Sturgeon v. Great Lakes Steel Corporation

• Decision Date: 10 July 1944
• Docket Number: No. 9685.,9685.
• Citation: 143 F.2d 819
• Parties: STURGEON et al. v. GREAT LAKES STEEL CORPORATION.
• Court: U.S. Court of Appeals — Sixth Circuit

143 F.2d 819 (1944)

STURGEON et al. v. GREAT LAKES STEEL CORPORATION.

No. 9685.

Circuit Court of Appeals, Sixth Circuit.

July 10, 1944.

M. C. Harrison of Cleveland, Ohio (M. C. Harrison and H. H. Marshman, both of Cleveland, Ohio, and William Schwartz, of Detroit, Mich., on the brief), for appellants.

Edward T. Goodrich, of Detroit, Mich. (Prewitt Semmes and Edward T. Goodrich, both of Detroit, Mich., on the brief), for appellee.

Before SIMONS, HAMILTON, and McALLISTER, Circuit Judges.

HAMILTON, Circuit Judge.

This is a class action in which the jurisdiction of the court is based on diversity of citizenship.

Plaintiffs, twelve in number, in the District Court, four of whom appeal here and employees of appellee, are beneficiaries of policies of sickness, accident and life insurance procurred by appellee for its employees under group insurance issued by the Prudential Insurance Company of America, a mutual company.

The appellee-employer made application to the insurer for group insurance on its employees, the insurance to be in force as to each employee when accepted by him. The premiums, with a slight exception hereinafter noted, were to be collected by the employer from each employee and paid by the employer to the insurer. Two master policies were issued to the employer containing a recital of the contract stipulations and the employer furnished each of his employees a prospectus on the plan of insurance, wherein there was outlined the classes of employees to which the insurance applied, the amount of death and sick benefits payable on the individual's policy and the respective premiums due in advance which were to be withheld and remitted by the employer out of the salary or wages of each employee who accepted the insurance. Each employee indicated his acceptance of the insurance and his willingness for his employer to deduct the premiums from his monthly wages or salary by filling in a form furnished by appellee on which he designated the name of the insured, the amount of life and disability insurance, the monthly premium and the name of the beneficiary.

The insurer, in accordance with and subject to the terms and conditions of the group policies, issued individual policies to each employee insuring him against (1) sickness and accidents, and (2) against death. Each of the master policies contained a provision that while in force, the proportion of the divisible surplus accruing thereon should be ascertained and apportioned by the Board of Directors of the insurer and credited to the policy at the end of the year as a dividend, which dividend was at the option of the employer to be paid in cash or applied to reduction of premiums then due, if any, or upon the written request of the employer, the dividend was to be left with the insurer to accumulate to the credit of the policy, with interest compounded annually at the rate of three and one-half percent.

Appellee's prospectus made no reference to policy dividends nor did the individual policies of employees make such reference.

The employee paid the full premium on the health and accident insurance and on the life insurance with the exception of a certain proportion of the life insurance premium which was paid by the employer, the specific proportions not being shown in the record.

Appellants, in their complaint, allege that there is more than $3,000 involved in the controversy and that each of them is a citizen of the State of Michigan and that appellee is a Delaware corporation authorized to do business in that State. They further allege that this action is brought for themselves and for all employees, past or present, of appellee who at any time were insured under the group policies heretofore described, and that all of said persons are situated similarly to appellants and that the issues are of common and general interest; that said parties are numerous and that it is wholly impracticable to bring all of them before the court. They further allege that appellee, in procuring the insurance and in collecting and paying the premiums thereon, was an agent for its employees and also a trustee. They allege that all sums received by appellee from the insurer as dividends on the policies in question are the property of the individual policyholders and that they have demanded of appellee an accounting and payment of these sums which has been refused. Appellants pray that appellee be required to account for all money collected by it as dividends and that all of said sum or sums be ordered paid into court or to a master under the direction of the court for distribution to the employees insured under said policies as their interests may appear and that appellee be required to pay interest thereon.

The trial court sustained appellee's motion to dismiss the complaint and appellants appeal.

It is the policy of the Congress to force litigants, citizens of different states, to settle their disputes in state courts, unless the matter in controversy exceeds the sum or value of $3,000. Healy v. Ratta, 292 U.S. 263, 54 S.Ct. 700, 78 L. Ed. 1248. In order to support the court's jurisdiction in diversity of citizenship actions, facts must appear in the record showing to a legal certainty that the requisite jurisdictional amount is involved.

The rule is thoroughly settled that where two or more plaintiffs have separate and distinct demands in a single suit, it is essential that the demand of each be of the requisite jurisdictional amount, but when several plaintiffs unite to enforce a single title or right in which they have a common, undivided interest, it is enough if their interests collectively equal the jurisdictional amount. Gibson v. Shufeldt, 122 U.S. 27, 7 S.Ct. 1066, 30 L.Ed. 1083; Clay v. Field, 138 U.S. 464, 479, 11 S.Ct. 419, 34 L.Ed. 1044; Troy Bank v. Whitehead, 222 U.S. 39, 32 S.Ct. 9, 56 L.Ed. 81.

Jurisdiction in the case at bar turns on the single question as to whether each complainant has a claim separate and distinct from the other or a common, undivided interest in a fund. In determining that question, the rule that interested parties may join in one action for the purpose of convenience, the saving of cost and the avoidance of a multiplicity of actions, has no application. Seaver v. Bigelows, 72 U. S. 208, 18 L.Ed. 595.

It is true the present bill of complaint alleges generally that the amount involved is in excess of $3,000.00 exclusive of interest and costs, but this allegation is insufficient to satisfy jurisdictional requirements in a class action where there are numerous plaintiffs having no joint or common interest or title in the subject matter of the suit. Clark v. Paul Gray, Inc., 306 U.S. 583, 59 S.Ct. 744, 83...