Aetna Life Ins. Co. of Hartford, Conn. v. Haworth

• Citation: 84 F.2d 695
• Decision Date: 27 July 1936
• Docket Number: No. 10562.,10562.
• Parties: ?TNA LIFE INS. CO. OF HARTFORD, CONN., v. HAWORTH et al.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

84 F.2d 695 (1936)

?TNA LIFE INS. CO. OF HARTFORD, CONN., v. HAWORTH et al.^*

No. 10562.

Circuit Court of Appeals, Eighth Circuit.

July 27, 1936.

E. R. Morrison, of Kansas City, Mo. (Chas. C. Byers and Douglas Stripp, both of Kansas City, Mo., on the brief), for appellant.

Rees Turpin, of Kansas City, Mo., for appellee.

Before STONE, WOODROUGH, and THOMAS, Circuit Judges.

THOMAS, Circuit Judge.

This is a suit in equity for a declaratory judgment under the Declaratory Judgment Act (Judicial Code, ß 274d, 28 U.S.C.A. ß 400 and note) by the ?tna Life Insurance Company, insurer, against Edwin P. Haworth, insured, and Cora, his wife, beneficiary, seeking a judgment declaring certain life insurance policies referred to in the petition null and void. A motion to dismiss was sustained and the appeal is from the order of dismissal. (D.C.) 11 F.Supp. 1016.

The motion to dismiss is in the nature of a demurrer to the petition, challenging the sufficiency of the statement of facts to constitute a cause of action, and the jurisdiction of the court.

The trial court, upon entering the order of dismissal from which this appeal is taken, filed a memorandum opinion from which it appears that he held that the petition fails to state a cause of action within the meaning of the Declaratory Judgment Act of June 14, 1934, because it presents no actual controversy in the constitutional sense, and because it does not disclose any present rights or other legal relations to be declared.

Section 2 of article 3 of the Constitution confines the judicial power of the courts of the United States to "cases" and "controversies"; and the Act of June 14, 1934, keeps within these constitutional boundaries, because it is applicable only to "cases of actual controversy." Its first subdivision declares (28 U.S.C.A. ß 400 (1) and note): "(1) In cases of actual controversy the courts of the United States shall have power upon petition, declaration, complaint, or other appropriate pleadings to declare rights and other legal relations of any interested party petitioning for such declaration, whether or not further relief is or could be prayed, and such declaration shall have the force and effect of a final judgment or decree and be reviewable as such."

The question for our determination is whether the facts stated in the petition present an "actual" or justiciable "controversy," in the constitutional sense, between the plaintiff and the defendants.

The petition recites that the plaintiff had previously issued five policies of life insurance upon the life of the defendant, Edwin P. Haworth, in which the defendant, Cora M. Haworth, is named as beneficiary. Each policy contains provisions under which payment of premiums is suspended during total disability of the insured, and two of them provide for certain payments immediately upon proof of total permanent disability.

It is alleged that beginning about 1930 the insured defaulted in the payment of the contractual premiums upon said policies, and that such default continues to the present time; that from time to time since said date the defendants have served upon the plaintiff statements under oath all of similar tenor, one of which is set out. The statement exhibited, after describing the policies, and averring the total permanent disability of the insured, continues:

"The insured says that all of the above described policies are now in full force and effect; that under the terms of said policies and each of them all annual premiums upon them, or any of them, becoming payable in the year 1930 or in the year 1931 or in the year 1932 are waived by reason of such disability, and the insured is entitled to have said policies continue in full force and effect without the payment of any further premium so long as his said disability shall continue.

"The insured says this statement is made for the purpose of asserting and claiming his right to have said policies continue under the permanent total disability provision contained in each of them."

No other act or omission of the defendants is alleged.

The plaintiff denies that the insured is now or that he was totally and permanently disabled at or prior to the default in the payment of premiums, and says that all of said policies have lapsed by reason of such default.

It is further alleged that, unless a declaratory judgment is entered herein as prayed, the plaintiff will suffer irreparable injury for the reasons: (1) That the defendants have not instituted any action at law or other judicial proceeding wherein the plaintiff would have an opportunity to prove the absence of permanent total disability of the insured and that the policies have lapsed; (2) that actions upon the policies will not be barred until after the running of the statute of limitations following the death of the insured, and that there is danger that evidence to establish such defense now available may not be available at that time; and (3) that because the permanent total disability has not been judicially determined the plaintiff is compelled annually to set aside and maintain substantial reserves upon the policies.

