Anderson v. Aetna Life Ins. Co. of Hartford, Conn., 4101.

• Decision Date: 06 April 1937
• Docket Number: No. 4101.,4101.
• Citation: 89 F.2d 345
• Parties: ANDERSON et al. v. ÆTNA LIFE INS. CO. OF HARTFORD, CONN.
• Court: U.S. Court of Appeals — Fourth Circuit

89 F.2d 345 (1937)

ANDERSON et al. v. ÆTNA LIFE INS. CO. OF HARTFORD, CONN.

No. 4101.

Circuit Court of Appeals, Fourth Circuit.

April 6, 1937.

James E. Leppard, of Chesterfield, S. C. (George K. Laney, of Chesterfield, S. C., and C. P. Laney and P. A. Murray, Jr., both of Cheraw, S. C., on the brief), for appellants.

Henry E. Davis, of Florence, S. C., for appellee.

Before PARKER, NORTHCOTT, and SOPER, Circuit Judges.

PARKER, Circuit Judge.

This is a suit by an insurance company asking relief under the Federal Declaratory Judgment Act of June 14, 1934, 48 Stat. 955, Jud.Code § 274d, as amended by Act Aug. 30, 1935, 28 U.S.C.A. § 400. From a decree holding that a group insurance policy had lapsed and that the rights of defendants insured thereunder had ceased and determined, the defendants have appealed. The question presented by the appeal is the jurisdiction of the court to entertain the suit, no question being raised as to the decision of the court if its jurisdiction is conceded. The facts out of which the case arises and the proceedings had in the court below are as follows:

In the year 1925 the company issued to J. L. Anderson of Cheraw, S. C., a policy of group insurance, covering, in varying amounts, the employees in a veneer plant which he operated. This policy provided for monthly payment of premiums by the employer, with provision for annual renewal at his option, and with the right on the part of the company at the end of each year to establish new premium rates for its continuance. It provided insurance against death and against total and permanent disability; and the employees were furnished certificates setting forth the terms of the insurance and that it was subject to cancellation upon the discontinuance of the term policy. In August, 1933, toward the end of the insurance year, the company notified the employer that, if the policy were continued, the premiums would be raised very considerably, and suggested that a new type of policy be taken in lieu thereof covering death but not disability. This suggestion was accepted, premiums were paid on the old policy which carried it in force to November 16, 1933, and a new policy was issued as of that date.

When the employees were offered certificates under the new policy a number of them became dissatisfied because of the lack of disability provision, and in March 1935, over a year later, eleven of them instituted actions under the old policy in the court of common pleas of Chesterfield county, S. C., asking actual damages in the total amount for which they were insured thereunder and punitive damages in the sum of $10,000 each. The company removed these suits into the court below and at the same time instituted this suit against the employer and all of the employees covered by the old policy, setting forth the facts as above stated, asking a declaratory judgment to the effect that the coverage of the old policy had terminated on December 17, 1933, thirty-one days after the date to which premiums were paid, and for general relief in the premises. Following this, the defendants whose actions had been removed from the state court into the court below, on September 9, 1935, were allowed to take nonsuits therein; and these judgments of nonsuit were affirmed by this court. See Aetna Life Ins. Co. v. Wilson et al. (C.C.A.4th) 84 F.(2d) 330.

The judgments of nonsuit left no litigation pending between the company and the persons insured under the policy except this suit for the declaratory judgment; but in January, 1936, three other of the defendants herein commenced actions in the court of common pleas of Chesterfield county, asking damages of the company on the ground that it had fraudulently canceled or attempted to cancel the old policy and fixing the claims for damages at sums not within the federal jurisdiction. On application of the company, the judge below granted an interlocutory injunction in this suit restraining the defendants from prosecuting those actions pending the hearing herein. No appeal was taken from the order granting the interlocutory injunction which, of course, expired with the entry of final decree.

When the case came on for final hearing, the judge below found the facts with regard to the termination of the old policy and held that it ceased to be effective on November 16, 1933, and that the rights of the certificate holders thereunder ceased as to causes of action that did not accrue prior to that date. He denied a motion to dismiss the bill of complaint for lack of jurisdiction and entered a decree in the following terms: "Ordered, adjudged and decreed that the group policy of insurance No. 2901, issued to J. L. Anderson, be, and it hereby is, declared to have been discontinued, to have lapsed, and to have ceased to be effective, as of November 16, 1933, and that all rights of the answering defendants, under both the said master policy and each of the certificates issued to them or to the intestate of any of them, ceased and determined with the termination of said master policy; that the plaintiff is not liable to any of said answering defendants either under the master policy or...