Equitable Life Assur. Soc. v. Wert

• Decision Date: 01 March 1939
• Docket Number: No. 11191.,11191.
• Citation: 102 F.2d 10
• Parties: EQUITABLE LIFE ASSUR. SOC. OF THE UNITED STATES v. WERT.
• Court: U.S. Court of Appeals — Eighth Circuit

102 F.2d 10 (1939)

EQUITABLE LIFE ASSUR. SOC. OF THE UNITED STATES v. WERT.

No. 11191.

Circuit Court of Appeals, Eighth Circuit.

March 1, 1939.

David A. Fitch, of Omaha, Neb. (Norris Brown, Ralph M. West, and Robert A. Fitch, all of Omaha, Neb., on the brief), for appellant.

Maxwell V. Beghtol, of Lincoln, Neb. (Glen H. Foe and J. Lee Rankin, both of Lincoln, Neb., on the brief), for appellee.

Before SANBORN, WOODROUGH, and THOMAS, Circuit Judges.

SANBORN, Circuit Judge.

The Equitable Life Assurance Society of the United States, as plaintiff, brought this suit in equity against Bernice L. Wert, as defendant, to determine the rights of the parties with respect to thirteen policies of insurance and to enjoin her from prosecuting six cases in a state court of Nebraska involving eight of these policies. From a decree denying a temporary injunction, the plaintiff has appealed.

The application for the temporary injunction was submitted upon the plaintiff's petition and supplemental petition and an affidavit of its counsel, which disclosed the following facts:

The plaintiff is a citizen of New York, and the defendant is a citizen of Nebraska. The amount in controversy exceeds $3,000. On November 30, 1927, the plaintiff issued to the defendant three retirement annuity policies which, for convenience, will be referred to as policies 1, 2 and 3. On June 19, 1928, the plaintiff issued to the defendant five similar policies, which will be referred to as policies 4, 5, 6, 7 and 8. On August 1, 1932, the plaintiff issued to the defendant three similar policies, which will be referred to as policies 9, 10 and 11. On July 5, 1933, the plaintiff, at the defendant's request, divided policy 9, issuing a new policy 9 for one-half of the amount of the original policy, and another policy — which will be referred to as policy 12 — for an equal amount. None of the policies above referred to exceeded in face value $2,000.

After the issuance of policies 1 to 8, the defendant from time to time made applications to the plaintiff for loans on these policies. The loans were made. In making them the plaintiff discounted interest thereon to the next annual premium date. Separate vouchers were made out to the defendant in each instance for the net amount of the loan. Each voucher was endorsed by the defendant and was used either to pay a premium on a retirement annuity policy issued by the plaintiff to Julia M. Wert, a sister of the defendant, in which the defendant was designated as beneficiary, or to pay the premiums due on policies 9, 10, 11 and 12.¹ In March, 1933, Julia M. Wert, the sister of the defendant, died. Since her death, the defendant has been receiving from the plaintiff $15.12 monthly under the policy issued by it to the deceased. This policy was kept in force by virtue of the proceeds of some of the loans above referred to. On July 25, 1933, the defendant, in writing, requested that the plaintiff treat policies 4, 5, 6, 7 and 8 as surrendered for their cash value, that the premiums paid on policies 4, 5, 6 and 7 be allocated to policy 12, and that the premiums paid on policy 8 be transferred to policy 11. These requests were complied with by the plaintiff.

About July 14, 1937, the defendant commenced five separate actions against the plaintiff and its agent Charles E. Reilly in the District Court of Lancaster County, Nebraska, on policies 4, 5, 6, 7 and 8, for total damages of $6,493.93 (and a reasonable attorney's fee) resulting from their wrongful conduct described in each complaint in the following language: "That the defendant Charles E. Reilly together with the defendant The Equitable Life Assurance Society of the United States, a corporation, on or about the 18th day of May, 1932 entered into a wrongful and fraudulent plan and scheme, without the consent or knowledge of this plaintiff, the purpose of which plan and scheme was to fraudulently make loans upon said contracts of insurance held by this plaintiff for the benefit and use of the said defendants and ultimately by said loans and by cancellation acquire from said plaintiff all of the value from said contracts of insurance; * * *." At or about the same time, the defendant commenced a sixth action in the same court against the same defendants, but in equity, for the cancellation of encumbrances on policies 1, 2 and 3, upon the same ground as was alleged in the five actions at law.

The plaintiff alleges in its petition: (1) That if the defendant should prevail in her actions brought in the state court, it is entitled (a) to have policies 9, 10, 11 and 12 cancelled, since such policies would in that event have been obtained by the defendant without any cost to her, and (b) to have the court determine the rights of the parties under the Julia M. Wert policy and to have an accounting in connection therewith, since that policy was kept in force by the loans procured by the defendant on the policies sued upon in the state court; (2) that, since these defenses are equitable in nature and cannot be asserted in the five actions at law brought by the defendant in the state court, "plaintiff herein has no adequate remedy at law."

