United Services Life Insurance Company v. Delaney

STEAKLEY, Justice

(dissenting).

Whether or not we agree in principle, the Federal Court of Appeals, while retaining jurisdiction “for the purpose of taking such further action as may be required,” is standing by in a diversity case, in which no federal question is to be decided and no fact question is to be resolved, while the parties obtain an adjudication under our declaratory judgment procedure of a question of local law. I would test the question of whether the judgment of our courts would be advisory only, and hence whether or not we have jurisdiction, by two considerations: First, whether our courts in the declaratory judgment proceeding can enter final judgment granting the relief sought, and, second, whether the judgment of our *865 courts will conclusively settle and terminate the controversy between the parties.

As to the first, this is simply a proceeding to obtain a declaration under local law of the legal rights of an insurance company and the beneficiary of a policy issued by the company. There is no impediment to state jurisdiction in the fact that a suit involving the same subject matter is pending in a federal court. It was held in Kline v. Burke Construction Co., 260 U.S. 226, 232 , 43 S.Ct. 79, 82 , 67 L.Ed. 226 (1922):

“Where a suit is strictly in personam, in which nothing more than a personal judgment is sought, there Is no objection to a subsequent action in another jurisdiction, either before or after judgment, although the same issues are to be tried and determined; and this because it neither ousts the jurisdiction of the court in which the first suit was brought, nor does it delay or obstruct the exercise of that jurisdiction, nor lead to a conflict of authority where each court acts in accordance with law.”

This was reaffirmed in McNeese v. Board of Education, etc., 373 U.S. 668 , 673-674 n. 5, 83 S.Ct. 1433, 1436 , 10 L.Ed.2d 622 (1963):

“And we held in Kline v. Burke Constr. Co. * * * a suit in per-sonam based on diversity of citizenship could continue in the federal court even though a suit on the same cause of action had been started in the state court: ‘Each court is free to proceed in its own way and in its own time, without reference to the proceedings in the other court. Whenever a judgment is rendered in one of the courts and pleaded in the other, the effect of that judgment is to be determined by the application of the principles of res ad judicata by the court in which the action is still pending * * ”

For an explication of the above rule, see Hart & Wechsler, The Federal Courts and the Federal System 1073-74 (1953); Gowen & Izler, Abstentation in Diversity Cases, 43 Tex.L.Rev. 194, 207 (1964).

Contrary, then, to the disparagement in the majority opinion, it is not a directive of a federal court which vests our courts with jurisdiction to decláre the rights of the parties in this proceeding but, to the contrary, that which does so is the filing of a suit invoking the provisions of the Texas Declaratory Judgments Act, Article 2524-1, Vernon’s Annotated Civil Statutes. The Act has been upheld by this Court and has been given a liberal construction to accomplish its purposes. Cobb v. Harrington, 144 Tex. 360 , 190 S.W.2d 709 , 172 A.L.R. 837 (1945); Guilliams v. Koonsman, 154 Tex. 401 , 279 S.W.2d 579 , 57 A.L.R.2d 97 (1955). Apparently the majority in its reliance upon Morrow v. Corbin, 122 Tex. 553 , 62 S.W.2d 641 (1933), is of the view that the giving of consequential relief is essential to an exercise of the judicial function and prerequisite to the existence of jurisdiction in a court to enter a declaratory judgment. It is probably true that the later-enacted Texas Declaratory Judgments Act will not stand a literal application of the conditions to jurisdiction enumerated in Morrow in deciding the problem there presented. But the Texas Act is written in express contemplation of utilization of its procedures in situations where consequential relief cannot be given.

Bórchard in his work on Declaratory Judgments 25 (2d ed. 1941), speaks of a declaratory judgment action as differing “in form in no essential respect from any other action, except that the prayer for relief does not seek execution or performance from the defendant or opposing party.” The Supreme Court of Indiana speaks in terms of a declaratory judgment being “none the less an exercise of judicial power even though it does not carry with it, by force of the judgment itself, consequential relief.” Rauh v. Fletcher Savings and *866 Trust Co., 207 Ind. 638 , 194 N.E. 334, 336 (1935).

This Court delineated the true advisory opinion situation in California Products, Inc. v. Puretex Lemon Juice, Inc., 160 Tex. 586 , 334 S.W.2d 780 (1960), as one where an actual and real dispute was not before the court and a concrete case was not present; as a consequence, a judgment by the court would settle nothing and be binding on no one. But the situation before us here is as expressed by the Supreme Court of Michigan: “When an actual controversy exists between parties, [and] is submitted in formal proceedings to a court, the decision of the court is binding upon the parties and their privies and is res ad-judicata of the issue in any other proceeding in court in which it may be involved, what else can the decision be but the exercise of judicial power?” Washington-Detroit Theatre Co. v. Moore, 249 Mich. 673 , 229 N.W. 618, 620 , 68 A.L.R. 105 (1930).

