Summary
In First Nat'l Bank, the Supreme Court of Ohio concluded the affirmative defense of the defendant insurer that the decedent was not in good health at the time the policy was issued was not barred by the doctrine of estoppel.
Summary of this case from John Hancock Life Ins. Co. v. UferOpinion
No. 38465
Decided June 24, 1964.
Estoppel by judgment — Reasons for — By whom may be asserted — Judgment must have determined identical issue — Life insurance — Effective only if policy delivered during good health of insured — Two policies covering same insured — Judgment on one policy not estoppel as to other.
1. Where a judgment is relied upon as determining an issue against a party to the judgment and estopping that party from relitigating that issue, the one so relying upon that judgment must allege and prove that that judgment necessarily determined that identical issue.
2. Where each of two policies of life insurance provides that it shall not take effect until the policy is delivered during the good health of the insured, a judgment against the insurer on one of those policies determining that such insured was in good health on the date of its delivery will not estop the insurer from asserting, as an affirmative and complete defense to the other policy, that the insured was not in good health 26 days before on the date when the other policy was delivered.
3. The reasons for estopping a party to a judgment from relitigating an issue determined against him by that judgment are (1) that public policy requires an end to litigation and (2) that the public is interested in protection of a person from being again vexed for the same cause.
4. In an instance where the estoppel of a party by a judgment which was rendered against him will not protect another from being again vexed for the same cause and will have no substantial effect in ending litigation, such judgment cannot be asserted as an estoppel by one not a party or in privity with a party to the action in which such judgment was rendered.
5. Where an insurer issues and delivers two life insurance policies on the same insured payable to an assignee of the insured, and the second is delivered 26 days after the first, where pursuant to the same application as that for the second policy that insurer issues and delivers a third policy on the same insured payable to a named beneficiary, where each of those three policies provides that it shall not take effect until the policy is delivered during the good health of the insured, and where a judgment for the beneficiary of the third policy is necessarily based upon a determination against the insurer's affirmative defense that the insured was not in good health on the date of delivery of the second and third policies, the insurer will not be estopped by that judgment from asserting, as an affirmative defense in an action by the assignee of the first two policies, that the insured was not in good health on the delivery of those two policies.
APPEAL from the Court of Appeals for Hamilton County.
This action was commenced by the First National Bank of Cincinnati, as plaintiff (herein sometimes called the bank), against the Berkshire Life Insurance Company, as defendant (herein sometimes called the insurer), by the filing of a petition in the Court of Common Pleas of Hamilton County to recover the death benefits on two separate policies of life insurance, each for $5,000, issued respectively on March 16, 1955, and April 11, 1955, to Elroy C. Denton, who, by written assignments dated May 25, 1955, assigned those policies to the bank as one of several items of collateral security for the payment of a $10,000 note. Denton died on June 12, 1955.
To this petition, which sets out each policy as a separate cause of action, the insurer filed an answer denying liability (except for a return of the premiums paid which were tendered into court) on two separate and distinct grounds, first, that Denton was not in "good health" on the respective dates when said policies were delivered and each first premium paid, a condition precedent to the effectiveness of each, and, second, that said policies were procured by false and fraudulent representations made by Denton concerning his health, habits and previous medical attention.
An amended reply of the bank, in addition to general denials, alleges that, on the date of issuance of the second policy (April 11, 1955), the insurer issued a third policy upon the life of Denton for $5,000; that Anna Marie Slate was designated beneficiary of that third policy; that that beneficiary sought recovery of the proceeds of that third policy from defendant-insurer in a Florida court; that defendant filed an answer "interposing the identical defenses as are set forth in its answer filed herein"; that a final judgment was rendered in that Florida case in favor of that beneficiary and against defendant; that "all facts and issues raised by defendant's * * * answer filed herein were raised by defendant's answer in" that Florida case "and decided therein against defendant"; and that "by reason thereof defendant is estopped to assert the same again in this action in which plaintiff claims through the same decedent that" that beneficiary "claimed through and against" this same defendant.
On motion of the defendant, the allegations in the amended reply, except for the general denials thereof, were stricken. Thereafter, a second amended reply was filed containing only those general denials.
The parties having waived a jury, the case was tried to the court which found (1) that Denton was not "in good health" at the respective times of delivery of the two policies sued on, and (2) that Denton had procured the policies by false and fraudulent representations of which the insurer was without knowledge and except for which the policies would not have been issued. Judgment was rendered for defendant-insurer on both causes of action.
