Federal Life Ins. Co. v. Rascoe, 12 F.2d 693 (6th Cir. 1926)

*694 *695 Thos. J. Tyne, of Nashville, Tenn. (J. M. Peebles and Thos. J. Tyne, Jr., both of Nashville, Tenn., C. A. Atkinson, of Chicago, Ill., and Jas. C. Jones, of St. Louis, Mo., on the brief), for plaintiff in error.

W. H. Washington and Edwin A. Price, both of Nashville, Tenn. (Thos. W. Schlater, Jr., of Nashville, Tenn., on the brief), for defendant in error.

Before DENISON, DONAHUE, and MOORMAN, Circuit Judges.

DONAHUE, Circuit Judge (after stating the facts as above).

Neither the opinion of the court nor the motion for new trial can be accepted as a separate finding of facts. Law v. U. S., 266 U.S. 494, 496, 45 S. Ct. 175, 69 L. Ed. 401; U. S. v. Gordin and U. S. v. Gordin, Adm'r, 9 F(2d) 394, decided by this court December 1, 1925.

Without such separate findings of facts, neither the evidence nor the question of law presented by it is reviewable by this court. If, however, the facts stated in the opinion and in the motion for a new trial were accepted as a finding of facts made by the court, to which exceptions were taken by the defendant, the result would not be different. The record discloses that they are all sustained by substantial evidence. This court has no authority to consider and determine the weight of the evidence.

It is also assigned as error that the court abused its discretion in overruling the defendant's motion for a continuance after the transfer of the case to the law docket and the amendment of plaintiff's declaration. This order was entered on the 9th of February. No evidence was introduced until the 11th of February and the hearing of evidence was not concluded until the 12th. This afforded ample opportunity for officers of the company living in Chicago to appear and testify in the case. No reason is stated in the motion for continuance why it would require a week to secure the attendance of officers of the defendant. In the absence of such statement, and proof thereof, the presumption would obtain that the delay would be for their convenience only, and not because of necessity.

Nor was the change in the pleadings of such character as to present a wholly new issue. The plaintiff's action was based upon the failure and refusal of the defendant to comply with the terms of this contract. Plaintiff, in her original bill of complaint, not only prayed for a recovery of payments then due, but also prayed in the alternative for a recovery of the total sum she would be entitled to receive by reason of her total disability for life. It is true that the original action contemplated recovery upon the contract, and not for damages for its breach; yet the defendant in its answer denied all liability and averred that the plaintiff had received all she was entitled to receive under the terms of the contract. Therefore the original pleadings presented substantially the same issues of fact as presented by the amendments thereto. For the reasons stated, we do not think the court abused its discretion in refusing a continuance, nor has it been made to appear, by affidavit or otherwise, that the defendant has been prejudiced thereby.

It is further claimed that the court erred in overruling the demurrer to the amended declaration. In support of this assignment of error it is insisted that the amended declaration fails to state a cause of action, because there can be no anticipatory breach of a unilateral contract for the payment of money at some future date. As an abstract proposition that may be true, but this is not a unilateral contract for the unconditional payment of money, such as a bond or a promissory note. While the plaintiff in this case has fully discharged her obligation to pay the premiums coming due prior to her injuries, and has continued to pay the premiums until the insurance company declined to accept further payments, nevertheless it is averred in the bill of complaint that by the express terms of this contract she is still required to furnish, and has furnished, regularly to the insurance company, every 30 days, or as near thereto as may be reasonably possible, a report in writing from her attending physician or surgeon, fully stating the condition of the assured and the probable duration of her disability.

*696 This contract therefore, is not an unconditional promise to pay a sum certain in installment, or in gross, where plaintiff has fully performed. On the contrary, she is required every 30 days to submit her person to the examination of a physician and pay the physician for making such examination and for preparing a report in writing to be forwarded to the company. These are the means and methods of proof of continuing disability stipulated in the contract to be furnished by the assured after first proofs of injury and resulting disability have been made and accepted by the insurance company, and, in the absence of fraud or collusion, this provision is binding alike on the company and the assured.

