Stephenson v. Equitable Life Assur. Soc.

• Decision Date: 29 September 1937
• Docket Number: No. 4184.,4184.
• Citation: 92 F.2d 406
• Parties: STEPHENSON et al. v. EQUITABLE LIFE ASSUR. SOC. OF THE UNITED STATES.
• Court: U.S. Court of Appeals — Fourth Circuit

92 F.2d 406 (1937)

STEPHENSON et al. v. EQUITABLE LIFE ASSUR. SOC. OF THE UNITED STATES.

No. 4184.

Circuit Court of Appeals, Fourth Circuit.

September 29, 1937.

COPYRIGHT MATERIAL OMITTED

Archibald G. Robertson, of Richmond, Va. (Norman L. Flippen and Hunton, Williams, Anderson, Gay & Moore, all of Richmond, Va., on the brief), for appellants.

Stuart G. Christian, of Richmond, Va. (Christian & Lamb, of Richmond, Va., on the brief), for appellee.

Before PARKER, NORTHCOTT, and SOPER, Circuit Judges.

PARKER, Circuit Judge.

On June 21, 1928, the Equitable Life Assurance Society of the United States issued to one Harry C. Stephenson its policy of life insurance in the sum of $5,000, providing for double indemnity in case of accidental death and for waiver of premiums and payments of $50 per month in case of total and permanent disability. Annie C. Stephenson was named as beneficiary under the ordinary insurance and double indemnity provisions. The policy contained an incontestable provision to the effect that, except as to provisions relating to disability and double indemnity, it should be incontestable after one year from date. In June, 1934, proof of total and permanent disability was made, and thereafter until August, 1936, premiums were waived and disability benefits were paid monthly in accordance with the terms of the policy. In the latter month the company, claiming to have discovered that material representations contained in the application for the policy were untrue, disavowed any liability under the disability and double indemnity provisions, tendered return of the premiums paid under these provisions, and demanded that the amount paid under the disability provision be repaid to the company and that the policy be returned in order that the disability and double indemnity provisions might be canceled. About the same time the company demanded payment of the premiums for ordinary life insurance which had fallen due since June, 1934, and notified insured that, unless same were paid by September 21, 1936, the policy would become forfeited except as to the surrender value or paid up insurance therein provided for. The insured not making the payment of premiums as demanded, the company, on September 28, 1936, notified him that the policy stood lapsed.

On October 30, 1936, the insured, by his next friend, filed in the court below a "Bill of Complaint and Petition for Declaratory Judgment" in which the facts were set forth as above stated, and in which the relief prayed was that judgment or decree under the Declaratory Judgment Act (Jud. Code § 274d, 28 U.S.C.A. § 400) be entered declaring the policy of insurance to be in full force and effect and granting insured a recovery of $50 per month under the disability provision for the period beginning August 13, 1936. The beneficiary was duly made a party to this proceeding, which came on for hearing on the company's motion to dismiss. This motion was granted by the District Judge, who was of opinion that suit for declaratory judgment with respect to the validity of the policy could not be maintained because of the right of plaintiff to test its validity by action for the recovery of the past-due disability installments, and that, viewed as an action for the recovery of these, it did not involve the jurisdictional amount of $3,000. Decree was thereupon entered dismissing the cause for lack of jurisdiction, and plaintiff has appealed. Two questions are presented for our consideration: (1) Whether under the circumstances stated a proceeding can be maintained under the Declaratory Judgment Act to invoke the judgment of the court as to the validity of the policy; and (2) whether such proceeding involves the jurisdictional amount.

The fundamental error of the court below consists in assuming that a proceeding for a declaratory judgment may not be maintained where another remedy is available. There is nothing in the act which limits its application to suits in equity or which suggests that the availability of other remedies shall preclude its use. On the contrary, the provision in the first paragraph for pleading by "declaration," as well as by complaint or petition, and the provision in the third paragraph for jury trial show clearly that declaratory judgments in legal as well as equitable proceedings were contemplated; and that the remedy provided was intended as an alternative one in cases where other remedies are available is shown by the provision of the first paragraph that such judgments may be rendered "whether or not further relief is or could be prayed."

As pointed out by Prof. Borchard in his Declaratory Judgments, at pages 147, 148, there are two types of action in which declaratory relief is invoked: (1) Where the plaintiff seeks a declaration under circumstances wherein no coercive decree is possible; and (2) where the plaintiff, though in position to sue for an executory or coercive decree, "contents himself with the milder declaration of rights as adequate to his needs and purposes." In the first class of cases the declaratory judgment is the exclusive remedy, but only because no other remedy is available. In the second class the declaratory judgment is available because plaintiff is content with the mere declaration for which the statute provides even though he might have a coercive judgment or decree by asking it.

The Federal Declaratory Judgment Act is a regulation of procedure providing a new remedy for application in actions at law and suits in equity within the jurisdiction of the federal courts; and there is nothing to suggest that its use is to be confined to cases in which no other adequate remedy is available. Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 57 S. Ct. 461, 464, 81 L.Ed. 617, 108 A.L.R. 1000; Anderson v. Aetna Life Ins. Co. (C.C.A. 4th) 89 F.(2d) 345, 347; Columbian Nat. Life Ins. Co. v. Foulke (C.C.A. 8th) 89 F.(2d) 261; E. Edelmann & Co. v. Triple-A Specialty Co. (C.C.A. 7th) 88 F.(2d) 852, 854; Gully v. Interstate Natural Gas Co. (C.C.A. 5th) 82 F.(2d) 145, 149. As we said in Anderson v. Aetna Life Ins. Co., supra, "We think that irrespective of whether the suit would have been cognizable in equity or whether plaintiff would have had an adequate remedy at law in defending actions at law...