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ROGGE v. MENARD COUNTY MUTUAL FIRE INSURANCE CO.

United States District Court, Southern District of Illinois, S. D


June 8, 1960

JOHN P. ROGGE, PLAINTIFF,
v.
MENARD COUNTY MUTUAL FIRE INSURANCE COMPANY, FARMERS AND GRANGE DISTRICT MUTUAL TORNADO INSURANCE COMPANY, AND ELSIE B. ROGGE, EXECUTOR OF THE LAST WILL AND TESTAMENT OF ANDREW J. STOUT, DECEASED, DEFENDANTS.

The opinion of the court was delivered by: Poos, District Judge.

John P. Rogge filed this suit here on October 26, 1959, against Menard County Mutual Fire Insurance Company, Farmers and Grange District Mutual Tornado Insurance Company and Elsie B. Rogge, as executor of the last will and testament of Andrew J. Stout, deceased, on a policy of fire and tornado insurance issued to A.J. Stout on June 11, 1958, covering a policy period of five years to June 11, 1963, to recover for a fire loss that occurred on October 27, 1958. Likewise plaintiff, on the same day, filed a similar suit in the same cause of action in the Circuit Court of Menard County, Illinois, except that in this suit the executor of the estate joins him as plaintiff.

The complaint alleges that corporate defendants and Elsie B. Rogge, executor of the estate of Andrew J. Stout, deceased, are citizens and residents of Illinois, and that plaintiff is a resident and citizen of Houston, Texas, and that the amount involved exceeds, exclusive of interest and costs, the sum of $10,000; that jurisdiction is invoked because of diversity of citizenship of the parties hereto.

The further allegation is that on June 11, 1958, and prior thereto, plaintiff was the owner in fee simple subject to a life estate in Andrew J. Stout of certain property located in Section 16, Township 17 North, Range 7 West of the Third Principal Meridian, Menard County, Illinois, which property was improved with a two-story dwelling house and other out buildings; that on June 5, 1958, the deceased, acting on his behalf and as agent of plaintiff, applied to defendants for a policy of insurance, insuring Stout, as life tenant and plaintiff as remainderman, against loss of improvements by fire or windstorm, and said corporate defendants thereupon issued their policy of insurance and named A.J. Stout as the insured under said policy instead of naming A.J. Stout as life tenant and John P. Rogge as remainderman, as the persons insured under said policy as mutually agreed upon by the corporate defendants and A.J. Stout on his own behalf and as agent for plaintiff.

The further allegation is that on October 27, 1958, the dwelling house was destroyed by fire, smoke and explosion; that on said date Stout died of injuries sustained by him in said fire; that the fire loss was in excess of $25,000, the amount of the policy; that on and prior to date of loss plaintiff and A.J. Stout had an insurable interest in said property so destroyed by fire; that plaintiff and the personal representative of A.J. Stout, the executor of his estate, have performed all the conditions of said policy on their part to be performed and that no part of the policy has been paid, although demanded.

The prayer of the complaint here is:

    (1) that said policy of insurance be reformed
  to name A.J. Stout and John P. Rogge as the
  insured persons under the aforesaid policy.

    (2) that plaintiff have judgment in such amount
  as shall appear to be due him for his interest in
  said property under said policy.

The prayer of the complaint in the State Court is that the policy be reformed to include John P. Rogge as an insured, for judgment in favor of both, and that the Court divide the judgment between plaintiffs.

The policy is attached to the complaint as Exhibit "A". The policy provides:

  "do insure A.J. Stout and legal representatives
  in the sum of $25,000.00 for loss by fire,"

and further states the facts as alleged in the complaint here and in the State Court.

The corporate defendants file a motion to dismiss on the ground that the same action is pending in the Circuit Court of Menard County, Illinois. They attach to the motion a certified copy of a complaint filed by plaintiff herein wherein he and Elsie B. Rogge as executor of the last will of Andrew Stout, deceased, join as plaintiffs against the corporate defendants. This complaint was filed on October 26, 1959, and was entitled "Elsie B. Rogge, Executor of the Last Will of Andrew Stout, deceased, and John P. Rogge, plaintiffs, vs. Menard County Mutual Fire Insurance Company and Farmers and Grange District Mutual Tornado Insurance Company, defendants, No. L. 59-20." The cause of action alleged claims on the same policy of insurance and is in effect the same cause of action as that claimed here.

