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Aetna Life Ins. Co. v. Haworth - 300 U.S. 227, 57 S. Ct. 461 (1937)

Rule:

A "controversy" must be one that is appropriate for judicial determination. A justiciable controversy is thus distinguished from a difference or dispute of a hypothetical or abstract character; from one that is academic or moot. The controversy must be definite and concrete, touching the legal relations of parties having adverse legal interests.

Facts:

Plaintiff Aetna Life Insurance Company (Aetna) issued five life insurance policies to defendant Edwin P. Haworth, which named co-defendant Cora Haworth as beneficiary. Under the Federal Declaratory Judgment Act of 1934 (Act), 28 U.S.C.S. § 400, Aetna sought a decree that certain insurance policies be declared null and void by reason of lapse for nonpayment of premiums. Haworth claimed that when he ceased to pay premiums, he had become totally and permanently disabled, and thus, incurred no obligation to pay further premiums and was entitled to the stipulated disability benefits including the continued life of the policy. Aetna alleged that consistently and at all times, it has refused to recognize defendant’s claim on the basis that Haworth was not totally and permanently disabled at any of the times to which his claims referred. The trial court dismissed Aetna's suit upon the ground that there was no justiciable controversy. The Court of Appeals for the Eighth Circuit affirmed the trial court’s decision. In its petition for certiarari review by the U.S. Supreme Court, Aetna alleged that there was an actual controversy with the Haworths as to the existence of the total and permanent disability of the insured, and as to the continuance of the obligations asserted despite the nonpayment of the premiums.

Issue:

Did the insurer's complaint contain a justiciable controversy, warranting the grant of relief by the courts?

Answer:

Yes.

Conclusion:

The United States Supreme Court held that Aetna's complaint contained a justiciable controversy. Specifically, it held that the existence of the total and permanent disability of the insured and the continuance of Aetna's obligations despite the nonpayment of premiums were issues that presented an actual controversy within the meaning of the Act. Noting that the Act incorporated a purely constitutional standard, the Court reversed the decree of the lower court and remanded for further proceedings pursuant to that statute.

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