ROSENBAUM: ".'OOUNcrL BLUFFS INS. CO.
ment it rendered would have valid. If the jurisdiction of the courl upon his failure to insist upon his personal privilege be conceded in the one case, why should there be doubt of the jurisdiction when he voluntarily seeks the court. I am aware that in the case of Harold v.Mining 00.,33 Fed. Red. 529, I concurred with Judge HALL:ETTin an opinion different from that herein expressed, but further reflection, after the question discussed at length and frequently, has satisfied me that that opinion was erroneous. It is perhaps unnecessary to carry this discussion any further, and it is enough to say that we hold that the fact that both parties are non-residents of this district does not oust this court of jurisdiction in a case removed from the state court by a Don-resident defendant; It follows, therefore, that the motion to remand must be overruled, and the plaintiff will have leave to apply for the appointment of commissioners.
RosENBAUM
et al· .".
COUNCIL BWFFS
lNs.
Co.
(Ci'1'cuit CO'l1l1't, N. D. 100000a. December 22, 1888.)
1.
COURTS":"FEDERAL COURTS-FOLLOWING STATE ORMATION OF POLICY.
In llnaction at law, in ·the federal court sitting in Iowa. on an insurance policy, it appeared from the petition that the person named in the the party assured was not the real party in interest. The court sustained ,8 demurrer for want of interest in the assured. but grantedplaintifl's' 'leave to file a billin equity for reformation of the contract. and continued the- action at law pending the proceedings in equity. Held, that such order was Dot con· trary to Oode Iowa, § 2654, which provides that on the decision of a demur· rer, if the unsuccessful party fails to amend, the same consequences shall en.. sue as though verdict had passed against him. If the case had been heard in the state court. the plaintiffs could have amended their petition by setting out the facts relied on for reformation, and in making the order the federal CODrt followed· the state practice as near as possible, retainingthe separate forms of.actions. . Nor was such order contl'arjto the provision of the policy no action could be maintained thereon unless within six months after the hap" pening Of. the loss. Had the. cause remamed in the state court. the petition could have been amended, and the defendant cannot complain ohhe proceed· ing in equity tendered necessary by its removal of the cause to the federal court. _
2.
SAME.
At Law. On motion to set aside order granting leave to file a bill in equity, and also motion for judgment on demurrer. Blake Hormel and C. Clark, for plaintiffs. Sapp P1JMfJ and Henderson, Hurd; Daniels KUsel,for defendant. ';1
SRmAS, J. On the 12th day of September, 1882, the SUM a policy of insurance against fire upon an elel'stor and its contents', the contract of insurance being made with one H. Eyler, and his name appearing in the policy as the party assured. The property having been destroyed .byfire J the present action was brought by the plaintiffs J who
8
FEDERAL RJWPRTER.
sue as of the rights of Eyler and one G. Abraham, to whom as mortgagee the loss was to be paid by the terms of the policy. From the averments in the petition contained it appears that the real party interested in the property insured was the said G. Abraham, it being averred that he was the owner of the elevator and the business carried on therein, the same, however, being carried on in the name of Eyler; and that in fact the contract of insurance was made with Abraham. The defendant demurred to the petition, and the court held that, the action being at law, the plaintiff was bound by the legal effect and meaning of the written contract of intcrwit, the policy sued on; that upon its face it showed that the contract was to insure Eyler's interest in the property; and that upon the face of.the policy plaintiffs could not recover, unless it was shown that Eyler had an actual interest in the property covered by the and that plaintiffs could not by parol evidence show a contract contradicting the written policy on which the suit was based; that if the policy as signed did not represent the real contract made by the parties, it could be reformed in equity, but that, unless so reformed, an action at law thereon could. not be maintained to recover the loss caused to the property of Abraham. Thereupon, at the request of plaintiffs, the court granted leave to file a bill in equity for tho reformation of the written con.