Fogle v. Equitable Life Assur. Soc.

• Decision Date: 05 December 1938
• Docket Number: No. 5963.,5963.
• Citation: 123 S.W.2d 595
• Parties: FOGLE et al. v. EQUITABLE LIFE ASSUR. SOC. OF UNITED STATES.
• Court: Missouri Court of Appeals

123 S.W.2d 595

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

No. 5963.

Springfield Court of Appeals. Missouri.

December 5, 1938.

Rehearing Denied January 4, 1939.

Appeal from Circuit Court, Barry County; Emory E. Smith, Judge.

"Not to be published in State Reports."

Action by J. Carl Fogle and another against the Equitable Life Assurance Society of the United States on a life insurance policy. Judgment for plaintiffs, and defendant appeals.

Affirmed.

William C. Michaels and Ralph M. Jones, both of Kansas City, and James E. Sater, of Monett (Michaels, Blackmar, Newkirk, Eager & Swanson, of Kansas City, of counsel), for appellant.

Harry A. Hall, of Kansas City, and Gardner & Gardner, of Monett, for respondents.

ALLEN, Presiding Judge.

The Equitable Life Assurance Society appeals from a judgment against it on a life insurance policy. The policy was issued in the State of Louisiana December 29, 1917, on the life of William H. Pierson, payable to his wife Lottie Pierson, as beneficiary. Pierson died in December 1933 and the wife, as beneficiary, assigned all her right, title and interest in the policy to J. Carl Fogle, a resident of New York, and Harry A. Hall, a lawyer and resident of Missouri.

Fogle and Hall as assignees brought suit on the policy in the circuit court of Barry County, Missouri. Process was served on the Insurance Department of the State of Missouri, the plaintiffs claiming to have complied with Section 5894, R.S. Mo.1929, Mo.St.Ann. § 5894, p. 4495, pertaining to service of process on foreign insurance companies.

The Equitable Life Assurance Society filed its petition and bond for the removal of the cause to the federal court on the theory that the real party in interest was Lottie Pierson, the beneficiary, who was a resident of Louisiana, and that the assignment to Fogle and Hall was fraudulent and made for the sole purpose of defeating the federal court of jurisdiction by eliminating diversity of citizenship. The trial court denied the petition for removal.

The insurance company then filed a motion to quash the summons and service of the writ and the return of the sheriff of Cole County on the theory that it appeared from the face of the proceedings that the circuit court did not have jurisdiction of the person of the defendant because the cause of action, if any, was outstanding in Louisiana and not Missouri; that the assignment to Fogle and Hall was for the sole purpose of avoiding the Supreme Court of Missouri's interpretation of Section 5894, R.S.Mo.1929, and that therefore service of process could not be had on the insurance department. The motion to quash was overruled and the defendant filed its plea to the jurisdiction and answer raising the questions of fraudulent joinder and improper service of process.

The appellant now contends that the trial court erred in denying the removal petition and in overruling the motion to quash and the plea to the jurisdiction claiming that the trial court did not have jurisdiction of either the subject matter or the person of the defendant.

The removal petition, in substance, alleged that Lottie Pierson was the real party in interest, that she was a resident of the state of Louisiana and that the assignment to Fogle and Hall was "colorable, fraudulent, and without consideration, is void, and was made solely in an attempt to prevent defendant from exercising its right to remove this case to the United States District Court." There can be no question but that fraudulent joinder is a ground for removing a cause to the federal court if all other requisites for a removable case are present. Martin v. Norfolk & W. Ry. Co., 4 Cir., 43 F.2d 293. But, there is some question as to whether or not a cause of action may be assigned to a resident of the forum for the purpose of preventing removal to the Federal Court, the general rule is that a cause of action may be assigned for the sole purpose of defeating removal. Schepman v. Mutual Benefit Health & Acci. Ass'n, 231 Mo. App. 651, 104 S.W.2d 777; Note, 63 A.L. R. 216. It may be that it is otherwise when the parties admit in open court that the assignee has no interest whatever in the subject matter of the litigation and that the sole purpose of the assignment was to defeat removal as in Phœnix Mut. Life Ins. Co. v. England, D.C.Mo., 22 F.Supp. 284. But the question here arises solely from the pleadings. We have set out that portion of appellant's removal petition charging fraudulent joinder and if the petition states facts showing fraudulent joinder it was the duty of the trial court to make an order of removal. But the petition states only the conclusions of the petitioner that the joinder is colorable and fraudulent. Speaking of a similar removal petition the Fourth Circuit Court of Appeals, in Martin v. Norfolk & W. Ry. Co., 43 F.2d loc. cit. 296, said: "* * * the joinder, although fair upon the face of the declaration or complaint, may be shown by a petition for removal to be only a sham or fraudulent device to prevent removal. But the showing must consist of a statement of facts rightly leading to that conclusion, apart from the pleader's deductions. If the facts appropriately stated in the petition lead to the rational conclusion, apart from the pleader's deductions, that the joinder was made without any purpose to prosecute the action in good faith against the resident defendant and with the purpose of fraudulently defeating the right of removal, the right of removal should be sustained."

