U.S. Supreme Court ENELOW v. NEW YORK LIFE INS. CO., 293 U.S. 379 (1935)

[Page 293 U.S. 379, 382]

well as a court of equity, may grant in a cause pending before it by virtue of its inherent power to control the progress of the cause so as to maintain the orderly processes of justice. The power to stay proceedings in another court appertains distinctively to equity in the enforcement of equitable principles, and the grant or refusal of such a stay by a court of equity of proceedings at law is a grant or refusal of an injunction within the meaning of section 129 as amended. And, in this aspect, it makes no difference that the two cases, the suit in equity for an injunction and the action at law in which proceedings are stayed, are both pending in the same court, in view of the established distinction between 'proceedings at law and proceedings in equity in the national courts and between the powers of those courts when sitting as courts of law and when sitting as courts of equity.' Per Van Devanter, J., in Griesa v. Mutual Life Insurance Company (C.C.A.) 165 F. 48, 50, 51.

When the Congress enacted section 274b of the Judicial Code (28 USCA 398), providing for equitable defenses in actions at law and the granting of affirmative equitable relief, the procedure was simplified, but the substance of the authorized intervention of equity was not altered. The court was empowered to exercise a summary equitable jurisdiction. Equitable defenses were permitted to be interposed in actions at law 'by answer, plea or replication without the necessity of filing a bill on the equity side of the court.' [Footnote 1] The defendant is to have 'the same rights' as if he had filed a bill seeking the same relief. The equitable issue 'is to be tried to the judge as a chancellor.' The same order of trial is preserved as under the system

[Page 293 U.S. 379, 384]

See Liberty Oil Company v. Condon Nat. Bank, supra; Union Pacific Railroad Co. v. Syas (C.C.A.) 246 F. 561, 565; American Cyanamid Co. v. Wilson & Toomer Fertilizer Co., supra; New York Life Insurance Co. v. Miller (C.C.A. 8th Circuit, October 25, 1934) 73 F.(2d) 350. Compare Phillips-Morefield v. Southern States Life Insurance Co. (C.C.A.) 66 F.(2d) 29, 30; New York Life Insurance Co. v. Marotta (C.C.A.) 57 F.(2d) 1038. And it necessarily follows that this summary procedure cannot aid the defendant when a bill for the same relief would not lie because the defense is one which is completely available in the action at law. Emphasizing the fundamental principle of the equitable jurisdiction, the Congress, from the first Judiciary Act, has declared that suits in equity shall not be sustained in any court of the United States in any case where a 'plain, adequate and complete remedy' may be had at law. Act of September 24, 1789, 16, 1 Stat. 82, now Jud. Code, 267, 28 U.S.C. 384 (28 USCA 384).

The instant case is not one in which there is resort to equity for cancellation of the policy during the life of the insured and no opportunity exists to contest liability at law. Nor is it a case where, although death may have occurred, action has not been brought to recover upon the policy, and equitable relief is sought to protect the insurer against loss of its defense by the expiration of the period after which the policy by its terms is to become incontestable. [Footnote 2] Here, on the death of the insured, an action at law was brought on the policy, and the defendant had opportunity in that action at law, and before the policy by its terms became incontestable, to contest its liability and accordingly filed its affidavit of defense. That defense

[Page 293 U.S. 379, 386]

District Court, with direction to vacate its order for a hearing in equity and to proceed with the trial of the action at law.

It is so ordered. Footnotes

Footnote 1 The text of section 274b (28 U.S.C. 398 (28 USCA 398)) is as follows:'Equitable defenses and equitable relief in actions at law. In all actions at law equitable defenses may be interposed by answer, plea, or replication without the necessity of filing a bill on the equity side of the court. The defendant shall have the same rights in such case as if he had filed a bill embodying the defense of seeking the relief prayed for in such answer or plea. Equitable relief respecting the subject matter of the suit may thus be obtained by answer or plea. In case affirmative relief is prayed in such answer or plea, the plaintiff shall file a replication. Review of the judgment or decree entered in such case shall be regulated by rule of court. Whether such review be sought by writ of error or by appeal the appellate court shall have full power to render such judgment upon the records as law and justice shall require.'

Footnote 2 See Mutual Life Insurance Co. v. Hurni Packing Co., 263 U.S. 167, 177, 44 S.Ct. 90, 31 A.L.R. 102; Jefferson Standard Life Insurance Co. v. Keeton (C.C.A.) 292 F. 53, 54; Jefferson Standard Life Insurance Co. v. McIntyre (C.C.A.) 294 F. 886; Jones v. Reliance Life Insurance Co. (C.C.A.) 11 F.(2d) 69, 70; Peake v. Lincoln National Life Insurance Co. (C.C.A.) 15 F.(2d) 303, 305, 306; Keystone Dairy Co. v. New York Life Insurance Co. (C.C.A.) 19 F. (2d) 68; Rose v. Mutual Life Insurance Co. (C.C.A.) 19 F.(2d) 280, 282; Brown v. Pacific Mutual Life Insurance Co. (C.C.A.) 62 F.(2d) 711, 712.