On appeal to the Court of Appeals, that judgment was reversed because of error of the trial court in granting the motion to strike portions of the amended reply, and the cause was remanded to the Common Pleas Court.
The cause is now before this court on appeal from that judgment of the Court of Appeals, pursuant to allowance of a motion to certify the record.
Messrs. Frost Jacobs and Mr. James G. Headley, for appellee.
Messrs. Marble Vordenberg, for appellant.
Each of the two policies involved in the instant action as well as the third policy involved in the Florida case provided that it should not take effect until the policy was delivered "during the good health of the * * * insured."
The trial court held that, as alleged in the answer of the insurer, the insured, Denton, was not in good health on March 16, 1955, the date when plaintiff alleges and the trial court found that the first policy was delivered, or on April 11, 1955, the date when plaintiff alleges and the trial court found that the second policy was delivered.
In view of these two findings, the trial court held, in accordance with the decisions of this court, that the bank could not recover. Metropolitan Life Ins. Co. v. Howle (1900), 62 Ohio St. 204, 56 N.E. 908; (1903), 68 Ohio St. 614, 68 N.E. 4; John Hancock Mutual Life Ins. Co. v. Luzio (1931), 123 Ohio St. 616, 176 N.E. 446.
Therefore, unless the portion stricken from the bank's amended reply contains allegations of a judgment against the insurer that would estop the insurer from relitigating the issue as to the good health of Denton on March 16, 1955, the bank could not recover on the policy delivered on that day.
The allegations of the bank's amended reply do describe a judgment against defendant on the third policy issued on April 11, 1955. Recovery by the beneficiary on that policy might determine the good health of Denton on April 11, 1955, but it would not necessarily determine the good health of Denton on March 16, 1955. Denton's good health on March 16, 1955, would not have been an issue in the Florida case based on the policy issued on April 11, 1955.
Where a judgment is relied upon as determining an issue against a party to the judgment and estopping that party from relitigating that issue, the one so relying upon that judgment must allege that that judgment necessarily determined that identical issue. Lessee of Lore v. Truman (1859), 10 Ohio St. 45; Porter v. Wagner (1881), 36 Ohio St. 471; Norwood v. McDonald et al., Admrs. (1943), 142 Ohio St. 299, 52 N.E.2d 67; Taylor v. Monroe, Treas. (1952), 158 Ohio St. 266, 109 N.E.2d 271; Bernhard, Admx., v. Bank of America Natl. Trust Savings Assn. (1942), 19 Cal.2d 807, 122 P.2d 892; 30A American Jurisprudence, 422, Section 375.
It follows that, although proof of the allegations of the bank's amended reply might have established that the Florida judgment could estop defendant from asserting as an affirmative and complete defense to the second policy that Denton was not in good health on April 11, 1955, it could not estop defendant from setting up as an affirmative and complete defense to the first policy that Denton was not in good health on March 16, 1955. The good health of Denton on March 16, 1955, was not an issue in the action brought on the third policy in the Florida court.
The insurer contends also that the bank cannot assert the Florida judgment as an estoppel against the insurer (even as to the April 11, 1955, policy) because
(1) the bank was neither a party nor in privity with a party to the Florida action, and
(2) no mutuality of estoppel can exist because the insurer could not have relied upon a judgment in the Florida case in its favor as an estoppel against the bank which was not a party to the Florida case. See Developments in the Law — Res Judicata (1952), 65 Harvard Law Review, 818, 862.
On the other hand, the bank contends that this court should follow those authorities which have abandoned the requirement of mutuality of estoppel and which permit one not a party or in privity with a party to a judgment to use that judgment as an estoppel against one who was such a party or in privity with such a party to that judgment. See for example Coca Cola Co. v. Pepsi-Cola Co. (1934), 36 Del. 124, 172 A. 260; Bernhard v. Bank of America, supra ( 19 Cal. [2d], 807); Cantrell v. Burnett Henderson Co. (1948), 187 Tenn. 552, 216 S.W.2d 307; Gammel v. Ernst Ernst (1955), 245 Minn. 249, 72 N.W.2d 364, 54 A.L.R. (2d), 316; Liberty Mutual Ins. Co. v. George Colon Co., Inc. (1932), 260 N.Y. 305, 183 N.E. 506; Supulver v. Gilchrist Dawson, Inc. (1922), 28 N.M. 339, 211 P. 595; Eisel v. Columbia Packing Co. (D. Ct. Mass., 1960), 181 F. Supp., 298. See also Schimke, Admx., v. Earley (1962), 173 Ohio St. 521, 523 et seq., 184 N.E.2d 209. Cf. Gibson v. Solomon (1939), 136 Ohio St. 101, 23 N.E.2d 996, 125 A.L.R., 903; Wright, Admr., v. Schick (1938), 134 Ohio St. 193, 16 N.E.2d 321, 121 A.L.R., 882; Conold v. Stern (1941), 138 Ohio St. 352, 35 N.E.2d 133, 137 A.L.R., 1003.
