Guardian Life Ins. Co. of America v. Kortz, 3200

• Citation: 151 F.2d 582
• Decision Date: 30 October 1945
• Docket Number: 3201.,No. 3200,3200
• Parties: GUARDIAN LIFE INS. CO. OF AMERICA v. KORTZ et al. (two cases).
• Court: United States Courts of Appeals. United States Court of Appeals (10th Circuit)

151 F.2d 582 (1945)

GUARDIAN LIFE INS. CO. OF AMERICA v. KORTZ et al. (two cases).

Nos. 3200, 3201.

Circuit Court of Appeals, Tenth Circuit.

October 30, 1945.

Lowell White, of Denver, Colo., for appellant.

Max P. Zall and Samuel S. Ginsberg, both of Denver, Colo., for appellee.

Before PHILLIPS, BRATTON, and MURRAH, Circuit Judges.

PHILLIPS, Circuit Judge.

The Guardian Life Insurance Company¹ has appealed from judgments dismissing two separate actions brought by it against Kortz under § 274d of the Judicial Code, 28 U.S.C.A. § 400.

In its complaint in Number 3200, the first of such actions, the Insurance Company alleged that it is a citizen of New York; that Kortz is a citizen of Colorado; that the amount in controversy, exclusive of interest and costs, exceeds $3,000; that on August 20, 1923, it issued to Kortz a policy of life insurance; that by a separate contract attached to the policy, the Insurance Company agreed that if due proof should be furnished to it at its home office that Kortz, before attaining the age of 60 years and while the policy was in full force and effect, had become totally and permanently disabled by bodily injury or disease, the Insurance Company would pay him during such disability an income of $220 per month; that such contract provided that although proof of total and permanent disability may have been accepted by the Insurance Company, it might at any time demand due proof of the continuance of such total disability, and upon failure to furnish such proof or if it should appear to the Insurance Company that Kortz was able to perform any work or follow any occupation whatever for remuneration or profit, no further income payments should be made.

The Insurance Company further alleged in Number 3200 that on or about January 21, 1938, Kortz filed with the Insurance Company a proof claiming that he was totally and permanently disabled, and that thereafter a court of competent jurisdiction adjudged that Kortz was totally and permanently or totally and continuously disabled from January 21, 1938, to March 21, 1939; that thereafter a final judgment was entered in the District Court of the United States for the District of Colorado in an action brought by Kortz against the Insurance Company, by which it was adjudged that Kortz was not totally and permanently disabled within the meaning of such contract between March 21, 1939, and June 21, 1943; that an actual controversy exists between the Insurance Company and Kortz; that Kortz claims that he became totally and permanently disabled by bodily disease on June 21, 1943, and that such disability has continued since that date; that Kortz claims the Insurance Company owes him disability benefits at the rate of $220 per month from June 21, 1943, or a total of $5,060; that such contract provides that there shall be no liability for any disability commencing after Kortz has attained the age of 60 years; that Kortz was approximately 64 years and 5 months of age on June 21, 1943; that according to the statutes of Colorado, Kortz, having completed his sixty-fourth year, has a life expectancy of 11.68 years; that such contract, if it continues to exist, has a present value of $30,825.60; and that if such contract is in force, it will be necessary for the Insurance Company to set up a reserve of approximately $16,000 to pay such disability benefits as they become due.

The Insurance Company prayed that the court enter a judgment declaring that the disability provision of the contract had terminated and that the Insurance Company was no longer liable for any disability benefits, and enjoining Kortz from maintaining any action against the Insurance Company on account of present or future alleged disability.

Kortz filed a motion to dismiss in Number 3200 in which he set up that the amount in controversy is less than $3,000; that there is pending in the District Court in and for the City and County of Denver an action brought by Kortz against the Insurance Company to recover disability benefits under such contract for the period from June 21, 1943, to June 21, 1944, in the sum of $2,640, with interest at 6 per cent from the respective dates when such payments became due; that the Insurance Company has appeared in such action and that the state court has exclusive jurisdiction of the controversy; that if Kortz should make a claim for disability benefits which have accrued since the commencement of the state court action, it would not exceed $2,420. The motion further set up that the complaint in the first of the instant actions fails to state a claim upon which relief can be granted.

In its complaint in Number 3201, the second action for a declaratory judgment, the Insurance Company alleged substantially the facts alleged in its complaint in Number 3200. To the complaint in Number 3201, Kortz filed a motion to dismiss in which he set up substantially the same grounds as he set up in his motion in Number 3200.

The actions for declaratory judgments were commenced on June 1, 1945. Thereafter, on July 26, 1945, Kortz commenced another action in the state court against the Insurance Company in which he sought to recover disability benefits under such contract for the period from June 21, 1944, to July 21, 1945.

Here, an actual controversy exists between the parties. Kortz asserts that he is totally and permanently disabled and that the Insurance Company is liable to him for disability benefits under the contract. The Insurance Company asserts that such disability arose after Kortz became 60 years of age and that the contract has, therefore, expired by its own terms. The question presented is whether there is now an existing contract. The installments that had matured when Number 3200 was commenced exceeded $3,000. Moreover, the controversy involves more than alleged liability for matured installments. The Insurance Company seeks an adjudication that will relieve it from both matured and future disability payments. Since Kortz's life expectancy is 11.68 years, the amount involved, exclusive of interest and costs, is far in excess of $3,000.²

The pendency of the actions brought by Kortz in the state court did not give that court exclusive jurisdiction of the subject matter of the actions for declaratory judgments. The causes of action asserted are not the same. In the state court actions, Kortz seeks recovery of accrued disability benefits. In the declaratory judgment actions, the Insurance Company seeks an adjudication that the contract is terminated and seeks relief from matured, as well as future, liability for disability benefits. Moreover, the state court actions and the declaratory judgment actions are in personam. It is well settled that where two actions involving the same cause of action are pending in a state and a federal court, and are within the concurrent jurisdiction of each, both actions, in so far as they seek relief in personam, may proceed at the same time and when one action has gone to final judgment, that judgment may be set up as a bar in the other action under the doctrine of res judicata.³

28 U.S.C.A. § 400 does not enlarge the jurisdiction of the federal courts. It merely creates a new form of procedure by which declaratory judgments may be rendered by the federal courts in the exercise of the jurisdiction to decide cases or controversies, both at law and in equity, which the Judiciary Acts had already conferred.⁴

Whether a federal court shall entertain an action for a declaratory judgment rests in its sound discretion.⁵

Counsel for Kortz assert that the Insurance Company can present the issues raised by the complaints for declaratory judgments by cross-petitions in the state court actions. On the other hand, counsel for the Insurance Company asserts that as the issues...