The second of the conditions to jurisdiction which I pose is also present. Under the circumstances of this case — no federal or fact questions — the final judgment of our courts will be conclusive and further action in the federal courts may be only in accordance therewith. Erie R.R. Co. v. Tompkins, 304 U.S. 64 , 58 S.Ct. 817 , 82 L.Ed. 1188 , 114 A.L.R. 1487 (1938); West v. American Tel. & Tel. Co., 311 U.S. 223 , 61 S.Ct. 179 , 85 L.Ed. 139 (1940); Clay v. Sun Insurance Office, Ltd., 363 U.S. 207 , 80 S.Ct. 1222 , 4 L.Ed.2d 1170 (1960). The last word on a question of local law is the state forum. Railroad Commission of Texas v. Pullman Co., 312 U.S. 496 , 61 S.Ct. 643 , 85 L.Ed. 971 (1941). This is res judicata in principle if not in the conventional sense. Indeed, the Fifth Circuit Court of Appeals in its subsequent opinion in Clay [Sun Insurance Office, Ltd. v. Clay, 319 F.2d 505 (1963)], in reasoning to another problem, stated the view that an adjudication of the state court “in litigation inter parties during a federal court abstention” would constitute “a binding determination which became the law of the case and res judicata.” A decision in the state court even on a federal question is res judicata where the litigant, though going to the state court involuntarily, does not reserve his right to return to the federal forum for a final adjudication. England v. Louisiana State Board of Medical Examiners, 375 U.S. 411 , 84 S.Ct. 461 , 11 L.Ed.2d 440 (1964); Propper v. Clark, 337 U.S. 472 , 69 S.Ct. 1333 , 93 L.Ed. 1480 (1949). 1 The right of a litigant in a diversity case to a federal determination of federal or of fact questions may, in the abstention situation, be protected either by a reservation of jurisdiction by the federal court or by a reservation of such right by the litigant. But even in such circumstances neither the federal court nor a litigant can prevent the binding force of a decision of a state court on a question of local law. It was said in Guaranty Trust Co. v. York, 326 U.S. 99, 108 , 65 S.Ct. 1464, 1469 , 89 L.Ed. 2079, 2086 , 160 A.L.R. 1231 (1945):

“Here we are dealing with a right to recover derived not from the United States but from one of the States. When, because the plaintiff happens to *867 be a non-resident, such a right is enforceable in a federal as well as in a State court, the forms and mode of enforcing the right may at times, naturally enough, vary because the two judicial systems are not identic. But since a federal court adjudicating a state-created right solely because of the diversity of citizenship of the parties is for that purpose, in effect, only another court of the State, it cannot afford recovery if the right to recover is made unavailable by the State nor can it substantially affect the enforcement of the right as given by the State.”

Policy considerations seem to have fathered the majoi'ty holding. The declaratory judgment procedure is described as “highly cumbersome, expensive and time consuming”; a certified question practice is said to be “more advisable” and “the question should come directly to this Court from either the Supreme Court of the United States or one of the Circuit Courts of Appeals.” These are policy considerations, as is the question of whether this proceeding represents a sensible accommodation between the federal and state judicial systems. But I fail to see the relevance of these matters to the problem of jurisdiction. Nor do I feel that our decision here should be influenced by jurisdiction or policy problems which may be presented in the abstention case involving federal or fact questions where our courts will have only a fragment of a case pending in the federal courts. This is the “one point case involving a matter of state law” which gives the majority some pause [majority opinion page 864]. What is decided by our courts will terminate the controversy between the parties and in my view will be res judicata as to the entire case. Clearly, the judgment will be a decision made in adversary litigation in our courts and will leave nothing for the federal courts to decide.

CALVERT, C. J., and HAMILTON, J., join in this dissent.

. In Propper the Supreme Court of the United States said that although the federal district court could compel parties before it to litigate in an appropriate state court some narrow issue of state law, “ * * * as the state court could reasonably require complete adjudication of the controversy, [if the state court did so] the District Court would perhaps be compelled to stay proceedings in the state court to protect its own jurisdiction. 28 U.S.C.1948 ed. § 2283. Otherwise in sending a fragment of the litigation to a state court, the federal court might find itself blocked by res judicata with the result that the entire federal controversy would be ousted from' the federal courts where it was placed by Congress.” See the concurring opinion in England.