U.S. Supreme Court ATLAS LIFE INS. CO. v. W. I. SOUTHERN, INC., 306 U.S. 563 (1939)

[Page 306 U.S. 563, 568]

Section 11 of the Judiciary Act of 1789, 1 Stat. 78, provided that the circuit courts should have 'cognizance ... of all suits of a civil nature at common law or in equity' in cases appropriately brought in those courts. This provision is perpetuated in 24(1) of the Judicial Code, 28 U.S.C. 41(1), 28 U.S.C.A. 41(1), which declares that the district courts shall have jurisdiction of such suits. The 'jurisdiction' thus conferred on the federal courts to entertain suits in equity is an authority to administer in equity suits the principles of the system of judicial remedies which had been devised and was being administered by the English Court of Chancery at the time of the separation of the two countries. Payne v. Hook, 7 Wall. 425, 430; In re Sawyer, 124 U.S. 200, 209, 210 S., 8 S.Ct. 482, 486, 487; Matthews v. Rodgers, 284 U.S. 521, 525, 52 S.Ct. 217, 219; Gordon v. Washington, 295 U.S. 30, 36, 55 S.Ct. 584, 587. This clause of the statute does not define the jurisdiction of the district courts as federal courts, in the sense of their power or authority to hear and decide, but prescribes the body of doctrine which is to guide their decisions and enable them to determine whether in any given instance a suit of which a district court has jurisdiction as a federal court is an appropriate one for the exercise of the extraordinary powers of a court of equity. See Massachusetts State Grange v. Benton, 272 U.S. 525, 528, 47 S. Ct. 189, 190; Pennsylvania v. Williams, 294 U.S. 176, 181, 55 S.Ct. 380, 383, 96 A.L.R. 1166, and cases cited. [Footnote 1]

[Page 306 U.S. 563, 569]

Section 16 of the Judiciary Act of 1789, 1 Stat. 82, continued without material change as 267 of the Judicial Code, 28 U.S.C. 384, 28 U.S.C.A. 384, declares that suits in equity shall not be sustained in the courts of the United States in any case where a 'plain, adequate and complete remedy may be had at law.' The command of 267 is but a declaration of the equity rule established long before the enactment of the Judiciary Act, and it serves by emphasis of the rule to protect the states from the encroachments which would result from the exercise of equity powers by federal courts failing to observe it. Matthews v. Rodgers, supra, 284 U.S. page 525, 52 S.Ct. page 219; Stratton v. St. Louis Southwestern R. Co., , 52 S.Ct. 222.

By long-settled construction, the accepted test of legal adequacy which the section prescribes is the legal remedy which the federal, rather than state, courts afford. [Footnote 2] Smyth v. Ames, 169 U.S. 466, 18 S.Ct. 418; Risty v. Chicago, M. & St. P.R. Co., 270 U.S. 378, 388, 46 S.Ct. 236, 240; Di Giovanni v. Camden Insurance Ass'n, , 56 S.Ct. 1; Petroleum Exploration, Inc., v. Public Service Commission, 304 U.S. 209, 217, 58 S.Ct. 834, 838. But although the adequacy of the legal remedy precludes resort to a federal court of equity, it does not follow that the converse is true-that the want of a legal remedy in the federal courts gives the suitor free entrance to a fed-

[Page 306 U.S. 563, 573]

the equity suit should be dismissed or whether the bill should be retained without further proceedings pending disposition of the suit at law, as may be done by the equity court in its discretion. Landis v. North American Co ., 299 U.S. 248, 57 S.Ct. 163; American Life Insurance Co. v. Stewart, supra, 300 U.S. page 215, 57 S.Ct. page 380, 111 A. L.R. 1268. The guiding principle is that the federal court should proceed only so far as is necessary to protect the suitor from loss of his defense at law, without needlessly interfering with the determination of the plaintiff's rights in the state court, where his action was properly begun. See Di Giovanni v. Camden Insurance Ass'n, supra, 296 U.S. page 73, 56 S. Ct. page 5, and cases cited.

The certificate fails to disclose whether all the facts and circumstances pertinent to this issue have been certified. This Court cannot be required by certificate to answer, and should not answer, questions which may be affected by unstated matter lurking in the record, or questions which admit of one answer under one set of circumstances and a different answer under another, neither of which is inconsistent with the certificate. See Tripplett v. Lowell, 297 U.S. 638, 648, 649 S., 56 S.Ct. 645, 650.

The certificate is dismissed.

Dismissed. Footnotes

Footnote 1 Unlike the objection that the court is without jurisdiction as a federal court, see Mansfield Coldwater & Lake Michigan R. Co. v. Swan, 111 U.S. 379, 382, 4 S.Ct. 510, 511, the parties may waive their objections to the equity jurisdiction by consent, Hollins v. Brierfield Coal & Iron Co., 150› U.S. 371, 380, 14 S.Ct. 127, 128; In re Metropolitan Railway Receivership, , 28 S.Ct. 219; cf. Marin v. Augedahl, 247 U.S. 142, 38 S.Ct. 452, or by failure to take it seasonably. Brown, Bonnell & Co. v. Lake Superior Iron Co., 134 U.S. 530, 535, 536 S., 10 S.Ct. 604, 606; Southern Pacific R. Co. v. United States, No. 1, 200 U.S. 341, 349, 26 S. Ct. 296. The objection should be taken by the court sua sponte, when obvious, Lewis v. Cocks, 23 Wall. 466, 470; Singer Sewing Machine Co. v. Benedict, 229 U.S. 481, 484, 33 S.Ct. 942, or when the exercise of the equity powers of the federal court affects the relationship of the federal to the state courts. See United States ex rel. Kennedy v. Tyler, , 46 S.Ct. 1; Matthews v. Rodgers, 284 U.S. 521, 525, 526 S., 52 S.Ct. 217, 219; Pennsylvania v. Williams, 294 U.S. 176, 185, 55 S.Ct. 380, 385, 96 A.L.R. 1166; Di Giovanni v. Camden Insurance Ass'n, 296 U.S. 64, 73, 56 S.Ct. 1, 5. Cf. Central Kentucky Natural Gas Co. v. Railroad Commission of Kentucky, , 271-273, 54 S.Ct. 154, 157.

Footnote 2 'Otherwise, the suitor in the federal courts might be entitled to a remedy in equity which the federal courts of law are competent to give, or on the other hand, be obliged to forego his right to be heard in the federal courts in order to secure an equitable remedy which state courts of law do, but the federal courts of law do not, give. See Stratton v. St. Louis Southwestern R. Co., 284 U.S. 530, 533, 534 S., 52 S.Ct. 222 (223); ....' Di Giovanni v. Camden Insurance Ass'n, 296 U.S. 64, 69, 56 S.Ct. 1, 4.