DECISIONS OF THE CIRCUIT AND DISTRICT COURTS OF THE UNITED STATES. 1863-1871. THE HOME INSURANCE COMPANY 0. Circuit Court, Eighth Circuit; District of Minnesota, October T., 1870. INSURANCE. INJUNCTION.-DISCOVERY. A circuit court ought not to entertain a bill in equity filed by an insurance company, after a loss has occurred under a policy issued by them, to procure a decree canceling the policy and enjoining the insured from bringing any action upon it, where the bill is founded upon charges of fraud in obtaining the policy, which, if true, might be set up in defense of an action at law upon it. So held, where the policy contained a clause limiting the time for suing upon it to twelve months from the date of the loss; so that there was no danger of injury to the complainant through any unreasonable delay to sue. Query, whether a circuit court within a State whose laws allow parties to examine each other upon a given cause of action or defense, ought to entertain a bill of discovery, merely in aid of such cause of action or defense? Motion to dismiss a bill in equity. Home Ins. Co. v. Stanchfield. This bill was filed to obtain a decree canceling, on the ground of fraud, a policy of insurance issued by the complainants, and enjoining the defendants from bringing any action upon such policy. The bill alleged that the complainants were a foreign insurance corporation, and that the respondents were citizens of the State of Minnesota. It then alleged that the corporation issued, on December 15, 1858, a policy of insurance, described in the bill, to the respondent Stanchfield, loss, if any, payable to Newman. It then charged that they were induced to issue the policy by reliance upon certain false and fraudulent representations, which were particularly set out, made by Stanchfield; and averred a loss of the insured building by fire; and alleged that the fraud practiced on the complainants was not discovered by them till after the loss, and shortly before the filing of the bill, and that they had tendered a return of premium, and demanded that the policy be delivered to them to be canceled, which had been refused. The bill prayed for a temporary injunction to restrain the defendants commencing any action, in any court, upon the policy; and, further, that on the final hearing, the defendants might be decreed to deliver up to the complainants the policy to be canceled, and that it be declared null and void, and for general relief. On the bill, and before answer, a temporary injunction was allowed by one of the judges of this court. To this bill an answer was filed, admitting the issuing the policy, the loss, and the intent to sue upon the policy, but fully denying the alleged fraud and every allegation of false representations, or intent to defraud. The defendants now moved, upon the bill and answer, for an order dissolving the temporary injunction. The motion was heard before Mr. Justice MILLER, of the supreme court, and DILLON, Circuit Judge. Home Ins. Co. v. Stanchfield. Atwater & Flandrau, for the motion. H. H. Finley and H. K. Davis, opposed. DILLON, J.-This is a bill in equity by the Home Insurance Company, of New York, to cancel a policy of insurance against fire, issued by them to the respondent, Stanchfield, and for an injunction to restrain him from commencing any action thereon. The policy was in the usual form of such instruments, and by its terms was to continue in force for one year, or until December 15, 1869. In November, 1869, the building covered by the policy was consumed by fire, and in the March succeeding, the present bill was exhibited. The nature of the bill appears above; and it is, in substance, one to have the policy declared void because it was procured by the assured by means of false and fraudulent representations. A temporary injunction to restrain the respondents from commencing any action on the policy, was allowed before answer. On the coming in of the answer, which denies the alleged fraud and fraudulent representations, a motion is made to have the order for the injunction vacated; and it is this motion which was argued by counsel and which the court is now to decide. But the solicitors for both parties desired the questions arising on the bill and answer to be disposed of on their merits, and to have the court determine whether bills like the present one are maintainable in equity, when the fraud alleged as a ground for the cancelation of the policy is available to the company as a defense to an action on the policy, and constitutes, if proved, a complete defense thereto. Under the full denials in the answer of the fraud charged in the bill, there would be little hesitation in holding that the injunction ought to be dissolved; but though dissolved, the bill would yet be pending, and the question as to the right to maintain such a bill would still remain to be determined. Home Ins. Co. v. Stanchfield. The complainant's solicitor maintains that the bill is sustainable upon two grounds: 1. Because a discovery is sought, and relief consequent upon the discovery. 2. Because courts of equity have jurisdiction concurrent with courts of law in matters of fraud, and will, in all cases, set aside agreements obtained by means of false and fraudulent representations. Of these grounds in their order; and first as to the discovery. This is not a bill for discovery in aid of a suit or defense at law; and it is a bill of discovery only in the same general sense that every bill is such which seeks an answer from the defendant under oath. It is simply a bill calling for an answer under oath, and praying that a policy of insurance be set aside because it was procured by fraud. Bills of discovery had their origin at a time when at law a party was not entitled to and could not obtain the evidence of his adversary. By the legislation of Minnesota (Stat. 1866, 520) and by that of Congress (Act of July 6, 1862, 12 Stat. at L. 588; Act of July 2, 1864, 13 Id. 351), parties to suits at law, in equity and admiralty, are not only permitted to testify in their own behalf, but compellable to testify at the instance of the adverse party. The effect of this legislation is to remove the grounds or reasons which originally existed for bills of discovery; and it may admit of doubt whether a bill merely to obtain a discovery in aid of another action or defense ought longer to be sustained; but this is a point not now necessary to be determined. If the present bill be treated as one for discovery and relief, and as one where the necessity of obtaining a discovery is the ground of equity jurisdiction, the discovery sought has failed, for the answer denies all the essential averments of the bill charging fraud, and where this is the result the bill must be dismissed. Speaking of such a case, Mr. Justice STORY says: "If the discovery is totally denied by the answer, the Home Ins. Co. v. Stanchfield. bill must be dismissed, and the relief denied, although there might be other evidence sufficient to establish a title to relief; for the subject matter is, under such circumstances, exclusively remediable at law." Story Eq. Jur. § 691; Id. §§ 74, 690. As to the first ground of equitable jurisdiction, viz: the necessity of a discovery from the defendant, it fails, because the complainant has failed to obtain the discovery which he sought. Brown v. Swann, 10 Pet. 497; Russell v. Clark, 7 Cranch, 69, 89; Young v. Colt, 2 Blatchf. 373. We are thus brought to the main question argued by counsel, viz: Whether equity will entertain a bill to cancel a fire policy, filed after a loss has happened, where the foundation for the relief sought is the fraudulent representations of the assured in procuring the policy, with respect to the property, its ownership, value, the state of the incumbrances, &c., when such fraudulent representations are a good defense at law to an action on the policy, and available, as such, to the company. If such a bill will lie, the present suit having been brought, and properly brought, the assured would not be allowed afterwards to sue at law on the policy, pending the equity suit to cancel it; and hence an injunction to restrain the commencement of such an action, if threatened, would be proper. But if, on the other hand, equity will not entertain such a bill as the present, of course the injunction should not have been allowed, and ought to be dissolved. The injunction feature of the present suit is thus dependent upon the principal inquiry before us, and we shall give no separate consideration to it. The policy to which this suit relates contains two provisions, usual in such instruments, to which reference may be made, as bearing upon the question to be decided. One is that the loss, if any happens, is not payable immediately, but only after the preliminary proofs re |