Petition for Writ of Certiorari — McCoach v. Griffin

INDEX

Subject Index

Petition for Writ of Certiorari

Summary Statement of the Matter Involved _

Questions Presented

Jurisdiction ae Be Pe

Reasons Relied on for Allowance of the Writ __.

Conclusion

Prayer for Writ

Brief in Support of Petition for Writ of Certiorari

Prior Opinions of Courts

Grounds for Jurisdiction

Statement of the Case

Specifications of Error

Argument

Point A

Point B

Point C

Conclusion

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li Table of Cases Cited

Page

Aetna Life Ins. Co. v. Dunken, 266 U.S. 399 ...... 27

Alexander v. Missouri State Life Ins. Co., 68 Fed.

SMS TA Ate at edi F nay a ak Sale Wie 7,17

American Nat. Ins. Co. v. Coates, 246 S. W. 356 | 12, 22

American Nat. Ins. Co. v. Smith, 13 S. W. (2d) 720 19

Automobile Mortgage Co. v. Ayub, 266 S. W. 134 24

Brammer v. Wilder, 57 S. W. (2d) 571 ...... .6, 10, 15

Cheeves v. Anders, 87 Tex. 287, 28 S. W. 274 ... 6,14, 15

Cheney v. Coffey, 113 S. W. (2d) 162... ..12, 22

Chicago, R. I. & P. Ry. Co. v. Thompson, 100 Tex.

185, 97 S. W. 459 20

Dug 1 v. Lewis, 14 S. W. 1024, 79 Tex. 246 25

Erie Railroad Co. v. Tompkins, 304 U. S. 64 5, 16

Fidelity Mutual Life Assn. v. Harris, 94 Tex. 25, 57

S. W. 635 13, 19, 21

Fidelity Union Trust Co. v. Field, 311 U.S. 169 16

Griffin v. MeCoach, 313 U. S. 498 6

Grovey v. Townsend, 295 U.S.45 7,16

Klaxon Co. v. Stentor Electric Mfg. Co., 313 U. S.

aS oor 6

Layne-Western Co. v. Buchanan Cian Mo., 85 Fed.

(2d) 334 7,17

Merrielles v. State Bank of Keokuk, 24 8S. W. 564 23

Moore v. Illinois Cent. R. Co., 312 U.S. 630 a

New England Mutual Life Ins. Co. v. Mitchell, 118

Fed. (2d) 414. 7,17

New York Life Ins. Co. v. English, 95 Tex. 391, 67

S. W. 884 19

Pendleton v. Great Southern Life Ins. Co., 273 Pac.

1007 ; 27

Table of Cases Cited—Continued iii

Page

Ryan & Company v. M. K. T. Railway Co., 65 Tex.

SBIR TEA SAID 2 AEE Ot eae Tan a ae i a 23

Seiders v. Merchants Life Assn. of the U. S., 93 Tex.

194, 548. W. 753 ...... 19

Shoemaker v. American National Ins. Co., 30 S. W.

(2d) 539; 48S. W. (2d) 612 ............. 6, 8, 11, 18

St. Regis Candies, Inc. v. Hovas, 83 S. W. (2d) 429 12, 22

Vandenbark vy. Owens-Illinois Glass Co., 311 U. S.

538 Bee ea Gre te, PA ts Shige Shc es 7,16

Wade v. Travis aie Texas, 174 U.S.499 ._.. 7,16

Walker v. Goetz, 218 S.W.569 .................... 24

J. R. Watkins Co. v. McMullan, 6 S. W. 823 ...... 25

Yoder v. Nu-Enamel Corp., 117 Fed. (2d) 488 .... 7,17

Judicial Code, See. 240(a) [28 U.S. C. A. 347(a)] . 5,10

Restatement of the Law of Conflicts of Laws, Sec.