\ract, and continued this action, awaiting the result of th() proceedings in equity'. A bill for the purpose named was thereupon filed ripon the equity. side of the court, and is still pending. The defendant now moves for an order expunging and rescinding the leave granted for filing the bill, and also for final judgment on the demurrer, upon the ground that the statute of Iowa, (section 2654,00de,) provides that upon the decisionof a demurrer, if the unsuccessful party fails to amend or plead over, the same consequences shall ensue as though a verdict had passed against the plaintiff; and that the court, as a court of law, cannot do otherwise than to tender a strictly legaljudgment upon the demurrer. Taking the ground assumed by defendant's counsel, that the statutory rule is binding upon this court, what is the result? When the time comes for entering final judgment on the demurrer, the rule cited will be appli':' of the Oode relied on was never intended to bear cable, but the the narrow construction now claimed to be applicable, nor are the powers of a court at law so limited as counsel seem to assume. The section relied on by counsel provides that if the party beaten 011 the demurrer fails to amend or plead over, then certain consequences ensue; but the section does not prOVide when and how such amendment must be made. That is a matter that is within the power of the court, and the time within which an amendment may be made must depend upon the circumstances Section 2638, Oode Iowa. The practical effect of the of each ruling upon the demurrer was that, to enable the plaintiffs to rely upon the contract ofinsurance, which it was averred had in fact been made; it was necessary to reform the written contract or policy, and then to deit ias· aD}ended. If the case had been pending in the .state court, the plaintiffs; upon the sustaining of the demurrer,could have filed an amended petition in the cause, setting up the facts relied on asjustifying
ROSENBAUM ". COUNCIL BLUFFS INS. CO.
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thereformation of the contract of insurance, and praying for appropriate relief. The issue thus made would be equitable, to be heard and determined by the court as a court of equity; but this would have been entirely proper under the state practice. Thus in Nowlin v. Pyne, 47 Iowa, 293', which was commenced as an action at law upon a written contract, a demurrer was interposed to the action; and after the decision thereon an answer was filed, setting forth grounds for the reformation of the written contract, and, this answer being treated as a cross-petition in equity, the court below reformed the contract, and decided the cause upon the terms of such reformed contract; and upon appeal the supreme court affirmed the decision. In McTucker v. Taggart, 29 Iowa, 478, the action was commenced at law upon the covenant as a deed. The defendant averred that there was a mistake in the deed, and prayed its reformation. The cause was transferred to the chancery docket, heard upon the evidence', and a decree entered reforming the deed. Upon appeal the suprern)e court reversed the case on the facts, but sustained the practice follow:ed in presenting the issue. In Hablitzel v. Latham, 35 Iowa, 550, it appears that the action was at law, to recover against the rlefendants as stockholders in an insurance company. The defendants filed a cross-bill, making the insurance company a party thereto, as well as the plaintiffs, and charged collusion between them, setting up various fads showing tlle need for equitable interference, and asked that the cause be transferred to the equity docket, and that plaintiff's action at law be stayed. · Tlie court appointed a receiver, as asked in the cross-bill, and granted an otdel' staying the plaintiff's action. at law. .Upon appeal the supreme court affirmed the action of the trial court. It is hardly necessary to cite further authorities for the purpose of shOWing that, under the provisions of the Code of Iowa, the courts of the state have full power. when an action at law is brought, and it appears that cause exists for reforming the written contract sued on, or when for any good reason it is necessary to hear and determine equitable issues, to allow a proper amendment to the pleadings to be filed, and lto hear and determine such equitable issues. and 'in the mean