Massachusetts Ben. Life Ass'n v. Lohmiller

• Citation: 74 F. 23
• Decision Date: 16 May 1896
• Docket Number: 281.
• Parties: MASSACHUSETTS BENEFIT LIFE ASS'N v. LOHMILLER et al.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

74 F. 23

MASSACHUSETTS BENEFIT LIFE ASS'N v. LOHMILLER et al.

No. 281.

United States Court of Appeals, Seventh Circuit.

May 16, 1896

The Massachusetts Benefit Life Association, appellant, is a corporation of the state of Massachusetts, engaged in the business of 'life insurance on the assessment plan,' and had complied with the requirements of an act of the general assembly of the state of Illinois, approved June 22, 1893, which authorized its transaction of business in that state, and was operating therein accordingly. The appellee John C. Lohmiller, at the March term, 1895, of the circuit court for Adams county, in the state, had obtained entry of a judgment on default against the appellant for $3,030 and costs, upon a declaration in assumpsit, on a policy of $3,000 issued by the association in favor of Lohmiller on the life of his wife Kate Lohmiller, since deceased. After the expiration of the term of the state court the association filed its bill in chancery in the circuit court of the United States for the Southern district of Illinois, to enjoin all proceedings for the enforcement of the judgment so entered, and applied for a temporary injunction in accordance with the prayer of its bill. The hearing of the application was had upon the bill and amendments thereto,-- including an amendment which alleged that B. K. Durfee, insurance commissioner of the state of Illinois, would proceed to revoke the authority of the association to transact business in the state unless such pretended judgment was satisfied, and praying that he be made party defendant and restrained from such action,-- and upon the several answers filed, and certain testimony preserved in a bill of exceptions. The injunction was denied, and this appeal is from the order thereupon. Aside from its formal allegations, and certain statements of design to cheat wrong, and defraud the complainant, the bill of complaint alleges a single ground for relief against the judgment at law, namely, that it is invalid for want of legal service of the summons upon the defendant therein; that pursuant to a requirement in that behalf of the act referred to, for its admission to transact business in the state of Illinois, the association had appointed, in writing, the proper officer of that state, designated by the act, to be its 'true and lawful attorney, upon whom all process in any action or proceeding against it may be served, and had no other attorney or person within the state upon whom process might be served'; that, disregarding such provision and appointment, the summons in the action was served upon William C. Abrams and Mathew Jansen, as agents of the association, who 'were not persons upon whom service of process might lawfully be made within the state,' and made no service upon the officer so appointed. It is further alleged that such service was made by direction of the plaintiff in the action, and his attorney, with full knowledge of the premises, 'and for the purpose of concealing' from the complainant 'the fact that a suit had been filed and commenced'; that they concealed 'from the court the fact that valid service of summons in said alleged suit had not been made,' and procured judgment by default; that they remained silent, and concealed from the complainant the fact of such action, until the expiration of the term at which the judgment was rendered. The act of the general assembly approved June 22, 1893 provides for the incorporation of 'life and accident insurance companies on the assessment plan,' and for 'control of such companies in this state and other states doing business in this state,' and, by its twenty-second section, requires that every such corporation doing business in the state shall appoint, in writing, the auditor of public accounts, or his successor in office, 'to be its true and lawful attorney, upon whom all process in any action or proceeding against it be served,' with an agreement that service so made 'shall be of the same force and validity as if served on the corporation, and that the authority shall continue in force so long as any liability remains outstanding against the corporation' in the state. The auditor is required, to give to the corporation immediate notice when process is so served, to forward a copy, and to keep a record showing 'the day and hour when such service was made.' By the practice act of Illinois (paragraph 5, c. 110, 2 Starr & C.Ann.St.p. 1777), general provision is made for service of process upon an incorporated company, which allows service upon 'any agent of said company found in the county,' if the president shall not be found therein; and this provision is applicable to foreign corporations engaged in business in the state, as interpreted by uniform decisions of the supreme court. See Johnson v. Insurance Co., 11 Biss. 452, 15 F. 97. By the general act concerning corporations (paragraph 26, c. 32, 1 Starr &C.Ann.St.p. 619), it is provided that foreign corporations doing business in the state 'shall be subject to all the liabilities, restrictions and duties that are or may be imposed upon corporations of like character organized under the general laws of this state, and shall have no other or greater powers.'