The plaintiff in its petition further alleges: "That it has no plain, adequate and complete remedy at law in the premises, and that it is subjected to a multiplicity of suits; that all of said suits are between plaintiff and defendant herein, and grow out of the same transactions, and that this court, as a court of equity, can hear and determine the controversy in one action and determine the rights of plaintiff and defendant, and afford the plaintiff a complete and adequate remedy."

In its supplemental petition the plaintiff asserts that policies 1, 2 and 3 lapsed for nonpayment of the premium due November 28, 1937, and that the action brought by the defendant against the plaintiff in the state court praying that those policies be declared to be free and clear of encumbrances involves a moot question.

The question presented by this appeal is whether the lower court abused its discretion in denying to the plaintiff a temporary injunction restraining the prosecution by the defendant of the six cases in the state court.

This suit is in personam. The court below has jurisdiction of it, since diversity of citizenship exists and the requisite jurisdictional amount is in controversy. It was proper to aggregate the value of the thirteen policies to make the jurisdictional amount. Simecek v. United States Nat. Bank, 8 Cir., 91 F.2d 214, 217; Kimel v. Missouri State Life Ins. Co., 10 Cir., 71 F.2d 921, 924, and cases cited; Rainier Nat. Park Co. v. Martin, D.C., 18 F.Supp. 481, 486, affirmed 302 U.S. 661, 58 S.Ct. 478, 82 L.Ed. 511.

The actions brought by the defendant in the state court are also in personam. The issues of fact in five of them are triable by jury. All of them are based upon the same alleged wrong committed by the plaintiff and its agent. Since these cases are not removable to the federal court, the state court has exclusive jurisdiction of them. Kline v. Burke Construction Co., 260 U.S. 226, 234, 43 S.Ct. 79, 67 L.Ed. 226, 24 A.L.R. 1077. If they had been brought as one action, instead of six, the federal court could not have enjoined the defendant from prosecuting that action. Where an action first brought is in personam and only a personal judgment is sought, another action for the same cause in a different jurisdiction is not precluded. Kline v. Burke Construction Co., supra, 230, 43 S.Ct. 79; Stanton v. Embrey, 93 U.S. 548, 554, 23 L.Ed. 983; Merritt v. American Steel-Barge Co., 8 Cir., 79 F. 228, 232-234; Standley v. Roberts, 8 Cir., 59 F. 836, 844, 845; W. E. Stewart Land Co. v. Arthur, 8 Cir., 267 F. 184, 185; Baltimore & O. R. Co. v. Wabash R. Co., 7 Cir., 119 F. 678, 680.

Section 265 of the Judicial Code (§ 379, U.S.C., Title 28, 28 U.S.C.A. § 379), upon which the lower court relied in denying the temporary injunction, provides: "The writ of injunction shall not be granted by any court of the United States to stay proceedings in any court of a State, except in cases where such injunction may be authorized by any law relating to proceedings in bankruptcy."

This provision has been in force for nearly a century and a half and "is intended to give effect to a familiar rule of comity and like that rule is limited in its field of operation. Within that field it tends to prevent unseemly interference with the orderly disposal of litigation in the state courts and is salutary; but to carry it beyond that field would materially hamper the federal courts in the discharge of duties otherwise plainly cast upon them by the Constitution and the laws of Congress, which of course is not contemplated." Wells Fargo & Co. v. Taylor, 254 U.S. 175, 183, 41 S.Ct. 93, 96, 65 L.Ed. 205.

"At the same time, since 1793, the prohibition of the use of injunction from a federal court to stay proceedings in a state court has been maintained continuously, and has been consistently upheld. Hull v. Burr, 234 U.S. 712, 723, 34 S.Ct. 892, 58 L.Ed. 1557, and cases cited. In exceptional instances the letter has been departed from while the spirit of the prohibition has been observed; for example, in cases holding that, in order to maintain the jurisdiction of a federal court properly invoked, and render its judgments and decrees effectual, proceedings in a state court which would defeat or impair such jurisdiction may be enjoined." Essanay Film Co. v. Kane, 258 U.S. 358, 361, 42 S.Ct. 318, 319, 66 L.Ed. 658.

Section 265 "is to be construed in connection with section 262 Judicial Code; § 377, U.S.C., Title 28, 28 U.S.C.A. § 377, which authorizes the United States courts `to issue all writs not specifically provided for by statute, which may be necessary for the exercise of their respective jurisdictions, and agreeable to the usages and principles of law.' See Julian v. Central Trust Co., 193 U.S. 93, 112, 24 S.Ct. 399, 48 L.Ed. 629; Lanning v....