A fire insurance company sued two defendants in the federal
district court for the cancellation of two policies, one issued to
both defendants, insuring a building, the other issued to one of
them insuring personal property in the building. The bill alleged
that defendants procured the policies by misrepresentations; caused
the property to be over-insured by the plaintiff and other
insurers, and then caused it to be destroyed by fire, all in
execution of a
Page 296 U. S. 65
conspiracy. It alleged also that defendants were about to begin
actions at law against plaintiff to recover the amounts of the
policies, but did not show that, by agreement or by local law and
procedure both actions could not be disposed of by a single trial
in a state court. It was conceded that no action at law could be
maintained on either or both of the policies in the federal court,
because each was for less than the jurisdictional amount.
Held:
1. The alleged fraud and destruction of property are available
as defenses to actions at law upon the policies. P.
296 U. S.
68.
2. The bill cannot stand as a bill
quia timet, there
being no danger that the defense at law may be lost or prejudiced.
P.
296 U. S.
68.
3. Whether a suitor is entitled to equitable relief in the
federal courts, other jurisdictional requirements being satisfied,
is strictly not a question of jurisdiction in the sense of the
power of a federal court to act. It is a question only of the
merits; whether the case is one for the peculiar type of relief
which a court of equity is competent to give. P.
296 U. S.
69.
4. If a plaintiff is entitled to be heard in the federal courts,
he may resort to equity when the remedy at law there is inadequate,
regardless of the adequacy of the legal remedy which the state
courts may afford. P.
296 U. S.
69.
5. Want of the jurisdictional amount in controversy, which
deprives a federal court of its authority to act at law, is not
ground for invoking its equity powers. P.
296 U. S.
69.
6. Avoidance of the burden of numerous suits at law between the
same or different parties, where the issues are substantially the
same, is a recognized ground for equitable relief in the federal
courts, but this remedy rests in sound discretion, and a
theoretical inadequacy of legal remedy may be outweighed by other
considerations. P.
296 U. S.
70.
7. Equity not infrequently withholds relief which it is
accustomed to give where it would be burdensome to the defendant
and of little advantage to the plaintiff. P.
296 U. S.
71.
8. The grounds for equitable relief to a single plaintiff which
will deprive two or more defendants of their right to a jury trial
must be real and substantial, and its necessity must affirmatively
appear. P.
296 U. S.
72.
9. The policy of Congress to leave original jurisdiction over
cases involving less than the jurisdictional amount exclusively to
the state courts should be recognized by the federal courts in
cases within their discretionary powers. P.
296 U. S.
73.
Page 296 U. S. 66
10. The threatened injury to the plaintiff of having to defend
two suits at law in this case is of too slight moment to justify an
exercise of its discretion by the federal court, granting an
equitable remedy which would entail denial of a jury trial to the
defendants and withdraw from the jurisdiction of the state courts
suits which could not otherwise be brought into the federal court.
P.
296 U. S. 74.
75 F.2d 808 reversed.
Certiorari, 295 U.S. 728, to review the reversal of a decree of
the District Court dismissing a bill to cancel policies of fire
insurance.
MR. JUSTICE STONE delivered the opinion of the Court.
This is a suit in equity, brought in the District Court for
Western Missouri by respondent, a New Jersey fire insurance
company, against petitioners, citizens of Missouri, to cancel two
insurance policies. One, for $3,000, was issued to petitioners, who
are husband and wife, to insure them against loss by fire of a
building which they held as tenants by the entirety. The other, for
$1,500, was issued to the husband to insure his personal property
located in the building. On motion to dismiss the bill of complaint
for want of equity and want of jurisdiction, the District Court
dismissed the suit on the ground that the amount in controversy did
not exceed $3,000. Its decree was reversed by the Court of Appeals
for the Eighth Circuit, 75 F.2d 808. This Court granted certiorari
to settle an important question of federal law affecting the
jurisdiction of federal courts.
The bill of complaint alleges that the petitioners procured the
two policies from respondent by representing
Page 296 U. S. 67
that they would not effect insurance on the property in excess
of a stated amount; that thereafter they did effect insurance with
respondent and other companies in excess of that amount, and in
excess of the value of the insured property, and then caused the
property to be destroyed by fire, all in execution of a conspiracy
between them. It avers that petitioners have filed proofs of loss
with respondent, and that they threaten to and are about to begin
suits at law against respondent to recover the full amounts of its
policies.
