were knowingly made and fraudulent in design and constitute moral fraud. They point out that the action is for a specific sum of money. There is no demand for equitable relief, such as injunction, rescission or cancellation, and therefore the claim constitutes an action in the nature of money damages at law. The defendants further contend that a defrauded party has a choice of two remedies, either to restore the property and recover what he has paid in equity or to affirm the contract and sue at law for damages, but that he cannot pursue both remedies.
The sufficiency of this complaint is governed by the New Jersey law. Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S. Ct. 817, 82 L. Ed. 1188, 114 A.L.R. 1487.
In support of its contention plaintiff submits, among others, the cases of Eggers v. Anderson, 63 N.J.Eq. 264, 49 A. 578, 55 L.R.A. 570; Moore v. Baker, 62 N.J.Eq. 208, 49 A.836; Commercial Casualty Insurance Company v. Southern Surety Company of Des Moines, Iowa, 100 N.J.Eq. 92, 135 A. 511, affirmed 101 N.J.Eq. 738, 138 A. 919; Metropolitan Life Insurance Company v. Tarnowski, 130 N.J.Eq. 1, 20 A.2d 421.In each of these cases some form of equitable relief is sought. In no case referred to by the plaintiff is a sum of money alone demanded.
In the instant case plaintiff alleges material representations made by the defendants which the defendants knew were false and untrue, or which the defendants should have known were false and untrue. The plaintiff bases its right to obtain relief solely on allegations of equitable fraud or innocent misrepresentations and asks for nothing more than the recovery of money damages.
The defendant cites, among others, the case of Krueger v. Armitage, 58 N.J.Eq. 357, 44 A. 167. In this case equitable relief was sought to recover money paid for stock purchased under false representations knowingly made. While the court recognized concurrent jurisdiction at law and in equity over fraud, it refused equitable relief on the ground that the remedy at law was adequate and that no equitable relief was sought, a demand being made for money damages only. This case has received approval
in later New Jersey cases.
The present case poses the claim for equitable jurisdiction where there is a likelihood of inadequate remedy at law, but makes demand for money damages only without other equitable relief.
The plaintiff implies that it may not be able to prove the case it sets out in Counts 8 to 14 by its failure to establish misrepresentations which were knowingly made by the defendants and therefore it may not be in a position to recover at law. The mere fact that the legal remedy of the plaintiff may thus be thwarted does not of itself entitle it to an equitable action. It appears to follow logically that the plaintiff should bring its complaint within a framework that will sustain relief cognizable in an equitable action. If plaintiff is exempted from such a requirement and permitted to project itself into court solely because it fails to meet the requirements of the action at law, the defendants may lose rights which should be accorded to them. For instance, in this case if because of innocent misrepresentations the plaintiff has paid disability benefits to the defendants and if the defendants caused to pay the premiums due on the policies of insurance at the time the disability payments were allowed, recovery may be had by the plaintiff of the disability payments made to the defendants and the ultimate protection of the policies could be lost to the defendants under a claim by the plaintiff that the defendants failed to meet the premium payments. This would result in distinct inequity for the defendants.
I am aware that the alleged misrepresentations made here were contained in proofs of claim rather than in applications for policies and therefore probably fail to constitute a basis for the cancellation of the policies or the rescission of the contracts of insurance. However, this in itself cannot excuse plaintiff from grounding its equitable action on a foundation that will support a demand for equitable relief. In this, the first seven counts of plaintiff's present complaint fail and the motion to strike them must be granted.
Such an order accordingly may be taken by the defendants.