Columbian Nat. Life Ins. Co. v. Foulke

• Decision Date: 01 April 1937
• Docket Number: No. 10708.,10708.
• Citation: 89 F.2d 261
• Parties: COLUMBIAN NAT. LIFE INS. CO. v. FOULKE.
• Court: U.S. Court of Appeals — Eighth Circuit

89 F.2d 261 (1937)

COLUMBIAN NAT. LIFE INS. CO. v. FOULKE.

No. 10708.

Circuit Court of Appeals, Eighth Circuit.

April 1, 1937.

David A. Murphy, of Kansas City, Mo. (John T. Harding, R. C. Tucker and John Murphy, all of Kansas City, Mo., on the brief), for appellant.

Whitson Rogers, of Kansas City, Mo. (John S. Wright and Abraham E. Margolin, both of Kansas City, Mo., on the brief), for appellee.

Before STONE, GARDNER, and WOODROUGH, Circuit Judges.

WOODROUGH, Circuit Judge.

The Columbian National Life Insurance Company, a Massachusetts corporation, has appealed from an order dismissing its petition for declaratory judgment under section 274d of the Judicial Code (28 U.S. C.A. 400). It alleged in the petition that it had issued a policy insuring one Edward L. Foulke against loss resulting from bodily injuries effected directly and independently of all other causes from accidental means and providing that if such injuries resulted in the death of said Edward L. Foulke within 90 days of the accident causing such injuries the Insurance Company would pay Nelle Foulke the principal sum therein stated, to wit, $7,500. It alleged further that said Edward L. Foulke came to his death at a time when the policy was in full force and effect, but that his death resulted from and was due to natural causes and did not result from any injuries effected directly and independently of all other causes through accidental means. Nelle Foulke, of Kansas City, Mo., the beneficiary of the policy, was made defendant and it was alleged that she "claims and asserts that the death of the said Edward L. Foulke was the result of bodily injuries effected directly and independently of all other causes through accidental means" and that the Insurance Company "is obligated to her under the provisions of said policy in the sum of $7,500.00," and that "she has demanded that plaintiff make such payment to her." It was also alleged, "There is an actual controversy between plaintiff and defendant as to the obligation of the plaintiff to the defendant arising out of the aforesaid claim and demand of defendant under said policy, and the aforesaid denial thereof by the plaintiff." The prayer of the petition was that the court "declare the rights of the defendant and the obligations of the plaintiff under said policy in accordance with the provisions of section 274d of the Federal Judicial Code."

The defendant, Nelle Foulke, demurred to the petition on the grounds: "1. That said petition does not state facts sufficient to constitute a cause of action in favor of the plaintiff and against the defendant. 2. That said petition does not state a justiciable controversy. 3. That said petition shows upon its face that plaintiff is not entitled to any relief under the declaratory judgment law." The District Court sustained the demurrer (13 F.Supp. 350, 352), and, the plaintiff having refused to plead further, the judgment of dismissal followed.

It appears from the opinion of the trial court that the judge first gave careful consideration to the question whether a "case of actual controversy" was presented by the allegations of the petition within the intendment of the federal declaratory judgment statute set out in full in the footnote to his opinion. The court decided that the question was settled in plaintiff's favor by Nashville, etc., R. Co. v. Wallace, 288 U.S. 249, 53 S.Ct. 345, 77 L.Ed. 730, 87 A. L.R. 1191, and said: "In the light of this precedent, it cannot be said that a proceeding for a declaration that an insurance company is not liable on an insurance contract to the beneficiary under the contract after the death of the insured during the life of the contract is not a `case' or `controversy.'"

We agree with the District Court's conclusion, as stated.

The trial court also expressed the opinion that the declaration of the plaintiff's petition to the effect that the plaintiff, notwithstanding the death of the insured within the life of the policy and notwithstanding the claims and demands of the defendant, was not liable to the defendant beneficiary on account of the policy "is not a declaration of a right the plaintiff has or had" (within the meaning of the act). On this issue we have come to the conclusion that the plaintiff's alleged right to be immune from the claim the defendant makes against it under the policy is a "right" which it may petition to have declared by the terms of section 274d. We think our conclusion is in accordance with Nashville, etc., R. Co. v. Wallace, supra, and Aetna Life Insurance Company v. Edwin P. Haworth and Cora M. Haworth, 57 S.Ct. 461, 81 L.Ed. ___, decided March 1, 1937.

