Smith v. Insurance Company of North America

• Decision Date: 25 January 1963
• Docket Number: Civ. A. No. 434.
• Parties: Thurman SMITH, Trustee, et al. v. INSURANCE COMPANY OF NORTH AMERICA et al.
• Court: U.S. District Court — Middle District of Tennessee

213 F. Supp. 675

Thurman SMITH, Trustee, et al. v. INSURANCE COMPANY OF NORTH AMERICA et al.

Civ. A. No. 434.

United States District Court M. D. Tennessee, Columbia Division.

December 20, 1962.

Supplemental Opinion January 25, 1963.

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COPYRIGHT MATERIAL OMITTED

Fyke Farmer, Nashville, Tenn., for plaintiff Helen Corinne Scales Trice, executrix of the will of Joe W. Scales, deceased.

Lon P. MacFarland and William B. Cain, MacFarland & Colley, Columbia, Tenn., D. C. Lee, Pulaski, Tenn., Joe W. Henry, Jr., Henry & Henry, Pulaski, Tenn., and Malcolm Marshall, Ogden, Brown, Robertson & Marshall, Louisville, Ky., for defendants Commercial Union Assur. Co., Limited, and others.

GRAY, District Judge.

The overriding issue on the trial of this case was whether the late Joe W. Scales had somebody set fire to his feed and seed mill near Pulaski, Tennessee, July 14, 1956, to collect insurance. The overwhelming weight of the evidence was that he did. The jury said he did not but did say that he had been guilty of fraud, false swearing or willful concealment or misrepresentation of material matters in relation to his claims against the two defendants who insured only grain and other commodities stored in the mill.

Upon the verdict, judgment was entered in favor of the substituted plaintiff, Helen Corinne Scales Trice, Executrix of Scales's will, for $45,000.00 against the seven defendants insuring buildings, machinery and equipment, and a judgment was entered against Mrs. Trice and in favor of the two grain insurers both on her claim against them and on their counterclaim for the statutory bad faith penalty, T.C.A. § 56-1106, the amount of the judgment against her being $3,000.00. Mrs. Trice has paid this judgment.

By the satisfied judgment, the defendants, Insurance Company of North America and United States Fidelity & Guaranty Company, have been eliminated from the case. By compromise, settlement and agreed order of dismissal the mortgagee-plaintiffs, Thurman Smith and Union Bank of Pulaski, Tennessee, had been eliminated before the case was submitted to the jury. Thus the issues now before the court are entirely between Mrs. Trice and the seven remaining defendants, Commercial Union Assurance Company, Limited; American National Fire Insurance Company; North British and Mercantile Insurance Company, Limited; Citizens Insurance Company of New Jersey; Queen Insurance Company of America; Home Insurance Company, and New Hampshire Fire Insurance Company. Unless otherwise designated, references to the plaintiff and the defendants hereafter refer to these remaining parties only.

The issues now to be decided were raised by the defendants' timely motions under Rule 50(b), Federal Rules of Civil Procedure, for judgment notwithstanding the verdict and for new trial; by the plaintiff's motion under Rule 60(b) (4), Federal Rules of Civil Procedure, for relief from a portion of the amended judgment entered on the special verdict; and by the plaintiff's notice of appeal from a prior order of the court. Because the issues raised by the plaintiff's actions are jurisdictional, they will be considered first.

I The Plaintiff's Motion for Relief and Notice of Appeal

Pursuant to the plaintiff's own motion to amend the original judgment of May 25, 1962, the court asked counsel to submit a proposed order. It received two conflicting proposals and the parties submitted briefs on the merits of the proposals. Upon consideration of the briefs the court entered an order July 23, 1962, directing entry of an amended judgment allocating the costs, granting the plaintiff's request for interest on the damages found by the jury, and granting the defendants' proposal that the judgment specifically provide for credit against the judgment for payments made to the mortgagee-plaintiffs under the compromise settlement. Each side then entered a new motion to amend the judgment to eliminate the prior amendment favorable to the opposing party, and the defendants, out of an abundance of caution, also renewed their motions under Rule 50(b). The opposing motions to amend the amended judgment were denied in an order entered October 8, 1962, in which the continuing pendency of the motions under Rule 50(b) was noted. The plaintiff's instant motion for relief was filed thirty days later, on November 7, 1962, and the notice of appeal was filed one minute after the motion. The asserted object of both is to delete from the amended judgment the provision that the defendants should receive credit against the judgment for payments made to the mortgagees under the loss-payable clauses of the policies on which this action is founded. The ground is that the court lacked jurisdiction to amend the judgment in the absence of a timely motion by the defendants.