We do not deem it necessary to decide in the instant case whether this court should follow those authorities. The reasons for the conclusions which they reach, as well as the reasons for ever having a judgment operate as an estoppel, militate against use of the Florida judgment as an estoppel in the instant case.
The reasons generally given for estopping a party (even where there is no mutuality of estoppel) to a judgment from relitigating an issue determined against him by that judgment are
(1) that public policy requires an end to litigation, and
(2) that the public is interested in protection of a person from being twice vexed for the same cause. Bernhard v. Bank of America, supra ( 19 Cal. [2d], 807), 811; Coca-Cola Co. v. Pepsi-Cola Co., supra ( 36 Del. 124), 130, 131; 2 Freeman on Judgments (5 Ed., 1925), 1318, Section 626; 30A American Jurisprudence, 373, Section 326.
In the instant case, where the bank has never previously had to oppose or been "vexed" by the insurer's affirmative defense that Denton was not in "good health" on the dates when the bank's policies were delivered, it is obvious that the second reason does not apply.
Also, allowing the bank in the instant case to assert the Florida judgment as an estoppel against the insurer would have no substantial effect in ending litigation between the bank and the insurer. As hereinbefore pointed out, the Florida judgment cannot estop the insurer from litigating the issue as to Denton's "good health" on March 16, 1955, when the first policy was delivered. The same witnesses would necessarily testify at the same time and at the same trial on the similar but not identical issue as to Denton's "good health" on April 11, 1955. Thus, permitting reconsideration of the latter issue, notwithstanding the Florida judgment which determined it against the insurer, would interfere only very slightly, if at all, with the end of litigation between the insurer and the bank.
Furthermore, there are reasons for requiring mutuality of estoppel. Thus, it is stated in Developments in the Law — Res Judicata, 65 Harvard Law Review (1952), 818, 862:
"The justification for this requirement has been said to be that a party may be unwilling to press his case to the utmost in a particular suit, and that it would penalize him to enable strangers to take advantage of his laxity; that an adversary system requires that 'a party to an action should [normally] risk the loss of rights or the creation of liabilities only with reference to his adversaries;' or that a jury may often reach results inconsistent with the truth, and that such a mishap should not affect a losing party outside the particular litigation."
See also Coca Cola Co. v. Pepsi-Cola Co., supra ( 36 Del. 124), 133, 134.
Such reasons for requiring mutuality of estoppel may generally have little weight. However, that little weight is sufficient to enable them to far outweigh the slight, if any, weight in the instant case of the reasons generally given for estopping a party to a judgment from relitigating an issue determined against him by that judgment.
As hereinbefore pointed out, even the authorities relied upon by the bank will not support the conclusion that the insurer can be estopped by the Florida judgment from litigating the issue as to Denton's "good health" on March 16, 1955. Thus, to permit the bank to assert the Florida judgment as an estoppel against the insurer in the portion of the instant case relating to the second policy issued on April 11, 1955, would result in a holding in the same action for the insurer on the March 16 policy and for the bank on the April 11 policy, even though the evidence in this case clearly discloses that the insured's health was no better on April 11 than it had been on March 16. This would be an anomalous result that would hardly reflect any credit upon our courts.
It may be added here that there may even be a difference between the law of Florida and the law of Ohio, and the insurer had nothing to do with the selection of either jurisdiction as a place in which to litigate. This could explain the result of this judgment which holds for the insurer on one April 11 policy, even though there is a judgment in Florida against the insurer on another policy of the same date involving the same question of insured's good health on that date.
For the foregoing reasons the judgment of the Court of Appeals is reversed, and that of the Common Pleas Court is affirmed.
Judgment reversed.
ZIMMERMAN, MATTHIAS, O'NEILL, GRIFFITH, HERBERT and GIBSON, JJ., concur.