It is contended for the beneficiary, Nelle Foulke, that a declaratory judgment suit does not lie where other adequate remedy at law or in equity exists. The argument is that the Insurance Company may wait until it has been sued and can then defend itself, so that it must be deemed to have adequate remedy without resort to this declaratory judgment suit. It is not contended that there is any other procedure open to the Insurance Company by which it could presently obtain relief from the claims and demands which it alleges the defendant is wrongfully making against it. The position of appellee finds some support in cases that have arisen under state laws and possibly in Zenie Bros. v. Miskend et al. (D.C.) 10 F.Supp. 779. But we find no support in the federal act. The act says nothing about limiting proceedings under it to cases where there are no other forms of action in which the rights of the parties may ultimately be determined. It refers only to "cases of actual controversy," and in such cases the courts of the United States are empowered to declare rights and other legal relations of any interested party petitioning for such declaration.

The appellee Nelle Foulke also presents that "it was discretionary with the lower court whether to entertain the petition for declaratory judgment" and "its discretion properly should not be reviewed by this court." She cites the following cases: Zenie Bros. v. Miskend, supra; Automotive Equipment, Inc., v. Trico Products Corporation (D.C.) 11 F.Supp. 292; New Discoveries v. Wisconsin Alumni R. Foundation (D.C.) 13 F.Supp. 596; Zeigler v. Pickett, 46 Wyo. 283, 25 P.(2d) 391; Newsum et al. v. Interstate Realty Co. et al., 152 Tenn. 302, 278 S.W. 56; Ladner et al. v. Siegel et al., 294 Pa. 368, 144 A. 274; Washington-Detroit Theatre Co. v. Moore, 249 Mich. 673, 229 N.W. 618, 68 A.L.R. 105; and 28 U.S.C.A. § 400. See Borchard, Declaratory Judgments, p. 99 et seq.

But the record does not disclose that either of of the parties invoked the exercise of judicial discretion in the trial court or that any question concerning such discretion was presented or any ruling thereon preserved for review. The defendant's demurrer, above set forth in full, asserts a failure "to state facts sufficient to constitute a cause of action," the absence of "a justiciable controversy" and "that the petition shows upon its face that plaintiff is not entitled to any relief under the declaratory judgment law." The District Court sustained the demurrer as laid and having done so, dismissed the case when the plaintiff failed to plead further, and that action is the sole matter for review. The appellee also says in her brief that special circumstances existed and were "learned" by the trial court which justified the exercise of discretion to dismiss the petition. But the record presents no basis for a ruling by this appellate court upon the matter of judicial discretion argued by appellee and we make none. The trial court erred in sustaining the demurrer.

Reversed and remanded for further proceedings in conformity with this opinion.

STONE, Circuit Judge (dissenting).

I agree with the majority opinion that "a case of actual controversy" exists within the meaning of the Declaratory Judgment Act (28 U.S.C.A. § 400) and the Constitution. Also, I agree that the act may apply where the petitioner seeks to have determined presently his liability upon a contract where such liability has ripened and he could be proceeded against at law or in equity. I cannot agree that the act covers a situation where "other adequate remedy at law or in equity exists" (italics added), which seems to be announced in the majority opinion.

If the paragraph in the majority opinion means what I think it does, then a declaratory judgment may be sought, within the act, no matter how completely, how adequately, how all sufficiently existing legal or equitable remedies would protect every right of the petitioner in the situation in which he finds himself at the time he files his petition. If this be true, then proceedings under the act can be used to replace all existing judicial remedies under any and all circumstances and without limit. Most respectfully, I suggest that this is attributing to Congress an intention — said to be expressed in this act — which is neither justified nor tenable in view of the known purposes of the Congress in enacting the statute. In this most important regard, I think such a construction is directly opposed to the intent of Congress. The intent of Congress was to provide a remedy in the legal situations where no existing remedy would lie¹ or where an existing remedy which was available was inadequate to completely protect.²

In some jurisdictions, this effect has been worked out...