Firemen's Ins. Co. of Newark, New Jersey v. Burch

SMITH, Justice

(dissenting).

I am now convinced that the Court was in error in holding that the judgment of the trial court declaring the liability of Firemen’s Insurance Company upon any judgment which may be rendered in the case of Burch v. Buttler was “purely advisory in nature and beyond the power and jurisdiction of the district court to render.” I agree with the general proposition that the judicial power does not embrace the giving of advisory opinions. At the same time, the Court should recognize that the Constitution of Texas does not prohibit advisory opinions by definition. In fact, there is no definition of “judicial power” in the Constitution. The Texas Constitutional provisions with reference to “judicial power” is very similar to the Federal Constitution, Section 1 of Art. 3, which provides that, “[t]he judicial Power of the United States, shall be vested in one supreme Court and in such inferior Courts as the Congress may from time to time ordain and establish.” In the final analysis, the question is, have the parties, Burch, in seeking a declaration of Firemen’s liability under its policy in advance of a determination that Sarah Buttler is legally responsible for the Burch injuries, and Firemen’s, by cross-action, in seeking a declaration that it is not liable, presented an actual controversy within the meaning of the Uniform Declaratory Judgment Act? Although both parties have, in my opinion, drawn an issue, within the purview of the Uniform Declaratory Judgment Act, this Court, on its own motion, has raised the question and held that under the record in this case, the Court is merely asked to render an advisory opinion on a hypothetical state of facts. With this conclusion, I respectfully disagree.

Underlying the concept of justiciability is the requirement that parties having adverse legal interests be involved in a real and substantial controversy. Aetna Life Ins. Co. v. Haworth, 300 U.S. 227 , 57 S.Ct. *336 461 , 81 L.Ed. 617 (1937); Borchard, Declaratory Judgments 33-56 (2d ed. 1941). The requisite controversy, however, does not have to have reached the point where an invasion or threatened invasion of rights has already occurred. It is sufficient if there is a present practical need for the determination of an antagonistic assertion and denial of rights between parties having adverse legal interests with respect to the issue in question. This has been particularly true in the area of insurance. For example, where a tort claimant has already gotten judgment against an insured defendant, it is settled that the claimant has a sufficient interest in the insurance contract as a third party beneficiary for a justiciable controversy to exist between him and the insurer. Developments in the Law—Declaratory Judgments, 62 Harv.L.Rev. 787, 851 (1949). Moreover, if a damage suit is brought against the insured, there, of course, exists a justi-ciable controversy between the insured and the insurer with respect to the insurer’s obligation to defend the suit. Maryland Cas. Co. v. Pacific Coal and Oil Co., 312 U.S. 270 , 61 S.Ct. 510 , 85 L.Ed. 826 (1941); see Evans v. General Ins. Co. of America, 390 S.W.2d 818 (Tex.Civ.App.1965, no writ).

If, as in the present case, the injured party’s suit against the insured is still pending, most courts have reached the conclusion that a justiciable controversy does exist between the injured party and the insurer concerning the issue of the insurer’s liability under the policy. 1 Professor Bor-chard, a co-draftsman of the Uniform Declaratory Judgments Act, points out that one of the main purposes of the declaratory judgment is to remove clouds from legal relations before they become completed attacks. This purpose, he submits, is left unfulfilled when a court refuses to recognize the justiciability of a dispute between an insurance company and the injured party until judgment is obtained against the insurer. In answer to the assertion that a declaratory judgment would be “premature” or that there is only a “contingent future possibility of dispute”, Professor Borchard states that:

“If there is a human probability that danger or jeoparty or prejudice impends from a certain quarter, a sufficient legal interest has been created to warrant a removal of the danger or threat. * * * It seems clear that the probable, practically inevitable, claims of an injured person under the usual casualty policy can never be deemed merely hypothetical or insufficiently ripe for an adjudication of the question of insurer’s liability” Borchard, Declaratory Judgments 637 (2d ed. 1941).

