Great North Woods Club v. Raymond
| Decision Date | 21 December 1931 |
| Docket Number | No. 5895.,5895. |
| Parties | GREAT NORTH WOODS CLUB v. RAYMOND, District Judge. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Altheimer & Mayer, of Chicago, Ill., for Great North Woods Club.
Chilton P. Wilson, of Chicago, Ill., and Mark Norris, of Grand Rapids, Mich., for respondent.
Before DENISON, HICKS, and HICKENLOOPER, Circuit Judges.
A policy was issued by the insurance company upon the life of Callahan, payable to the Great North Woods Club, as beneficiary. It contained the customary provision that it would be incontestable after two years from the date of issue (September 26, 1927). Callahan having died, suit was commenced in a state court in Illinois by the beneficiary against the insurer. Just before the expiration of the two-year period, the insurer filed a bill in an equity court in Illinois, asking that the policy be canceled, and basing equity jurisdiction upon the incontestable clause the jurisdiction sustained by us in New York Life v. Seymour, 45 F.(2d) 47, 73 A. L. R. 1523. The reasons urged for cancellation were that the insurance contract was beyond the power of the insurance company, and that the beneficiary had no insurable interest in the life of the insured. Shortly thereafter, but after the two-year period, the beneficiary discontinued its Illinois suit upon the policy, and brought a similar action in the United States Court for the Western District of Michigan. The insurance company pleaded in defense to this action the same two grounds of invalidity upon which it had based its Illinois equity suit. When it appeared that the decree in the Illinois case might at any time destroy the basis of the suit in the federal court, and would be binding as an adjudication, Judge Raymond made an order staying this suit until the Illinois equity suit should be decided. By the present mandamus proceeding it is sought to have this stay order vacated.
The questions involved are two: Was the Illinois equity case so far a suit in rem that jurisdiction must be yielded to that court? Was the stay of proceedings, if not obligatory, yet within the discretion of the trial judge?
There is plausibility in the thought that the insurance contract itself and its status constitute a res which will support appurtenant jurisdiction. This seems to have been assumed in Perry v. Young, 133 Tenn. 522, 182 S. W. 577, L. R. A. 1917B, 385, and some New Jersey cases and Giblin v. North Wisconsin Co., 131 Wis. 261-269, 111 N. W. 499, 120 Am. St. Rep. 1040, are also cited in support. The last one related to a county warrant; the New Jersey cases to the ownership of corporate stock; all were brought in the home jurisdiction of the corporation, and they are plainly distinguishable. On the other hand, in Kline v. Burke Co., 260 U. S. 226, 230, 43 S. Ct. 79, 67 L. Ed. 226, 24 A. L. R. 1077, the real controversy was as to the status and effect of the contract. The equity suit alleged that the contract had become broken for the reasons stated, and the same reasons formed the defense against the action on the contract in the other court. It was pointed out that a...
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