Opinion — Aetna Life Ins. Co. v. Haworth

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Hariford, Connecticut, Petitioner,

SUPREME COURT OF THE UNITED STATES.

No. 446.—-Ocroser Term, 1936.

a Life Insuranee Company of? a ; ;

Aetna Life Insure deadies On Writ of Certiorari to the

United States Gireuit Court

Us. ¢

. of Appeals for the Eighth

Edwin P. Haworth and Cora M. f e PI

Cireuit.

Waworth.

[March 1, 1937.]

Mr. Chief Justice Hucues delivered the opinion of the Court.

The question presented is whether the District Court had juris-

diction of this suit under the Federal] Declaratory Judginent Act.

Act of June 14, 1934, 48 Stat. 955; Jud. Céde, see. 274D; 28

US. C. 400.3 eee sie

The question arises upon the plaintiff’s complaint which was

dismissed by the District Court upon the ground that it did not

_ set forth a ‘‘controversy’’ insthe constitutional sense and hence did

not come within the legitimate scope of the statute. 11 F. Supp.

1016. The decree of dismissal was affirmed by the Cireuit Court

of Appeals. 84 F, (2d) 695. We granted certiorari. November

16, 1936.

From. the complaint it appears that plaintiff is an insurance

‘company which had issued to the defendant, Edwin P. Haworth,

five policies of insurance upon his life, the defendant Cora M.

Haworth being named as beneficiary. The complaint sct forth the

a TES,

1The Act provides: .

““(1) In eases of actual controversy the courts of the United States shall

have power upon petition, declaration, complaint, or other appropriiite plead-

ings to declare rights and other legal relations of any interested party peti-

tioning for sueh declaration, whether or not further relief is or could be

prayed, and such declaration shall have the force and effect of a final judg-

ment or decree and be reviewable as such,

(2) Further relief based on a declaratory judgment or decree may be

granted whenever necessary or proper. The application shall be by petition

to a eourt having jurisdiction to grant the relief. If the application be

deemed sufficient, the court shall, on reasonable notice, require any adverse

party, whose rights have been adjudicated by the declaration, to show cause

why further relief should not be granted forthwith.

(3) When a declaration of right or the granting of further relicf based .

thereon shall involve the determination of issues of fact triable by a jury, such

issues may be submitted to a jury in the form of interrogatories, with proper

instructions by the ceurt, whether a general verdiet be required or not’’,

2 Aetna Life Insurance Co. vs. Haworth.

terms of the policies. They contained various provisions whic

‘for the preseat purpose it is unnecessary fully to particulariz

It is sufficient to observe that they all provided: for certain benef

in. the event that the insured became totally and permanently dis

cabled. In one policy, for $10,000, issued in 1911, the compan:

agreed, upon receiving the requisite proof of such disability ani

Without further payment of premiums, to pay the sum insure’

and dividend additions, in twenty annual instalments, or a |i:

annuity as specified, in full settlement. In four other’ policis,

issued in 1921, 1928 and 1929, respectively, for amounts agzregs.

ing $30,000, plaintiff agreed upon proof of sueh disability to wair-

further payment of premiums, promising in one of the policies:

vay a specified amount monthly and in the.other three to continy

the life insurance in foree. By these four policies the benefits +

be payable at death, and the eash and loan values to be availabl:

were to be the samé whether the premiums were paid or wer

waived by reason of the deseribed disability.

The complaint alleges that in 1930 and 1931 the insured ceased:

pay premiums on the four policies last mentioned and claimed tl:

disability benefits as stipulated. Ile continued to pay premiums

on the first mentioned policy until 1934 and then claimed disability

benefits. These elaings, which were repeatedly renewed, were pr

sented in the form of affidavits accompanied by certificates ¢

physicians. A typical written claim on the four policies is annexe

to the complaint. -Ti states that while these polieies were in fore.

the insured beeame totaliy and permanently disabled by diseas

and was ‘‘prevented from performing any work or conducting an

business for compensation or profit’’?; that on October 7, 1930, l:

had made and delivered to the company a sworn statement ‘for th:

purpose of asserting and claiming his right to have these policis

continued under the permanent and total disability provision cor

tained in each of them’’; that more than six months before the

date he had become totally and permanently disabled and _ hai

furnished evidence .of his disabilitv: within the stated time: the

the annual premiums payable in the year 1930 or in subsequer’

years were waived by reason of the disability and that he was en

titled to have the policies continued in foree without the paymer’

of premiums so long as the disability should continue.

