Decided on the authority of
Enelow v. New York Life Ins.
Co., ante, p.
293 U. S. 379.
71 F.2d 997 reversed.
Certiorari to review the affirmance of a final decree of the
District Court, 5 F. Supp. 278, 280, cancelling several insurance
policies and providing for repayment of the premiums, which were
tendered back by the insurance companies. The decree was rendered
on an equitable defense set up under Jud.Code, § 274b, in an action
by the beneficiary to collect the policies.
MR. CHIEF JUSTICE HUGHES delivered the opinion of the Court.
Petitioner brought this action at law as beneficiary of several
policies of insurance issued by respondent. The policies were
alleged to have been issued in April, 1932, upon the life of
petitioner's father who died in July, 1932. The policies were to be
incontestable after two
Page 293 U. S. 387
years from date of issue. The action was brought in a state
court in Pennsylvania, and was removed to the federal court in
February, 1933. Respondent's affidavit of defense set up as new
matter that the insured had made false answers and declarations in
his application with respect to a surgical operation he had
undergone and to the treatment he had received by physicians and at
hospitals, that the insured knew that these answers and
declarations were false, and that they had been made by the
insured
"fraudulently with the intent of deceiving the defendant into
issuing to him the policies of insurance in litigation, when the
facts were such that, if he had answered said questions truthfully
and had made a full and honest disclosure, the defendant would not
have issued any of said policies, but would have declined his
application."
Respondent tendered judgment for the amount of the premiums
received by it, with interest, and prayed that the policies be
cancelled. Petitioner replied, denying the allegations of
fraud.
Respondent asked that the equitable issue raised by its
affidavit of defense should be heard under § 274b of the Judicial
Code (28 U.S.C. § 398) "by a chancellor according to equity
procedure in advance of the trial by jury at law of any purely
legal issues." The application was granted over petitioner's
objection, and the issue of fraud was tried in equity. The District
Judge decided that it was "a very plain case of fraud upon the
insurance company," that the insured had "falsely answered the
questions as to his medical history," and that these questions were
all as to "matters of fact within his knowledge." 5 F. Supp. 278,
280; 5 F. Supp. 1019.
Decree was entered cancelling the policies and providing for the
repayment of the premiums tendered. The decree was affirmed by the
Circuit Court of Appeals, 71 F.2d 997, and this Court granted
certiorari.
Page 293 U. S. 388
What we have said in
Enelow v. New York Life Ins. Co.,
ante, p.
293 U. S. 379, is
directly applicable here. The issue of fraud raised by respondent's
affidavit of defense was fully available in the action at law, and
the court erred in directing the trial of that issue in equity.
The decree of the Circuit Court of Appeals is reversed, and the
cause is remanded to the District Court, with direction to vacate
its decree and to proceed with the trial of the action at law.
It is so ordered.