Neither a motion for relief under Rule 60(b) nor an appeal under 28 U.S.C. § 1291 will lie except to a final judgment. The original judgment involved here has never become final because it was suspended upon the filing of the defendants' timely motions under Rule 50(b) and will remain suspended until these motions are disposed of, Rules 62(f) and 73(a), Federal Rules of Civil Procedure; Waller v. Skeleton, 31 Tenn.App. 103, 212 S.W.2d 690 (M.S. 1948); Phinney v. Houston Oil Field Material Co., 252 F.2d 357 (5th Cir., 1958). The intervening proceedings and orders directed to the form and incidental provisions of the suspended judgment on the suspended verdict are necessarily interlocutory until such time as the judgment amended could come into force.

The plaintiff contends, however, that the entry of the amended judgment impliedly overruled all motions inconsistent with it then pending, citing Mosier v. Federal Reserve Bank of New York, 132 F.2d 710, 712 (2nd Cir., 1942); Agostino v. Ellamar Packing Co., Inc., 191 F.2d 576, 577, 13 Alaska 34 (9th Cir., 1951); 42 C.J., Motions & Orders, § 148, p. 511; 60 C.J.S. Motions & Orders § 38, p. 37 at notes 36-38. The origin of this was in Corpus Juris based on state court cases; Mosier cited C.J.; and Agostino and C.J.S. cited Mosier. The authority may be taken as supporting the rule, but not the application urged by the plaintiff. By its terms and as applied in the cases the rule contemplates that the judgment or order from which the implication arises be inconsistent with granting the motion. In fact, the Mosier case involved a situation in which the judge had specifically overruled the motion in question but had entered no formal order to that effect prior to entry of a final judgment. In the present case, no judgment has become final to the present day. Motions filed by the plaintiff herself were sufficient to keep it from becoming final until October 8, 1962, and the order entered that date specifically noted the continuing pendency of the defendants' motions. Furthermore, the order of July 23, 1962, specifically ordered entry of the amended judgment as of the date of the original one. And even if that order might otherwise have been a final one, the defendants' renewal of their motions challenging the verdict would have been effective to suspend it. Clearly there has been no implication by the court or any indication of any inference by the parties that the defendants' motions were overruled. In a brief filed September 17, 1962, the plaintiff said:

"The defendants, within ten days after the reception of the verdict, filed the motion for judgment in accordance with their motions for a directed verdict, and in the alternative for a new trial. Thus, they have followed the procedure entitling them to have both motions passed on by the Court."

In any view, there was no appealable order or judgment on which the plaintiff could base her notice of appeal of November 7, 1962. It is true that ordinarily even an appeal that is later dismissed will divest the District Court of jurisdiction during the pendency of the appeal. Commonwealth Ins. Co. of New York v. O. Henry Tent & Awning Co., 273 F.2d 163, 165 (7th Cir., 1959). But the court is not required to suspend its proceedings while the plaintiff pursues an improvident appeal, Resnik v. La Paz Guest Ranch, 289 F.2d 814, 818 (9th Cir., 1961), particularly where it is apparent that it is a nullity, see United States v. Crescent Amusement Co., 323 U.S. 173, 177-178, 65 S.Ct. 254, 89 L.Ed. 160 (1944). The motion is likewise untimely and must be dismissed.

Even if the motion were properly before the court on its merits, it would have to be denied for several reasons:

1. The plaintiff herself opened the judgment for amendment, treated the defendants' proposals as properly before the court on their merits and briefed them repeatedly prior to the July and October orders without once suggesting that they were untimely. She cannot be heard to raise this technicality now unless she is prepared to show that the court lacked jurisdiction to amend the judgment in any respect, yet she is obviously not prepared to abandon the portions of the amendment favorable to her.

2. The provision to which the plaintiff objects was so obviously implicit in the original judgment that its omission may properly be regarded as an inadvertent error subject to correction at any time under Rule 60(a), Federal Rules of Civil Procedure.

3. The challenged provision is in accord with her testator's original complaint, which she necessarily adopted in reviving the case and which she has never sought to amend.

4. Her bald effort to require the defendants to pay double on a single liability shocks the conscience of the court.

In short, her motion is without any vestige either of legal merit or of good faith.

II

Defendants' Motion for Judgment N.O.V.

The defendants moved for directed verdicts on all issues at the close of all the evidence on grounds that the evidence conclusively established the affirmative defenses of fraud, false swearing, willful concealment and misrepresentation of material matters, and arson, and that it...