Atlas Life Ins. Co. v. W. I. Southern, Inc. - 306 U.S. 563 (1939)
U.S. Supreme Court
Atlas Life Ins. Co. v. W. I. Southern, Inc., 306 U.S. 563 (1939)
Atlas Life Insurance Co. v. W. I. Southern, Inc.
Submitted March 29, 1939
Decided April 17, 1939
306 U.S. 563
1. In Oklahoma, an insurer may set up fraud in the procurement of a policy as a defense to an action at law upon it, or may interpose a cross-complaint in that action for cancellation of the policy. P. 306 U. S. 567.
2. An action in a state court of Oklahoma by a Delaware corporation against an Oklahoma insurance company upon a policy of insurance is not removable to the federal court, since the defendant is not a nonresident of Oklahoma within Judicial Code, § 28. P. 306 U. S. 567.
3. The "jurisdiction" of suits in equity, conferred on the federal courts by Judicial Code, § 24(1), is an authority to administer in equity suits the principles of the system of judicial remedies which had been devised and was being administered by the English Court of Chancery at the time of the separation of the two countries. P. 306 U. S. 568.
4. The provision of Judicial Code, § 267, that suits in equity shall not be maintained in the federal courts in any case where a "plain, adequate and complete remedy may be had at law," which continues, in substance, § 16 of the Judiciary Act of 1789, is but a declaration of the equity rule established long before the enactment of the Judiciary Act, and it serves by emphasis of the rule to protect the States from the encroachments which would result from the exercise of equity powers by federal courts failing to observe it. P. 306 U. S. 569.
5. The accepted test of legal adequacy which the section prescribes is the legal remedy which the federal, rather than state, courts afford. P. 306 U. S. 569.
6. Though the federal court have jurisdiction, in the sense of power to hear and decide the cause, and there is an absence of legal remedy, the right to equitable relief nevertheless depends upon allegation and proof of a cause of action in equity. P. 306 U. S. 569.
7. The fact that an "incontestable" clause in a policy would soon come into operation is not necessarily ground for resort to equity in the federal court, when a suit at law is pending in a state court wherein the ground for equitable relief can be set up as a defense.
The federal court should proceed only so far as is necessary to protect the suitor from loss of his defense at law. P. 306 U. S. 572.
8. Questions certified by the Circuit Court of Appeals to this Court in a suit by an insurance company for cancellation of policies of insurance on the ground of fraud in procurement, seeking instructions as to the right of the insurer to equitable relief in view of the pendency in the state court of a action at law previously brought on the policies by the beneficiary, held not appropriately framed for proper answer, because the facts certified fail to show whether the insurance company is entitled to the relief sought. P. 306 U. S. 571.
The questions suggested may be properly answered only by reframing them or giving qualified answers to them. This the Court is not required to do, and cannot properly do without recourse to the record, which, in this case, is not here.
9. It is inappropriate on certificate to answer questions which may be affected by unstated matter lurking in the record, or questions which admit of one answer under one set of circumstances and a different answer under another, neither of which is inconsistent with the certificate. P. 306 U. S. 573.
Certificate from the Circuit Court of Appeals upon an appeal from a decree dismissing a bill in equity for cancellation of policies of insurance.