Button v. Mutual Life Ins. Co. of New York

• Decision Date: 09 January 1943
• Docket Number: No. 418.,418.
• Citation: 48 F. Supp. 168
• Parties: BUTTON v. MUTUAL LIFE INS. CO. OF NEW YORK.
• Court: U.S. District Court — Western District of Kentucky

48 F. Supp. 168

BUTTON v. MUTUAL LIFE INS. CO. OF NEW YORK.

No. 418.

District Court, W. D. Kentucky, at Louisville.

January 9, 1943.

James H. Frazee, and Jones, Keith & Jones, all of Louisville, Ky., for plaintiff.

William Marshall Bullitt and Francis T. Goheen, both of Louisville, Ky., for defendant.

MILLER, District Judge.

This action was originally filed by the plaintiff, Ruby P. R. Button, in the Jefferson Circuit Court of Kentucky and was thereafter removed by the defendant, Mutual Life Insurance Company of New York, to the United States District Court. The plaintiff has moved to remand the action to the State court.

The petition states that on November 20, 1924, the defendant executed and delivered to the plaintiff its policy of insurance, whereby in consideration of an annual premium of $107.10 the defendant insured her life for $5,000; that in consideration of an additional premium of $8.05 per year the defendant agreed that in the event of total and permanent disability on the part of the insured before attaining the age of 60 years, it would, during the continuance of such disability, waive payment of each premium as it became due and pay to the insured $50 per month; that on September 14, 1939, while the policy was in full force and effect the insured became permanently and totally disabled; that the defendant made the monthly payments of $50 to her until November, 1940, at which time it refused to recognize her condition as being one of total and permanent disability and has refused to make any such payment for November, 1940, or thereafter; and that there was due to her by the defendant under the policy at the time when this action was filed in December, 1941, the sum of $700 which the defendant has failed and refused to pay. The petition prays judgment against the defendant in the sum of $700; that the plaintiff be adjudged permanently and totally disabled under the stipulations of the policy, and that she be adjudged payment of $50 per month from the defendant for the remainder of her natural life. The petition for removal alleges diversity of citizenship between the parties and that the matter in controversy exceeds, exclusive of interest and costs, the sum or value of $3,000. It states in support of these allegations that in accordance with the requirements of the law of New York it is required to carry reserves for disability benefits and that in accordance with sound actuarial principles and practices it has set up against the plaintiff's claim and now maintains a reserve which exceeds $8,000; that the plaintiff was 36 years of age at the time of filing her action and had a reasonable expectancy of life of more than ten years; and if the plaintiff sustains her claim in this action and lives during her reasonable life expectancy and remains totally and permanently disabled the defendant will be required to pay her more than 120 monthly installments of $50 each or a total sum of more than $6,000, and waive more than ten annual premiums of $115.50 each, which makes a total payment of monthly income and waiver of premiums of more than $7,151.50.

The present motion to remand raises only the question of whether or not under the facts so stated the matter in controversy exceeds, exclusive of interest and costs, the sum or value of $3,000. Sections 41(1) and 71, Title 28 U.S.C.A.

The Federal decisions are in conflict as to whether or not the legal necessity of maintaining, and the actual maintenance of, a reserve in excess of $3,000 to meet disability claims satisfies the statutory jurisdictional requirement that the matter in controversy exceed $3,000. The following cases have held that the setting up of such a reserve by an insurance company is merely incidental and collateral to the plaintiff's claim and is not the amount in controversy, in that the defendant will not necessarily be required to pay out the sum so set aside by reason of such claim: Mutual Life Ins. Co. of New York v. Moyle, 4 Cir., 116 F. 2d 434; Berlin v. Travelers Ins. Co., D.C., 18 F.Supp. 126; Edelman v. Travelers Ins. Co., D.C., 21 F.Supp. 209; Small v. New York Life Ins. Co., D.C., 18 F.Supp. 820; Shabotzky v. Massachusetts Life Ins. Co., D.C., 21 F.Supp. 166; Huey v. Prudential Life Ins. Co., D.C., 23 F.Supp. 708; Stockman v. Reliance Life Ins. Co., D.C., 28 F.Supp. 446; Travelers Ins. Co. v. Wechsler, D.C., 34 F.Supp. 721; Asbury v. New York Life Ins. Co., D.C., 45 F. Supp. 513.

