Dunn v. Prudential Ins. Co.
Decision Date | 15 October 1934 |
Docket Number | No. 3365.,3365. |
Citation | 8 F. Supp. 799 |
Parties | DUNN v. PRUDENTIAL INS. CO. OF AMERICA. |
Court | U.S. District Court — District of Minnesota |
Irving J. Clark, of Minneapolis, Minn., for plaintiff.
Shearer, Byard & Trogner, of Minneapolis, Minn., for defendant.
NORDBYE, District Judge (after stating the facts as above).
Defendant takes the position that, in that it has interposed the defense of an equitable plea, the proper practice is to order the equity cause transferred to the equity side of the court. It maintains that this practice is implied from the language to be found in 28 USCA § 398, and recognized in Liberty Oil Co. v. Condon Nat. Bank, 260 U. S. 235, 43 S. Ct. 118, 67 L. Ed. 232, which gives to the defendant the same rights as if it had filed a bill embodying the relief prayed for in said answer. Defendant further advances the contention that the fraud set up in its answer cannot be proved at law, and that a court of equity is the only tribunal in which the defendant can avail itself of the fraud which it contends that the insured perpetrated; that the fraud refers to a representation which induced defendant to issue the policy, and does not pertain to the execution of the instrument; that is, the fraud occurred in the application, in the negotiations, so to speak, which defendant contends is cognizable only in equity, as distinguished from the fraud which goes to the question of the legal existence of the instrument. Defendant admits that fraud may be interposed as a defense to an instrument where there was no meeting of the minds, and hence no contract came into existence, but that only equity can vitiate a contract where fraud occurred in the inducement. Defendant refers to the often-cited cases of Hartshorn v. Day, 19 How. 211, 222, 15 L. Ed. 605, and George v. Tate, 102 U. S. 564, 26 L. Ed. 232.
In Hartshorn v. Day, supra, the court stated:
In George v. Tate, supra, the court used the following language (page 570 of 102 U. S.):
These two cases have caused considerable confusion and diversity of opinion in our federal courts. Some courts have recognized them as authority for holding to the strict common-law distinction between a court of law and a court of equity in all proceedings where fraud is the basis of relieving a contracting party where the instrument is under seal. Great solemnity was attached to an instrument under seal at common law. It was not to be overthrown lightly; consequently, where it appears that there was a meeting of the minds between the contracting parties, and a contract came into being, it was said to require the decree of a chancellor to vitiate any such contract under seal on the grounds of fraud. Judge Taft, in Wagner v. National Life Ins. Co., 90 F. 395 (C. C. A. 6), while not referring to the Hartshorn and George Cases, entered upon a lengthy and learned treatise of the common-law distinction herein referred to, and stated (page 404 of 90 F.):
The Hartshorn and George Cases were discussed by the Circuit Court in Such v. Bank of State of New York, 127 F. 450 (S. D. N. Y.), but the court refused to extend the doctrine of these cases where a receipt or release not under seal was attacked on the grounds of fraud in a court of law.
The Circuit Court of Appeals in the Sixth Circuit, in Southern Ry. Co. v. Clark, 233 F. 900, page 905, followed the Wagner Case, and made the following comment:
And, referring to the case of George v. Tate, supra, the court stated (page 905 of 233 F.): "We think the decision in that case and the decisions in other cases of a kindred character are sufficiently distinguished by the fact that they deal with sealed instruments, and so, for that reason alone, the rule in the Wagner Case cannot be said to be in conflict with those decisions."
In Kansas City Southern R. Co. v. Martin, 262 F. 241 (C. C. A. 5), the plaintiff brought an action for damages and defendant set up a written release. Plaintiff replied that he was induced to execute the release by reason of fraudulent representations and sought in an action at law to have the release rendered null and void. The following view of the court is to be found on page 243 of 262 F.: ...
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Wenzel & Henoch Const. Co. v. Metropolitan Water Dist.
...for the sale of an interest in a patent was held not to call for a transfer to the equity side; and Dunn v. Prudential Insurance Co. of America (D.C.Minn.1934) 8 F.Supp. 799, where the attempt of an insurance company to transfer an action at law upon a contract of insurance to the equity si......
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