The allegations of the motion are that plaintiff is:

(1) Seeking relief in the State Court,

(2) This action unnecessarily burdens this court and the corporate defendants,

(3) Causes the defendants unnecessary inconveniences,

(4) Is a repetitious suit,

(5) May cause corporate defendants with duplicate or conflicting determinations of this court and the state court,

(6) That this court, under the circumstances, is not in a position to do complete justice,

(7) That under the doctrine of forum non conveniens the corporate defendants may not be twice vexed with the same action in the different courts at the same time.

The court points out that the executor is not brought before this court with process, and has not entered her appearance, although she is named in the complaint as a defendant. This leaves the court absent a party who may have some interest in the policy declared upon. The policy as above pointed out runs to the decedent and his personal representative, the executor.

The grounds of the motion when analyzed can be decided on four general propositions: (1) it is improper to seek relief in a federal and state court, both having jurisdiction at the same time, (2) the possibility of two judgments against the corporate defendants from the respective courts, (3) hardship in parties under the doctrine of forum non conveniens, and (4) lack of diversity of citizenship when the party plaintiff and one of the defendants, when properly aligned, is a resident and there is no collision of interest between the nonresident plaintiff and resident defendant.

The plaintiff has the legal right to bring the cause of action in both courts. This doctrine is well settled. The doctrine is announced in 1 Am.Jur. p. 44, Sec. 40, as follows:

    "The rule that the pendency of an action in one
  jurisdiction cannot be pleaded in abatement of a
  subsequent action in another jurisdiction finds
  application where separate suits are pending at
  the same time, one in a Federal court, and one in
  a State court; early cases which seemingly
  entertained the view that such actions could be
  pleaded in abatement (13) have long since been
  disregarded. It is now well established that the
  pendency of an action in personam in a state
  court cannot be pleaded in abatement of a
  subsequent suit brought in the Federal court
  having concurrent jurisdiction with the State
  court, although both suits are between the same
  parties, and for the same cause. (14) The
  converse of this rule is equally true as a
  general proposition. The pendency of a prior suit
  in the Federal court is not generally a bar to a
  suit in the State court by the same plaintiff
  against the same defendant and for the same cause
  of action, unless the action in the Federal court
  is one that has been removed from the State
  court."

          1 Am.Jur. p. 44, Sec. 40,
          Abatement and Revival.

The doctrine of forum non conveniens is inapplicable here for the reason that the State court is located at Petersburg, Illinois, approximately 25 miles from Springfield, in which city is located the courthouse for this court. There is no necessity for witnesses to travel hundreds of miles at great expense, and there is no possibility that the cost and expense of litigation will consume any judgment. The case can be tried in either court at about the same expense. Springfield would be just as convenient as Petersburg. The practical aspect of the doctrine is discussed in Gulf Oil Corporation v. Gilbert,
330 U.S. 501, 508, 67 S.Ct. 839, 843, 91 L.Ed. 1055, where the court said:

    "Wisely, it has not been attempted to catalogue
  the circumstances which will justify or require
  either grant or denial of remedy. The doctrine
  leaves much to the discretion of the

  court to which plaintiff resorts, and experience
  has not shown a judicial tendency to renounce
  one's own jurisdiction so strong as to result in
  many abuses.

    "If the combination and weight of factors
  requisite to given results are difficult to
  forecast or state, those to be considered are not
  difficult to name. An interest to be considered,
  and the one likely to be most pressed, is the
  private interest of the litigant. Important
  considerations are the relative ease of access to
  sources of proof; availability of compulsory
  process for attendance of unwilling, and the cost
  of obtaining attendance of willing, witnesses;
  possibility of view of premises, if view would be
  appropriate to the action; and all other
  practical problems that make trial of a case
  easy, expeditious and inexpensive. There may also
  be questions as to the enforcibility of a
  judgment if one is obtained. The court will weigh
  relative advantages and obstacles to fair trial.
  It is often said that the plaintiff may not, by
  choice of an inconvenient forum, `vex,' `harass,'
  or `oppress' the defendant by inflicting upon him
  expense or trouble not necessary to his own right
  to pursue his remedy. But unless the balance is
  strongly in favor of the defendant, the
  plaintiff's choice of forum should rarely be
  disturbed.