The other view, namely, that the amount of necessary reserve should be considered in determining the jurisdictional amount, was followed in the following cases: Jensen v. New York Life Ins. Co., 8 Cir., 50 F.2d 512; Enzor v. Jefferson Standard Life Ins. Co., D.C., 14 F.Supp. 677; Ross v. Travelers Ins. Co., D.C., 18 F.Supp. 819; Struble v. Connecticut Mutual Life Ins. Co., D.C., 20 F.Supp. 779; Penn Mutual Life Ins. Co. v. Joseph, D.C., 5 F.Supp. 1003; Thorkelson v. Etna Life Ins. Co., D.C., 9 F.Supp. 570.

The views and reasons given by the Court in its opinion in Berlin v. Travelers Insurance Co., supra, appear to me to correctly interpret the meaning and purpose of the statute, and to be in accord with early rulings of the Supreme Court on analogous questions. Troy v. Evans, 97 U.S. 1, 24 L.Ed. 941; Town of Elgin v. Marshall, 106 U.S. 578, 1 S.Ct. 484, 27 L. Ed. 249. The reserve set up by the Insurance Company is not the matter in controversy; it merely represents collateral action on the part of the Insurance Company by reason of the existence of the claim. The collateral effect of a judgment is not the test of jurisdiction. Wright v. Mutual Life Ins. Co. of New York, 5 Cir., 19 F.2d 117, and cases therein cited. This ground for assuming jurisdiction is therefore denied.

A conflict seems to also exist in the Federal authorities on the question of whether or not in an action to recover payments already accrued under a contract providing for installment payments where liability for any payment is denied, the Court can also consider in determining the matter in controversy payments due in the future if liability under the contract is established. Several decisions strongly support the view that such future payments are properly included in determining the jurisdictional amount, even though they are subject to being decreased or even cut off by a change in conditions at a later time. Thompson v. Thompson, 226 U.S. 551, 33 S.Ct. 129, 57 L.Ed. 347; Brotherhood of Locomotive Firemen & Enginemen v. Pinkston, 293 U.S. 96, 55 S. Ct. 1, 79 L.Ed. 219; Ballard v. Mutual Life Ins. Co. of New York, 5 Cir., 109 F.2d 388; Penn Mutual Life Ins. Co. v. Joseph, D.C., 5 F.Supp. 1003; Franzen v. E. I. Du Pont De Nemours & Co., D.C., 36 F.Supp. 375. On the other hand, the following decisions have held that such future payments are not properly included in determining the amount in controversy: Wright v. Mutual Life Ins. Co., 5 Cir., 19 F.2d 117, affirmed 276 U.S. 602, 48 S.Ct. 323, 72 L.Ed. 726; Equitable Life Assurance Society v. Wilson, 9 Cir., 81 F.2d 657; Colorado Life Co. v. Steele, 8 Cir., 95 F.2d 535; Mutual Life Ins. Co. of New York v. Moyle, 4 Cir., 116 F.2d 434; LaVecchia v. Connecticut Mutual Life Ins. Co., D.C., 1 F.Supp. 588; Hines v. Fidelity Mutual Life Ins. Co., D.C., 6 F.Supp. 692; Moon v. Pacific Mutual Life Ins. Co., D.C., 28 F.Supp. 199; Mitchell v. Mutual Life Ins. Co., D.C., 31 F.Supp. 441; Asbury v. New York Life Ins. Co., D.C., 45 F.Supp. 513.

It would serve no useful purpose to review the arguments and reasons advanced by these conflicting lines of authority, as a full discussion of the question involved can be obtained by a reading of the several opinions above referred to. I am of the opinion that the basic reason stressed in the two opinions in Wright v. Mutual Life Ins. Co., supra, and Mutual Life Ins. Co. of New York v. Moyle, supra,...