Clark v. Paul Revere Life Insurance Co.

• Decision Date: 27 October 1969
• Docket Number: 19544,No. 19543,19598,19610.,19543
• Citation: 417 F.2d 683
• Parties: Myrtle N. CLARK, Appellee, v. PAUL REVERE LIFE INSURANCE CO., Appellant. Myrtle N. CLARK, Appellant, v. PAUL REVERE LIFE INSURANCE CO., Appellee. Myrtle N. CLARK, Appellee, v. CONTINENTAL CASUALTY CO., Appellant. Myrtle N. CLARK, Appellant, v. CONTINENTAL CASUALTY CO., Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

417 F.2d 683 (1969)

Myrtle N. CLARK, Appellee, v. PAUL REVERE LIFE INSURANCE CO., Appellant.

Myrtle N. CLARK, Appellant, v. PAUL REVERE LIFE INSURANCE CO., Appellee.

Myrtle N. CLARK, Appellee, v. CONTINENTAL CASUALTY CO., Appellant.

Myrtle N. CLARK, Appellant, v. CONTINENTAL CASUALTY CO., Appellee.

Nos. 19543, 19544, 19598, 19610.

United States Court of Appeals Eighth Circuit.

October 27, 1969.

Jay W. Dickey, Jr., of Dickey, Dickey & Drake, Pine Bluff, Ark., for Myrtle N. Clark.

H. Watt Gregory, III, of Rose, Meek, House, Barron, Nash & Williamson, Little Rock, Ark., for Continental Casualty Co.

William R. Holland of Bridges, Young, Matthews & Davis, Pine Bluff, Ark., for Paul Revere Life Ins. Co.

Before VAN OOSTERHOUT, Chief Judge, and LAY and HEANEY, Circuit Judges.

VAN OOSTERHOUT, Chief Judge.

Defendant Continental Casualty Company has taken a timely appeal in case No. 19,598 from the final judgment of the District Court filed September 24, 1968, awarding plaintiff Myrtle N. Clark interest at 6% per annum on the $50,000 face of defendant's policy from June 14, 1967, to the time of deposit of the policy proceeds in the registry of the court, plus 12% penalty on the $50,000, and attorneys' fees in the amount of $1,500. Defendant also appeals from the court's failure to allow it costs and attorneys' fees, arising out of the intervention proceedings, out of the deposited funds. Plaintiff by cross-appeal (No. 19,610) urges that the attorney fee allowance made was not adequate and that interest on the policy principal should accrue from the time notice of loss was received by the defendant (May 1, 1967).

Defendant Paul Revere Life Insurance Company has taken a timely appeal (No. 19,543) from final judgment awarding plaintiff Myrtle N. Clark interest at 6% per annum on the $25,000 policy coverage from April 27, 1967, to the time the policy proceeds were deposited in the registry of the court, plus a 12% penalty on the $25,000, and attorneys' fees of $1,000. Plaintiff by cross-appeal (No. 19,544) urges the allowance of attorneys fees is not adequate.

In each of these cases both parties moved for summary judgment. The cases were consolidated in the trial court and heard by the court without a jury. All pleadings and motions together with affidavits and exhibits thereto attached were made a part of the record. Oral evidence was received. Both cases were submitted and decided on the merits and the judgments heretofore described were entered. Jurisdiction based on diversity of citizenship is established.

The cases were consolidated for hearing upon appeal. We shall deal with the appeals and cross-appeals in both cases in this opinion.

Defendants' Appeals.

The principal issue raised by each defendant on appeal is whether the court erred in awarding plaintiff statutory penalty, attorneys' fees and interest. The full amount of the policy coverage in each instance has been paid. The answer to the propriety of the allowance of penalty and attorneys' fees lies in the interpretation of Arkansas Statutes Annot. § 66-3238 which in material part reads:

"In all cases where loss occurs and the * * * insurance company * * * shall fail to pay the same within the time specified in the policy, after demand made therefor, such person * * * shall be liable to pay the holder of such policy or his assigns, in addition to the amount of such loss, twelve percent (12%) damages * * * with all reasonable attorneys fees * * *."

The Supreme Court of Arkansas in Clark v. New York Life Ins. Co., 434 S.W.2d 611 (December 2, 1968) and Clark Center, Inc. v. National Life & Accident Ins. Co., 433 S.W.2d 151 (November 4, 1968), both decided after the judgments before us were entered, authoritatively interprets § 66-3238. The Court, after stating that § 66-3238 is highly penal and to be strictly construed, holds:

"The language in § 66-3238, supra, to the effect `shall fail to pay the same within the time specified within the policy, after demand made therefor\' contemplates that the insurer shall have a reasonable time to make necessary investigation in reference to the loss and the circumstances thereof after demand." 434 S.W.2d 611, 613.

What is a reasonable time for an investigation necessarily depends upon the facts and circumstances of each case. Liability in the cited Arkansas cases, as in the cases before us, is predicated upon accident insurance policies issued upon the life of Millard M. Clark. In the cases before the Arkansas Supreme Court and those before us in these appeals, it is conceded that the policies were valid and in full force and effect. Mr. Clark was found in his apartment fatally wounded by a gunshot in his head on the morning of March 19, 1967. His wife, Myrtle N. Clark, beneficiary of the policies and plaintiff in these cases, was in the room with him. There is no evidence that anyone else was present. On April 25, 1967, Mrs. Clark was charged in a county attorney's information with murder of her husband.¹

Each of the defendant insurance companies received notice of Mr. Clark's death shortly after the incident. They immediately proceeded to investigate the policy claims with due diligence but were unable to get any information from Mrs. Clark, who upon advice of her attorney and her son refused to make any statement with respect to the circumstances leading to Mr. Clark's death. The prosecuting attorney, following what he believed to be proper ethical standards, refused to give any information that he possessed with respect to the circumstances of Mr. Clark's death and he instructed the investigating officers to give out no information. No other sources of information appeared to have been available. Defendants assert an investigation was necessary for two reasons: (1) The policies excluded liability for suicide and hence an investigation of the suicide aspect was necessary and reasonable. (2) Under Arkansas law, willful, unlawful and feloniously killing of the assured by the person named as beneficiary forfeits all rights of the beneficiary to the policy proceeds. See Clark Center, Inc. v. National Life & Accident Ins. Co., supra.

It fairly appears from the trial court's findings, dictated into the record after the case had been submitted, that the court did not doubt defendants' diligence and good faith in the investigation of the loss...