American Medical Services, Inc. v. Mutual Federal Sav. & Loan Ass'n

• Citation: 52 Wis.2d 198,188 N.W.2d 529
• Decision Date: 29 June 1971
• Docket Number: 292,Nos. 291,s. 291
• Parties: AMERICAN MEDICAL SERVICES, INC., a Wisconsin corporation, Appellant, v. MUTUAL FEDERAL SAVINGS & LOAN ASSOCIATION, Respondent. MUTUAL FEDERAL SAVINGS & LOAN ASSOCIATION, a corporation, Respondent, v. AMERICAN MEDICAL SERVICES, INC., Appellant, Assured Realty & Construction Co., et al., Defendants.
• Court: Wisconsin Supreme Court

Page 529

188 N.W.2d 529

52 Wis.2d 198

AMERICAN MEDICAL SERVICES, INC., a Wisconsin corporation, Appellant, v. MUTUAL FEDERAL SAVINGS & LOAN ASSOCIATION, Respondent.

MUTUAL FEDERAL SAVINGS & LOAN ASSOCIATION, a corporation, Respondent, v. AMERICAN MEDICAL SERVICES, INC., Appellant, Assured Realty & Construction Co., et al., Defendants.

Nos. 291, 292.

Supreme Court of Wisconsin.

June 29, 1971.

The appeal in case number 291 is from an order entered by Circuit Judge Gramling dismissing the complaint for a declaratory judgment of the American Medical Services, Inc. (Medical Services). The appeal in case number 292 is from orders entered by Circuit Judge Voss in a mortgage foreclosure action commenced by Mutual Federal Savings & Loan Association (Mutual Federal). The first order appointed a receiver to receive and invest monthly-instalment payments made on the mortgage during the pendency of the action. The second order clarified the first order.

In its complaint for declaratory relief Medical Services alleges it is the owner of a nursing home in River Hills upon which Mutual Federal has several mortgages. It alleges a written contract, made after the mortgages were in default, in which Mutual Federal agreed not to accelerate the payments of the notes so long as certain new conditions were met. It is alleged such conditions have been met but nevertheless Mutual Federal did on October 7, 1969, contrary to the terms of the agreement, declare the mortgage notes due and payable forthwith. Medical Services then brought the action for declaratory judgment to determine the rights of the parties under the notes, mortgages, and agreements. Mutual Federal demurred to the complaint on the ground it stated no cause of action; and the trial court sustained the demurrer and dismissed the complaint for the reason that any judgment declaring rights would not terminate the controversy.

Mutual Federal then commenced its foreclosure action and refused to accept the monthly payments on the mortgages tendered by Medical Services on the ground acceptance would waive its election to accelerate the payment of the notes. The trial court appointed a receiver to receive the momthly payments during the pendency of the suit and also those payments tendered and refused prior to his appointment. Medical Services appeals from the order overruling its demurrer and from the orders appointing the receiver.

Samson & Nash, Godfrey & Kahn, Milwaukee, for appellant; James Ward Rector, Milwaukee, of counsel.

Frisch, Dudek, Slattery & Denny, Milwaukee, for respondent; Edward A. Dudek and Robert D. Scott, Milwaukee, of counsel.

HALLOWS, Chief Justice.

This appeal raises the question of whether the discretion of the trial court conferred by sec. 269.56(6), Stats., ¹ the Declaratory Judgment Act, may be exercised on demurrer and whether a demurrer can present the question of whether a judgment would terminate the controversy. Medical Services relies on Miller v. Currie (1932), 208, Wis. 199, 242 N.W. 570, and Iowa Nat. Mutual Ins. Co. v. Liberty Mut. Ins. Co. (1969), 43 Wis.2d 280, 168, N.W.2d 610, for the proposition that the court's discretion may only be exercised upon the record as it exists when the entry of a judgment would be appropriate and construes this language in Miller v. Currie, supra, to mean after the court has heard the case on the merits. We think not. In most cases a court may not know a declaratory judgment would not terminate a controversy giving rise to the proceeding until it had heard the evidence. We see no reason why a court must go through trial to arrive at a foregone conclusion when it appears on the face of the complaint a declaratory judgment would not terminate the controversy. The language in Miller v. Currie, supra, must be so modified and understood. This is consistent with what this court has done in more recent cases.

In Selective Ins. Co. v. Michigan Mut. L. Ins. Co. (1967), 36 Wis.2d 402, 153 N.W.2d 523, a demurrer was sustained to a complaint for declaratory relief and a judgment entered dismissing the complaint on the ground the consideration of the merits was premature because the interest of the plaintiff was contingent upon the happening of an event. See also Skowron v. