Merrigan v. Metropolitan Life Ins. Co., 565.

• Decision Date: 07 February 1942
• Docket Number: No. 565.,565.
• Parties: MERRIGAN v. METROPOLITAN LIFE INS. CO.
• Court: U.S. District Court — Eastern District of Louisiana

43 F. Supp. 209

MERRIGAN v. METROPOLITAN LIFE INS. CO.

No. 565.

District Court, E. D. Louisiana, New Orleans Division.

February 7, 1942.

John C. Hollingsworth, Robert Link, Jr., and David Gertler, all of New Orleans, La., for plaintiff.

Spencer, Phelps, Dunbar & Marks and W. B. Spencer, Jr., all of New Orleans, La., for defendant.

CAILLOUET, District Judge.

The plaintiff filed suit in the Civil District Court of the Parish of Orleans, as named beneficiary under a life insurance policy, claimed to have been issued by the defendant company on the life of her deceased husband, she alleging that said policy was in full force and effect on October 17th, 1939, when the insured came to his death, and that due proof of death and delivery of policy to the defendant's agent was promptly made, as evidenced by receipt in hand dated a few days after the death.

The petition alleged that, notwithstanding amicable demand, and retention of the policy by the defendant, said insurer has failed, neglected and refused to make payment, although there has been full compliance with all the policy conditions relating to either decedent, or plaintiff as beneficiary.

Judgment was prayed for "in the full sum of three thousand and 00/100 ($3,000.00) Dollars principal, together with 6 per cent per annum interest thereon from October 17th, 1939 until paid, and all costs of these proceedings."

Additionally, "all general and equitable relief" was prayed for.

The defendant company effected removal to this Court, its petition for removal addressed to the State Court alleging diversity of citizenship, and claiming the necessary jurisdictional amount as follows, to-wit: "That the value of the matter in controversy in said suit, exclusive of interest and costs, exceeds the sum of Three Thousand ($3,000.00) Dollars, being an action for the full proceeds of the aforesaid policy of insurance in the sum of Three Thousand ($3,000.00) Dollars, with six (6%) per cent thereof per annum additional as provided by Act 17 of the Louisiana Legislature for 1920."

The state act so referred to, however reads as follows, viz: "All life insurance companies doing business in this State, whether foreign or domestic, are hereby required to pay all death claims within sixty days from date of receipt of due proof of death and should they fail to do so without just cause, then policy will bear interest at the rate of six per cent. (6%) per annum from date of receipt of due proof of death until paid." (Italics supplied.) Dart's La. Gen.Stat. § 4112, Act No. 17 of 1920, § 1.

The plaintiff moves to remand the case to the State Court, on the ground that "the amount in dispute and controversy, exclusive of interest and cost, is the sum or value of $3,000.00 and no more."

The matter in controversy does not exceed, exclusive of interest and costs, the sum or value of $3,000, 28 U.S.C.A. § 41, unless defendant's contention that the claimed 6% per annum interest on the $3,000 sued for as due to the beneficiary, under the life insurance policy at issue, is actually not interest but a constituent element of the principal demand.

But interest, no matter whether looked upon as the measure of the damages suffered by reason of the nonpayment of money when due, is still interest in its very nature, and interest cannot be included in "the matter in controversy", in seeking to establish this Court's jurisdiction. Brown v. Webster, 1895, 156 U.S. 328, 15 S.Ct. 377, 39 L.Ed. 440; Greene County v. Kortrecht, 5 Cir., 1927, 81 F. 241; Voorhees v. Aetna Life Insurance Company, D.C.D.N.J.1918, 250 F. 484, 489.

Interest is a matter of law and, when arising ex mora, is in the nature of damages for nonpayment of money due by contract. Art. 1935, La.Rev.Civ.Code. White v. McQuillan, 1838, 12 La. 530; Stiff v. Nugent, 1843, 5 Rob., La., 217; Curtis v. Innerarity, 1848, 6 How. 146, 154, 12 L.Ed. 380, 384; New Orleans Insurance Ass'n v. Piaggio, 1873, 16 Wall. 378, 387, 21 L.Ed. 358, 360.

Interest can not be sued for distinctly from the principal, for it is an accessory to the debt. Succession of Mann, 1849, 4 La. Ann. 28.

The "amount in controversy" is determined, for the purpose of ascertaining whether this Court has jurisdiction, by the ad damnum stated in the petition, which is, as has already been stated, no more than $3,000. It is true that the plaintiff seeks to recover 6% per annum interest on said principal sum from October 17, 1939, until paid, whilst the usual legal rate of interest, "unless otherwise stipulated", is 5% per annum, which is allowed on all debts from "the time they become due", Art. 1938, La.R.C.C., Art. 554, La.C.P.

The Louisiana Legislature, however, has "stipulated" by the enactment of Act No. 17 of 1920, that the legal rate of interest, and the time from which the same shall run, with reference to debts due under death claims, by life insurance companies doing business in Louisiana, when payment of such claims is not made, without just cause, within sixty (60) days from the receipt of due proof of death, shall be the legal, distinguished from conventional, rate (Art. 1936, La.R.C.C.) of 6% per annum, calculated from the date of receipt of said due proof of death, until paid.

It is argued on behalf of defendant that the Louisiana courts have frequently referred to said 6% interest as a "penalty" and in support thereof, there are cited six Louisiana Court of Appeal cases, five from Orleans Parish, which are reported, respectively, as Wilmer v. Most Worshipful St. John's Grand Lodge, 142 So. 858, at page 859; Harding v. Metropolitan Life Ins. Co., 188 So. 177, at page 185; Williams v. District Grand Lodge, 192 So. 895; Calvery v. Liberty Industrial Life Ins. Co., 195 So. 97, at page 99; Parretti v. Metropolitan...