So it is with the instant removal petition, no facts are stated which lead to the conclusion that the assignment to the plaintiffs was fraudulent and for the sole purpose of defeating removal and the trial court properly denied the removal petition.

It is next contended that the trial court erred in overruling its motion to quash and its plea to the jurisdiction, because the policy sued upon is an obligation outstanding in Louisiana and service of process could not be had upon the defendant, a foreign insurance company, by serving the superintendent of the insurance department in Missouri. Section 5894, R.S.Mo.1929, provides for service of process on a foreign insurance company "so long as it shall have any policies or liabilities outstanding in this state." The appellant contends that the assignment of this cause of action did not create a liability outstanding in this state so as to confer jurisdiction of the person of the defendant by such service.

It has been held that this statute does not authorize service of process on a foreign insurance company by serving the insurance department, on a cause of action accruing in another state and instituted in Missouri by a non-resident. State ex rel. American Central Life Insurance Company v. Landwehr, 318 Mo. 181, 300 S.W. 294; Crabtree et al. v. Ætna Life Ins. Co., 341 Mo. 1173, 111 S.W.2d 103; L.R.A.1916F, p. 410. This for the reason that such an obligation is not a liability outstanding in Missouri. However, a non-resident beneficiary may become a resident of Missouri and by so doing create a liability outstanding in this state on a policy issued in another jurisdiction. Woelfle v. Connecticut Mut. Life Ins. Co., Mo.App., 112 S.W. 2d 865; State ex rel. Liberty Life Ins. Co. v. Masterson et al., 231 Mo.App. 68, 95 S.W.2d 864. Then the question arises as to whether or not the assignment of a cause of action on a foreign policy to a resident of Missouri creates an obligation in Missouri so as to authorize service of process under Section 5894. That the assignee of a life insurance policy is the real party in interest and the proper party to sue on such a policy is settled. Williams v. Metropolitan Life Ins. Co., Mo.App., 233 S.W. 248.

Both the appellant and the respondents state in their briefs, that there are no cases passing on the validity of service of process in cases similar to the instant one. A case very much in point is London Guarantee & Accident Co. v. Woelfle, 8 Cir., 83 F.2d 325. There a man died in Illinois leaving two accident insurance policies payable to his estate. The policies were assigned to his wife by the Illinois executor. The wife then moved to Missouri and instituted suit on the policies. Service of process was had by serving the Superintendent of the Insurance Department. Raising practically the same questions that the appellant now raises the insurance company questioned the service. Judge Sanborn pointed out that the policy in State ex rel. American Cent. Life Ins. Co. v. Landwehr, supra, was not an obligation outstanding in Missouri since the plaintiff was a non-resident and stated that when the assignee became a resident of Missouri an obligation outstanding in this state was created. The court then said that until the Supreme Court of Missouri held such service to be invalid the Eighth Circuit Court of Appeals would not invalidate it. The fact is that a life insurance policy or a claim on such a policy may be assigned and if it is assigned to a resident of the State of Missouri he becomes the real party in interest and may sue on the policy. There is no other mode of service of process provided in such instances and we are of the opinion that the service of process was valid and that the court thereby obtained jurisdiction of the person of the defendant. See also Saunders v. London Assur. Corp., 8 Cir., 76 F. 2d 926; Hunter v. Mutual Reserve Life Ins. Co., 192 N.Y. 85, 84 N.E. 576; and Hunter v. Mutual Reserve Life Ins. Co., 218 U.S. 573, 31 S.Ct. 127, 54 L.Ed. 1155, 30 L.R.A.,N.S., 686.

On the merits of the case the facts are that the policy in suit is a $5000 ordinary life insurance policy with total and permanent disability benefits. The policy is dated January 7, 1918, but was taken out on December 29, 1917, by William H. Pierson. The annual premium of $241.30 was paid until December 29, 1931. There was a loan on the policy of $1614.84 with interest at six per cent per year on which the interest was...