Liberty Nat. Life Ins. Co. v. Read

• Decision Date: 13 June 1938
• Docket Number: No. 1971.,1971.
• Citation: 24 F. Supp. 103
• Parties: LIBERTY NAT. LIFE INS. CO. v. READ, Insurance Commissioner of Oklahoma.
• Court: U.S. District Court — Western District of Oklahoma

24 F. Supp. 103

LIBERTY NAT. LIFE INS. CO. v. READ, Insurance Commissioner of Oklahoma.

No. 1971.

District Court, W. D. Oklahoma.

June 13, 1938.

H. L. Stuart, of Oklahoma City, Okl. (Frank E. Spain and H. H. Grooms, both of Birmingham, Ala., on the brief), for plaintiff.

F. A. Rittenhouse, of Oklahoma City, Okl. (Mac Q. Williamson, Atty. Gen., of Oklahoma, and J. B. Dudley, of Oklahoma City, Okl., on the brief), for defendant.

Before WILLIAMS, Circuit Judge, and RICE and VAUGHT, District Judges.

PER CURIAM.

Submission on facts for final decree in an action to enjoin the Insurance Commissioner of Oklahoma from enforcing an order requiring plaintiff to desist from writing an insurance policy form in Oklahoma, herein referred to as the Perfection Endowment Policy.

The action was commenced on July 24, 1937, being called up on that day after notice to defendant for restraining order against the enforcement of the Commissioner's desist order. Solicitor for defendant at that time stated that the case was one for three judges, plaintiff's solicitor contending that the case could not properly come before three judges, unless and until the District Judge, after hearing, should find against plaintiff upon the first aspect of the bill wherein it is asserted that the Commissioner's order is discriminatory, oppressive, and without warrant of any law, and further, that if that issue be decided against complainant, the asserted unconstitutionality of House Bill 190, c. 51, art. 7 (Act, April 28, 1937, 36 Okl.St.Ann. § 106) amending Section 10487, Oklahoma Statutes 1931, would be for determination, adding thereto the following:

"Provided, also, that no company organized under the laws of any other state shall continue to write, nor shall any company organized under the laws of any other state be hereafter licensed to write any type or kind of policy form in this State, if the laws of the state under which it is organized do not permit the licensing of companies organized under the laws of this State, to write such form of policy in such other state. The provisions of this Section are hereby made applicable to all types of companies writing life or health and accident insurance, including stipulated premium companies, fraternal societies and mutual benefit associations."

The District Judge then announced the case would go over until September 8, 1937, to be heard by him sitting as a District Judge, and in case it became necessary to call in two other judges, including a Circuit Judge, such court would be organized on September 10.

On September 8, 1937, the defendant filed a brief in support of its contention that the case was solely within the jurisdiction of a three-judge court. Then on suggestion the matter was passed over to a final hearing before three judges on September 10, to be disposed of as a three-judge case or a one-judge case, according as the court would deem it proper, all parties consenting thereto, and on the hearing on September 10, 1937, it was agreed by all parties that such hearing should constitute not only a hearing before a three-judge court but also before the District Court, the District Judge Vaught, sitting as such, and on the final submission plaintiff made no argument for three judges or one judge, leaving that determination for the court, but defendant's contention was that the case was one properly before a three-judge court.

Title 28, U.S.C.A. Section 380 (Judicial Code 266) is in part as follows:

"No interlocutory injunction suspending or restraining the enforcement, operation, or execution of any statute of a State by restraining the action of any officer of such State in the enforcement or execution of such statute, or in the enforcement or execution of an order made by an administrative board or commission acting under and pursuant to the statutes of such State, shall be issued or granted by any justice of the Supreme Court, or by any district court of the United States, or by any judge thereof, or by any circuit judge acting as district judge, upon the ground of the unconstitutionality of such statute, unless the application for the same shall be presented to a justice of the Supreme Court of the United States, or to a circuit or district judge, and shall be heard and determined by three judges, of whom at least one shall be a justice of the Supreme Court or a circuit judge, and the other two may be either circuit or district judges, and unless a majority of said three judges shall concur in granting such application. * * * The requirement respecting the presence of three judges shall also apply to the final hearing in such suit in the district court; and a direct appeal to the Supreme Court may be taken from a final decree granting or denying a permanent injunction in such suit."

The existence of a substantial question as to the constitutionality of a state statute, justifying such Federal Tribunal in taking such jurisdiction, must be determined from the allegations of the Bill. Ex parte Joseph Poresky, 290 U.S. 30, 54 S.Ct. 3, 78 L.Ed. 152. See, also, Mosher v. City of Phoenix, 287 U.S. 29, 53 S.Ct. 67, 77 L.Ed. 148.

The Bill alleges that the statute under which the defendant acted is unconstitutional, praying an interlocutory injunction restraining the defendant, a state officer, in the enforcement and execution of a state statute, and has pressed for and obtained a restraining order and injunction, which has been held in force pending the rendition of a final decree in the case.

(1.) Plaintiff's complaint in sub-section 17, is as follows:

"* * * Said section 10487 of the Oklahoma Statutes as amended by House Bill No. 190 under and by virtue of which defendant purports to have acted in making said order, is void and violative of said first section of the Fourteenth Amendment to the United States Constitution in that it denies to the plaintiff the equal protection of the laws and deprives the plaintiff of its property without due process of law."

It is also averred that the statute is violative of the Oklahoma Constitution in that it delegates to other states the legislative power of Oklahoma, praying that "the court find and decree that the state statute in its application to plaintiff is unconstitutional and void" and that:

"* * * the court make a temporary restraining order, to be effective until the hearing upon plaintiff's application for interlocutory injunction, and that upon such hearing an interlocutory injunction issue, * * *"

See Stratton, Secretary of State of Illinois, v. St. Louis-Southwestern Ry. Co., 282 U.S. 10, 51 S.Ct. 8, 75 L.Ed. 135.

In Brucker, Attorney General v. Fisher, 6th Cir., 49 F.2d 759, it is held:

"3. To justify hearing before three-judge court, and subsequent appeal direct to Supreme Court, application for interlocutory injunction must be pressed to hearing, but not necessarily decided (Jud.Code § 266 28 U.S.C.A. § 380).

"4. Jurisdiction of three-judge court convened to hear application for interlocutory injunction continues to end, or until application for temporary injunction has been withdrawn (Jud.Code § 266 28 U.S.C.A. § 380).

"5. Defendant's voluntary consent to inaction by state officers in lieu of preliminary restraining order, or interlocutory injunction, should not divest three-judge court of jurisdiction. * * *

"6. Existence of other grounds of federal jurisdiction, or fact that court placed final decision on nonconstitutional grounds, does not affect jurisdiction of statutory three-judge courts."

See Sterling, Governor of Texas, v. E. Constantin, 287 U.S. 378, 53 S.Ct. 190, 77 L. Ed. 375.

The three-judge court has jurisdiction. However, it is suggested in open court that the final submission should be not only to the three-judge court but also to the United States District Court and that separate decrees should be entered in each respective capacity.

The Perfection Endowment Policy is (1) a life insurance policy providing for payment of principal amount to insured's beneficiary upon his or her death; (2) an old-age endowment providing for payment of principal amount to the insured upon his or her attaining age of 85 years, and (3) a contingent mortality endowment providing for payment of principal amount to insured when his or her policy becomes oldest policy in division of his entry-age class which had fewest policies in it at time he or she became a policyholder and a death thereafter occurs in that division.

Each of the three benefits so provided in the policy covers an insurable risk. Each of the events insured is known and certain and the time of its happening, being only contingency, is predictable and insurable through application of long-established experience tables of mortality. The amount of each benefit is the face of the policy, and under universally accepted principles of cost accounting the premiums are calculated so that they, with the interest thereon, will be sufficient in each case to pay the benefit promised upon the happening of the event maturing the claim. For the security of the policyholder adequate reserves are set aside out of premiums collected and these are calculated just as are the reserves on all life insurance policies upon the American Experience Table of Mortality with interest assumption of 3½ per cent, there being no forfeiture for lapse. The insured may at any time exchange his policy for any other policy providing other benefits and have the new policy dated back to the time of his or her original application so as to preserve his or her earlier age and lower premium rates, and upon such exchange the difference in reserves must be adjusted and paid to the insured or by the insured according as his or her new policy calls for a lesser or greater reserve than his or her Perfection Endowment Policy.

Rates and reserves on this policy were calculated under supervision of plaintiff's president, Frank P. Samford, by F. M. Speakman, consulting actuary of Insurance Department of...