Atlas Life Ins. Co. v. WI Southern, Inc.

• Decision Date: 20 May 1938
• Docket Number: No. 1272.,1272.
• Citation: 23 F. Supp. 334
• Court: U.S. District Court — Northern District of Oklahoma
• Parties: ATLAS LIFE INS. CO. v. W. I. SOUTHERN, Inc.

23 F. Supp. 334

ATLAS LIFE INS. CO. v. W. I. SOUTHERN, Inc.

No. 1272.

District Court, N. D. Oklahoma.

May 20, 1938.

Rogers, Stephenson & Dickason, of Tulsa, Okl., for plaintiff.

A. F. Moss and H. R. Young, both of Tulsa, Okl., for defendant.

FRANKLIN E. KENNAMER, District Judge.

On March 7, 1938, W. I. Southern, Inc., brought suit in the district court of Tulsa county, Okl., to recover the proceeds of a policy of insurance issued by the plaintiff herein upon the life of Wheaton I. Southern, who died after the policy was issued. The policy contained a clause providing for incontestability after the expiration of two years from its date, and this period would have expired shortly after the institution of the suit. Service was had upon the insurance company the same day the suit was filed.

Thereafter and within the period of contestability this suit was filed to cancel the policy on the ground that it was obtained by virtue of certain fraudulent representations by the insured. The defendant, the beneficiary in said policy, moves the court to dismiss the action pending in this court.

Plaintiff urges that whether or not it has an adequate remedy at law must be tested by whether or not its remedy on the law side of the federal court is adequate and that whether or not it has a remedy in the state court is immaterial. Di Giovanni v. Camden Fire Ins. Ass'n, 296 U.S. 64, 256 S.Ct. 1, 80 L.Ed. 47; Chicago & N. W. Ry. Co. v. Railroad and W. Commission, D.C., 280 F. 387; Munn v. Des Moines Natl. Bank, 8 Cir., 18 F.2d 269; American Life Ins. Co. v. Stewart, 300 U.S. 203, 57 S. Ct. 377, 81 L.Ed. 605, 111 A.L.R. 1268; Enelow v. New York Life Ins. Co., 293 U.S. 379, 55 S.Ct. 310, 79 L.Ed. 440; Brown v. Pacific Mutual Life Ins. Co., 4 Cir., 62 F.2d 711, and similar cases. The fact that a person may have an adequate remedy at law in a state court does not necessarily preclude federal equity jurisdiction if there be no adequate remedy at law in the federal court, for federal equity jurisdiction is not dependent upon state practice or procedure. I do not conceive, however, that the principle just stated controls this case, otherwise, it might well be said that the federal courts must rule that no adequate remedy at law is afforded in a state court suit and that every litigant has a right to have his case tried in a federal court. Such, of course, is not the law. It is therefore immaterial that the insurance company may not have the right to remove to this court the suit filed against it in the state court.

When the beneficiary filed its suit in the state court, that court obtained jurisdiction of the subject matter of the action and of the parties thereto. In that court the insurance company may obtain all the relief it seeks here, fraud in obtaining the issuance of the policy being available to it as a defense in that court. This case is therefore to be distinguished from Ruhlin v. New York Life Insurance Company, 3 Cir., 93 F.2d 416, and is also to be distinguished from cases where the identity of the beneficiary may be uncertain.

I hold that this case is ruled by Metropolitan Life Insurance Company v. Banion, 10 Cir., 86 F.2d 886, in which Judge McDermott collected the cases and stated their doctrine as follows (page 888): "The philosophy of these cases, as we read them, is this: An insurance...