APPEAL from the Supreme Court of the District. The Phoenix Mutual Life Insurance Company filed a bill against Mrs. Elizabeth Bailey, widow of Albert Bailey, to compel the cancellation of two policies of insurance issued by that company upon the life of the said Albert, on the 12th of June and 15th of July, 1867, respectively. The grounds of the bill were that the policies had been procured by the defendant by fraudulent suppression of certain material facts, and the misrepresentation of other ones of the same class. The answer denied the allegations made. Evidence was given tending to show that the defendant, then bearing the name of Mrs. Von Kammecher, after a husband from whom she had been divorced, went, on the 10th June, 1867, to the office of the insurance company to have Mr. Bailey's life insured; the insurance being in Bailey's own favor, he representing himself as unmarried. Bailey being required, in the usual form, to name an intimate friend who could answer as to his health, referred to Mrs. Von Kammecher, in whose house he was then boarding, and who accordingly signed a certificate that he was in good health and of temperate habits. A policy was accordingly made out to Bailey for $4000. Nine days afterwards, that is to say, on the 19th June, 1867, the same lady called at the office and requested that the policy should issue to her as the wife of Bailey and should be increased to $6000. The policy was thus made, and was dated as of the 12th June, 1867, the date intended for the other. An additional policy was made for $4000 on the 15th July, 1867. Bailey and Mrs. Von Kammecher were married June 22d, 1867, and Bailey died October 11th following, of phthisis pulmonalis. Evidence was also given tending to show that Bailey had been under treatment from February till May, 1867, was told that his lungs were diseassed, and that he 'must strenuously take care of himself;' and, moreover, that Mrs. Von Kammecher knew this, and had been told that Mr. Bailey 'might live two years or not more than six months;' and that she had been herself principally if not solely instrumental in procuring the policies. Evidence was also given tending to show that Bailey's habits were not temperate. On the other hand evidence was given tending to a contrary conclusion, but it did not perhaps establish it. It was not alleged in the bill, nor was there evidence given to show that Mrs. Bailey had attempted to assign or that she was about to dispose of the policies. The averment of the bill was that Mrs. Bailey, insisting upon the obligation of the company under the policies, 'demanded the $10,000, and threatened to bring an action at law to recover the same, and by such suit to harass and injure the company.' But, on the other hand, it appeared that after the bill had been filed, suit was brought at law on the policies; so that the company could now set up the fraud alleged. The court below dismissed the bill without prejudice.
The opinion of the court was delivered by: Mr. Justice Clifford delivered the opinion of the court.
Messrs. Carlisle, McPherson, and W. S. Cox, for the appellant:
The jurisdiction of courts of equity to compel the cancellation of agreements obtained through false and fraudulent representations is well established, and insurance cases are peculiarly within the jurisdiction. The facts show a clear case of fraud.
Messrs. W. D. Davidge and R. B. Washington, contra:
There is a complete defence at law in favor of the insurance company, if the allegations of the bill are true, and it is sued. If not sued no injury is done to it. The issues of fact raised in the cause are peculiarly suited for the determination of a jury; and even if a court of equity has discretion to entertain the case, which we do not deny, that discretion should not be exercised.
Policies of life insurance are governed, in some respects, by different rules of construction from those applied by the courts in case of policies against marine risks or policies against loss by fire.
Marine and fire policies are contracts of indemnity, by which the claim of the insured is commensurate with the damages he sustained by the loss of, or injury to, the property insured. Such being the nature of the contract, it is clear that an absolute sale of the property insured, prior to the alleged disaster, is a good defence to an action on the policy, as the insured cannot justly claim indemnity for the loss of, or injury to, property in which he had no insurable interest at the time the loss or injury occurred.
Life insurances have sometimes been construed in the same way, but the better opinion is that the decided cases which proceed upon the ground that the insured must necessarily have some pecuniary interest in the life of the cestui qui vie are founded in an erroneous view of the nature of the contract, that the contract of life insurance is not necessarily one merely of indemnity for a pecuniary loss, as in marine and fire policies, that it is sufficient to show that the policy is not invalid as a wager policy, if it appear that the relation, whether of consanguinity or of affinity, was such, between the person whose life was insured and the beneficiary named in the policy, as warrants the conclusion that the beneficiary had an interest, whether pecuniary or arising from dependence or natural affection, in the life of the person insured.*fn1
Insurers in such a policy contract to pay a certain sum, in the event therein specified, in consideration of the payment of the stipulated premium or premiums, and it is enough to entitle the insured to recover if it appear that the stipulated event has happened, and that the party effecting the policy had an insurable interest, such as is described, in the life of the person insured at the inception of the contract, as the contract is not merely for an indemnity, as in marine and fire policies.
Two policies for insurance upon the life of Albert Bailey, the husband of the appellee, were issued by the appellants, and made payable to the appellee in ninety days after due notice and proof of the death of the husband. He died on the eleventh of October following, and due notice of that event was given to the appellants by the appellee, to whom the sums insured, amounting to ten thousand dollars, were payable, but they refused to pay the same, upon the ground that the policies were obtained by fraudulent misrepresentations and by the fraudulent suppression of material facts. They not only refused to pay the sums insured, but instituted the present suit in equity to enjoin the appellee from assigning or in any manner disposing of the policies, and also prayed that she might be compelled by the decree of the court to deliver up the policies to be cancelled, and for further relief. Process was issued and served and the respondent appeared and answered, denying all the charges set forth in the bill of complaint, and alleging that the complainants were bound to pay her the entire sums insured in the respective policies. Proofs were taken on both sides, and the cause having been duly transferred to the general term, the parties proceeded to final hearing, and the Supreme Court of the District entered a decree dismissing the bill of complaint with costs, but without prejudice, and the complainants appealed to this court.
Fraudulent misrepresentations and the fraudulent suppression of material facts are the principal grounds alleged for the relief prayed in the bill of complaint, and it must be conceded that the proofs introduced by the complainants tend strongly to support the allegations which contain those charges. Those allegations in the bill of complaint are denied in the answer, and the respondent has introduced proofs in support of those denials, but it is not going too far to say that the weight of the evidence, as exhibited in the record, is adverse to the pretensions of the respondent, nor does it appear that any different views were entertained by the subordinate court. Grant all that, and still it does not follow that the decree in the court below is erroneous, as the bill of complaint may well have been dismissed upon grounds wholly disconnected from the merits of the controversy.
Suits in equity, the Judiciary Act provides, shall not be sustained in either of the courts of the United States in any case where plain, adequate, and complete remedy may be had at law, and the same rule is applicable where the suit is prosecuted in the Chancery Court of this District*fn2
Much consideration was given to the construction of that section of the Judiciary Act in the case first referred to, and also to the question whether a party seeking to enforce a legal right could resort to equity in the first instance in a controversy where his remedy at law is complete, and the court, without hesitation, came to the conclusion that he could not, if his remedy at law was as practical and as efficient to the ends of justice and its prompt administration as the remedy in equity.
Most of the leading authorities were carefully examined on the occasion and the court came to the following conclusion, which appears to be correct: That whenever a court of law in such a case is competent to take cognizance of a right and has power to proceed to a judgment which affords a plain, adequate, and complete remedy, without the aid of a court of equity, the plaintiff must in general ...