Opinion
No. 12814.
March 12, 1929.
Revelle, Revelle Kells and Henry T. Ivers, all of Seattle, Wash., for plaintiff.
Kerr, McCord Ivey, of Seattle, Wash., for defendant John Hancock Mut. Life Ins. Co.
Shank, Belt Fairbrook, of Seattle, Wash., for defendant Spokane Savings Loan Ass'n.
At Law. Action by Edith T. Hellenthal against the John Hancock Mutual Life Insurance Company and another. On motion to remand. Motion granted.
The plaintiff in her complaint in the state court alleges, in substance, that the defendant life insurance company is a foreign corporation and the savings and loan company a domestic corporation; that a policy of life insurance was issued to the husband of the plaintiff, who thereafter died; that she is the beneficiary of the policy; that the loan association has some interest in the policy by virtue of an assignment, and has refused to join as plaintiff, and because of which fact is made defendant.
The Spokane Savings Loan Association filed answer in the state court, in which it admits that it refused to join as plaintiff, and alleges that the deceased executed an assignment of the policy of life insurance applied for by deceased, if the same should be issued and become effective, but denies that the policy was issued or became effective.
The defendant insurance company filed a petition for removal, alleging jurisdictional facts, and that every issue of fact and law is wholly between the plaintiff and the defendant insurance company; that the loan company has no interest in the subject-matter of the action and no interest in the alleged policy of life insurance; that the insurance company is the sole proper and necessary party; that no relief is sought or prayed for against the loan company; and prays removal, and tenders therewith the bond provided by statute; and thereupon the cause was removed to this court.
The plaintiff moves to remand, alleging there is no diversity of citizenship between the plaintiff and all the defendants; that there is involved no separable controversy between citizens of this state and another state, and in support of the motion files an affidavit stating that the loan company and the insurance company, prior to the commencement of this action and to any transactions in issue, associated in business, the insurance company being engaged in the general insurance business in the state and therewith loaning and investing funds, and the loan society acted for the insurance company in making loans and investments; that the policy in issue was obtained through the loan association as additional security for the loan it was making to the deceased for the construction of an apartment house; that it was one of the conditions of the loan company that the life insurance policy be obtained from the defendant life insurance company; that the insurance company and the loan society employed a common agent acting for both in arranging the mortgage on the apartment; that as a part of the transaction the common agent wrote the policy of insurance on the life of the deceased, naming the plaintiff as beneficiary, but, when the policy had been written, it was assigned by the deceased to the defendant loan society as further security for the mortgage loan; that the policy was retained by Snyder, the common agent, for the loan association, and upon the death of the deceased the loan society and the common agent immediately took the position adverse to the plaintiff's claim and co-operated with the defendant insurance company in denying that the policy had been delivered and the premium paid; that the common agent, instead of delivering the policy to the loan company as assignee or to the plaintiff as beneficiary, did surrender it to the defendant insurance company; that the defendant loan association refused to bring an action against the defendant insurance company to recover upon the policy, and refused to join with the plaintiff in such action, but that it has of record denied the plaintiff's cause of action and joined with the defendant insurance company in seeking its defeat; that, at the time proof of death and claim under the policy was made, the loan company asserted an interest to the extent of $9,000 as security, and, because it is the assignee of such policy, to the extent of its interest a necessary party to this cause; that since insured's death other parties have taken over the undertaking to construct the building and the obligation upon the mortgage loan made by the defendant loan company; and that there is ample security to reimburse the loan company other than any interest in this policy; and that by the co-operation of the insurance company and the loan society in the defeat of this claim they are each asserting adverse interests to the plaintiff which are not severable.
The court must arrange the parties on the different sides of the controversy as their interests may appear. Casey v. Baker (D.C.) 212 F. 247; Colleton Mercantile Mfg. Co. v. Savannah River Lbr. Co. (C.C.A.) 280 F. 358; Removal Cases, 100 U.S. 457, 25 L. Ed. 593; Pac. R. Co. v. Ketchum, 101 U.S. 289, 25 L. Ed. 932; Harter v. Kernochan, 103 U.S. 562, 26 L. Ed. 411.
The plaintiff is not unlike a minority stockholder in a corporation. The corporation, controlled by the majority, abuses its trust and refuses to sue. The minority stockholder may sue, and the corporation is a necessary party, but their interests for the purpose of the action are adverse. In the instant case the Spokane Savings Loan Association, assignee of the policy, is trustee and refused to bring suit or join with the beneficiary in the suit. It is a necessary party, and was necessarily made a defendant. It assumes an antagonistic attitude by denying the plaintiff's claim under oath by its manager "authorized to make this verification for and on its behalf."
Where a duty is imposed, a refusal to protect the same amounts to a breach of trust. Dodge v. Woolsey, 18 How. (59 U.S.) 331, 15 L. Ed. 401. The loan society, as assignee of the insurance policy, is a trustee, and legally bound to protect the cestui que trust, and, on its refusal to do so by bringing suit or joining with the plaintiff, and not surrendering the assignment or waiving any right therein, it exposed an attitude and interest antagonistic. It makes common interest with the insurance company by denying the issuance of the policy and any liability thereon. This common interest is not severable. The ultimate interest of the loan society may be the same as the plaintiff, but, as said by the Supreme Court in Venner v. Great Northern R. Co., 209 U.S. 24, 28 S. Ct. 328, 52 L. Ed. 666, the insurance company by reason of the relation between the defendants, may have the loan society under antagonistic control, and make it act in a way detrimental to the plaintiff's right. Where the conduct of the party is shown to be antagonistic to the plaintiff and makes common cause and interest with the defendant, the court may not align the party as a plaintiff. Hodgman v. Atlantic Refining Co. (D.C.) 274 F. 104; Hutchinson Boxboard Paper Co. v. Van Horn (C.C.A.) 299 F. 424; Wood v. Deskins (C.C.A.) 141 F. 500.
The motion to remand is granted.