Source: https://openjurist.org/293/us/379
Timestamp: 2019-04-20 20:25:46+00:00

Document:
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.'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 of separate courts. Liberty Oil Company v. Condon Nat. Bank, 260 U.S. 235, 242, 243, 43 S.Ct. 118, 67 L.Ed. 232. The trial of the issue at law may be postponed until the equitable issue is first disposed of, and then, if an issue at law remains, it is triable by a jury as the Seventh Amendment requires. Id.
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.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 was solely that the defendant had been induced to issue the policy by false answers in the application which were alleged to have been made by the applicant 'with knowledge of their falsity and fraudulently' in order to obtain the insurance. The affidavit of defense showed nothing whatever as a further ground for equitable relief, and the respondent is necessarily confined to the case it made. In such a case, the defense of fraud is completely available in the action at law, and a bill in equity would not lie to stay proceedings in that action in order to have the defense heard and determined in equity. Phoenix Mut. Life Insurance Co. v. Bailey, 13 Wall. 616, 623, 20 L.Ed. 501; New York Life Insurance Company v. Bangs, 103 U.S. 780, 782, 26 L.Ed. 608; Cable v. United States Life Insurance Co., 191 U.S. 288, 305, 24 S.Ct. 74, 48 L.Ed. 188; American Mills Co. v. American Surety Co., 260 U.S. 360, 363, 43 S.Ct. 149, 67 L.Ed. 306; New York Life Insurance Co. v. Marshall (C.C.A.) 23 F.(2d) 225; New York Life Insurance Co. v. Miller, supra. Respondent was in no better position under section 274b (28 USCA § 398).
See Mutual Life Insurance Co. v. Hurni Packing Co., 263 U.S. 167, 177, 44 S.Ct. 90, 68 L.Ed. 235, 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.

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