It is not merely a technical requirement, but a substantial and continuing burden, involving the expenditure of time and money on the part of the assured. It is said, however, that this is merely a condition precedent to the payment of these installments, and not a condition that could be enforced by the company. The latter may be true, so far as enforcement by action is concerned; nevertheless it is a provision binding on the plaintiff, the performance of which may be enforced by refusal to pay. In this respect it does not differ from a tender of property under a sales contract, or the tender of service under an employment contract (Hochstetter v. De la Tour, 2 El. & Bl. 678), or the delivery of notes as in Equitable Trust Company v. Railroad Company (D. C.) 244 F. 485, in which case this question is fully discussed in the opinion on pages 501, 502, and 504. See, also, Central Trust Co v. Chicago Auditorium, 240 U.S. 581, 36 S. Ct. 412, 60 L. Ed. 811, L. R. A. 1917B, 580; Lovell v. Ins. Co., 111 U.S. 264, 274, 4 S. Ct. 390, 28 L. Ed. 423; Parker v. Russell, 133 Mass. 74; Mutual Reserve Fund Life Ass'n v. Ferrenbach, 144 F. 342, 75 C. C. A. 304, 7 L. R. A. (N. S.) 1163; Railroad Co. v. Staub, 75 Tenn. (7 Lea) 397, cited with approval in Pierce v. Tenn. Coal Co., 173 U.S. 1, 14, 19 S. Ct. 335, 43 L. Ed. 591; Roehm v. Horst, 178 U.S. 1, 8, 20 S. Ct. 780, 44 L. Ed. 953, citing with approval Hochstetter v. De la Tour, supra.

In Roehm v. Horst, supra, it is said by Fuller, Chief Justice, in the opinion on page 8 (20 S. Ct. 783): "If a contract provides for a series of acts, and actual default is made in the performance of one of them, accompanied by a refusal to perform the rest, the other party need not perform, but may treat the refusal as a breach of the entire contract, and recover accordingly."

In this case the plaintiff does not rely upon an anticipatory breach, nor upon mere delay, neglect, or default to pay the several installments due under the terms of this contract, but upon an actual breach, after full proofs of continuing disability had been made in the manner and form specifically provided in the policy, coupled with an actual repudiation of the entire contract. A jury was waived, and the trial court found on the issues joined for the plaintiff. Tri-Bullion Smelting Co. v. Jacobsen, 233 F. 646, 147 C. C. A. 454. There are no separate findings of fact, and this court has no authority to review the evidence or questions of law presented by it. Law v. U. S., supra. But, even if this court could accept the opinion of the trial court, in connection with the motion for a new trial, as a separate finding of fact, it appears therefrom that the court specifically found that defendant was acting in bad faith; that it was guilty of an actual breach and an unequivocal repudiation of the entire contract.

This is a single contract. The fact that defendant is required to perform in part at stated intervals does not change its unitary character into a multiplicity of contracts, each relating to but one installment. If there has been an actual breach, coupled with repudiation, of this one contract, then, to avoid a multiplicity of suits, public policy requires that plaintiff may maintain but one action for the entire damages occasioned by such breach. Pierce v. Tennessee Coal Co., supra; Railroad Co. v. Staub; Roehm v. Horst, supra; Williston on Contracts, § 1317; United Press Ass'n v. National Newspaper Ass'n, 237 F. 547, 555, 150 C. C. A. 429; Ætna Life Ins. Co. v. Phifer, 160 Ark. 98, 105, 254 S.W. 335; Pakas v. Hollingshead, 184 N.Y. 211, 77 N.E. 40, 3 L. R. A. (N. S.) 1042, 112 Am. St. Rep. 601, 6 Ann. Cas. 60; Milburn v. Insurance Co., 209 Mo. App. 228, 237, 234 S.W. 378.

The policy provides for the payment of weekly indemnity during disability. It is the claim of the plaintiff that she is permanently disabled. If she can sustain this claim by proofs, then, it appearing that she is in good health, except for the result of her injuries, which are not at all likely to shorten her expectancy, there can be no substantial difficulty, since the adoption of life tables in the ascertainment of her damages. Parker v. Russell, supra. If, on the other hand, it *697 should appear from the proofs that she is not permanently disabled, then her damages can be readily ascertained for such length of time as the evidence discloses will be necessary to effect a cure.

In view of the conclusion reached, it is unnecessary to consider or discuss the claims of counsel for defendant in error that this contract was made in Tennessee, to be performed in Tennessee, and must therefore be construed by the law of that state.