Clark Varnum, for appellant.

James N. Sprigg, for appellees.

Before WOODS and JENKINS, Circuit Judges, and SEAMAN, District Judge.

SEAMAN District Judge, after the statement of the case, .

By this bill the complainant invokes the equity jurisdiction of the circuit court of the United States for a decree pronouncing a judgment obtained against the complainant upon purported default in the circuit court of Adams county, Ill., 'to be null and void, and to have been rendered without due, legal, and proper process,' and enjoining any enforcement of said judgment. If redress can be granted upon the allegations contained in the bill, it is manifest that an injunction is necessary to make it effectual. The appeal is taken from an order denying the preliminary injunction prayed for, after a hearing upon the bill of complaint and amendments, the several answers, and certain testimony. The arguments of counsel are mainly directed to two propositions which are asserted on behalf of the appellant as ground for intervention against the judgment, substantially as follows: First. That the chancery powers of the federal court are sufficient to grant this relief in favor of a judgment defendant who is not a citizen of the state, and was not subjected to the jurisdiction of the state court by legal service of its process, when the statutory time had expired within which an application could there by made to open the judgment; that the fact of the alleged invalidity of service is concealed of record by the absence of any allegation showing that the corporation defendant is either foreign, or engaged in 'life insurance on the assessment plan'; and that the failure to disclose want of jurisdiction upon the face of the record renders the appellant remediless, without the aid of equity. And it is urged that the prohibition upon the federal courts against granting injunctions to stay proceedings in any court of the state,-- which is preserved in section 720 from the judiciary act of 1793,-- as interpreted in recent decisions by the supreme court, does not operate to bar the jurisdiction of equity to deprive a party of the benefits of a judgment so obtained; citing Marshall v. Holmes, 141 U.S. 589, 12 Sup.Ct. 62, and other cases. Second. That the statute of Illinois under which this corporation was admitted to transact business in the state prescribes the appointment of the auditor as its agent to receive service of process when suits were brought therein, and that, such appointment having been made, this special provision was exclusive of all other methods of service; that the service in question, made, ostensibly under the general statute, upon an agent not so authorized to receive service, was of no effect to confer jurisdiction, but was intended to impose upon the state court, and obtain inequitable advantage over the defendant, and accomplished that purpose. The prayer of this bill could be granted only upon an affirmance of both these propositions, but whether they are true need not be considered, because the bill is defective in other fundamental requisites.

The writ of injunction is aptly called the 'strong arm of equity.' It must be employed only for the enforcement of rights, or the prevention of wrongs, in accordance with the principles of equity, and in cases which are clearly equitable cognizance. The exercise of the power is one of great delicacy, and requires strict adherence to the well-settled rules by which it is limited and guarded against abuse. This caution is of special importance when it is sought to enjoin proceedings upon a judgment in another court. As remarked in Truly v. Wanzer, 5 How. 141, 143, an injunction-- 'Never should be permitted to issue when it is even suspected that it will be prostituted to the unworthy purpose of delaying, vexing, and harassing suitors at law in the prosecution of their just demands.'

The elementary rule which must govern has been repeatedly declared by the supreme court, that:

'A court of equity does not interfere with judgments at law unless the complainant has an equitable defense of which he could not avail himself at law, because it did not amount to a legal defense, or had a good defense at law which he was prevented from availing himself of by fraud or accident, unmixed with negligence of himself or his agents. ' Hendrickson v. Hinckley, 17 How. 443, 445; Knox Co. v. Harshman, 133 U.S. 152, 154, 10 Sup.Ct. 257.

The application must rest upon clear and unqualified equities and 'not upon any mere legal grounds.' 3 Pom.Eq.Jur. § 1361. In...