322 ae ear) ee

Revised Civil Statutes of Texas, 1925, Art. 5048 6, 10, 14

Stromberg Conflict of Laws, page 214............. 25

Texas Law Review, 163 (Vol.10) ............... 21

University of Chicago Law Review, Vol. 9, p.141 .. 26

Supreme Court of the United States

OCTOBER TERM, 1941

WANG oo iscscreace,

JOHN D. McCoacH, TRUSTEE,

Petitioner,

Vv.

J. ROB GRIFFIN, Administrator of the Estate of

Robert D. Gordon, Deceased.

PETITION FOR WRIT OF CERTIORARI TO THE UNIT-

ED STATES CIRCUIT COURT OF APPEALS

FOR THE FIFTH CIRCUIT

To the Honorables the Chief Justice and the Associate Jus-

tices of the Supreme Court of the United States:

YOUR PETITIONER respectfully submits his petition

for a writ of certiorari directed to the record of the pro-

ceedings in the Circuit Court of Appeals for the Fifth Cir-

cuit, to bring such record here for revision and review of

the decision of that court in the above entitled matter.

SUMMARY STATEMENT OF THE MATTER

INVOLVED

This action was brought in the United States District

Court for the Northern District of Texas by Mrs. Fannie

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V. Gordon, individually, and as next friend of her two

minor children, against The Prudential Insurance Company

of America, seeking to recover upon a policy of life insur-

ance issued on the life of Robert D. Gordon. (R. 1.)

The insurance company answered by a Bill of Inter-

pleader, which was allowed. The Bill of Interpleader named

as cross defendants John D. McCoach, Trustee, John D.

MecCoach, Max I. Brenwasser, George B. Cody, Nathan

Schweiger, Alfred D. Leonard, Frederick W. Mead, and

Julius A. Bates. These parties answered, asking that the

proceeds be awarded John D. McCoach, Trustee, who was

named beneficiary in the policy. (R. 1, 2.)

Subsequently J. Rob Griffin was appointed administra-

tor with will annexed of the estate of Robert D. Gordon,

and was substituted in the cause as plaintiff. (R. 2.)

John D. McCoach, Trustee, and the other cross defend-

ants were citizens of the State of New York; the plaintiff

and the decedent were citizens of the State of Texas.

Gordon had dealings in New York with the cross defend-

ants who formed the Middletown-Tex Oil Syndicate for the

purpose of dealing with Gordon. (R. 2.) The Middletown-

Tex Oil Syndicate was a common law association composed

of McCoach and the other cross defendants. (R. 2.) Gordon

procured a life insurance policy, payable to the association.

(R. 2.) Some two years later this association ceased to do

business due to financial reverses, and the seven members

of that association formed a new association called the

“Protection Syndicate.” (R. 2.) McCoach was the Trustee

of that association. The insurance policy was changed by

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Gordon to designate the Protection Syndicate and its indi-

Se i

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vidual members as beneficiaries in place of the Middle-

town-Tex Oil Syndicate. (R. 3.)

The original policy was a term policy with the privilege

of conversion into an ordinary life policy at the expiration

of seven years. At that time Gordon converted the term

policy into a new policy, with the individual members of

the Protection Syndicate as beneficiaries. (R. 3.)

From the inception of Gordon’s relations with the cross

defendants he had borrowed money from them, and they

had invested money in his oil enterprises in the State of

Texas. (R. 3.) The policy of insurance was procured by

Gordon to protect the loans and the investments these indi-

viduals and the association they comprised had made. (R.

17.) The premiums were paid by the association at Gor-

don’s request upon his agreement to repay. However,

neither the premiums nor any other loans or advancements

were ever repaid by Gordon. (R. 2, 3.)

The loans and advancements made to Gordon exceeded

ihe amount of the insurance policy. (R. 18.)