Affirmed.

DENISON, Circuit Judge.

I find myself unable to concur. If the amended declaration is freed from conclusions and confined to fact allegations, the demurrer sufficiently presented the question whether there could be a judgment for the present value of an annuity to the plaintiff, continuing so long as she "lives and suffers."

The parties made a contract by which, in the event of the plaintiff's injury, defendant was to perform at future periods. The judgment, upon the theory of anticipatory breach, has transformed it into a contract for present performance. Unless there is clear and satisfactory reason, according to settled legal principles, the defendant should not be held liable for not doing something which it never agreed to do, and this is as true in regard to time of performance as to other particulars. A plaintiff, who wants now a payment which he agreed to wait for until next year, should show a clear right, not a doubtful one.

Roehm v. Horst is the leading case in the United States. It declares that, where a contract is executory on both sides and is repudiated by one party, the other may presently have his damages assessed as for an anticipatory breach; but it excepts from that rule cases where the contract on the plaintiff's part is not executory. The exception cannot be interpreted and applied without understanding the reason for it, and search for the reason for the exception must take us to the reason for the rule. This is not satisfactorily developed, as I think, in any judicial or text-book discussion which I have seen. The suggestion that there is an implied contract to keep the express contract in force, and that damages of this character are really assessed for breach of this implied contract, seems to me to be going a long way for an answer.^[1] To my mind the most forcible reason for the rule of anticipatory damages is this:

In the ordinary case of mutually dependent executory contracts, the plaintiff may say to defendant: "True, I have no right to claim damages now for your nonperformance of what you agreed to do next year; but the meritorious reason for my inability is that you are not obliged to perform your part of next year's contract, unless I also perform my part. Now, by your repudiation, you have put it out of my power further to perform, and hence you cannot be permitted to say that you have not received or will not receive that consideration for your future act, and there is no good reason why you should not pay now (less discount) the damages which would accrue next year."

If this be the reason for the rule, it explains as well the exception. Where his part of the contract has been executed by the plaintiff, he has nothing to do but to wait, and to do so continues to be in his power. His position will not be prejudicially changed by defendant's repudiation; and hence he will have no estoppel to rely upon to precipitate the defendant's obligation. It follows that, not only by its authority, but upon sound principles, the exception made in Roehm v. Horst should be recognized and applied, and not dissipated by hesitant application.

I do not understand that a contract sued upon is executory, as against a plaintiff, unless it binds him to do something, so that an action may lie against him for specific performance, or for nonperformance.^[2] By that definition the contract here sued upon is not executory on the plaintiff's part. She is merely obliged from time to time to furnish evidence, if and when she wishes payment; what she must do is, in kind, like presenting a note for payment at a particular place, although it is more burdensome in degree; after all, it is a condition, not an obligation.

Further, I do not find in the facts such an absolute repudiation of the contract as justifies the application of the anticipatory breach rule. Such a repudiation cannot be found in the final cancellation made by the insurance company; that cancellation was an act in express pursuance of the contract, and not in repudiation of it; it was a termination of future liability, and not at all a repudiation of any accrued and existing obligation. Nor can it be found, as I think, in the *698 refusal to pay. What defendant really did was to deny that there was any breach which had obligated it to pay or which obligated it to pay any more. Defendant never has questioned the entire validity of the contract, or denied its continuing liability to pay anything which, under the contract, it ought to pay. While there are decisions which find the necessary basis in a mere denial or breach, I doubt whether they give due regard to what ought to be the character of a repudiation effective to create an obligation inconsistent with the express terms of the contract.

In my judgment, this case illustrates the evils of laxity in permitting a premature recovery. In such a case as this (as facts often are, though possibly not in this case), plaintiff in a year or two may recover entirely or (if the case is as bad as here claimed) is very likely not to live long. In either case the true liability is for a short term; but the recovery has been upon the basis of the full expectation of life of a healthy person, though no error in this respect was duly saved.

[1] See Equitable Co. v. Western Co. (D. C.) 244 F. 485, 501.

[2] Even in Pierce v. Tennessee Co., 173 U.S. 1, 19 S. Ct. 335, 43 L. Ed. 591, the plaintiff was bound to continue to work as much as he could, and in the support-for-life cases there is usually an implied, if not express, promise of much co-operation by the one supported.