Wheiles v. ÆTNA Life Ins. Co.

Full title: WHEILES v. ÆTNA LIFE INS. CO

Court: Circuit Court of Appeals, Fifth Circuit

Date published: Jan 13, 1934

68 F.2d 99 (5th Cir. 1934)

Opinion

No. 6999.

December 19, 1933. Rehearing Denied January 13, 1934.

Appeal from the District Court of the United States for the Northern District of Texas; William H. Atwell, Judge.

In Equity. Suit by the Ætna Life Insurance Company against Robert W. Wheiles. Decree for plaintiff, and defendant appeals.

Reversed and remanded, with directions.

Robert W. Wheiles appeals from a decree in equity setting aside in part a judgment at law which he had recovered against the Ætna Life Insurance Company. A mistake of fact on the part of the insurance company in its defense of the suit at law, as alleged in its bill of complaint and as disclosed by the evidence, is the basis of the decree.

The insurance company issued to the Humble Oil Refining Company a group policy of life and accident insurance for the protection of the Humble Company and its employees. The Humble Company paid the premiums and kept in force at its own expense during all times here material what is called bonus or individual insurance, the amount of which was determined on the basis of the particular employee's wages and length of service. Under the terms of the policy, an employee was permitted to take out additional insurance, the premiums on which, though paid by the Humble Company, were deducted from his wages. The insurance company issued certificates to each employee who took out additional insurance, and furnished the Humble Company with a policy card indicating the name of such employee, the number of his certificate, and the amount of his additional insurance. Upon the lapse of such insurance for nonpayment of premiums, it was the practice of the Humble Company to mark the policy card canceled and return it to the insurance company. Wheiles, an employee of the Humble Company, sustained an injury in January, 1931, in the course of his employment. His individual insurance amounted to $1,620. He also held at that time two certificates of additional insurance, one for $1,400 and the other for $3,600. In March, 1930, he advised the Humble Company by letter that he wished to discontinue all additional insurance. The Humble Company thereupon marked the policy cards evidencing such insurance canceled, returned them to the insurance company, and made no further deductions on account of the premiums thereon from the wages of Wheiles. In June, 1932, Wheiles, because of his injury, brought his suit against the insurance company upon not only the bonus insurance but the additional insurance as well. In his petition he not only declared on all three certificates, identifying them by number and amount, but in addition he plainly and unequivocally alleged that insurance in the aggregate amount of $6,620 was still in force. In its answer the insurance company denied generally the allegations of the petition, and specially that the injury was total and permanent. At the trial Wheiles testified that up to that time deductions had been made by the Humble Company from his wages on account of additional insurance. The insurance company's evidence was mainly directed to prove that the injury was not total and permanent. It did not offer any evidence tending to show that the additional insurance had been canceled. Verdict and judgment for the full amount sued for were duly returned and entered. It is admitted that recovery was properly had for $1,620, the amount of the bonus insurance, and the decree appealed from undertakes to set aside the judgment to the extent of the $5,000 recovered on the two certificates of additional insurance. The insurance company was duly and promptly notified by its Texas agent of the Wheiles suit and instructed its attorney Bruce to defend it. Bruce was, of course, fully aware when he was preparing for trial that Wheiles was claiming that insurance aggregating $6,620 was in full force and effect. He testified that upon being employed to defend the case he asked the company to send him its file, but that the file received by him in response to his request contained no reference to the additional insurance, but related only to the bonus insurance. He did not send the petition or a copy of it to the insurance company, and it assumed that the petition declared only upon the bonus insurance. During the trial Bruce wired the insurance company that he could settle the case for $3,000, and it immediately replied by wire that the insurance for $1,400 and for $3,600 had been canceled; and instructed him further not to pay $3,000 in compromise settlement, but that, if the case were nearing trial, to get full particulars from the Humble Company. The case was tried on the 25th and 26th days of November, 1932. No motion for a new trial was made and the term of court was adjourned on December 8, 1932. On November 29th Bruce notified the insurance company by letter of the result of the trial and the amount of the judgment, and on December 10th received from it a letter dated December 6th in reply explaining more at length than it had done in its telegram that the additional insurance had been canceled in April, 1930. After the trial, Bruce proceeded in a leisurely sort of way to procure such information as the books and records of the Humble Company would disclose. He ascertained therefrom, but not until December 15, 1932, the existence of Wheiles' letter requesting a discontinuance of his additional insurance, and that the company had not made any deductions from his wages subsequently to the receipt of that letter. Nothing further was done toward having the judgment set aside until January, 1933, when this bill was filed. The bill alleges that the judgment in favor of Wheiles to the extent of $5,000, the aggregate amount of the two certificates of additional insurance, was procured by his false, fraudulent, and perjured testimony, and as proof thereof introduced in evidence (1) Wheiles' letter to the Humble Company requesting that his additional insurance be discontinued; (2) the Humble Company's books, in respect of wages paid to Wheiles, which disclosed that no deductions of premiums had been made from his wages after the receipt of that letter; and (3) the policy cards, which the insurance company had in its possession, indicating that his additional insurance had been canceled. Wheiles in his answer denied that he had given false testimony, and also denied other material averments of the bill, but he offered no evidence at the hearing; instead he moved to dismiss the bill on the ground that the insurance company had not exercised due diligence in defense of his suit at law.