With respect to the policy first mentioned, it appears that th:

insured claimed that prior to June 1, 1934, when he ceased to pai

1

Aetna Life Insurance Co. vs. Haworth. 3

premiums, he had become totally and permanently disabled; that

he was, Without obligation to pay further premiums and was en-

titled to the stipulated disability benefits including the continued

life of the policy.

Plaintiff alleges that consistently and at all times it ties refused

to recognize theSe claims of the insured and has insisted that all

the policies had’ lapsed according to their terms by reason of the

non-payment of premiums, the insured not being totally and per-

manently disabled at any of the times to which his claims referred. |

Plaintiff further states that taking loans into consideration four

of the policies have no value and the remaining policy ‘the one

first mentioned) has a value of only $45 as extended insurance.

If, however, the insured has been totally and permanently dis-

abled as he claims, the five policies are in full foree, the plaintiff

is now obliged to pay the acerued instalments of cash disability

benefits for which two of the policies provide, and the insured has

the right to claim at any time cash surrender values accumulating

by reason of the provisions for waiver of premiums, or at lis death,

Cora M. Haworth, as beneficiary, will be entitled to reecive the face

of the polieles less the loans thereon.

Plainti? thus conten ds that there is an actual contros ‘ersyv with

defendants as to the e¢ Listenc eof the total and permanent disability

of the insured and as-to the continuance of the obligations asserted

despite the non-payment of premiums. Defendants have not in-

stituted any action wherein the plaintiff would have an oppor-

tinits to prove the absence of the alleged disability and plaintiff

points tothe danger that it may lose the benefit-of evidence through

disappearange, illness. or death of witnesses; and meanwhile, in the

absence of a judicial decision with respect to the alleged disability,

the plaintiif in relation to these policies will be compelled to main-

tain reserves in excess of $20,000.

The complaint asks for a decree that the four policies be de-

cared’ to be nul: and void by reason of lapse for nonpayment of

premiums and that the obligation upon the remaining policy be

held to consist solely in the duty to pay the sum of $45 upon the

death of the insured, and for such further relief as the exigencies

of the case may require. , :

First. ~The Constitution limits the exercise of the Judicial power

to ‘‘eases’’ and ‘ ‘controversies’’ ‘““The term ‘controversies’, if

4 Aetna Life Insurance Co. vs. Haworth.

distinguishable at all from ‘cases’, is so in that it is less compre.

hensive than the latter, and includes only suits of a civil nature”

Per Mr. Justice Field in Jn re‘Pacific Railway Commission, 32 Fed

241, 255, citing Chisholm-v. Georgia, 2 Dall. 431, 482. See Muskre:

v. United States, 219 U.S. 346, 356, 357; Old Colony Trust Coy

Commissioner, 279 U.S. 716, 723, 724. The Declaratory Judemey

Act of 1934, in its limitation to ‘‘eases of actual controversy”

manifestly has regard to the constitutional: provision and is opera.

tive only in respect to controversies which are such in the consti

tutional sense. The word ‘‘actual’’ is one of emphasis rather ther

of definition. 'Chus the operation of the Declaratory Judgment Ae

is procedural only. In providing remedies and defining procedir-

in relation to cases and controversies in the constitutional sense th.

Congress is acting within its delegated power over the jurisdicticr

of the federal courts which the Congress is authorized to establist

Turner v. Bank of North America, + Dall. 8, 10; Stevenson v. Fain,

195 U.S. 165, 167; Wline v. Burke Construction Co., 260 U.S. 2

234. Exercising this control of practice and procedure the Cengres

‘is not confined to-traditional forms or traditional remedies. Th

judiciary clause of the Constitution ‘‘did not erystallize int

changeless form the procedure of 1789 as the only possible mean:

for presenting a case or controv ersy Otherwise cognizable by th:

federal courts’’. Nashville, Chattanooga & St. Louis: Rwy. Co. +.