In 1934 Gordon agreed to relinquish his right to change

the beneficiary and to receive disability payments and all

other rights under the policy to the individual beneficiaries

upon the association’s agreement to pay to Gordon one-

eighth of the proceeds of the policy received during his life

time, and one-eighth of the proceeds of the policy to his

wife at his death. (R. 4.) In surrendering these rights the

last change of beneficiary was made, naming John D. Mc-

Coach, Trustee, as beneficiary. The naming of one indi-

vidual rather than all was made at the suggestion of the

insurance company, and McCoach was Trustee for the bene-

fit of the former beneficiaries. (R. 5, 6.)

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Subsequently three of the original members of the asso-

ciation assigned their interest in the policy. Two of these

assignments were made for cash considerations, and the

third was made by Alfred D. Leonard to his son, Leroy F.

Leonard. There was no monetary consideration for the

assignment from the elder to the younger Leonard, but it

was made because the elder Leonard was unable to continue

to pay his share of the premiums on the policy. (R. 6.)

None of assignees knew Gordon, never made any loans

or advancements to him and never had any business deal-

ings with him except to pay part of the premiums of the

policy. None of the assignees were related to Gordon by

blood or marriage. (R. 7.) The assignors admittedly had an

insurable interest. (R. 7.)

In the District Court the insurance company was dis-

charged with its fees and costs, and the controversy over

the funds was decided in favor of McCoach, Trustee. (R.

1, 19.) An appeal was taken limited to the amount that

would go to the assignees. (R. 7.) The case was submitted

on appeal to the Fifth Circuit Court of Appeals, and the

judgment of the lower court in favor of McCoach, Trustee,

was affirmed. A writ of certiorari was granted by this

court, and on June 2, 1941 the cause was remanded for

determination of the law of Texas, as applied to the cireum-

stances of this case (313 U.S. 498.)

After reargument the Circuit Court on November 15,

1941 reversed the judgment of the lower court and the

cause was remanded with directions to enter judgment in

favor of J. Rob Griffin. (R. 25.) Motion for rehearing was

filed on the 6th day of December, 1941, which motion was

thereafter overruled by the Circuit Court of Appeals with-

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out written opinion on the 30th day of December, 1941.

(R. 25, 28.) The time for filing this application was ex-

tended until April 15, 1942 by an order of this court dated

March 27, 1942. (R. 28.)

QUESTIONS PRESENTED

1. In determining the applicable state law under the

doctrine of Erie Railroad Co. v. Tompkins, 304 U. S. 64,

are the lower courts bound by the latest pronouncement of

the highest court of the state in which they sit, or can they

rely upon pronouncement of such courts which have later

been expressly overruled?

2. In determining the applicable state rules involving a

conflict of laws question, can the lower courts ignore the

local conflict of laws rule and apply the internal rule?

3. Where there is no express ruling by the state court

of the state in which the Federal Court sits on the point

involved, what rule governs the lower courts under the doc-

trine of Erie Railroad Co. v. Tompkins?

JURISDICTION

The jurisdiction of this court is invoked and believed to

be sustained under Section 240 (a) Judicial Code [28 U.S.

C. A. 347 (a)] as amended by Act of Congress of February

13, 1925. ‘s

REASONS RELIED ON FOR ALLOWANCE OF

THE WRIT

(a) The Circuit Court of Appeals has decided an impor-

tant question of local law in a way in conflict with appli-

cable local statutes and decisions.

" OTT et

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This involves an interpretation of Article 5048, Revised

Civil Statutes of Texas, 1925, and the decision of the Texas

Commission of Appeals (opinion adopted by the Supreme

Court) in Brammer v. Wilder, 57S. W. (2d) 571, wherein

it was specifically held that the rule laid down in Cheeves

v. Anders has been changed, Cheeves v. Anders being the

case principally relied upon by the Circuit Court of Appeals.

Further this involves inquiry as to whether the case of

Cheeves v. Anders and those following it have not been

overruled by the decision of the Commission of Appeals of

Texas (opinion adopted by the Supreme Court) in Shoe-

maker v. American National Ins, Co., 48S. W. (2d) 612.

