EF Hutton & Co. v. Cook

• Decision Date: 16 October 1968
• Docket Number: Civ. A. No. 68-H-358.
• Citation: 292 F. Supp. 409
• Parties: E. F. HUTTON & CO., Inc. v. William O. COOK.
• Court: U.S. District Court — Southern District of Texas

292 F. Supp. 409

E. F. HUTTON & CO., Inc. v. William O. COOK.

Civ. A. No. 68-H-358.

United States District Court S. D. Texas, Houston Division.

October 16, 1968.

Joe Jaworski, of Bracewell & Patterson, Houston, Tex., for plaintiff.

Bryan J. McGinnis, of Bell, McGinnis & Bell, Beaumont, Tex., for defendant.

MEMORANDUM AND ORDER

SINGLETON, District Judge.

This is a suit whereby plaintiff, E. F. Hutton & Company, seeks a declaration of non-liability to defendant, William O. Cook, pursuant to the Federal Declaratory Judgment Act, 28 U.S.C. §§ 2201, 2202 (1964). Jurisdiction is invoked on the basis of diversity of citizenship. The case is now before the Court on defendant's motion to dismiss.

The controversy between the parties arose out of the alleged activity of one Jerry Stedman, an account executive, formerly employed by Hutton at its Beaumont, Texas office, in managing an account maintained by Cook with Stedman at the Beaumont office. Prior to the filing of the instant action, Cook had apprised Hutton that he thought he was entitled to repayment because of the wrongful activities of Stedman in maintaining his account. From September, 1967 into April, 1968, discussions between counsel for both parties were conducted, and the filing of this suit by Hutton followed.

Defendant's motion to dismiss is two pronged. First, Cook contends that, since Hutton had admitted liability to Cook, there was no actual controversy between the parties which threatened any legal right of petitioner subject to being protected under the Declaratory Judgment Act. Secondly, Cook contends that this Court, in its discretion, should refuse to hear this suit for the following reasons: (1) That to do otherwise would permit Hutton to use the declaratory judgment remedy as a device to set venue and (2) that a subsequent suit has been filed in the Eastern District of Texas, which is the more appropriate forum since this is where the great majority of the records, witnesses, etc. are located.

Hutton denies that it admitted liability to Cook, and asserts that it owes nothing to Cook for its employee's (Stedman's) actions. Hutton argues that a declaratory judgment action is to be accorded equal dignity with a direct action, and the fact that a subsequent direct action involving the identical parties has been filed has no effect on the declaratory action pending here. It then denies that it would be more convenient to try the dispute in the Eastern District rather than here, and in addition, asks for an injunction to restrain Cook from proceeding with the Beaumont action.

The granting of a declaratory judgment is dependent upon the exercise of a sound, judicial discretion by the Court, and is not an absolute right conferred upon the litigant. Public Service Commission of Utah v. Wycoff Co., Inc., 344 U.S. 237, 73 S.Ct. 236, 97 L.Ed. 291 (1952). As to what constitutes sound judicial discretion is clearly related in the case of Aetna Casualty & Surety Co. v. Quarles, 92 F.2d 321 at page 324 (4th Cir. 1937):

"The discretion to grant or refuse the declaratory relief `is a judicial discretion, and must find its basis in good reason,' and is subject to appellate review in proper cases. We think that this discretion should be liberally exercised to effectuate the purposes of the statute and thereby afford relief from uncertainty and insecurity with respect to rights, status and other legal relations (see Borchard, Declaratory Judgments, 101); but it should not be exercised for the purpose of trying issues involved in cases already pending, especially where they can be tried with equal facility in such cases, or for the purpose of anticipating the trial of an issue in a court of co-ordinate jurisdiction. The object of the statute is to afford a new form

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