As the two policies are separate contracts, with different
beneficiaries, insuring different properties, it is conceded that
no suit at law could be maintained upon them in the federal courts,
since neither exceeds $3,000, the amount requisite for the
jurisdiction of the federal courts, and the two independent causes
of action upon them could not be joined in a single suit at law.
The Court of Appeals held that the jurisdictional requirement was
satisfied by the expedient of seeking cancellation of the two
policies in a single suit in equity, wherein their amounts might be
united. It recognized that jurisdiction cannot ordinarily be
conferred on a federal court by joining in a single suit separate
causes of action in none of which is the amount involved more than
$3,000, although their aggregate exceeds that sum.
Walter v.
Northeastern R. Co., 147 U. S. 370;
Citizens Bank of Louisiana v. Cannon, 164 U.
S. 319. But it applied the doctrine sanctioned by this
Court in
Woodmen of the World v. O'Neill, 266 U.
S. 292, and
McDaniel v. Traylor, 212 U.
S. 428, that, in a bill to restrain the maintenance of
vexatious suits by numerous parties pursuant to a conspiracy among
them, the allegations of conspiracy are sufficient to "tie
together" the amounts involved in the several suits so that their
aggregate is deemed to be the amount in controversy. The Court of
Appeals thought that the equity powers of the District Court were
rightly invoked by the allegations that
Page 296 U. S. 68
the two policies were obtained by fraud, and by the prayer for
their cancellation, and that the right to this relief was not
defeated by the existence of an adequate remedy at law, since it
would be necessary to establish the defense to the policies in two
suits at law, instead of in one in equity, and more especially
because the adequate remedy at law which will prevent resort to
equity in the federal courts is that available in the federal
courts at law, where the suits could not be heard for want of the
jurisdictional amount.
We address ourselves only to the question whether the equitable
relief is warranted, leaving aside doubts whether the present case,
by the allegation that the insurance was effected and the loss
caused pursuant to a conspiracy, is brought within the peculiar
doctrine of
Woodmen of the World v. O'Neill, supra, where
the conspiracy was to abuse the processes of the courts by the
prosecution of groundless suits.
1. This Court has recently pointed out that equity will not
compel the cancellation and surrender of an insurance policy
procured by fraud where the loss has occurred and a suit at law to
recover the amount of the loss is pending or threatened.
Enelow
v. New York Life Insurance Co., 293 U.
S. 379. The alleged fraud of petitioners, as well as
their alleged destruction of the property insured, are defenses
available in suits at law upon the policies. While equity may
afford relief
quia timet by way of cancellation of a
document if there is a danger that the defense to an action at law
upon it may be lost or prejudiced, no such danger is apparent
where, as respondent's bill affirmatively shows, the loss has
occurred and suits at law on the policies are imminent, and there
is no showing that the defenses cannot be set up and litigated as
readily in a suit at law as in equity.
See Enelow v. New York
Life Insurance Co., supra, 293 U. S.
384-385.
Page 296 U. S. 69
2. Section 24 of the Judicial Code, 28 U.S.C. § 41, restricts
the jurisdiction of the District Courts whether at law or in equity
to controversies in which the amount involved exceeds $3,000.
Section 267 of the Judicial Code, 28 U.S.C. § 384, forbids the
maintenance of suits in equity in the courts of the United States
"in any case where a plain, adequate, and complete remedy may be
had at law." It is true, as this Court has often pointed out, that
the inadequacy prerequisite to relief in a federal court of equity
is measured by the character of remedy afforded in federal, rather
than in state, courts of law.
See Henrietta Mills v. Rutherford
County, 281 U. S. 121;
Smyth v. Ames, 169 U. S. 466;
Risty v. Chicago, R.I. & & P. Ry. Co.,
270 U. S. 378.
This follows from the nature of "equity jurisdiction" of the
federal courts. Whether a suitor is entitled to equitable relief in
the federal courts, other jurisdictional requirements being
satisfied, is strictly not a question of jurisdiction in the sense
of the power of a federal court to act. It is a question only of
the merits; whether the case is one for the peculiar type of relief
which a court of equity is competent to give.