(b) The decision of the Circuit Court of Appeals is in

conflict with the decisions of this court in Griffin v. Me-

Coach, 313 U. S. 498, and Klaron Co. v. Stentor Electric

Mfg. Co., 313 U. S. 487, which holds that Federal Courts

in diversity of citizenship cases are governed by the con-

flict of laws rule of the courts of the state in which they

sit, rather than by the internal rule where a conflict of

laws question is presented.

(c! If petitioner be mistaken in the effect of the hold-

ing of the cases cited in (4), then the Circuit Court of

Appeals has decided an important question of federal law

which has not been but should be settled by this court, in

that by failing to take into consideration and discuss the

Texas conflict of laws rule, and applying without comment

its internal rule, it has in effect held that in cases involv-

ing a conflict of laws question, that the Federal Courts may

apply the internal rule of the state in which they sit rather

than its conflict of laws rule, even though the two rules be

different.

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(d) The decision of the Circuit Court of Appeals is in

conflict with the decisions of this court in Wade v. Travis

County, Texas, 174 U.S. 499; Grovey v. Townsend, 295 U.

S. 45; Vandenbark v. Owens-Ilinwis Glass Co., 311 U. S.

5388; and Moore v, Illinois Cent. R. Co., 312 U. S. 630, which

hold that Federal Courts should apply the latest pronounce-

ments of the highest state court even though such pro-

nouncement is in conflict with or overrules earlier holdings.

‘e} The decision of the Circuit Court establishes a rule

in conflict with the rule on the same matter established by

Circuit Courts for the Seventh and Eighth Circuits in

Alexander v. Missouri State Life Ins. Co., 68 F. (2d) a3

Layne-Western Co. v. Buchanan County, Mo., 85 F. (2d)

334; and Yoder v. Nu-Enamel Corporation, 117 F. (2d)

488, which hold that where decisions of a state court are

conflicting the most recent pronouncement must be accepted

by the Federal Courts as declaring the law of the state.

(f' The decision of the Circuit Court is in conflict with

the decision of Fourth Circuit in New England Mutual Life

Ins. Co. v. Mitchell, 118 F. (2d) 414 (cert. denied) which

holds that dicta in opinions of state courts is not binding on

the Federal Courts in determining the applicable state law.

(g) The Cirenit Court of Appeals has so far departed

from the accepted and usual judicial course of procedure,

as to call for the exercise of this court's power of super-

vision. Although the highest court of the State of Texas has

held that insofar as conflict of laws cases are concerned,

the publie poliey of the State of Texas is determined by

legislative enactment only, the Circuit Court of Appeals

has held that the public policy of the State of Texas results

from both legislative and judicial enactment relying on two

decisions neither of which are Texas cases.

nes fear

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(h) The Circuit Court of Appeals has decided an impor-

tant question of local law in a way in conflict with applica-

ble local decisions, in that it has held that under the Texas

law insurance policies are not subject to assignment to

parties have no insurable interest in the life of the insured.

This is in conflict with the holding of the highest court of

the State of Texas in Shoemaker v. American National Ins.

Co., 48 S. W. (2d) 612.

(i) Likewise the Circuit Court of Appeals has errone-

ously held that the assignments were made to parties hay-

ing no insurable interest, and there is no finding to sus-

tain such a conclusion.

CONCLUSION

The decision of the Circuit Court of Appeals erroneously

construes the legal effect of the agreed facts in this cause.

It applies to these facts rules drawn from superseded de-

cisions which have no application, and fails to follow the

rules and principles of the decisions of this court.

WHEREFORE, premises considered, your petitioner re-

spectfully prays that a writ of certiorari issue under the

seal of this court directed to the Honorable Circuit Court

of Appeals for the Fifth Circuit in the above cause, and

that the record be removed to this court, and that the de-

cree of the lower court be reversed.

Respectfully submitted,

CARL B. CALLAWAY,

1902 Santa Fe Building,

Dallas, Texas,

Counsel for Petitioner.

FRANK C. BROOKS,

Dallas, Texas,

Of Counsel.