time to stay the hearing of the action at law. The act of congress ·assimilating the practice in law actions in the United States courts fu that obtaining in the state courts requires that the courts of the United · States shall follow the state rules, as near as may be. Owing to the rule in the United States courts that matters cognizable in equity only cannot be heard and determined in an action at law, but that equitable relief · can be had only upon a proper proceeding brought in the conrtof equity, it was impossible for the court to permit· an amendment to be filed upon the ruling on the demurrer, setting up the grounds alleged to exist for the reformation of the contract. Could this practice have been permitted, then, upon the filing of the amendment, no final judgment could have been rendered upon the demurrer, but the issue of law would remain undetermined until action had been had upon the equitable issue touchillg the reformation of the contract. Under these circmitstances, the court, following the rule of the state practice asnearlyll.s conld be done, stayed the law action for the purpose of permitting the
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,1tEPORTER·. '
bill in for the, reformation of the written condoing, the!lpirit of the, state practice was observed and enforced, and'the difference in ,mode is one of mere form, due to the existence, of the, rule of, this court, forbidding the admixture of legal and equitable proceedings in one cause; if upon the proceedings in eqnity it is held that the policy sued on should be reformed, theu this court can permit an amendment to·the petition to be made setting forth the reforma:tion of the policy, lind its terms as reformed; and, this being done, then, un<ler section 2654, the defendant cannot claim final judgmenton the 'demurrer, because the amendment will have obviated the ol;ljectioi:l to the petition as originally brought. The question is not, as is al,'guedby defendant's counsel, dependent upcm the character of the judgment which a court of law is authorized to enter upon the decision of IL. demurrer, but upon the power of the court to permit an amendment to, ll,1ad,e l which will precl\lde the entry ofa final judgment on the decan be no question that under the provisions of the Code ,of Iow:a. to allow the filing of an amendment exists, and that the time within which such amendment shall be filed is within the discretion the ,court, to be exerpised with due regard the facts of the par,ticular case., So far, therefore, as the present motion is based upon the of power to make the order cOlltinuing the cause for the of epabljngplaintiffs to procure the reformation oithe policy justify it" and, when reformed, to amend the petisued on, if tion, in t\le :PEesent gause by declaring on the poljcy as reformed, the same IDl;ljlt be ()vlm'ul,ed. ., , Counself1,1rtl1ef argue that, granting the right tc;> make the order complained of to exist, the order was improvidently and improperly made jn ,this Jor the reasot;l that the policy contains ,a provision that in ,case ofloss no suit or action can be maintained thereon unless brought within 'mollthsafter the happening of the loss, and that the' of :ml1Y deprive the company of the l;lenefit of this provision, the cO].lrt.has not the right todo., The.theorypf the defendant's coun,sel tl;t;atthe court should, upon the hearing of the demurrer, have ,.retldere9. afiual jlildgment dismissing the action, and that then, when thebillwal;l f()r the reformation of the contract, this limitation could in bar of the proceeding itlequity,and, if not held a. have QaJ;to it pould in bar of the action based upon the contract. Counsel, ip their argument, assume. that if the at: of the. Qourt had been called to this provision of the policy at the ,of was made the court would have refused to ..,Im,lke tp,e 9r!iilr, and would have given judgment on the demurrer, so as :tQ have the defendant to avail itself of limitation. Thisas"/?umptionil?,ill founded. The of the limitation referred to was one of thEjfeaSOnS why the order was made th,atis now sought to be set ,811ide" action on ,the policy walil bl'oughtqefpre the expiration of the sixwonths; behig in the district cotlrt of Benton county. It was reDl;Ov.ed to this court by the defendant in October, 1884, more occurrence of the fire. Had the cause remained than ,a "i
plaintiffs to
.of
ROSENBA OM 'V. COUNCIL BLUFFS INS. CO.