See Pennsylvania
v. Williams, 294 U. S. 176,
294 U. S.
181-182. If a plaintiff is entitled to be heard in the
federal courts, he may resort to equity when the remedy at law
there is inadequate, regardless of the adequacy of the legal remedy
which the state courts may afford. Otherwise, the suitor in the
federal courts might be entitled to a remedy in equity which the
federal courts of law are competent to give, or, on the other hand,
be obliged to forego his right to be heard in the federal courts in
order to secure an equitable remedy which state courts of law do,
but the federal courts of law do not, give.
See Stratton v. St.
Louis Southwestern R. Co., 284 U. S. 530,
284 U. S.
533-534;
Matthews v. Rodgers, 284 U.
S. 521,
284 U. S. 529.
But want of the jurisdictional amount in controversy which
deprives
Page 296 U. S. 70
a federal court of its authority to act at law is not ground for
invoking its equity powers. The statute forbids resort to equity in
the federal courts when they afford adequate legal relief. It does
not purport to command that equitable relief shall be given in
every case in which they fail to do so. Plainly it does not so
command when the want of legal remedy is due to the express
prohibition of Congress, applicable alike to suits at law and in
equity.
See Healy v. Ratta, 292 U.
S. 263.
3. As the nature of the relief sought, cancellation of the
insurance policies and the inability of the federal courts to hear
the suits at law for want of the jurisdictional amount do not
warrant equitable relief, it is evident that the remedy which
respondent seeks depends on the slender thread of its right to ask
the federal court of equity to save it the possible inconvenience
of trying two lawsuits instead of one. Avoidance of the burden of
numerous suits at law between the same or different parties, where
the issues are substantially the same, is a recognized ground for
equitable relief in the federal courts.
See Ogden City v.
Armstrong, 168 U. S. 224;
Hale v. Allinson, 188 U. S. 56. But
the award of this remedy, as of other forms of equitable relief, is
not controlled by rigid rules rigidly adhered to, regardless of the
end to be attained and the consequences of granting the relief
sought. It rests in the sound discretion of a court of equity, and
a theoretical inadequacy of the legal remedy may be outweighed by
other considerations. In
Hale v. Allinson, supra, where
this Court denied relief to a single plaintiff who sought to unite
in a suit in equity claims founded upon the statutory liability of
numerous stockholders of a corporation, it was careful to point
out,
188 U. S.
72-78:
"In any case where the facts bring it within the possible
jurisdiction of the court, . . . the decision must depend largely
upon the question of the reasonable convenience
Page 296 U. S. 71
of the remedy, its effectiveness, and the inadequacy of the
remedy at law. . . . Each case, if not brought directly within the
principle of some preceding case, must, as we think, be decided
upon its own merits and upon a survey of the real and substantial
convenience of all parties, the adequacy of the legal remedy, the
situations of the different parties, the points to be contested and
the result which would follow if jurisdiction should be assumed or
denied. . . . The single fact that a multiplicity of suits may be
prevented by this assumption of jurisdiction is not in all cases
enough to sustain it. It might be that the exercise of equitable
jurisdiction on this ground, while preventing a formal multiplicity
of suits, would nevertheless be attended with more and deeper
inconvenience to the defendants than would be compensated for by
the convenience of a single plaintiff, and, where the case is not
covered by any controlling precedent, the inconvenience might
constitute good ground for denying jurisdiction."
Lord Hardwick, in laying down the principles which should guide
the award of a bill of peace, the progenitor of the modern bill to
avoid multiplicity of suits, thought that there was no occasion for
the relief where the asserted right could be established by "one or
two actions at law."
Lord Tenham v. Herbert, 2 Atk. 483.
While it need not be said that, under no circumstances could the
maintenance of two suits with common issues be so burdensome or
inconvenient as to justify equitable relief,
see McHenry v.
Hazard, 45 N.Y. 580;
compare Empire Engineering Corp. v.
Mack, 217 N.Y. 85, 95, 111 N.E. 475, it is nevertheless true
that the necessity of maintaining two suits involving the same
issue seems rarely to have been burdensome enough to impel a
plaintiff to seek equitable relief. Equity not infrequently
withholds relief which it is accustomed to give where it would be
burdensome to the defendant and of little advantage to the
plaintiff.
