Farmers' Mutual Fire Insurance v. Smith , 245 Mich. 514 ( 1929 )

It cannot be questioned since John Hancock Mutual Life Ins.Co. v. Dick, 114 Mich. 337 (43 L.R.A. 566), that in this State a court of equity has jurisdiction to cancel an outstanding insurance policy where grounds for equitable relief are present. Appellants' counsel do not question such jurisdiction, nor do they deny the general rule that a court of equity having assumed jurisdiction will retain it to settle the entire controversy, to do justice to the parties. They insist that such rule is not applicable where the matter in controversy between the parties is wholly independent, as it is here, of the matter which gave the court jurisdiction, i. e., the matter alleged in the bill. So far as we have been able to ascertain, the textwriters and courts sustain this contention. In 10 R. C. L. p. 374, it is said:

"Furthermore, it may be said that while the doctrine that equity having jurisdiction for one purpose disposes of all matters involved in the case, though some be of legal cognizance, is generally true where the rights concerned arise out of the same transaction, nevertheless it has no application where the rights involved grow out of other contracts or independent transactions."

In 21 C. J. p. 148, the rule is thus stated:

"The doctrine of retaining jurisdiction to settle the entire controversy is confined to the determination of rights dependent upon, or at least germane to, the subject-matter and main purpose of the bill. Jurisdiction will not be retained to adjust independent controversies between the parties, or controversies beyond the scope of that raised by the bill."

In Poe v. Insurance Co., 126 Md. 520 (95 A. 164), it is held (quoting from the syllabus):

"The doctrine that equity will retain jurisdiction to settle the entire controversy is confined to the determination of rights dependent upon or germane to the subject-matters and main purposes of the bill. Jurisdiction will not be retained to adjust independent controversies between the parties, or controversies beyond the scope of that raised by the bill."

In Haggins's Heirs v. Peck, 10 B. Mon. (Ky.) 210, it was said by the court:

"It does not follow because a court of equity has jurisdiction of one matter of controversy between parties, that, therefore, it may proceed, for the purpose of putting an end to litigation, to take cognizance of all matters of controversy between the same parties, whether legal or equitable."

See, also, Deepwater Co. v. Motter Co., 60 W. Va. 55 (53 S.E. 705, 116 Am. St. Rep. 873); Fulton v. Fisher, 239 Mo. 116 (143 S.W. 438); Lodor v. McGovern, 48 N.J. Eq. 275 (22 A. 199, 27 Am. St. Rep. 446); Harris v. Smith, 133 Ark. 250 (202 S.W. 244); Hooe v. Harrison, 11 Ala. 499; 116 Am. St. Rep. 877, note; 1 Pomeroy, Equity Jurisprudence (3d Ed.), § 237.

Courts of equity are not provided with the necessary machinery to try the ordinary tort case. Parties to such actions are entitled to a trial by jury. The fact that such parties may have disputes properly cognizable by a court of equity does not draw to such court jurisdiction of independent controversies. Let us illustrate: "A" had a policy of accident insurance in "B" insurance company. "A" receives personal injuries by an automobile owned by the "B" insurance company and negligently operated by its agent. "A" claims that he is entitled to recover on his policy of insurance and also to recover in an action of tort for the negligent operation of the insurance company's car. Could it be successfully contended that the "B" insurance company by filing a bill to cancel the policy of insurance on the ground of fraud could and would thereby draw to the chancery court jurisdiction to try and determine the personal injury case upon the theory that the court of equity having acquired jurisdiction would retain it to settle all disputes between the parties? Manifestly not. The asking of the question furnishes its answer.

So far as the decree cancels the insurance policy, it is affirmed. So far as it decides the facts involved in the Gratiot county case and restrains its further prosecution, it is reversed. Appellants will have costs.

NORTH, C.J., and FEAD, WIEST, CLARK, McDONALD, POTTER, and SHARPE, JJ., concurred.