John Q. Humphrey and C.J. Brannan, both of Wichita Falls, Tex., and A.E. Zellers, of Weatherford, Tex., for appellant.

Luther Hoffman and Arch Dawson, both of Wichita Falls, Tex., for appellee.

Before BRYAN, FOSTER, and SIBLEY, Circuit Judges.

BRYAN, Circuit Judge (after stating the facts).

There is no question here of a mutual mistake. Appellant in his answer adheres to his original position that at the time of trial all past due premiums on his additional insurance had been paid by his employer and deducted from his wages, and that such insurance was in full force and effect. Appellee was put upon full notice of this position by appellant's petition. The defense which it now makes against the judgment was available to it at all times after the suit at law was brought against it. Appellant did nothing to prevent it from making a full and complete defense. It was to be expected that appellant would testify as he did that he had kept the insurance alive by paying premiums upon it. In order to set the judgment aside, the burden was on appellee to show that it had a good defense which it was prevented from presenting by fraud, accident, or mistake, unmixed with negligence of itself or its agents. United States v. Throckmorton, 98 U.S. 61, 65 et seq., 25 L. Ed. 93; Greenameyer v. Coate, 212 U.S. 434, 444, 29 S. Ct. 345, 53 L. Ed. 587; Pickford v. Talbott, 225 U.S. 651, 658, 32 S. Ct. 687, 56 L. Ed. 1240; Toledo Co. v. Computing Co., 261 U.S. 399, 421, 43 S. Ct. 458, 67 L. Ed. 719. See, also, Town of Boynton v. White Construction Co. (C.C.A.) 64 F.2d 190. In our opinion the bill to set aside the judgment cannot be maintained because of the negligence and lack of diligence of appellee and its attorney. Under the facts here presented any negligence of appellee's attorney was equivalent to its own negligence. Drinkard v. Ingram, 21 Tex. 650, 73 Am. Dec. 250; 2 R.C.L. 965. In preparing its defense the most casual inspection of its files and records would have disclosed that the additional insurance had lapsed for nonpayment of premiums. Instead of making such inspection, appellee assumed that the only purpose of the suit against it was to collect the bonus insurance. Its attorney knew from the beginning that appellant was also suing to collect upon the two certificates of additional insurance. There was too much assumption made, too little diligence shown, by both appellee and its attorney in ascertaining the nature of the suit; and this attitude on the part of each continued throughout. After the exchange of telegrams during the trial, it ought to have been apparent to the attorney that the additional insurance had been canceled and to appellee that more was claimed than the amount evidenced by the bonus insurance; and so both of them must have known that recovery was sought for more than could possibly be due. Assuming that this knowledge came too late to be made use of at the trial, there was no excuse for not ascertaining immediately after the trial, and submitting to the court in a motion for new trial, the true state of facts. Instead of telegraphing, the attorney waited several days and then advised the insurance company by letter of the result of the trial, and the insurance company replied also by letter which did not reach the attorney until after the court had adjourned for the term. Information confirmatory of appellee's records was not obtained from the Humble Company until after the adjournment of court, notwithstanding the fact that the court remained in session for twelve days after the trial. Under the circumstances, it cannot be said that due diligence was shown in defending the suit at law or in attempting to have the erroneous judgment set aside.

Because of negligence and lack of diligence on the part of appellee and its attorney, the decree is reversed and the cause remanded with directions to dismiss the bill of complaint.