Great Northern Life Ins. Co. v. Vince

• Decision Date: 11 March 1941
• Docket Number: No. 8493.,8493.
• Citation: 118 F.2d 232
• Parties: GREAT NORTHERN LIFE INS. CO. v. VINCE et al.
• Court: U.S. Court of Appeals — Sixth Circuit

118 F.2d 232 (1941)

GREAT NORTHERN LIFE INS. CO. v. VINCE et al.

No. 8493.

Circuit Court of Appeals, Sixth Circuit.

March 11, 1941.

Charles R. Holton, of Chicago, Ill. (Whitman, Holton & Tews, of Chicago, Ill., and John J. Temple, of Detroit, Mich., on the brief), for appellant.

David E. Roberts, of Detroit, Mich. (David E. Roberts and Dale D. Libkuman, both of Detroit, Mich., on the brief), for appellees.

Before HICKS, SIMONS, and HAMILTON, Circuit Judges.

SIMONS, Circuit Judge.

The appellant, upon the death of its insured, conceiving itself defrauded by false statements and representations in the application for the policy, refused to pay the claim of the beneficiary, and brought suit in the court below by bill in equity for a declaratory judgment or decree pursuant to the Federal Declaratory Judgment Act, 28 U.S.C.A. § 400, praying that the court adjudge and decree the legal relations of the parties to the subject matter, adjudge the insurance policy to be null and void, and decree that it be delivered up and canceled. Appellee Andris was joined as party defendant because of assertion by him of some claim to the proceeds of the policy as a co-partner of the deceased. The beneficiary answered denying the appellant's right to relief, and cross-claimed for a declaration of the policy as valid, and for judgment in the sum mentioned therein.

The defendants requested determination of all triable issues of fact by a jury, and over the appellant's protest a jury was impaneled and the case tried, in all substantial respects, as a suit at law. The appellant's motion for directed verdict at the conclusion of all of the evidence, was overruled, a verdict was returned upon the cross-claim and the appellant's motion for judgment notwithstanding the verdict, or in the alternative for a new trial, denied. Andris, having disclaimed any interest in the policy, the bill was dismissed as to him and judgment entered for the beneficiary alone.

The claim of error includes denial of plaintiff's motion to discharge the jury; denial of its motions for directed verdict, and for judgment notwithstanding the verdict, or in the alternative for a new trial; the inadmissibility of evidence received; and errors and omissions in instructing the jury.

The first question presented by the appeal is not unattended with difficulty. The nature of an action for declaratory relief under the statute, is said to be "neither legal nor equitable, but sui generis." Borchard, Declaratory Judgments, 120. The Federal Declaratory Judgment Act provides § 274d(3), 28 U.S.C.A. § 400 (3), that when a declaration of right involves the determination of issues of fact triable by a jury, such issues may be submitted to the jury in the form of interrogatories, with proper instructions by the court, whether a general verdict be required or not. No interrogatories were submitted to the jury, and none were sought by either litigant. It has been thought that the phrase "triable by a jury" relates to a case triable as of right under the Seventh Amendment to the Federal Constitution, and that it was not the intent of Congress, when it changed the form of proceeding and permitted an action for declaratory relief, that this should affect the right of parties to a trial by jury as it had formerly existed. Pacific Indemnity Co. v. McDonald, 9 Cir., 107 F.2d 446, 131 A.L.R. 208. Compare Ætna Casualty & Surety Co. v. Quarles, 4 Cir., 92 F.2d 321; United States Fidelity & Guaranty Co. v. Koch, 3 Cir., 102 F.2d 288. In the principal case, however, the opinion pointed out that the trial court was of the view that some issues of fact were essentially equitable in nature, and others essentially legal, and disposed of them accordingly. This course was not disapproved.

Our difficulty resides in the fact that the federal courts can render no judgment at law directing cancellation of a contract for fraud, since this is a form of relief which a court of equity alone can give, and in the fact that the basis of equitable relief, when cancellation is asked, is the necessity of protecting the suitor from irreparable injury when there is manifest danger that his defense at law on the policy will be lost or prejudiced. Enelow v. New York Life Ins. Co., 293 U.S. 379, 55 S.Ct. 310, 79 L.Ed. 440; American Life Ins. Co. v. Stewart, 300 U.S. 203, 57 S.Ct. 377, 81 L.Ed. 605, 111 A.L.R. 1268. The circumstance usually relied upon as indicating the need for equitable relief is the impending expiration of the period during which the insurer may assail the validity of the policy unhampered by the incontestable clause. There is no such special circumstance here, and so no suit in equity may be entertained to cancel the policy because there exists an adequate legal remedy in defending a suit upon the policy which, though not pending, is imminent. The relief prayed can therefore be based only upon the declaratory judgment statute. There being no question of the existence of a controversy, the jurisdiction below to entertain the plaintiff's suit was clear, Ætna Life Ins. Co. v. Haworth, 300 U.S. 227, 57 S.Ct. 461, 81 L.Ed. 617, 108 A.L.R. 1000; Maryland Casualty Co. v. Pacific Oil & Coal Co., 61 S.Ct. 510, 85 L. Ed. ___, decided February 3, 1941, though relief is limited to that provided by the statute. That the courts of Michigan provide in such circumstances the equitable remedy of cancellation, is not controlling. Atlas Life Insurance Co. v. W. I. Southern, Inc., 306 U.S. 563, 59 S.Ct. 657, 83 L. Ed. 987.

While the court is unable to grant the equitable remedy of cancellation and cancellation may not be sought in the federal courts in a suit at law, and while the relief prayed in the counterclaim presents triable issues of fact in the decision of which the defendant was entitled to the verdict of a jury, though such issues should have been submitted upon special interrogatories for the guidance of the court in adjudication of the declaratory relief prayed, yet the issue as to the validity of the policy is so squarely raised upon the motion of the appellant for directed verdict and motion for judgment, that we find no need to decide whether, in the usual case, the issues raised by the bill and answer should first have been determined by the court before submission to the jury of the counterclaim, and we shall be able by our mandate to make such decision as shall dispose of the entire case.

The insured, William A. Vince, applied for the policy in dispute, on April 29, 1937. He was required to furnish certain information in respect to his insurability, and to answer certain questions contained in the application blank. To the question whether, during the preceding seven years, he had consulted any physician not previously mentioned, the answer was "No." To the question whether he had received treatment in any hospital, sanitarium, or asylum, the answer was also "No." The application blank more specifically sought information of various disorders including those of the respiratory system, and an affirmative answer required the name of the disease, the number of attacks and their date, duration and results, together with the name and address of the physicians consulted in connection therewith, but all were answered in the negative. To the still more specific question whether the applicant had ever had any disorder of the respiratory system, such as pneumonia, asthma, bronchitis, chronic cough, tuberculosis, spitting of blood, etc., the answer of the applicant was that he had never had any disorders of the respiratory system, and had never consulted any physician in connection with such disorders.

It appears, however, by the admissions of the appellee, or by uncontroverted evidence, that the applicant had not only had an attack of pneumonia in 1926-27, but that he had had a second attack in 1931-32, which required treatment in a hospital in Philadelphia and consultation with physicians...