Equitable Life Assur. Soc. v. Gillan

• Decision Date: 12 April 1945
• Docket Number: Civil Action No. 103.
• Citation: 70 F. Supp. 640
• Parties: EQUITABLE LIFE ASSUR. SOC. OF UNITED STATES v. GILLAN et al.
• Court: U.S. District Court — District of Nebraska

70 F. Supp. 640

EQUITABLE LIFE ASSUR. SOC. OF UNITED STATES v. GILLAN et al.

Civil Action No. 103.

District Court, D. Nebraska, Lincoln Division.

April 12, 1945.

COPYRIGHT MATERIAL OMITTED

Ralph M. West and John L. Barton, of Brown, Crossman, West, Barton & Fitch, all of Omaha, Neb., for plaintiff.

Robert VanPelt, of Perry, VanPelt & Marti, all of Lincoln, Neb., and Robert B. Waring, of Waring & Waring, all of Geneva, Neb., for defendants Bertha Howard Gillan and James L. Gillan.

DELEHANT, District Judge.

The plaintiff will be referred to as "the Society," the defendant Bertha Howard Gillan as "Mrs. Gillan," the defendant James L. Gillan as "Mr. Gillan," and the defendant Maude F. Miller as "Mrs. Miller."

The society was the defendant, and Mrs. Gillan the plaintiff in the case of Gillan v. Equitable Life Assurance Society, 142 Neb. 497, 6 N.W.2d 782; Id., 143 Neb. 647, 10 N.W.2d 693, 148 A.L.R. 496; and the original insurance policy and converted policy involved in that case are the policies upon which this suit is based. The facts relating to the procurement and issuance of the original policy and the converted policy, and the nature of Mrs. Gillan's disability and the cause and history thereof, to the extent that it should be considered here, are the same in both cases and, except for the additional items of evidence later noted herein, are presented to this court in the original bill of exceptions and record in the earlier case and the two opinions therein of the Supreme Court of Nebraska. Mr. Gillan and Mrs. Miller were not parties to the former case; nor will their presence as parties here require any considerable discussion. At the time of filing the present suit they were the designated beneficiaries under the death benefit provisions of the current policy, and they are respectively the husband and a sister of Mrs. Gillan. While Mr. Gillan has answered here, Mrs. Miller has not appeared and her default has been formally entered.

So, no further general statement of facts will be made on this occasion, and the court simply incorporates by reference into this opinion the summary of facts contained in the second opinion in the state court case. That seems appropriate and conducive to desirable brevity. No special consideration requires the publication of this memorandum. And the repetition of the factual background of the case is unnecessary both, (a) in the explanation of the court's ruling to counsel, who are thoroughly familiar with it, and (b) for the purpose of appeal, since the Nebraska Supreme Court's two published opinions are readily available and also constitute a part of the record before this court.

The present action, ostensibly to obtain a declaratory judgment, but praying also for relief not ordinarily granted in the way of a declaratory judgment, was filed on June 21, 1941, shortly after the institution of the state court case and while it was still pending and undetermined in the County Court of Fillmore County, Nebraska.

In the prayer of its original complaint herein, demand was made by the society for the recovery from Mrs. Gillan of $6,550 theretofore paid to her in the way of installments of total disability benefits. The court now understands the society, by forbearing to press that demand, inferentially to concede that, in view of the history of the state court case, it may not now be maintained. Whether that position be conceded or not, the court considers that the precise cause of action involved in that demand was litigated to final judgment upon a cross petition in the state court, which, on the basis of authorities hereafter discussed, constitutes an effective bar to its relitigation in this case. Hence, the court now denies that demand and dismisses the second cause of action of the complaint.

By an amendment to its complaint, filed before the time originally allowed for answer herein, the society also made claim and prayed for the recovery against Mrs. Gillan of $265.15, being the total amount of dividends by it allegedly paid to her upon the converted policy for the years 1936 to 1941, both inclusive. Passing over without the expression or intimation of an opinion thereon, certain questions arising on the failure to serve the amendment, Rule 5(a), Federal Rules Civil Procedure, 28 U.S.C.A. following section 723c (as distinguished from the matter of notice and leave for filing which are unnecessary, Rule 15(a), Federal Rules Civil Procedure), the court observes no proof of the alleged payments. The record before the court shows certain demands for repayment of the amount, which are adequate proof of their making, but not of the actual obligation to which they refer. That prayer is, therefore, denied, without prejudice to reconsideration of the point, if within the time allowed by rule, the society, in a motion for rehearing upon that issue, shall direct to the court's attention evidence sustaining its claim.