The record in this case does not present a mere remote or future possibility of dispute; the facts present a real and substantial controversy between the parties. A decision by this Court of the issue drawn by the pleadings and evidence in the trial court will finally determine the adverse positions of the parties. The Court does not reach the merits of the case. Therefore, this dissent refers to the facts only for the purpose of emphasizing that this is a genuine declaratory judgment action brought to determine whether or not a husband is legally liable under the terms of a “Family Automobile Policy” to pay damages arising out of a tort committed solely by his wife. The “Family Automobile Policy” involved was obtained by Larry Buttler and his wife, Sarah, in 1963, while they were living together as husband and wife; the policy was renewed each year; Buttler and his wife separated in mid-October, 1965; the collision occurred December 1, *337 1965; the policy was in effect at that time; Sarah was driving her father’s car, one of the cars involved in the collision. Firemen’s takes the position that since Buttler only was listed as the “Named Insured” and since the Buttlers were separated at the time of the collision, it had no obligation to defend Sarah or pay any judgment rendered against Buttler because of the negligence, if any, of Sarah. Firemen’s admits that it was liable to provide Buttler with a defense. When the policy was issued and renewed Buttler and his wife were living in the same household; the premiums were paid by the community. The insurance company should not be permitted to avoid its contractual obligations under the policy merely because Sarah was not listed as a “Named Insured.” It is unsound to hold that because the question of Sarah’s negligence has not been determined and possibly may never be determined, an opinion in the present case would be purely advisory. This Court in the case of Cobb v. Harrington, 144 Tex. 360 , 190 S.W.2d 709 , 172 A.L.R. 837 (1945), gave the Declaratory Judgment Act a liberal construction in holding the factual situation there presented a controversy within the meaning of the Uniform Declaratory Judgment Act, Article 2524-1, Vernon’s Texas Revised Civil Statutes Annotated (1964), “even before the wrong” had actually been committed.

In the light of the facts in this case, the Court should recognize that a justiciable controversy has been presented which brings the case squarely within the constitutional grant of judicial authority. The facts call for judicial declaration of the contractual obligations of Firemen’s under the terms of its policy. The parties are entitled to a declaratory judgment which would constitute a binding adjudication of their contested rights. See Douglas Oil Co. v. State, 81 S.W.2d 1064 (Tex.Civ.App.1935). Our Declaratory Judgment Act, just as does the Declaratory Judgment Act, 28 U.S.C. § 2202 , gives to the trial courts power in cases of actual controversy to declare rights and other legal relations of any interested party arising from contracts of insurance. The parties to this litigation are definitely interested parties. They seek and are entitled to a judicial determination of the extent of coverage of Firemen’s policy. See Maryland Cas. Co. v. Consumers Finance Service, 101 F.2d 514 (3rd Cir.1938); Aetna Life Ins. Co. v. Haworth, 300 U.S. 227 , 57 S.Ct. 461 , 81 L.Ed. 617 (1937).

Furthermore, I respectfully disagree with the Court’s holding that our case of California Products, Inc. v. Puretex Lemon Juice, Inc., 160 Tex. 586 , 334 S.W.2d 780 (1960) controls this case. As heretofore indicated, I have no quarrel with the general proposition that advisory opinions are outside the scope of judicial power, but I disagree with the view that Puretex is decisive of the question here. In Puretex, a declaratory judgment would not settle the controversy. In our case there is no “fish[ing] in judicial ponds for legal advice.” In Puretex, we said :

“A declaratory judgment rendered herein would not settle the controversy between the parties. The permanent injunction * * * is still outstanding. A violation of that judgment is subject to be punished for contempt in a proper proceeding. It cannot be determined whether or not a proposed bottle will be violative of the injunction issued * * * until California Products seeks to market its product in a bottle-in the same market with Puretex. * * * Should we decide that the bottle proposed to be used by California Products did violate the injunction, we would settle nothing. California could continue indefinitely to propose bottles of different sizes, shapes and colors on which it could seek an equally indefinite number of advisory opinions * * (Emphasis added.)

Our case is far different. For example, Firemen’s is not and cannot be a party to the suit between Buttler and Burch. This case is the only case pending in which the policy coverage issue can be decided. *338 The question of the extent of coverage Firemen’s policy affords the husband, Larry Buttler, on account of the torts of his wife, Sarah, and no one else. We do not have a question of a change in size of bottle as in Puretex. So far as this case is concerned we have one wife and one insured and only one case in which the controversy can be decided. Perhaps it is an “iffy” proposition as whether .or not Sarah will be found guilty of a compensable tort, but there is nothing “iffy” in the proposition that a judgment as to the contractual liability, if any, under the policy to protect Buttler will be final.

. Maryland Cas. Co. v. Pacific Coal and Oil Co., 312 U.S. 270 , 61 S.Ct. 510 , 85 L.Ed. 826 (1941); Standard Cas. Co. v. Boyd, 75 S.D. 617 , 71 N.W.2d 450 (1955); St. Paul Fire and Marine Ins. Co. v. Johnson, 216 Ga. 437 , 117 S.E.2d 459 (1960); Borchard, Declaratory Judgments 646-652 (2d ed. 1941); Developments in the Law—Declaratory Judgments, Harv.L.Rev. 787, 851 (1949). A Texas Court of Civil Appeals opinion is in accord with this view. Sheppard v. Employers Cas. Co., 365 S.W.2d 367 (Tex.Civ.App.1963, no writ).