Home Ins. Co. of New York v. Trotter

• Decision Date: 28 September 1942
• Docket Number: No. 12248.,12248.
• Citation: 130 F.2d 800
• Parties: HOME INS. CO. OF NEW YORK et al. v. TROTTER et al.
• Court: U.S. Court of Appeals — Eighth Circuit

130 F.2d 800 (1942)

HOME INS. CO. OF NEW YORK et al. v. TROTTER et al.

No. 12248.

Circuit Court of Appeals, Eighth Circuit.

September 4, 1942.

Rehearing Denied September 28, 1942.

Guy W. Green, Jr., of Kansas City, Mo. (John Hudson, of Kansas City, Mo., on the brief), for appellants.

Roy W. Rucker, of Kansas City, Mo. (Clif Langsdale and Josephine Myers, both of Kansas City Mo., on the brief), for appellees.

Before SANBORN, THOMAS, and RIDDICK, Circuit Judges.

RIDDICK, Circuit Judge.

The appellants and two other insurance companies insured, against loss by fire, a building owned by the appellees L. H. and Carrie L. Trotter. Each appellant was insurer in a separate policy for $3,500, and each of the other insurance companies issued its separate policy in the sum of $2,500. Each policy contained a provision that the insurer, in the event of a loss, should not be liable for a greater proportion of the loss than the amount insured in its policy bore to the whole insurance carried on the property by the appellees. Each policy also contained a standard mortgage clause whereby the holder of a mortgage on the property of appellees was insured in the sum of $4,000, plus accrued interest and advancements on account of premiums. Under this clause the liability of the insurers to the mortgagee was absolute in the event of a loss covered by the policies, but with the provision that if the insurers were of the opinion that as to the mortgagor no liability existed under the policies, the insurers, upon payment to the mortgagee, should be subrogated to all its rights and should be entitled to an immediate assignment of the mortgage.

The property insured was totally destroyed by fire caused, in the belief of the insurers, by the fraudulent acts of L. H. Trotter. All four insurers, after paying the mortgagee in full, joined as plaintiffs in this action in the district court, alleging that appellee L. H. Trotter had conspired with another to have the insured premises destroyed by fire and asking a judgment of the court declaring that the appellees had breached the policies, that the appellants were relieved of all liability under the policies by the breach charged, and that the appellants were subrogated to the rights of the mortgagee. The petition was entitled "Complaint for Declaratory Judgment". In it the appellants set out the material facts concerning the issue and terms of the policies of insurance, alleging that L. H. Trotter had caused the insured premises to be destroyed by fire and that appellants had paid the mortgagee in full under the standard mortgage clause. They also made the necessary allegations as to diversity of citizenship, alleged affirmatively that the matter in controversy, exclusive of interest and costs, exceeded the sum of $3,000, averred that the policies involved in the mortgage were identical in substance and form, that the loss of each company by reason of the provisions in the policies was dependent upon the relation of its loss to the total loss resulting from the fire, and that the plaintiffs had joined in one action to avoid a multiplicity of suits.

Averments of the answers by appellees, necessary to be noticed here, were the admission of payment by appellants of the claim of the mortgage under the standard mortgage clause, and the denial of the allegations of the complaint that appellee Trotter caused the insured building to be destroyed. The appellees also presented counterclaims asking for judgment against each of the plaintiffs for the full amount of each policy, together with interest, costs, statutory penalties, and attorneys' fees.

At the trial the appellees moved to dismiss as to the two insurance companies whose policies were for the face amount of $2,500 each, on the ground that the requisite amount for the jurisdiction of the court was not involved as to each of them. The motion was sustained at the conclusion of the trial, the court holding that the claims of the appellants could not be aggregated for the purpose of conferring jurisdiction on a federal district court in a proceeding of this character which, in the court's opinion, was an action for a declaratory judgment. A jury having been waived by the parties, the court found that the appellants here had failed to sustain the charge of the destruction of the building by L. H. Trotter and entered a judgment on the cross complaint against each appellant in the sum of $3,500, the face amount of its policy. All of the plaintiff insurance companies appealed. On the motion of the two companies issuing the policies in the sum of $2,500, the appeal as to them was dismissed by this court without prejudice to the others. We are now asked by the appellants here to reverse the judgment of the lower court upon the grounds (1) that the court was without jurisdiction in the present proceeding and (2) that the judgments against the appellants on appellees' cross complaints are not responsive to the pleadings and, therefore, are void.

(1) The ground of the appellants' contention concerning jurisdiction is that by the allegations of the petition it appears that no one of the plaintiffs below had involved in controversy with the appellees a sum sufficient to sustain the jurisdiction of the court, that the proceeding was one invoking the equity jurisdiction of the court in which the plaintiffs below could not aggregate their separate claims in order to sustain jurisdiction. This conclusion as to the amount in controversy is reached by appellants by means of a calculation proceeding as follows: The total insurance carried on the destroyed building was $12,000. Conceding that the loss resulting from the fire equaled the total amount of insurance, each appellant, if liable to appellees, was, by the terms of the policies, liable only in the proportion that the face of its policy bore to the total amount of insurance. The possible liability of an insurer in the sum of $3,500 was, therefore, 7/24ths of $12,000. But since the petition showed that the insurers, prior to the filing of the suit, had discharged a mortgage in the sum of $4,000, with accrued interest and such advancements for premiums as the mortgagee had made on behalf of the appellees, the total amount of insurance involved between the plaintiffs below and the appellees at the time of the filing of the suit could not exceed $8,000. Therefore, the maximum liability of each company which had written a $3,500 policy, appellants contend, could not have been in excess of 7/24ths of $8,000, or $2,333.33, less the insurer's proportionate share of accrued interest and advancements made by the mortgagee. From this calculation the appellants conclude that it was legally impossible for the sum in controversy between each of the appellant insurance companies and the appellees to equal, at the time the suit was filed, the amount necessary to sustain the jurisdiction of the court. This, appellants contend, appears on the face of the pleadings. We cannot agree.

This proceeding was not, as appellants now assert, a suit to invoke the equity jurisdiction of the court but, on the other hand, was a typical proceeding for a declaratory judgment as, indeed, appellants entitled it when brought and as the district court concluded at the trial. The petition did not ask the cancellation of the policies of insurance, nor injunctive relief, nor execution nor performance from the defendants, nor coercive relief of any character. The prayer of the petition was for a declaration of the rights of the appellants under contracts of insurance of face value in excess of the jurisdictional...