Fowles v. Commercial Casualty Ins. Co.

• Court: U.S. District Court — District of Washington
• Writing for the Court: SCHWELLENBACH
• Citation: Fowles v. Commercial Casualty Ins. Co., 59 F.Supp. 693 (E.D. Wash. 1945)
• Decision Date: 02 April 1945
• Docket Number: Civ. No. 191.
• Parties: FOWLES v. COMMERCIAL CASUALTY INS. CO.

59 F. Supp. 693

FOWLES v. COMMERCIAL CASUALTY INS. CO.

Civ. No. 191.

District Court, E. D. Washington, S. D.

April 2, 1945.

June Fowles, of Yakima, Wash., for plaintiff.

Ryan, Askren & Mathewson, of Seattle, Wash., for defendant.

SCHWELLENBACH, District Judge.

This is an action under the Federal Declaratory Judgment Act, 28 U.S.C. A. § 400, in which plaintiff seeks to require defendant to pay hospital expenses and weekly disability allowances under the provisions of a policy of insurance issued by the defendant to him in 1937. Plaintiff alleges that, while the policy was in force, he became totally and permanently disabled as a result of an accident occurring on April 14, 1943. He alleges that he has a life expectancy of 29.62 years and that, under the terms of the policy, he will be entitled during his life to receive benefits amounting to $35,400. He alleges that, up to the date of the filing of his amended complaint, benefits accrued to the extent of $2,575. He further alleges that the defendant refuses to pay the benefits provided in the policy for the reason that it contends that prior to the accident he had changed his occupation and that, under the provisions of the policy, the liability of the defendant is limited to such portion of indemnities provided in the policy as the premium paid would have purchased at the rate but within the limits fixed by the company for more hazardous occupation, which plaintiff alleges would be so limited in scope and value as almost to nullify any benefits. He alleges that his rights to future benefits which he seeks to preserve and protect by this action exceed the sum of $3,000 in value. To the complaint, the defendant has interposed a demurrer and a motion to quash. By these it seeks to raise the jurisdictional question as to whether the amount in controversy exceeds $3,000. Plaintiff objects to the consideration of this jurisdictional question under the demurrer and motion contending that they do not properly reach the question. 28 U.S.C.A. following section 723C, rules 7(c) and 12(b). Regardless of the tactical ineptness on defendant's part, the question is here and must be decided. Kavourgias v. Nicholaou Company, Limited, 9 Cir., 148 F.2d 96.

Defendant insists that consideration of this jurisdictional question must be limited exclusively to the allegations of the original complaint. That contention is without merit. Federal Rules of Civil Procedure, Rule 15(c), 28 U.S.C.A. following section 723c; Culver v. Bell & Loffland, 9 Cir., 146 F.2d 29, 31; Alderman v. Elgin, J. & E. Ry Co., 7 Cir., 125 F.2d 971, 973; International Ladies' Garment Workers' Union v. Donnelly Garment Co., 8 Cir., 121 F.2d 561, 562; Carr v. Fife, 156 U.S. 494, 15 S.Ct. 427, 39 L.Ed. 508. While it is true that, in determining jurisdiction, the decision must be based upon the facts that existed at the time of the commencement of the original action and it is true that a plaintiff cannot commence an entirely different action by an amended complaint, a plaintiff does have a right to insert new allegations of facts which existed at the time of the filing of the original complaint and they will relate back to the original filing. The only important factual amendment in the amended complaint here, as compared with the original, is the inclusion of the paragraph referring to plaintiff's life expectancy.

The problem which defendant presents on the question of jurisdiction is an extremely perplexing and vexatious one. There is a sharp conflict of opinion between the Circuit Courts of Appeals which have passed on it. The question posed is whether, in a declaratory judgment action, when the indemnities already accrued are less than $3,000, the court has jurisdiction when it is alleged that, taking into consideration the insured's life expectancy and accepting the allegation as to permanent and total disability, the value of the insured's rights will, if he lives out and is totally disabled during a sufficient period of his expectancy, amount to more than $3,000.

It is well settled that, in a straight action to recover disability benefits, the jurisdictional amount must be measured upon the basis of the indemnities already accrued. Mutual Life Insurance Co. of New York v. Wright, 276 U.S. 602, 48 S.Ct. 323, 72 L.Ed. 726; Equitable Life Assur. Society v. Wilson, 9 Cir., 81 F.2d 657; Wright v. Mutual Life Ins. Co. of New York, 5 Cir., 19 F.2d 117. This is true even though the collateral effect of the judgment in such actions may be to establish the right of the insured to recover sums far in excess of the jurisdictional amount. Elgin v. Marshall, 106 U.S. 578, 1 S.Ct. 484, 27 L.Ed. 249; Cromwell v. Sac County, 94 U.S. 351, 24 L.Ed. 195. See, also, Healy v. Ratta, 292 U.S. 263, 54 S. Ct. 700, 78 L.Ed. 1248. The Declaratory Judgment Act does not enlarge the jurisdiction of the Federal Courts nor alter the character of the controversies which are the subject of judicial power under the Constitution. Southern Pacific Co. v. McAdoo, 9 Cir., 82 F.2d 121; West Pub. Co. v. Colgan, 9 Cir., 138 F.2d 320, 149 A. L.R. 1094. But when the validity of the whole policy is in issue and the policy value exceeds the jurisdictional amount, the court has jurisdiction in a declaratory judgment action even though the accrued liability for disability payments is less than $3,000. Bell v. Philadelphia Life Ins. Co., 4 Cir., 78 F.2d 322; Pacific Mut. Life Ins. Co. of California v. Parker, 4 Cir., 71 F.2d 872; Ginsburg v. Pacific Mut. Life Ins. of California, 2 Cir., 69 F.2d 97. In that aspect, obligations it may be compelled to pay in the future are not merely contingent and enter into the amount in dispute. In determining what they are, the life expectancy of the insured may be considered. 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; New York Life Ins. Co. v. Swift, 5 Cir., 38 F.2d 175; Jensen v. New York Life Ins. Co., 8 Cir., 50 F.2d 512.

The court's jurisdiction in cases in which the basic facts substantially corresponded to those alleged here has been sustained in Ballard v. Mutual Life Ins. Co. of N. Y., 5 Cir., 109 F.2d 388; Franzen v. E. I. Du Pont De Nemours & Co., 3 Cir., 146 F.2d 837; Columbian Nat. Life Ins. Co., v. Goldberg, 6 Cir., 138 F.2d 192. See, also, Davis v. American Foundry Equipment Co., 7 Cir., 94 F.2d 441, 115 A.L.R. 1486. It has been denied in Mutual Life Ins. Co. of New York v. Moyle, 4 Cir., 116 F.2d 434; Mutual Life Ins. Co. v. Temple, D.C., 56 F.Supp. 737; Edelmann v. Travelers Ins. Co. of Hartford, Conn., D. C., 21 F.Supp. 209.

Unfortunately this is not a question of which disposition can be made through the simple mathematical process of comparing the number of decisions. In Mutual Life Ins. Co. v. Moyle, supra 116 F.2d 437, Judge Parker wrote an opinion which can not be ignored even in the face of the weight of authority. No one can deny the correctness of his statement that litigants "may not be permitted, under the guise of seeking declaratory judgments, to drag into federal courts the litigation of claims over which, because involving less than the jurisdictional amount, it was never intended that the federal courts should have jurisdiction." There is much logic in his statement: "A declaratory judgment can be had, however, only with respect to a justiciable controversy; and the justiciable controversy here, as we have seen, extends only to the accrued disability benefits, as the conditions...