American Life Insurance Co. v. Stewart

300 U.S. 203 (1937)

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American Life Insurance Co. v. Stewart

United States Supreme Court
300 U.S. 203 (1937)

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Facts

Reese Smith Stewart (defendant) purchased two life insurance policies from the American Life Insurance Company (American) (plaintiff). The policies provided a two-year time period during which American could contest the policy’s issuance. Three months after purchasing this coverage, Stewart died. Four months after Stewart’s death, American filed two suits in equity (one for each policy) seeking to cancel the policies due to fraudulent statements made be Stewart in his application. Shortly after American filed its suits, Stewart’s surviving family members filed an action at law seeking to enforce the policies. Both parties stipulated that the suit in law would be delayed until the suit in equity was resolved. Stewart’s family filed an answer in the equity suit, alleging that the time period to contest the policy had elapsed. After trial, the district court held that the policies were fraudulently procured and that they should be cancelled. Stewart’s family appealed to the United States Court of Appeals for the Tenth Circuit, which reversed the district court’s ruling. The court of appeals held that the insurer had an adequate remedy at law, namely utilizing the fraud on Stewart’s part as a defense in the suit at law. American appealed.

Rule of Law

Issue

Holding and Reasoning (Cardozo, J.)

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