Wallace, 288 U. 8. 249, 264. In dealing. with methods within it

sphere of remedial action the Congress may create and improve a

well as abolish or restrict. The Declaratory Judgment Act mus

be deemed.to fall within this ambit of congressional power, so far

as it authorizes relief which is consonant with the exercise of the

judicial funetion in- the determination of controversies to whiek

under the Constitution the judicial power extends. y

A “‘controversy’’ in this sense must be one that is appropriate

for judicial determination. Osborn v. United Stetes. Bank, !

Wheat. 737, 819. A Justiciable controversy is thus distinguished

from a difference or dispute of a hypothetical or abstract character:

from one that is academic or moot. United States v. Alasha 8. &

Co., 253 U. S. 113, 116. The controversy must be definite and con

erete, touching the legal relations of parties having adverse legal

interests. South*Spring Gold Co. v. Amador Gold Co., 145 U. &

Aetna Life Insurance Co. vs. Haworth. §

300, 301 ; Fairchit'd v. Hughes, 258 U.S. 126, 129; Massachusetts-v.

Yellon, 262 U.S. 447, 487, 488. It must be a real and substantial

controversy admitting of specific relief through a decree of a con-

elusive character, as distinguished from an opinion advising what

the law would be upon a hypothetical state of facts. See Muskrat

v-United States, supra; Texas v. Interstate Commerce ge oneaginea

9538 U. 8. 158, 162; New Jersey v. Sargent, age U. S. 328, 339, 340;

Liberty Warehouse Co. v. Grannis, 273 U.S. 70; New ¥ ih v. Illr-

nois, 274 U. S. 488, 490; Willing v. Chicago Auditorium Assocta-

tion, 277 U.S. 274, 289, 290; Arizona v. California; 283 U. 8. 423,

463, 464; Alabama v. Arizona, 291 U.S. 2856, 291; United States

v. West Virginia, 295 U. S. 463, 474, 475; Ashwander v. Tei-

nessee Valley ALDufhority, 297 U.S. 288, 324. Where there is such

a conerete case admitting of an imimediate and definitive deter-

mination of the legal rights ef the parties in an adversary pro-

ceeding upon the facts alleged, the judicial function may be appro-

priately exercised although the adjudication of the rights of the

litigants may not require the award: of process or the payment of

damages. Nashville, Chattanooga & St. Louis Rwy. Co. v. Wallace,

supra, p: 263; Tutun v. United States, 270 U. 8. 568, 576, 577:

Fidelity National Bank v. Swope, 274 U.S. 128, 152: Old Colony

Trust Company v. Commissioner, supra, p. 725. a as it is not

essential to the exercise of the judicial power that an injunction

be sought, allegations that irreparabl® injury is threatened are not

required. Nashville, Chattanooga & St. Louis Rwy. Co. v. Wallace,

supra, p. 264.

With these principles governing the application of the Declara-

tory Judgment Act, we turn to the nature of the controversy, the

relation and interests of the parties, and the relief soueht in the

instant case.

Second.—There is, here a dispute between parties who face each

rights and obligations arising from the contracts of insurance. The

dispute is‘definite and concrete, not hypothetical or abstract. Prior

to this suit, the parties had taken adverse positions with respect to

their existing obligations. Their contentions concerned the dis-

ability benefits which were to be payable upon prescribed condi-

tions, On the one'side, the insured claimed that he had become

totally and permanently disabled and hence was relieved of the

$

|

other in an adversary proceeding. The dispute relates to legal:

6 Actna Life Insurance Co. vs. Haworth. .

obligation té continue the payment of premiums and was entitl:

to the stipulated disability benefits and to the continuance of ¢,

policies in force. The insured presented this claim formally,

required by the policies. ‘It was a claim of a present, specific rig

On the other side, the company made an equally definite claim tig

the alleged basic fact did not exist, that the insured. was not total;

and permanently disabled and had not been relieved of the duty:

continue the payment of premiums; that in consequence the poli¢:

had lapsed, and that the company was thus freed from its oblig;

tion either to pay disability benefits or to continue the insurane::

foree. Such a dispute is manifestly susceptible of judicial dete

mination. It calls, not for an advisory opinion upon a hy;

thetical basis, but for an adjudication of present right upon este:

lished facts.

