Southeastern Life Ins. Co. v. Palmer , 120 S.C. 490 ( 1922 )

I concur in the opinion of Mr. Justice Watts as far as it goes, but think that it should be distinctly adjudicated that the complaint does not state a cause of action for cancellation of the policy of insurance cognizable by a Court of Equity. The policy had become a claim by the death of the insured prior to the commencement of this action, subject to such defenses as may have been interposed by the company. If it had been avoided by the fraudulent misrepresentations alleged in the complaint, there is no reason why they could not have been interposed in an action at law as a complete defense to an action by the beneficiary. There are no circumstances stated in the complaint tending even to show that this plain and adequate remedy could not have been availed of in such action at law. Some such showing is essential to the jurisdiction of the Court of Equity. That they could have been interposed by the company to an action at law is conclusively established by the case of Fludd v. Assur. Co.,75 S.C. 315, 55 S.E. 762, where it is declared:

"All the rights which the insurance company could maintain in an action for cancellation on the ground of false representation are available as a defense alleging forfeiture in a suit on the instrument. It was, therefore, perfectly proper to deny the equitable relief sought, inasmuch as defendant had a complete and adequate remedy at law."

In Phoenix Mut. Ins. Co. v. Bailey, 13 Wall. 616,20 L.Ed. 501, it is held in substance that equitable relief cannot be had when the remedy at law is plain, adequate, and complete. That was just such a case as this, where the insurance company after the loss brought a suit in equity to cancel the policy upon the ground of false representations. The Court held that the company had a plain and adequate remedy at law and dismissed the bill, conceding that the company had made out a strong case against the policy, saying:

"Where a party, if this theory of the controversy is correct, has a good defense at law, to `a purely legal demand,' he should be left to that means of defense, as he has no occasion to resort to a Court of Equity for relief, unless he is prepared to allege and prove some special circumstances to show that he may suffer irreparable injury if he is denied a preventative remedy."

In 6 Pom. Eq. Jur. § 685, it is said:

"The jurisdiction of equity to grant the remedy of cancellation exists and will always be exercised when it is necessary to protect or maintain equitable primary estates, interests, or rights. Where, however, the estate, interest, or right is legal, the jurisdiction always exists, but its exercise depends upon the adequacy of the legal remedies, a party being left to his affirmative or defensive remedy at law, where full and complete justice can thereby be done."

To the same effect see Niagara Ins. Co. v. Adams, 198 Fed. 827, 117 C.C.A. 464; Bankers' Reserve Life Co. v.Omberson, 123 Minn. 285, 143 N.W. 735, 48 L.R.A. (N.S.) 265; Griesa v. Mutual Co., 169 Fed. 513, 94 C.C. A. 635; Cable v. Insurance Co., 191 U.S. 288,24 Sup. Ct. 74, 48 L.Ed. 188.

In The Sailors v. Wolfe, 118 Tenn. 755,102 S.W. 1109, 12 L.R.A. (N.S.) 881, it is held:

"Equity will not, under its power to cancel instruments on the ground of fraud, enjoin proceedings at law on a mutual benefit certificate which the insurer claims to have been secured through fraud in the application, since the defense of fraud is fully available as a defense at law."

In a note to this case it is said:

"The overwhelming weight of authority sustains the rule laid down in the above case that a Court of Equity will not, after the loss insured against has occurred, cancel a policy of insurance and enjoin proceedings at law thereon, merely because the policy was procured through the fraud of the insured, since such a defense is fully available at law."

In Bankers' Co. v. Omberson, 123 Minn. 285,143 N.W. 735, 48 L.R.A. (N.S.) 265, it is held:

"An action brought after a loss under an insurance policy to cancel the policy for fraud, or to restrain an action at law thereon, cannot be maintained, in the absence of some special circumstance of a nature to cause irreparable loss to plaintiff if he is relegated to his remedy at law by way of defense to an action on the policy. Where the remedy at law is adequate, equity will not grant relief."

The judgment of this Court should be that the judgment below be affirmed; that the alleged cause of action set up in the complaint be dismissed; and that the case be remanded to the Circuit Court for trial by a jury upon the alleged cause of action set up in the defendant's counterclaim, with leave to the plaintiff to reply thereto within 10 days after filing of remittitur.

MR. CHIEF JUSTICE GARY concurs.