Aetna Life Insurance Company v. Texas Gulf Sulphur Company

235 F.2d 791

• Court: Court of Appeals for the Fifth Circuit
• Decided: October 8, 1956
• Docket: 15776
• Status: Published

Opinions

PER CURIAM.

As the opinion of Chief Judge Hutch-eson so colorfully portrays the case, accurately delineates the issues, expounds the competing contentions and, by contrasting the large area of our mutual agreement with the limited scope of our differences, effectively emphasizes the point of departure, we think it best to indicate briefly our disagreement in result and reasoning and thus preserve the continuity of that opinion.

We are all in agreement that the Freeport decision was correct. [Freeport Sulphur Co. v. Aetna Life Ins. Co., 206 F.2d 5, 41 A.L.R.2d 762], With unhesitating fidelity to that result and Freeport’s reasoning, we each seek diligently to discover and apply its teachings. We are also all in agreement that in its interpretation, the nature of the judicial system based on written opinions as the means of giving life to law and guidance to its craftsmen, requires that we, as would any other Judges, read it for what it says and then say what it says, Mississippi Valley Barge Line Co. v. Indian Towing Co., Inc., 5 Cir., 232 F.2d 750, 1956 A.M.C. 757, with none having, with none claiming, in that process, advantage or disadvantage from participation in that former appeal or the opinion.

We are likewise in agreement that, though responsibility must be laid at our feet for having led him into it, the District Judge gave too much, indeed almost conclusive, weight to the much discussed words ¹ of the opinion. We are, finally, in agreement that, reiterating here Free-port’s determination that the parties contemplated a long-time contract of extended duration — a holding which completely undercuts Aetna’s. main prop, the. argument of non-mutuality and the incongruity,of giving.Texas.Gulf but not it, an unlimited- escape — what we attempted to do, what we intended, to do, there was to declare in terms of law, the time beyond which the parties could not reasonably have meant to go — a time we fixed there at March 31, 1954, for a total term of 20 years.

It is here that our paths diverge. For agreeing once more that a 20-year term has no magic legal significance and that this conclusion of law must find its source in the setting of the Freeport contract, Judge Hutcheson concludes, as we cannot, that the contracts are identical and hence, results must be identical. In that process he also disregards altogether the much mooted sentence and actually abandons the stated rationale of Freeport— reasonable time — for an entirely new concept . advanced .to this day nowhere in prior opinions or. briefs, that the contin-ing option was binding only for the— “ ‘ “year period entered upon thereafter.” ’ ”

But the contracts are different — significantly different in the very.area of specified -contract periods, and admittedly because of the difference in the underlying, bargains. In Freeport rates as to annuities, original, and increased, co.uld never be raised as to employees coming under the plan in the first five years (1934 to 1939). Recognized soon as an onerous agreement, Aetna a few months later was unwilling to extend that vital privilege to Texas Gulf and sought² (in the intense sales campaign it waged to persuade Texas Gulf to give it this business) by extending the periods from five to ten years, to make up for it. It is, we believe, unreasonable for us, as Judges, to think that when two huge business concerns negotiate on high levels between articulate, skilled executives over a contract of immense importance to both, that this difference was either trivial or, as Aetna puts it, “adventitious.” And, accepting Judge Hutcheson’s rationale of an option limited to the contract period then “entered upon”, the contract, expressly making Texas Gulf’s for ten, rather than Freeport’s five-year period, subjected Aetna to double that obligation.

So, while we do not think, on the one hand, that the words (note 1, supra) are conclusive, we are, on the other hand, equally unwilling either to disrate them in Aetna’s words, brief page 25 as “ * * * evidently thrown in for good measure and without much thought * * * demonstrably conceived in error * * * included through inadvertence * * * [and thus] * * * entitled to little weight * * * ”, or effectually disregard them altogether because, in Judge Hutcheson’s language, these “* * * specific dates are of. no more significance in the determination of the overall reasonable time for its ending than those periods introduced by ‘et cetera.’ ” We think here, as in Freeport, they were of significance and so intended by the Court. The very spirited attack (see note 8 Judge Hutcheson’s opinion) so soon made on them by Freeport’s Petition for Rehearing brought these very arguments to the Court’s attention while it was still fresh and new. Of course, it would be unrealistic to say that opinions must be amended or modified to meet every supposed deficiency pointed out in Petitions for Rehearing, but we who now follow can hardly assume, in this posture, that this was mere make-weight.

As we have pointed out, there is a critical difference both in date and reasons as between the Freeport and Texas Gulf contracts. It, we think, both highlights the difference in specified times and, correlatively, the similarity of purpose. So that, once again, we are all in agreement that the “key” is largely to be found in this contractual provision. In Freeport those coming under the plan during the first period (1934 to 1939) could not be affected by subsequent increases and their rights were beyond alteration of any kind. Obviously then, the escalation could apply only to those coming in during the three subsequent periods (1) 1939 to 1944, (2) 1944 to 1949, (3) 1949 to 1954. It was this time that the Court in Freeport considered, as a matter of law, to be within the range of reasbnableness. Applying the same formula of three comparable periods subject to escalation in the Texas Gulf contract, the periods will be (1) 1934 to 1944, (2) 1944 to 1954, (3) 1954 to 1964, with the terminal date then fixed at August 1, 1964.' Since there is no “exempt” period and, unlike the Freeport contract, Texas Gulf annuitants coming under the plan during the “first” period (1934 to 1944) are subject to the subsequent escalation increases, we thus adhere uniformly to the principles established in Freeport and yet take adequate account of the differences.

The decree of the District Court appealed from in this cause will therefore be modified so as to designate August 1, 1964, as the date upon which Aetna has the right to discontinue the contract as to new coverages, and, - as so modified, said decree will be affirmed.

Modified and affirmed.

1 . Judge Strum wrote:

“In reserving the right to modify the premium rates on this policy, however, Aetna specifically provided for increases in rates through March 31, 1954, indicating that Aetna itself contemplated that the contract would remain in effect at least until that date.” [206 F.2d 5, 7.]

2 . Aetna’s brief [page 22], after pointing out tbe difference between Freeport and "' Texas Gulf contract, states: “By August 1, 1934, when the Texas Gulf contract became effective, Aetna was no longer willing to exempt the employees enter-ihg the plan during the first 5 years from ■ increases. But perhaps with a will to make up to Texas Gulf in a measure for the denial of this valuable exemption no longer available to anyone, Aetna agreed not to increase premiums on any-employees for 10 years from inception (instead of 5 as in Freeport) and not to make subsequent increases except to the extent of 5% of the original premiums every 10 years (instead of 2%% every 5 years as in Freeport). * * • ”