That the dispute turns upon questions of fact does not withdrs

it, as the respondent seems to contend, from judicial cognizan:

The legal consequences flow.from the facts and it is the provix

of the couris to 2seertain and find the facts in order to determ::

the leval consequenees. That is evéry day practice. ‘Equally u

availing is ee eee nt’s contention that the dispute relates tot

existence of a ‘‘mutable Fact”? and a ‘‘changeable condition—:

_ state of the insured’s health’’. The insured asserted a total

permanent disability occurring prior to October, 1930, and ec

tinuing thereafter. Upon that ground he ceased to pay premiu

His condition at the time he stopped payment, whether he was tz

totally and permanently disabled so that the policies did not lars:

is not a‘‘‘mutable’’ but a definite fact. it is a controlling ie

which ean be finally determined and which fixes rights and obliz

tions under the policies. If it were found that the insured ©

not totally and permanently disabled when he ceased to pay 7:

miums and hence was in default, the effect of that default

the consequent right of the company tod treat the policies as laps

could be definitely and finally adjudicated. If it were found t

he was totally and permanently disabled as he claimed, the d:

of the company to pay the promised disability benefits and to ma

tain the policies in force could likewise be adjudicated. — Th:

would be no difficulty in either event in passing a conclusive dec

applicable to the facts found and to the obligations of the part

corresponding to those facts. If the insured made good his cla

the edlecree establishing his right to the disability benefits, and’

te

Aetna Life Insurance Co. vs. Haworth. 7

the continuance of the policies in foree during the period .of the

proved disability, would be none the less final and conclusive as to

the matters thus determined even though a different situation

night later arise in the event of his recovery from that disability

and his failure after that recovery to comply with the requirements

of the policies. Such a contention would presenta distinct subject

“matter. .

If the insured had brought suit to recover the disability benefits

currently payable under two of the policies there would have been

no question’that the controversy was of a justiciable nature, whether

or not the amount involved would have permitted its determination

ina federal court. Again, on repudiation by the insurer of lia-

bility in such a case and insistence by thé insured that the repudia-

tin was unjustified because of his disability, the insured would

have ‘‘such an interest in the preservation of the contracts that he

night maintain a suit in equity-to declare them still in being’’.

Burnet v. Wells, 289 U.S. 670, 680; Cohen v. N. Y. Life Insurance

“Co. 50 N. Y. 610, 624; Fidelity National Bank v. Swope, supra.

But the character of the controversy and of the issue to be deter-

‘or by the insurer. Whether the District Court may entertain such

| asuit by the insurer, when the controversy as here is between citi-

‘zens of different States or otherwise is within the range of the fed-

eral judicial power, is for -the Congress to determine. It is the

nature of the controversy, not the method of its presentation or

the particular party who presents it, that is determinative. See

Insurance Co. v. Helmer, 15 F. Supp. 355, 356; New York Life In-

| surance Co. v. London, 15 F. Supp. 586, 089.

We have no occasion to deal with questions that may arise in

the. progress of the cause, as the complaint has been dismissed in

limine. Questions of burden of proot or mode of trial have not

been considered by the courts below and are not before us. i

Our conclusion is that the complaint presented a controversy to

which the judicial power extends and that authority to hear and

; etermine it has been conferred upon the District Court by the

& remanded for further proceedings in conformity with this

‘pinion.

Fd

Tt is so ordered.

mined is essentially the same whether it is presented by the insured |

Gully v. Interstate Natural Gas Co., 82 F. (2d) 145, 149; Travelers.

Declaratory Judgment Act. The decree is reversed and the eanse

Se At acai