Di Giovanni v. Camden Fire Ins Ass

• Decision Date: 11 November 1935
• Docket Number: No. 28,28
• Citation: 80 L.Ed. 47,56 S.Ct. 1,296 U.S. 64
• Parties: DI GIOVANNI et ux. v. CAMDEN FIRE INS. ASS'N
• Court: U.S. Supreme Court

296 U.S. 64

56 S.Ct. 1

80 L.Ed. 47

DI GIOVANNI et ux.

v CAMDEN FIRE INS. ASS'N.

No. 28.

Argued Oct. 23, 1935.

Decided Nov. 11, 1935.

[Syllabus from pages 64-66 intentionally omitted] Mr. Harry L. Jacobs, of Kansas City, Mo., for petitioners.

Messrs. Fenton Hume and Hume & Raymond, all of Kansas City, Mo., for respondent.

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, 295 U.S. 728, 55 S.Ct. 834, 79 L.Ed. 1678, 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 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 Railroad Co., 147 U.S. 370, 13 S.Ct. 348, 37 L.Ed. 206; Citizens Bank of Louisiana v. Cannon, 164 U.S. 319, 17 S.Ct. 89, 41 L.Ed. 451. But it applied the doctrine sanctioned by this Court in Woodmen of the World v. O'Neill, 266 U.S. 292, 45 S.Ct. 49, 69 L.Ed. 293; and McDaniel v. Traylor, 212 U.S. 428, 29 S.Ct. 343, 53 L.Ed. 584, 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 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, 55 S.Ct. 310, 79 L.Ed. 440. 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. 379, 384, 385, 55 S.Ct. 310, 79 L.Ed. 440 2. Section 24 of the Judicial Code, 28 U.S.C. § 41 (28 USCA § 41), restricts the jurisdiction of the Districk 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 (28 USCA § 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, 50 S.Ct. 270, 74 L.Ed. 737; Smyth v. Ames, 169 U.S. 466, 18 S.Ct. 418, 42 L.Ed. 819; Risty v. Chicago, Rock Island & P.R. Co., 270 U.S. 378, 46 S.Ct. 236, 70 L.Ed. 641. 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, 181, 182, 55 S.Ct. 380, 79 L.Ed. 841, 96 A.L.R. 1166. 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, 533, 534, 52 S.Ct. 222, 76 L.Ed. 465; Matthews v. Rodgers, 284 U.S. 521, 529, 52 S.Ct. 217, 76 L.Ed. 447. But 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. 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, 54 S.Ct. 700, 78 L.Ed. 1248.

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, 18 S.Ct. 98, ...