937. The bill alleges diversity of citizenship, which is not disputed, and shows the following material facts. The policy issued October 2, 1936, for an initial premium of $10, and quarterly premiums of $7 thereafter. It provides for death indemnity of $1250, increasing at the rate of $125 yearly, if the policy is kept in force, until the maximum of $2500 is reached. It provides for payment of various amounts to the insured for specified injuries resulting from accidents, to be doubled under certain conditions. It provides for the waiver of future premiums, if the insured becomes totally disabled, during the continuance of the disability. It does not contain the usual incontestable clause found in standard life policies.

The bill further alleges that the insured, claiming total and permanent disability, filed a claim for $50 a month indemnity, under which $100 was due on March 2, 1937; that the insured was 51 years of age with a life expectancy of at least 20 years, which if realized would entitle him to total payments of at least $12,000; and that, because of the waiver of premiums, plaintiff was required by law to establish and maintain a reserve in excess of $3000 on account of the claim. By appropriate allegations the bill also alleges fraud in the procurement of the policy and that no suit had been brought to recover on the policy.

Whether the District Court had jurisdiction depends upon the allegations that the life expectancy of the insured is 20 years which if realized would entitle him to a total payment of $12,000, to protect which plaintiff is required by law to set up a reserve exceeding $3000. It must be conceded that if plaintiff had brought suit in a state court to collect instalments amounting to less than $3000 it would not have been removable. Wright v. Mutual Life Ins. Co., 5 Cir., 19 F.2d 117; Mutual Life Ins. Co. v. Wright, 276 U.S. 602, 48 S.Ct. 323, 72 L.Ed. 726. But a different...