The prayer of the petition is that the court render a declaratory decree or judgment, declaring and defining the status of said policies of life insurance, and declaring each of them null and void, and that each of them has lapsed because of nonpayment of premiums.

It will be noted from an examination of the statement served upon plaintiff that no suit is threatened and no demand made by the defendants. The defendants simply assert that the policies are in force and effect. The apprehension of the plaintiff is that suit will be brought against it at some time prior to the running of the statute of limitations.

Apparently the sole object of this proceeding is to furnish plaintiff an opportunity to establish now its alleged defense to such anticipated litigation, because no claim is made to any contractual rights resulting from the purported wrongful nonpayment of premiums. Assuming that insured has defaulted as alleged, the plaintiff in such case is entitled to only one of two rights. First, it may rely on the contract and assert its right to damages or to specific performance; or, second, it may cancel or rescind the contract. In the present proceeding it seeks the equivalent of cancellation and makes no claim to the first right. The right of cancellation is one which the plaintiff may exercise itself without asking the aid of the court. The only advantage to be derived from a declaratory judgment is an adjudication of the right of cancellation, and the only value of such an adjudication is that it will be a defense in the event of a future suit on the policies. The only disadvantages alleged to result from the present status are the danger of loss of evidence and the setting aside of reserves.

We are impressed that the situation thus presented by the petition amounts to no more than an "assumed potential invasion" of plaintiff's rights, and that it does not for this reason present a justiciable controversy. State of Arizona v. California, 283 U.S. 423, 462, 51 S.Ct. 522, 75 L.Ed. 1154. The judicial power of the federal courts does not extend to the giving of mere advisory opinions or the determination of abstract propositions. State of Alabama v. Arizona, 291 U.S. 286, 291, 54 S.Ct. 399, 78 L.Ed. 798; United States v. West Virginia, 295 U.S. 463, 474, 55 S.Ct. 789, 79 L.Ed. 1546; State of New Jersey v. Sargent, 269 U.S. 328, 338, 46 S.Ct. 122, 125, 70 L.Ed. 289. To present an "actual controversy" within the constitutional meaning of that phrase there must be a statement of facts showing that the defendant is acting or is theatening to act in such a way as to invade, or prejudicially affect, the rights of the plaintiff. State of New Jersey v. Sargent, supra. The Declaratory Judgment Act does not change the essential requisites for the exercise of judicial power nor alter the character of controversies which are the subject of judicial power under the Constitution. Ashwander v. Tennessee Valley Authority, 297 U.S. 288, 325, 56 S.Ct. 466, 472, 80 L.Ed. 688; United States v. West Virginia, 295 U.S. 463, 475, 55 S.Ct. 789, 79 L.Ed. 1546.

The Supreme Court has said that a case or controversy may be presented to the federal courts by other than traditional forms of procedure which invoke only the traditional remedies. Nashville, C. & St. L. Ry. Co. v. Wallace, 288 U.S. 249, 265, 53 S.Ct. 345, 77 L.Ed. 730, 87 A.L.R. 1191. But the constitutional concept of what constitutes a "controversy" cannot be changed by the Legislature nor enlarged by the courts. Where rights are invaded or imminently threatened, federal courts have power to give relief by either traditional remedies or by declaratory judgments, because invasion or threatened invasion of rights are fundamental conditions in the absence of which federal courts have no power to act, since in their absence no justiciable controversy exists. Where these conditions are shown to exist, a declaratory judgment may be a salutary remedy. Zenie Bros. v. Miskend (D.C.S.D.N.Y.) 10 F.Supp. 779, 781; see, also, Hess v. Country Club Park, 213 Cal. 613, 2 P.(2d) 782, 783. In the Zenie Bros. Case, supra, such relief was granted, the court saying that: "Under the facts pleaded, the defendants are threatening their plaintiffs' customers with suits for infringement of a worthless patent and are disrupting their business."

No such situation is presented in the instant case. It is not shown that the business of plaintiff is prejudicially affected in any way by the alleged acts of the defendants. The alleged irreparable injuries to the plaintiff enumerated in the petition, when examined, are found wanting in the essential constitutional ingredients of a controversy. They are too remote and vague to be considered as elements of a cause of action. First, it is claimed that there is danger that evidence to establish the defense of...