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in the state court, as already pointed out, the plaintiffs could have amended the petition, setting 'Up the-grotlnds for equitable relief, and thus no defense could have been made based upon the limitation in the policy. Having removed the cause into this court, the defendant has no ground for complaint for that the court has continued the action at law, for the purpose of enabling the plaintiffs to reform the policy of insurance, Rnd thus, if the facts justify, complete their evidence needed to sustain the action at law. In principle, there is no difference betweenFhis action on the part of the court, and in granting a continuance to enable plaintiffs to procure the testimony of witnesses residing at a distance. Courts of law have undoubtedly the right to grant continuance for the purpose of enabling either party to properly prepare for trial, and this right exists, whether the time is needed to procure the testimony of absent witnesses, or to procure documentary evidence, to supply, by tbe aid of a court of equity, written evidence in cases wherein by the. rules of law evidence in that form is necessary to the maintenance of the parties' rights. By the bringing of the action on the policy, within the' six months, and the subsequent proceedings thereon, the defendant has been duly notified that a cJaim upon the contract of insurance was asaerted against it, and has received notice of the happenIng of the nre, olthe amount of the loss, and of all the other facts necessarY to enable the defendant to protect its rights in the premises. The suggestion is made that by the lapse of time caused by awaiting the outcome of the proc·eedings in equity for the reformation of the contract, the defendant may be deprived of the testimony of important witnesses. The action, however, is pending, and it is within tbe power ofdefendant to take the of all of its witnesses and thus perpetuate the same. This danger ,onoss of testimony is no other than occurs in all instances wherein a cause is continued from one' term to another,and it is evident that it did not impress the detendant, when it delayed the trial of the oo.SI', by removing the same from the state to the federal court. If the plaintiffs do not promptly prepare the cause in equity for trial, the remedy is not in attaeking the order made allowing the bill to be filed, but by forcing the equity cause to a hearing, or perhaps by having the Gourt set down the case at law for further proceedings. l'he plaintiffs must use due dil. igence in preparing themselves for trial, or otherwise the cause maybe brought to a hearing. Thetriotion now presented is overruled. . .
FEDERAL REPORr.ER.
LEE 1.
11. SIMPSON.
(Oii'cuit Oourt, D. South Oarolina. December 18,1888.) EQUITv-JURIsmCTION-ADEQUATEREMEDY AT LAW.
In thfs case the use was not executed upon the death of the married woman If'she failed to exercille the power of appointment, but the leg-al estateremainedlbithe trustee, 'and his devisee, a volunteer, took it and the property co .by the trust. INJUNCTION-RIGHTS PROTECTED.
TBlJSTs-E:nCUTED USE.
3. ,
The devise to'A. was updn trust to convey the property to the state of South :Carolina upon certain conditions; ignoring the claim of complainant. The devisee, after this biU was .:filed and ,subpwna served, addressed a letter to the general assembly of South Carolina asking its acceptance of the property, and of the conditions annexed to it; The general assembly at once put ah act on its passage for this purpose. Held, that the right of complainant to assert her claims iu this CO,urt,was imperilEld, and an interlocutory injunctiQn was issued. , . , '
·
t
When a defendant pendente lite in a circuit court of the United States seeks 'tl> convey the land, the subject of controversy, to a state, he will be restrained . by injunction. rSgllabusby ilteOourt.} !
SAME--:'AGAINST" CONVEYANCE TO STATE.
.. InEquity. :On motion for preliminary Bill by Isabella Lee,: an infant, by proch6'in ami, against Richard Simpson. Le Roy F. Youmans and James P. Carff!j, for complainant. < ,Wells &: Orr and Smythe &: Lee, for defendant. "SIlIW!"TON,
Vf.
From the.s¢ it appeal's thatMrs. Floride Calhoun,the grandmother ()f the mpthel',ofthe complainant, left in force a last will and testament. . That in clauses of this will she gave to Edward Noble. as trustee. a fund then invested in the bond of her son, Andrew P. Calhoun, secured by a mortgage of Fort Hill plantation. in Oconee county, and certain slaves. The purpose of the trust was that the fund be held for the sole and separate use of Mrs. Anna M. Clemson, for her natural life, with a power of appointment thereof by a last will and testament, as she pleases; and, in default of such appointment, to her daughter, of whom the complainant is the only child. That proceedings were taken in the life-time of Mrs. Calhoun to foreclose this mortgage. These proceedings were not consummated until after her death. At the sale for foreclosure the plantation of Fort
QO'lUes u:B on
bm. answer. affidl;tvits, with exhibits,
J. This is a rpotion for a preliminary injunction. It
