Alice Cable v. United States Life Insurance Company

• Citation: 24 S.Ct. 74,191 U.S. 288,48 L.Ed. 188
• Decision Date: 30 November 1903
• Docket Number: No. 28,28
• Parties: ALICE A. CABLE, Administratrix, etc., Petitioner , v. UNITED STATES LIFE INSURANCE COMPANY of the City of New York
• Court: United States Supreme Court

191 U.S. 288

24 S.Ct. 74

48 L.Ed. 188

ALICE A. CABLE, Administratrix, etc., Petitioner,

v UNITED STATES LIFE INSURANCE COMPANY of the City of New York.

No. 28.

Argued October 16, 19, 1903.

Decided November 30, 1903.

This case comes here upon certiorari, applied for by the petitioner, who was the administratrix of the estate of Herman D. Cable, deceased. 186 U. S. 482, 47 L. ed. 1185, 23 Sup. Ct. Rep. 855. The suit was brought in the circuit court of the United States for the northern district of Illinois by complainant, the United States Life Insurance Company, of the city of New York and a citizen of that state, against Alice A. Cable, a citizen of the state of Illinois, to have a certain policy of insurance for $50,000, payable as therein stated, upon the life of the said Herman D. Cable, delivered up for cancelation, on the ground that the same had been procured by the fraud of the agents of the deceased. The bill averred that the complainant was an insurance company of New York, lawfully engaged in doing business throughout the United States, and particularly in Illinois, under a permit or license duly granted therefor; that it had issued its policy upon the life of Herman D. Cable, and that it was procured by the fraud and fraudulent representations of his agents, such fraud and fraudulent representations being set forth at length; also that defendant had commenced a suit in the state court of Illinois to recover upon the policy, which suit was instituted about one and a half hours prior to the filing of complainant's original bill. A supplemental and amended bill was filed, in which, among other things, it was alleged:

'10. Your orator further avers that the Constitution and laws of the United States of America confer upon your orator the right to remove into this court said action at law so begun against your orator; that, on the other hand, the state of Illinois, by legislative enactment, has sought to prevent the removal to this court by insurance companies of actions similar to said action so begun by said administratrix, and has practically destroyed such right or made its exercise impracticable, by providing, in substance, that an insurance company shall forfeit and lose its right to do business in the state of Illinois upon removing any such action into this court; that by removing said action to this court your orator might lose its right to transact business in the state of Illinois, and would certainly become involved in serious controversy with said state respecting the transaction of any subsequent business by your orator in said state; that the laws of said state upon certain questions of general insurance law, as interpreted by its highest legal tribunal, and applicable to the facts in this case, are somewhat different from the laws of the United States as interpreted by the Federal courts, upon the same questions, and from the standpoint of the laws of the United States are unduly and erroneously adverse to insurance companies; that your orator is entitled to an application of the law according to the decisions of the Federal courts; and that under the facts and circumstances hereinbefore set forth in this bill, your orator is without a due and proper remedy at law in respect to the claim of said administratrix under said policy of insurance, but is without any remedy at law whatever in this court.'

To this bill the defendant interposed a demurrer, among other things, for want of equity, and that demurrer was sustained by the circuit court, but upon appeal to the circuit court of appeals for the seventh circuit the decree sustaining the demurrer was overruled, and the case remanded to the circuit court. 39 C. C. A. 264, 98 Fed. 761.

An answer was then put in by the administratrix of Cable's estate, denying any fraud, and averring that she had, before the suit in the Federal court was commenced, herself commenced an action upon the policy in a proper state court of Illinois, and that it was her intention and desire to push such action to a speedy conclusion if permitted by the Federal court.

The suit herein was tried and a decree entered that the policy was procured on behalf of the deceased by constructive fraud, and that no actual fraud was intended or practised in the delivery of the same, and it was thereupon decreed that the policy should be delivered up and canceled. The defendant appealed from such decree to the circuit court of appeals, and the complainant took a cross appeal so as to bring up the findings of fact as to the constructive fraud, so that, as counsel said, 'the case might be heard and considered in the circuit court of appeals upon the whole evidence, regardless of the findings of the master and of the circuit court.' This was done for the reason that, in counsel's belief, the evidence showed a deliberate and intentional concealment on the part of Lord, the agent of the deceased, and therefore a plain fraud perpetrated by such agent. The circuit court of appeals affirmed the judgment [49 C. C. A. 216, 111 Fed. 19], and upon application this court granted the writ of certiorari as stated.

