Asbury v. New York Life Ins. Co.

• Decision Date: 07 July 1942
• Citation: 45 F. Supp. 513
• Parties: ASBURY v. NEW YORK LIFE INS. CO.
• Court: U.S. District Court — Eastern District of Kentucky

45 F. Supp. 513

ASBURY v. NEW YORK LIFE INS. CO.

District Court, E. D. Kentucky.

July 7, 1942.

Daniel B. Smith, of Harlan, Ky., and Cleon K. Calvert, of Pineville, Ky., for plaintiff.

Bruce & Bullitt, of Louisville, Ky., for defendant.

FORD, District Judge.

This action was originally filed in the Harlan Circuit Court. It was removed upon the petition of the defendant alleging diversity of citizenship between the parties and that the matter in controversy, exclusive of interest and costs, exceeds the sum or value of $3,000, 28 U.S.C.A. § 41(1), § 71.

Although no motion for remand has been made, section 37 of the Judicial Code, 28 U.S.C.A. § 80, places upon the court the duty to inquire into its jurisdiction at all stages of the case whether the parties raise the question or not. McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 56 S.Ct. 780, 80 L.Ed. 1135.

The material allegations of the petition are, in substance, that on September 15, 1932, the defendant issued and delivered to the plaintiff a life insurance policy in the sum of $10,000 in consideration of the payment of an annual premium of $448.50, with the provision that if, before reaching sixty years of age, the insured should become totally and presumably permanently disabled, payment of annual premiums would be waived during the continuance of such disability. It it further alleged that while the policy was in full force and effect, the plaintiff, not having reached sixty years of age, suffered total and permanent disability as defined in the policy, that due proof was furnished to the defendant and thereafter the plaintiff paid defendant one annual premium of $448.50 under protest and without prejudice to his right to demand its refund should his claim of waiver be sustained.

The relief sought is recovery of the premium payment of $448.50 with interest and adjudication that the policy remain in full force and effect without further payment of premiums.

The policy, which is filed with and made a part of the petition by reference, contains the provision that "if at any time the Insured shall become able to perform any work, follow any occupation, or engage in any business for remuneration or profit, no further premiums shall be waived." The policy contains no provision for payments to the insured on account of his disability but limits the benefit to waiver of the annual premiums on the life insurance during the existence of the disability.

No controversy exists between the parties as to the validity or meaning of any of the provisions of the policy nor is there any dispute but that the policy was in full force and effect at the time of the alleged disability.

The theory upon which it is insisted that the sum or value of the matter in controversy exceeds the requisite jurisdictional amount is that in addition to the $448.50 for which the plaintiff seeks judgment, the aggregate amount of future premiums to which the waiver provisions of the policy may be applicable during the plaintiff's life expectancy, as well as the reserve which the plaintiff must maintain in order to carry the policy (the total of which would far exceed $3,000) also constitute "matters in controversy" within the meaning of the statute and must be considered in measuring the sum or value thereof.

A similar contention was presented in Mutual Life Insurance Co. of New York v. Moyle, 4 Cir., 116 F.2d 434, a carefully considered opinion in which the court held that since it appeared the company was obligated only so long as the condition evidencing total and permanent disability should continue, a condition which, theoretically at least, might change at any time, it was impossible to say that any controversy existed except in respect to such liability as had accrued, and hence the amount involved for the purpose of jurisdiction was limited to the amount for which the suit was brought. In the same case the court pointed out that the reserve which the insurance company was required to maintain did not measure in any way the sum or value of the matter in controversy.

The cogent reasoning and impressive array of authorities supporting the views expressed in the Moyle case need not be here repeated. It is sufficient to declare agreement with the reasoning and full accord with the conclusion that in an action for a declaration of rights or for recovery of benefits under an insurance policy, wherein no question is raised as to the validity, terms, meaning or subsistence of the policy according to its terms, the value of the matter in controversy within the meaning of the jurisdictional statute, 28 U.S.C.A. § 41(1), is limited to the sum of such disputed obligations as may have accrued. Neither subsequent accruals which are contingent upon the uncertainty of future events nor the reserve which the insurance company may be required to maintain are "matters in controversy" within the meaning of the statute, nor may they properly be considered in measuring the sum of value involved in the case. Such matters are, at most, only incidental and collateral.

It is earnestly argued, however, that under a rather unique rule applied in cases of this character, under the law of Kentucky, if the plaintiff succeeds in establishing his claim of present disability he may be further awarded a present declaratory judgment in respect to his right to the waiver of future premiums. Equitable Life Assurance Society v. Branham, 250 Ky. 472, 63 S.W.2d 498; Prudential Insurance Co. v. Hampton, 252 Ky. 145, 65 S.W.2d 980; Equitable Life Assurance Society v. Goble, 254 Ky. 614, 72 S.W.2d 35; Mutual Life Ins. Co. of New York v. Beckmann, 261 Ky. 286, 87 S.W.2d 602. Due to the form of judgment approved in these cases, it is claimed the scope of the controversy is so enlarged that in computing the value involved the sum of all future premiums during the life expectancy of the insured must be considered.

This contention appears to rest upon a mistaken idea of the law and a misconception of the nature and effect of the form of judgment approved in such cases. It is settled in Kentucky, as...