Merritt-Chapman & Scott Corp. v. Mutual Benefit Life Insurance

237 A.D. 70, 260 N.Y.S. 374, 1932 N.Y. App. Div. LEXIS 5272
CourtAppellate Division of the Supreme Court of the State of New York
DecidedNovember 18, 1932
StatusPublished
Cited by15 cases

This text of 237 A.D. 70 (Merritt-Chapman & Scott Corp. v. Mutual Benefit Life Insurance) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Merritt-Chapman & Scott Corp. v. Mutual Benefit Life Insurance, 237 A.D. 70, 260 N.Y.S. 374, 1932 N.Y. App. Div. LEXIS 5272 (N.Y. Ct. App. 1932).

Opinion

Sherman, J.

Insurance policies upon the life of William H. Baker, plaintiff’s president, were issued by a number of insurance companies in the aggregate sum of about $1,000,000, under which plaintiff is the beneficiary. This is one of ten equity suits, alike in substance, instituted by plaintiff in which relief is sought by way of injunction, restraining the insurers from proceeding with suits in the Court of Chancery of the State of New Jersey and in the Court of Chancery of the State of Delaware in which they, as complainants, seek rescission of the policies of life insurance, of which plaintiff is the beneficiary. The complaint herein asks such injunctive relief until after the determination of another pending action brought by this plaintiff in the Supreme Court, New York county, against defendant to recover upon the policies.

Injunction orders were entered upon plaintiff’s motion in this, as well as in nine like suits, restraining pendente lite the insurer from proceeding in the New Jersey and Delaware actions. This is one of ten appeals taken by each defendant insurer, from such orders which were argued together in this court, it being conceded that the question presented for review is virtually the same upon each appeal. (See 236 App. Div. -.) The real controversy at issue between plaintiff and the several insurers is the same in each case, and the disposition here made is controlling on all the other appeals.

In September, 1931, defendant issued two policies in the sum of $100,000 each on the life of Mr. Baker, wherein plaintiff was named as beneficiary. Plaintiff is a Delaware corporation. Mr. Baker was a resident of the State of New Jersey where he died and in which State his estate is being administered.

Mr. Baker died on May 13,1932, and plaintiff furnished defendant with proofs of death, as required by the policies. Defendant, in concert with other insurance companies, after conducting an investigation, tendered to plaintiff the premiums previously paid and demanded the surrender of the policies for cancellation. This tender and request were refused by plaintiff on June 28, 1932, and [72]*72immediately litigation ensued between the plaintiff and the various insurers.

To each policy is attached an application signed by Mr. Baker containing alleged misstatements, in that the insured is claimed to have failed to divulge his sojourn at the Battle Creek Sanitarium for observation, treatment and diagnosis shortly before he applied for the policy and in that he replied in the negative to the question in the application, Has any unfavorable opinion as to your fitness for insurance ever been expressed? ” whereas, in fact, three doctors had previously informed him that he was uninsurable.

The record contains averments which if established at trial would suffice to sustain the position taken by the defendant in contesting liability under the policies and would require their cancellation.

After the refusal of the tender, defendant on the same day filed verified bills for cancellation and surrender in the Chancery Court of New Jersey, and also in the Chancery Court of Delaware, seeking rescission. A subpoena was issued on that date in the New Jersey rescission suit and mailed to the sheriff of Hudson county for service on plaintiff. On the next day the Delaware Chancery Court issued its subpoena in the like suit and mailed it to the sheriff of Kent county, Del., for service on plaintiff.

Plaintiff, a Delaware corporation, is licensed to transact business in New York and New Jersey, and maintains its principal business office in the city of New York.

On the morning of June 29, 1932, plaintiff served the Superintendent of Insurance of this State, as the statutory agent of the defendant (which is a New Jersey corporation), with a summons in an action in the Supreme Court of this State. No complaint accompanied that summons, but the complaint was served on July 29, 1932, and seeks recovery of the amount of the policies. On June 29, 1932, the motion for preliminary injunction as prayed for in the complaint was filed by the complainant in the Delaware suit, and a rule to show cause was issued why a preliminary injunction should not be granted restraining this beneficiary from instituting and prosecuting actions upon the insurance policies, which motion was set for argument in September, 1932.

On July 5, 1932, plaintiff (there defendant) served a notice of motion in the rescission suit pending in New Jersey to dismiss the bill of complaint, which motion the vice-chancellor heard upon arguments and briefs. On August 3, 1932, the vice-chancellor denied plaintiff’s motion to dismiss the bill of complaint and accompanied this denial with a comprehensive opinion which stated that the grounds upon which the dismissal motion had been predicated were that the bill of complaint did not state an equitable [73]*73cause of action and that the court was without jurisdiction to entertain the bill because the complainant had an adequate remedy at law. In the course of that opinion he stated: “ Facts constituí-' ing the alleged fraud are set out in detail and if true there can be no question as to complainant’s right to relief.”

Thereafter plaintiff filed its answer to the bill of complaint in the New Jersey suit on August 25, 1932, and issue having been joined thereon by the filing of a replication, that rescission suit was on September 7, 1932, with the written consent of defendant (plaintiff here), referred to the vice-chancellor for final hearing.

On September 14, 1932, a demurrer previously filed on July eighteenth by defendant (plaintiff here) in the Delaware rescission suit was voluntarily withdrawn; previously, and on September 6, 1932, the insurer had filed affidavits in support of the rule for the prehminary injunction in the Delaware rescission suit, and upon the withdrawal of the demurrer, defendant (plaintiff here) in that action was required to answer the bill of complaint .on or before September 23,1932.

It was at this juncture in the litigation, which was proceeding in three States, that plaintiff commenced this equity action to restrain defendant from proceeding further in the New Jersey and Delaware courts and served an order to show cause why a preliminary injunction should not issue herein, resulting in the preliminary injunction, from which this appeal has been taken.

As a general rule, one court will not enjoin proceedings in an action pending in another court of competent jurisdiction involving the same subject-matter, unless it has a clear priority of jurisdiction, or exceptional circumstances are shown to exist which require such drastic remedy. As stated in Burgess v. Smith (2 Barb. Ch. 276, at p. 280): “ If this court has the power, it must be a very special case which will induce it to break over the rule of comity, and of policy, which forbids the granting of an injunction to. stay the proceedings in a suit which has already been commenced in a court of competent jurisdiction in a sister State.”

This ruling was recently re-enunciated in Colson v. Pelgram (259 N. Y. 370, at p. 376): It is elementary that courts should exercise the power to issue an injunction restraining the prosecution of a prior suit only in cases where the necessity therefor is clearly established.”

This plainly states the criterion in a case where the parties can obtain complete relief in the action in which the proceedings are sought to be enjoined. (Colson v. Pelgram, 259 N. Y. 370;

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Bluebook (online)
237 A.D. 70, 260 N.Y.S. 374, 1932 N.Y. App. Div. LEXIS 5272, Counsel Stack Legal Research, https://law.counselstack.com/opinion/merritt-chapman-scott-corp-v-mutual-benefit-life-insurance-nyappdiv-1932.