    "Factors of public interest also have place in
  applying the doctrine. Administrative
  difficulties follow for courts when litigation is
  piled up in congested centers instead of being
  handled at its origin. Jury duty is a burden that
  ought not to be imposed upon the people of a
  community which has no relation to the
  litigation. In cases which touch the affairs of
  many persons, there is reason for holding the
  trial in their view and reach rather than in
  remote parts of the country where they can learn
  of it by report only. There is a local interest
  in having localized controversies decided at
  home. There is an appropriateness, too, in having
  the trial of a diversity case in a forum that is
  at home with the state law that must govern the
  case, rather than having a court in some other
  forum untangle problems in conflict of laws, and
  in law foreign to itself."

An application of this reasoning to the facts of this case determine that this case should be retained here so that the matter can readily be disposed of.

The contention that corporate defendants might be confronted with two judgments, one in the State court and the other in this court, can readily be resolved. If the cause is tried to judgment in the State court, this court, on notice of the judgment, will, under the doctrine of res adjudicata, dismiss this case. Undoubtedly the State court would do the same. If, in the event the State court would proceed after judgment here, this court would have the power to enjoin the State court from acting. 1 Am. Jur., Abatement and Revival, See. 40, p. 45, Note 2.

Factually this is a suit against the corporate defendants, Menard County Mutual Fire Insurance Company, Farmers and Grange District Mutual Tornado Insurance Company, and Elsie B. Rogge, executor of the last will and testament of Andrew J. Stout, deceased, in personam to reform the policy of insurance and after reformation to enter judgment for the face amount, $25,000, in favor of plaintiff. The facts that would decree reformation are not alleged, except generally where in Paragraphs 3, 4 and 5 of the Complaint these allegations appear:

    "3. That on June 5, 1958, and at all times
  hereinafter mentioned in this Complaint,
  plaintiff was the owner in fee simple, subject to
  a life estate in one, Andrew J. Stout, of
  property located in Section 16, Township 17
  North, Range 7 West of the Third Principal
  Meridian, Menard County, Illinois, which said
  property was improved with a large

  two-story dwelling house and other out buildings.

    "4. That on June 5, 1958, Andrew J. Stout,
  acting on his behalf as an agent of the
  plaintiff, applied to the defendants, Menard
  County Mutual Fire Insurance Company and Farmers
  and Grange Mutual Tornado Insurance Company, for
  an insurance policy insuring Andrew J. Stout as a
  life tenant, and John P. Rogge as a remainderman,
  against loss or damage to the improvements above
  mentioned by fire or lightning, as a result of
  which and for a valuable consideration the said
  defendants executed and delivered to the said
  Andrew J. Stout their policy of insurance, No.
  M-782 (5972), a copy of which policy is attached
  hereto and made a part hereof as Exhibit A.

    "5. That by the mutual mistake of said Andrew
  J. Stout, acting on behalf of himself and as
  agent for the plaintiff and the defendants,
  Menard County Mutual Fire Insurance Company and
  Farmers and Grange District Mutual Tornado
  Insurance Company, the policy issued as abovesaid
  named A.J. Stout, meaning Andrew J. Stout, as the
  insured under said policy instead of naming A.J.
  Stout as life tenant, and John P. Rogge as
  remainderman, as the persons insured under said
  policy, as was mutually agreed upon by
  Defendants, Menard County Mutual Tornado
  Insurance Company and Andrew J. Stout acting on
  his own behalf and as agent for the Plaintiff."

It appears that the decedent owned a life estate in the real estate on which the house, destroyed by fire, was located, and that plaintiff owned the remainder in fee; that on June 5, 1958, the decedent, acting on his own behalf and as an agent for plaintiff, applied to the corporate defendants for a policy of insurance insuring Andrew J. Stout as a life tenant and John P. Rogge as remainderman against loss or damage to improvements by fire or lightning, as a result of which and for a valuable consideration the corporate defendants executed and delivered to the said Andrew J. Stout the policy of fire insurance involved in this case; that by mutual mistake of said Andrew J. Stout, acting on behalf of himself and as agent for plaintiff, and the corporate defendants, the policy as issued named A.J. Stout, meaning Andrew J. Stout, as the insured under said policy, instead of naming A.J. Stout as life tenant and John P. Rogge as remainderman, as mutually agreed upon by corporate defendants and as agent for the plaintiff. These allegations are all matters that will take evidence to prove.