Page 296 U. S. 72
See Harrisonville v. Dickey Clay Co., 289 U.
S. 334,
289 U. S. 335,
289 U. S. 338,
and cases cited;
cf. 75 U. S.
Tayloe, 8 Wall. 557;
Hennessy v. Woolworth,
128 U. S. 438;
McCabe v. Matthews, 155 U. S. 550,
155 U. S. 553.
The present case is different from
Woodmen of the World v.
O'Neill, supra, where 25 groundless suits were being
prosecuted against the complainant, and relief of the respondent
from the not very certain risk that it may have to try two suits at
law upon its two contracts would, without more, hardly compensate
for depriving the petitioners of their right to a trial by
jury.
The bare fact that a plaintiff is threatened with two suits on
the same document and having common issues has been held not to be
enough to call for their trial in a single suit in equity.
Druon v. Sullivan, 66 Vt. 609, 30 A. 98. There appears to
be no case in this Court where the relief has been granted in such
a case, and there are numerous cases where equitable considerations
were thought to require denial of the relief even though more than
two suits were involved.
See Matthews v. Rodgers, supra,
284 U. S.
529-530, and cases cited.
The grounds for relief to a single plaintiff which will deprive
two or more defendants of their right to a jury trial must be real
and substantial, and its necessity must affirmatively appear.
See Boise Artesian Hot & Cold Water Co. v. Boise City,
213 U. S. 276,
213 U. S.
285-286;
Dalton Adding Machine Co. v. State
Corporation Comm'n, 236 U. S. 699,
236 U. S.
700-701. Respondent's bill of complaint does not show
that petitioners are unwilling to abide the result of a trial of
one suit as controlling both, or unwilling to try first the suit in
which they would be joint plaintiffs, or that, in that case, the
judgment would not be
res adjudicata in a subsequent suit,
or in any case would not suffice to dispose of both, or that, upon
appropriate application, the state court would not direct the trial
of the controlling case first. Where the burden of which the
plaintiff complains
Page 296 U. S. 73
is so slight he should make a more persuasive showing that it
can be avoided only by resort to equity.
See Galion Iron Works
v. Ohio Corrugated Culvert Co., 244 F. 427.
Finally it is to be noted that this tenuous ground for the
exercise of equity powers is put forward as the sole medium by
which suits may be withdrawn from the jurisdiction of the state
courts which could not have been removed to or otherwise brought
into the federal courts. While the consequences of the court's
grant of equitable relief cannot affect its power, they
nevertheless have an important bearing on the exercise of the
judicial discretion which must guide a court of equity in
determining whether it should grant or withhold a remedy which it
is within its power to give. Its discretion may properly be
influenced by considerations of the public interests involved.
See United States ex rel. Greathouse v. Dern, 289 U.
S. 352, and cases cited. The power reserved to the
states under the Constitution to provide for the determination of
controversies in their courts may be restricted only by the action
of Congress in conformity to the judicial sections of the
Constitution. Congress, by its legislation, has declared its policy
that cases involving less than the jurisdictional amount be left
exclusively to the state courts, except that a judgment of the
highest court of the state adjudicating a federal right may be
reviewed by this Court.
See Healy v. Ratta, supra,
292 U. S.
269-270. Courts of equity, in the exercise of their
discretionary powers, should recognize this policy by scrupulous
regard for the rightful independence of the state governments and a
remedy infringing that independence, which might otherwise be
given, should be withheld if sought on slight or inconsequential
grounds.
See Pennsylvania v. Williams, 294 U.
S. 176,
294 U. S. 185;
Matthews v. Rodgers, supra, 575;
cf. Central Kentucky
Natural Gas Co. v. Railroad Commission of Kentucky,
290 U. S. 264,
290 U. S.
271-273;
United States ex rel. Kennedy v.
Tyler, 269 U. S. 13.
Page 296 U. S. 74
We think the threatened injury to respondent is of too slight
moment to justify a federal court of equity, in the exercise of its
discretion, in according a remedy which would entail denial of a
jury trial to the petitioners and withdraw from the jurisdiction of
the state courts suits which could not otherwise be brought into
the federal courts.
Reversed.