Bell v. Philadelphia Life Ins. Co., 3838.

• Decision Date: 10 June 1935
• Docket Number: No. 3838.,3838.
• Citation: 78 F.2d 322
• Parties: BELL v. PHILADELPHIA LIFE INS. CO.
• Court: U.S. Court of Appeals — Fourth Circuit

78 F.2d 322 (1935)

BELL v. PHILADELPHIA LIFE INS. CO.

No. 3838.

Circuit Court of Appeals, Fourth Circuit.

June 10, 1935.

Charles G. Rose, of Fayetteville, N. C. (Malcolm McQueen and Rose & Lyon, all of Fayetteville, N. C., on the brief), for appellant.

W. H. Fisher, of Clinton, N. C., and Henry C. Strickland, of Angier, N. C. (Dupree & Strickland, of Angier, N. C., on the brief), for appellee.

Before PARKER, NORTHCOTT, and SOPER, Circuit Judges.

PARKER, Circuit Judge.

This suit was instituted in the superior court of Cumberland county, N. C., and was removed by defendant into the court below, where it was docketed on the equity docket. The bill of complaint alleged that the defendant had issued to plaintiff a policy of life insurance in the sum of $10,000, with provision for the payment of $100 per month with waiver of further premiums in case of total and permanent disability; that a note had been given for a balance on the premium due in the year 1932, which had been extended to May 28, 1933, the day upon which the premium payable in the year 1933 became due; that plaintiff became totally and permanently disabled prior to May 28, 1933, but did not give defendant notice of disability pursuant to the terms of the policy because of his mental condition resulting from the disability; and that defendant, without notice to plaintiff, wrongfully proceeded to convert the policy into one for extended insurance because of the failure on plaintiff's part to pay the premium extension note. It prayed that the policy be declared by the court to be in full force and effect, and that plaintiff recover on account of total and permanent disability the sum of $100 per month for the period of the disability, which at the time of the institution of the action amounted to $600. The answer denied that the plaintiff had become totally and permanently disabled and alleged that the policy had lapsed, except as to the extended insurance feature, on May 28, 1933, because of failure to pay the premium extension note.

The judge below impaneled a jury to try the issues involved in the case, but at the conclusion of the testimony directed them to find for the defendant, and entered a decree dismissing the suit. From this decree complainant has appealed. In this court defendant has moved to strike from the record the statement of the evidence signed by the judge below on the ground that the action was one at law, that the statement of evidence should be treated as a bill of exceptions, and that, not having been signed at the trial term or within an extension thereof, it was not properly a part of the record. Plaintiff has moved to remand the cause to the court below with direction to remand same to the state court, on the ground that it involves less than the jurisdictional amount of $3,000.

The motion to remand must be denied. The suit was instituted, not merely to recover the disability benefits alleged to be due under the policy, but also to have the policy declared in full force and effect upon an allegation that the defendant had wrongfully declared it lapsed for nonpayment of the premium extension note and had converted it into a policy of extended term insurance under the option features of the contract. It is well settled that equity will afford such relief in the case of wrongful cancellation or conversion of a policy of insurance. Burnet v. Wells, 289 U. S. 670, 680, 53 S. Ct. 761, 77 L. Ed. 1439; Michaelsen v. Security Mut. Life Ins. Co. (C. C.) 150 F. 224; American Trust Co. v. Life Ins. Co. of Va., 173 N. C. 558, 92 S. E. 706, 711; Meyer v. Knickerbocker Life Ins. Co., 73 N. Y. 516, 29 Am. Rep. 200; Day v. Ins. Co., 45 Conn. 480, 29 Am. Rep. 693; Metropolitan Life Ins. Co. v. McCormick, 19 Ind. App. 49, 49 N. E. 44, 46, 65 Am. St. Rep. 392; Cooley's Briefs on Insurance, vol. 5, p. 4692; 14 R. C. L. 1014; 32 C. J. 1264. And as such relief would directly determine the validity of a policy involving $10,000 life indemnity in addition to disability benefits, it is perfectly clear that it involves more than $3,000, exclusive of interest and costs.

It is true, as contended by plaintiff, that the jurisdiction of the court depends upon the amount actually in controversy in the suit and not upon any amount indirectly involved because of the probative effect of the judgment rendered therein (New England Mortgage Co. v. Gay, 145 U. S. 123, 12 S. Ct. 815, 36 L. Ed. 646); but here the policy itself is directly in controversy and its value determines the value in suit. See Pac. Mut. Life Ins. Co. v. Parker (C. C. A. 4th) 71 F.(2d) 872, 874; Ginsburg v. Pac. Mut. Life Ins. Co. (C. C. A. 2d) 69 F.(2d) 97, 98.

It is unnecessary to pass upon the motion to strike from the record the statement of the evidence, since we are of opinion that, even though the plaintiff be correct in his contention that the suit was in reality heard in equity and hence no bill of exceptions was necessary to enable us to review the testimony, nevertheless, the testimony as certified, when examined, shows that the decree appealed from was correct. The insurance policy in question was issued by defendant on May 28, 1929. It insured the life of pla...