Aetna Casualty & Surety Co. v. Quarles

Citation92 F.2d 321
Decision Date29 September 1937
Docket NumberNo. 4173.,4173.
Parties?TNA CASUALTY & SURETY CO. v. QUARLES et al.
CourtUnited States Courts of Appeals. United States Court of Appeals (4th Circuit)

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James S. Bussey and Edwin D. Fulcher, both of Augusta, Ga. (W. K. Charles, of Greenwood, S. C., on the brief), for appellant.

C. A. Mays, of Greenwood, S. C., and J. Strom Thurmond, of Edgefield, S. C. (Douglas Featherstone, of Greenwood, S. C., on the brief), for appellees.

Before PARKER, NORTHCOTT, and SOPER, Circuit Judges.

PARKER, Circuit Judge.

On April 23, 1935, the Aetna Casualty & Surety Company issued to one H. E. Quarles a policy of automobile liability insurance, which was admittedly in effect on January 26, 1936, when his wife, Mrs. Carrie Mae Quarles, was injured while riding in the insured automobile that he was driving. Shortly after the injury she brought an action against him in a South Carolina state court to recover damages in the sum of $5,000 on account thereof. Thereafter, on June 4, 1936, the company filed suit in the court below, alleging that under the policy of insurance it was the duty of Quarles to co-operate with the company in the defense of any suit brought against him which was covered by the policy, that the suit instituted by Mrs. Quarles against her husband was collusive and was an attempt on the part of insured to have his wife obtain a judgment to be enforced against the company under the policy, and that the company had denied liability under the policy and had declined to defend the action for damages or to recognize any liability to the insured on account of her claim. Both the insured and his wife were made parties to the suit, and a declaratory judgment was asked to the effect that the company was not bound to defend the action for damages or to pay any judgment that might be recovered therein.

While the suit for declaratory judgment was pending in the court below, the action for damages was tried and Mrs. Quarles recovered judgment therein against her husband, the insured, for $5,000. The judgment not having been paid within thirty days after its rendition, she brought an action at law against the company in the court below to recover the amount of the judgment under a provision of the policy permitting, under such circumstances, suit on the policy by the person injured. After the last-mentioned action had been instituted, a motion to dismiss, which had been theretofore filed by the defendants in the suit for declaratory judgment, was brought up for hearing; and, upon the trial judge's intimating that he would allow the motion, the company filed an amendment to its bill setting up the rendition of the judgment in favor of Mrs. Quarles and the institution of the action against the company to recover the amount thereof under the terms of the policy. The motion to dismiss was thereupon renewed and was allowed, upon the ground that the granting of a declaratory judgment was a matter resting in the court's sound discretion and that the situation was not one which justified the granting of the relief prayed in the exercise of that discretion. As a basis for this action the court found that the company had already acted upon its conception of its rights by declining to defend the action brought by Mrs. Quarles against her husband, that the controversy was one that could more properly be adjudicated in the action at law which Mrs. Quarles had instituted and which the company saw in prospect when it filed its bill, and that a declaration of the rights of the parties would not necessarily dispose of the entire controversy.

We think that the action of the judge was clearly correct. The federal Declaratory Judgment Act (Jud.Code ? 274d, 28 U.S.C.A. ? 400) is not one which adds to the jurisdiction of the court, but is a procedural statute which provides an additional remedy for use in those cases and controversies of which the federal courts already have jurisdiction. Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 57 S.Ct. 461, 81 L.Ed. 617, 108 A.L.R. 1000. This being true, there is no ground for applying the settled rule, well stated in Cohens v. Virginia, 6 Wheat. 264, 404, 5 L. Ed. 257, that the courts may not decline the exercise of jurisdiction conferred upon them. The question is not as to whether jurisdiction shall be assumed but as to whether, in exercising that jurisdiction, a discretion exists with respect to granting the remedy prayed for. No one would question the power of the federal courts to grant injunctions in proper cases; but nothing is better settled than that whether or not injunctive relief shall be granted is a matter resting in the sound discretion of the trial judge.1 The same is true of specific performance2 and of the legal remedy of mandamus.3 The declaring of "rights and other legal relations" without executory or coercive relief is an extraordinary remedy, the granting of which, like the remedies mentioned, should certainly rest in the sound discretion of the court because of the liability of abuse to which it might otherwise be subjected.

The Uniform Declaratory Judgment Act expressly provides for the exercise of discretion (section 6) as does the New York Civil Practice Act and the Rules adopted thereunder (section 473; rule 212). And the rule is well settled under the English statute and court rules that the granting of declaratory relief is a matter resting in the court's discretion. Russian Commercial Industrial Bank v. British Bank, 90 L.J.K.B.N.S. 1089, 19 A.L.R.. 1101. Prof. Borchard points out that these statutory provisions "merely embody the established Anglo-American practice in all jurisdictions." Declaratory Judgments, p. 100. While the federal act does not expressly provide that the granting of declaratory relief shall rest in the court's discretion, this is clearly implied from the fact that it merely gives the court power to grant the remedy without prescribing any of the conditions under which it is to be granted, and it is hardly to be supposed that it was intended that it should be granted as of course in every case where a controversy exists. The Report of the Judiciary Committee of the Senate states that there is a discretion under the statute "not to issue the judgment if it will not finally settle the rights of the parties," and, further, that "while the procedure is neither distinctly at law or in equity, but sui generis, the Supreme Court could probably at any time make rules under its equity power, if it saw fit." Senate Report No. 1005, 73d Cong., 2d Sess. And in every case in which the question has been raised the holding has been that the granting of relief under the federal act is a matter resting in the sound discretion of the court. New York Life Ins. Co. v. London (D.C.) 15 F.Supp. 586, 590; New Discoveries v. Wisconsin Alumni Research Foundation (D.C.) 13 F.Supp. 596, 599; Automotive Equipment Co. v. Trico Products...

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