The allegation of Paragraph 7 is as follows:

    "7. That Andrew J. Stout died on October 27,
  1958, as a result of injuries sustained by him in
  said fire."

This allegation in plain language says that the fire started before Andrew J. Stout was injured; that thereafter Andrew J. Stout was injured in some way by the fire after it started, and as a result of the injuries, died. If this allegation be true and the court must take it on its face, the liability under the policy attached the very second that the fire started at a time when Andrew J. Stout was alive. This statement of the beginning of a fire liability is substantially supported in Allemania Ins. Co. v. Little, 20 Ill. App.? 431, 435, and in Western Coal & Dock Co. v. Traders Ins. Co., 122 Ill.App. 138, 140, where in the latter case, the court stated:

    "The policy provides that no suit or action
  shall be brought thereon `unless commenced within
  12 months next after the fire' and one question
  to be determined is whether the clause has
  reference to the time the fire broke out or the
  time it was extinguished. In Allemania Insurance
  Co. v. Little, 20 Ill.App. 431, the policy
  provided no suit should be maintained unless
  brought `within 6 months after the fire had
  occurred.' The fire in that case began

  Aug. 23, and was extinguished Aug. 24. Suit was
  begun to recover on the policy February 24th,
  following, and it was held the limitation began
  to run from the date the fire began and the
  action was therefore barred.

    "The validity of a contract between the parties
  limiting the time within which the action may be
  brought has been often sustained, and is not
  questioned here, and we are disposed to hold that
  the time within which suit must be brought should
  be reckoned from Sept. 11th, the date the fire
  broke out, and not from November 11th, the date
  of its extinguishment * * *."

    "Where a fire had begun in a building before
  the expiration of the policy insuring the goods
  therein, and it was impossible to save it from
  injury, the loss occurred during the life of the
  policy, whether or not the fire was actually
  communicated to the merchandise within that
  time." 44 C.J.S. Insurance § 331, p. 1270, note 40
  (citing cases).

Thus the liability attached in favor of Andrew J. Stout in his lifetime. Thus the cause of action, under Sec. 339 of the Probate Act of Illinois, S.H.A.S., Chapt. 3, Sec. 494, Sec. 339, Probate Act, I.R.S. 1959, Chapt. 3, Sec. 494, survived in favor of the executor of his estate and is not in plaintiff and the proceeds of the policy must be paid to the executor. Contract actions under the common law survived to the personal representatives; People ex rel. Powles v. Alexander Co., 310 Ill. App.? 602, 35 N.E.2d 92, First National Bank of Danville v. Taylor, 329 Ill.App. 49, 67 N.E.2d 306; and the rule is announced in 46 C.J.S. Insurance § 1143, Note 42, as follows:

    "A life tenant, remainderman, or residuary
  devisee, who insures his interest in his own
  right and at his own expense, is entitled to the
  proceeds of the insurance, and the holder of the
  other portion of the fee has no claim thereto."

While this authority cites no Illinois case, the majority rule favors this view. See Rendahl v. Hall, 160 Minn. 502, 200 N.W. 744, 940; Bell v. Barefield, 219 Ala. 319, 122 So. 318; Corder v. McDougall, 216 Cal. 773, 16 P.2d 740; Spalding v. Miller, 103 Ky. 405, 45 S.W. 462, 20 Ky. Law Rep. 131; Converse v. Boston Safe Deposit & Trust Co., 315 Mass. 544, 53 N.E.2d 841; Harrison v. Pepper, 166 Mass. 288, 44 N.E. 222, 33 L.R.A. 239; King v. King, 163 Miss. 584, 143 So. 422; Addis v. Addis, 60 Hun 581, 14 N.Y.S. 657; In re Gorman's Estate, 321 Pa. 292, 184 A. 86; Bennett v. Featherstone, 110 Tenn. 27, 71 S.W. 589; Clements v. Clements, 167 Va. 223, 188 S.E. 154; Thompson v. Gearheart, 137 Va. 427, 119 S.E. 67, 35 A.L.R. 36; Lynch v. Johnson, 196 Va. 516, 84 S.E.2d 419, 423. In the case of In re Gorman's Estate, supra, it was held that an insurer's option to rebuild does not entitle the remainderman to an interest in a cash settlement of the life tenant's policy. One case in Missouri holds that the remainderman is entitled to an interest in the proceeds of the policy, Fitterling v. Johnson County Mut. Fire Ins. Co., 232 Mo.App. 805, 112 S.W.2d 347, and another Missouri case holds that where there is no agreement that the life tenant shall keep the property insured and no provision to that effect in the instrument creating the life estate and no clause in the policy procured by the life tenant providing that payment shall be made to him as his interest may appear, the life tenant is entitled to the whole of the proceeds as against the remainderman, regardless of whether or not the insurance taken by the life tenant exceeds the value of the life estate in the property destroyed. Underwood v. Fortune, Mo.App., 9 S.W.2d 845. "A life tenant has an insurable interest in the property to the full value thereof." 44 C.J.S. Insurance § 190, p. 891. Notes 65 and 66 for cases cited. However, under the allegations of the complaint, the deceased was the agent of plaintiff, and if this allegation be proved, there is authority to the effect that a remainderman, if he meets the burden of proof, may have a cause of action on the policy announced in the same C.J.S. citation, as follows:

    "The remainderman is entitled to an interest in
  the proceeds of a policy taken out by the life
  tenant for the full value of the property
  insured, where the policy by its terms covers the
  interest of both the remainderman and the life
  tenant, or, even though it was taken out in the
  name of the life tenant, where the life tenant is
  under obligation, by agreement or otherwise, to
  insure for the benefit of the remainderman, or
  intended the insurance to be for the benefit of
  both; and a life tenant who collects from insurer
  the full amount of the insurance has been held in
  such case to hold the part in excess of his
  interest as trustee for the remainderman,
  although it has also been held that, in the
  absence of an agreement to that effect, the
  proceeds are not substituted for the insured
  property."

Thus it can readily be seen that there is a legitimate dispute to be settled by litigation either in this court or in the state court between plaintiff and the defendant, executor, and the authorities above are cited for the purpose of aligning the parties plaintiff and defendant, executor, to inquire whether or not this state of facts meets the requirement of the collision of interest rule as laid down in City of Indianapolis et al. v. Chase National Bank et el., 314 U.S. 63, 62 S.Ct. 15, 16, 86 L.Ed. 47. The court said:

    "As is true of many problems in the law, the
  answer is to be found not in legal learning but
  in the realities of the record. Though variously
  expressed in the decisions, the governing
  principles are clear. To sustain diversity
  jurisdiction there must exist an actual * * *
  substantial * * * controversy between citizens of
  different states, all of whom on one side of the
  controversy are citizens of different states from
  all parties on the other side * * *. Diversity
  jurisdiction cannot be conferred upon federal
  courts by the parties' own determination of who
  are plaintiffs and who are defendants. It is our
  duty, as it is that of the lower federal courts,
  to `look beyond the pleadings, and arrange the
  parties according to their sides in the
  dispute.' * * * Litigation is the pursuit of
  practical ends, not a game of chess. Whether the
  necessary `collision of interests' * * * exists, is
  therefore not to be determined by mechanical
  rules. It must be ascertained from the `principal
  purpose of the suit' * * * and the `primary and
  controlling matter in dispute' * * * These
  familiar doctrines governing the alignment of the
  parties for purpose of determining diversity of
  citizenship have consistently guided the lower
  federal courts and this Court."

The actualities of this litigation, while it is the purpose of both the plaintiff and the executor defendant to make the corporate fire insurance defendant pay the face of the policy, show under the law as above announced that there is a collision of interest between plaintiff and the executor defendant. Accordingly the motion to dismiss is denied for the reasons herein stated on the diversity of citizenship feature, provided the plaintiff bring the defendant, executor, before the court by process.

The next question raised by the defendant Farmers and Grange Mutual Tornado Insurance Company is that it should be dismissed because there is no liability as against it for the fire loss. An inspection of the combined policy shows that one company insures against loss by fire and the other against loss by cyclone or windstorm. The Farmers and Grange Mutual Tornado Insurance Company, according to the policy, insures against tornado, cyclone and windstorm. The record shows a fire loss and not a windstorm loss. While both companies join in the execution of the policy, the policy clearly states,

    "It is understood and agreed, now and forever,
  that the Fire Company and the Wind Company shall
  not, under any circumstances whatsoever, be
  liable for the losses of the other."

Coverage C provides for wind and hail insurance. Under the factual situation there can be no liability against the Wind Company. Accordingly the motion of Farmers and Grange District Mutual Tornado Insurance Company is allowed, and it is dismissed out of the case.

19600608

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