Request was also made early in the course of this case for injunctive relief against the prosecution of the case then pending in the state court, which Judge Munger, on October 10, 1941 (filing 10), appropriately denied.

The court will not discuss any of those demands further.

As amended after the termination of the state court case, the society's complaint, (1) upon the ground of Mrs. Gillan's alleged fraudulent statements, in the respects asserted also in the state court, in the procurement of the original policy and of the equally effective applicability of those statements in the procurement of the converted policy, and (2) upon the allegation of the opinion of the Supreme Court of Nebraska reported in 143 Neb. 647, 10 N.W.2d 693, 148 A.L.R. 496 (which it asserts to constitute a conclusive judicial determination upon the issue), now prays for a decree (1) finding that the answers of Mrs. Gillan to questions 6(a), 7(b), 7(d), 7(e), 8(a), 8(c), 8(d), and 8(f) in her written application for the original policy were false and fraudulent and material to the risk, and made with intent to deceive the society and that the society relied upon those answers in issuing both the original and the converted policy and would not have issued them, or either of them, if the questions involved had been truthfully and correctly answered; (2) directing the surrender of the policies to the plaintiff for the purpose of deleting therefrom the provisions with reference to permanent and total disability and double indemnity; (3) cancelling both of those clauses; and (4) enjoining the defendants and each of them from commencing or maintaining any action of any kind or nature upon either the disability provision or the double indemnity provision of the converted policy. And with that background and particularly upon the assertion of persistent and continued default since July 21, 1930, in the payment of premiums, it further prays for a finding and judgment that the original policy lapsed and that the converted policy never became effective. The prayer also seeks general relief and costs.

The final answer of Mr. and Mrs. Gillan, admitting the identity, residences and relationship of the several parties; the application for and issuance of the two policies; the designation of beneficiaries; the institution and formal history of the state court proceedings in respect of the then unpaid disability installments to and including that for May 1941; and the earlier payment of $6,550 to Mrs. Gillan on account of such disability installments prior to those involved in the state court suit, affirmatively alleges the continued and permanent total disability of Mrs. Gillan; the truthfulness of her actual answers to the medical examiner in response to the questions in the application; his inaccurate and incorrect transcription of the answers in the respects in which they are challenged; her signature of the application including them without knowing or having had an opportunity previously to read the answers as they were set down; (inferentially) her want of precise knowledge of the extent of the surgical operation performed upon her in Denver, Colorado, in May, 1928, but her disclosure to the medical examiner for the society of the identity of the surgeon performing it, coupled with a denial of the accuracy of the complaint's allegation of the surgeon's post operative diagnosis; her abandonment of a policy of life insurance in another company in reliance upon the validity of the life policy in suit; estoppel of the plaintiff, by reason of the history of its handling of her disability claim, now to assert the invalidity of the policy. Then, the answer pleads in detail the history of the state court case, its several pleadings, the trial in the District Court of Fillmore County, Nebraska, resulting in the verdict of a jury and judgment of the court; the failure of the society to except in its motion for new trial to the instruction of the trial judge to the jury giving to the jury, as its alternatives, a verdict for Mrs. Gillan for $100 plus interest and one for the society for $6,550, or to the judgment for Mrs. Gillan and against the society and for the dismissal of its counterclaim; the appeal to the Supreme Court; the affirmance there of the District Court's judgment; and the society's payment of the judgment with knowledge of Mrs. Gillan's claimed fraud. It also alleges that the state court's "judgment and decree is res judicata as to the issues raised by the plaintiff herein and is binding upon the plaintiff, and plaintiff herein is estopped, barred and precluded from prosecuting this action." The answer generally denies all other matter alleged in the complaint as amended. As to the claim of default by Mrs. Gillan in payment of premiums, the answer, though not directly admitting nonpayment of premiums or the amount thereof, does "admit the waiver of premiums on said policies Exhibits A & C by reason of Bertha Howard Gillan's total and permanent disability." Thus, fairly understood,...