1. In a civil action in the federal District Court against an
insurer to recover the proceeds of policies of life insurance,
wherein the insurer filed a counterclaim alleging fraud by the
insured in the procurement of the policies and praying their
cancellation and that further prosecution of the action be
enjoined, an order that the issue raised by the counterclaim shall
be heard and disposed of by the court prior to the issue raised by
the complaint is an interlocutory order granting an injunction,
within the meaning of Judicial Code § 129, and is appealable under
that Section. P. 317 U. S.
The provisions of Rule 1 of the Rules of Civil Procedure, that
the object of the Rules is "to secure the just, speedy, and
inexpensive determination of every action," and of Rule 2, that
"there shall be one form of action to be known as civil
action,'" do not require a different result.
Page 317 U. S.
2. Local law has no bearing on the question here determined. P.
317 U. S.
3. The applicability of Jud.Code § 129 is determined not by the
terminology of the order, but by its substantial effect. P.
317 U. S. 192
Certificate from the Circuit Court of Appeals upon an appeal to
that court from an interlocutory order of the District Court, 42 F.
Supp. 488. The suit, to recover upon policies of life insurance,
was begun in a state court but was removed by the defendant to the
MR. JUSTICE ROBERTS delivered the opinion of the Court.
The Circuit Court of Appeals has certified the following
"In a civil action in a district court upon a claim of a
character formerly cognizable at law in which the defendant has
filed a counterclaim of a character formerly cognizable in equity
(or in an action at law under the provisions of Section 274b
] of the Judicial
Code), is an order that the issue raised by the counterclaim shall
be heard and disposed of by the court prior to the issue raised by
the complaint an order granting an injunction within the meaning of
Section 129 [Footnote 2
] of the
Judicial Code, and therefore appealable under that section?"
From the certificate, it appears that the question arises upon
these facts: the plaintiffs filed, in a New Jersey State Court, a
complaint in five counts to recover amounts alleged to be due
plaintiffs by the defendant on life insurance
Page 317 U. S. 190
policies issued by it upon the life of Richard Ettelson,
deceased. The cause was removed to the United States District Court
for New Jersey. Plaintiffs demanded a jury trial. The defendant
filed an answer in the District Court setting up that the policies
were obtained by the fraud of the insured and are void because of
material false statements made by the insured in the application
for the policies. The answer did not allege that the false
statements were knowingly and intentionally made.
With the answer, the defendant filed a counterclaim alleging
that the policies were obtained by the fraud of the insured and are
void because of the material false statements made by him in the
application, and prayed that the policies be decreed void upon the
return by the defendant of the premiums paid thereon, and that the
plaintiffs be enjoined from further prosecuting the action at law.
The plaintiffs moved for dismissal of the counterclaim on the
ground that the defendant has an adequate remedy at law on the law
side of the court in the pending action in which issue has been
joined, and further that the counterclaim fails to state a claim
upon which equitable relief can or should be granted by the
The District Court denied the motion to dismiss and ordered that
the counterclaim should be heard and disposed of by the court
sitting in equity prior to trial of the issue made by the complaint
and answer in the action at law. 42 F. Supp. 488. The plaintiffs
thereupon appealed to the Circuit Court of Appeals, and the
defendant moved that court to dismiss the appeal in the view that
the District Court's order is not appealable.
The parties agree that, if the question had arisen prior to the
adoption of the Rules of Civil Procedure, [Footnote 3
] our decision in Enelow v. New York Life
Ins. Co., 293 U. S. 379
would require an affirmative answer to the question.
Page 317 U. S. 191
The defendant asserts, and the plaintiffs deny, that the rules
require a negative answer. The defendant points to Rule 1. which
states that the object of the rules is "to secure the just, speedy,
and inexpensive determination of every action," and more
particularly to Rule 2 which declares that "there shall be one form
of action to be known as civil action.'"
The defendant's contention, in brief, is that whereas, when the
case was decided, the distinction between actions
at law and suits in equity in federal courts still persisted, this
distinction has now been abolished; that equitable defenses,
whether a bar to plaintiffs' recovery at law or the basis of
affirmative relief against the plaintiffs, are part and parcel of
the single action initiated by the plaintiffs, and that any
direction by the court respecting the order in which the claim and
the counterclaim are to be heard is interlocutory, amounting, at
most, to a stay of the trial of one branch of the litigation, and
in no sense an injunction against the plaintiffs. We cannot
At the argument of the cause, much time was devoted to the
applicable law of New Jersey, where the action originated. It was
urged that, under that law, upon allegation and proof of innocent
misrepresentations inducing the issue of a policy, an insurer is
entitled to a decree cancelling the policy and restraining any
action at law upon it. It was urged that this feature of the local
law must be considered in determining the appealability of the
District Court's order. But, whatever effect should be given the
New Jersey law in determining the correctness of the District
Judge's action, the local law has no bearing upon the decision of
the narrow question certified.
As in the Enelow
case, so here, the result of the
District Judge's order is the postponement of trial of the jury
action based upon the policies, and it may, in practical
Page 317 U. S. 192
effect, terminate that action. It is as effective in these
respects as an injunction issued by a chancellor. If the order be
found to be erroneous, it will have to be set aside, and the
plaintiffs permitted to pursue their action to judgment. The
plaintiffs are therefore, in the present instance, in no different
position than if a state equity court had restrained them from
proceeding in the law action. Nor are they differently
circumstanced than was the plaintiff in the Enelow
The relief afforded by section 129 is not restricted by the
terminology used. The statute looks to the substantial effect of
the order made. Enelow v. New York Life Insurance Co.,
p. 293 U. S. 383
Compare General Electric Co. v. Marvel Rare Metals Co.,
287 U. S. 430
287 U. S. 432
Shanferoke Coal & Supply Corp. v. Westchester Service
Corp., 293 U. S. 449
293 U. S. 451
Griesa v. Mutual Life Ins. Co.,
165 F. 48, 49.
Question answered "Yes."
28 U.S.C. § 398.
28 U.S.C. § 227.
308 U.S. 653; 28 U.S.C. § 723c.