Messrs. W. S. Oppenheim and H. H. C. Miller for petitioner.

[Argument of Counsel from pages 291-294 intentionally omitted] Messrs. William G. Beale, Buell McKeever, Gibert E. Porter, and Charles E. Patterson for respondents.

Statement by Mr. Justice Peckham:

[Argument of Counsel from pages 294-302 intentionally omitted]

Page 302

Mr. Justice Peckham, after making the foregoing statement of facts, delivered the opinion of the court:

It is contended upon the part of the administratrix of the estate of the assured, that the court below had no jurisdiction, on the ground that there existed a complete and adequate remedy (or defense) at law when the company was sued upon the policy, and that the effect of allowing this jurisdiction in the circuit court is to improperly deprive the defendant herein of a trial by jury.

It is conceded by the plaintiff in error that no cause of action existed in favor of the complainant herein upon the law side of the Federal court, the contention being that the company could set up, as a defense to any action brought against it in the Federal court, those allegations of fraud which, being proved, would constitute a perfect and complete defense to any action upon the policy.

Page 303

The company, however, avers that the administratrix has elected not to bring her action in the Federal court, although she might have done so on the ground of diversity of citizenship, but has, instead of so doing, brought it in the state court, and hence the company would have no opportunity of setting up its defense in a Federal court in an action brought on the policy, and it insists that on that account it has not that complete and adequate remedy or defense at law, in the same jurisdiction, which it contends is necessary in such case.

It is true that the remedy or defense which will oust an equity court of jurisdiction must be as complete and as adequate, as sufficient and as final, as the remedy in equity, or else the latter court retains jurisdiction; and it must be a remedy which may be resorted to without impediment created otherwise than by the act of the party, and the remedy of defense must be capable of being asserted without rendering the party asserting it liable to the imposition of heavy penalties or forfeitures, arising other than by reason of its own act.

It is also urged, as an answer to the claim of the company as to jurisdiction, that even though the remedy or defense at law must exist in the same (Federal) jurisdiction, yet it is within the power of the company, if it see fit to do so, to remove the action in the state court to the Federal court, and thus its defense at law, while adequate, would also be within the same jurisdiction in which its suit in equity was commenced.

It is further insisted by the administratrix that it is unnecessary that an action at law should have been commenced in the same jurisdiction, but it is sufficient that the defense would be available and complete if such an action should be commenced in a Federal court of law.

As to the removal of the action from the state to the Federal court, the company avers that, even assuming it had the right so to remove, yet it insists that such removal would be too hazardous to the company by subjecting it to a possible revocation of its license to do business in the state, to be of any adequate avail.

Page 304

It is also argued upon the part of the company that the position of a defendant in an action is not so advantageous as that of a plaintiff, as the plaintiff has the conduct of a cause largely within his own control; and it is said that the law as administered in the state court is not so favorable to insurance companies as is the case in the Federal courts, and that the company had the right to an administration of the law by the Federal, instead of the state, court by reason of the diversity of citizenship.

These objections are to be considered.

In Hurd's Revised Statutes of Illinois, chap. 73, title Insurance, in relation to foreign insurance companies, it is provided that any such company must first file a written application for a license, in which it shall state that it desires to transact the business of insurance, and that it will accept a license according to the laws of the state, 'and that said license shall cease and terminate in case and whenever it shall remove or make application to remove into any United States courts any action or proceeding commenced in any of the state courts of this state, upon any claim or cause of action arising out of any business transaction, in fact, done in this state,' etc. The statute also provides that it any company thereafter removes or applies to remove into the United States court any action commenced in a state court of the kind above mentioned, 'it is hereby made the imperative duty of the auditor of public...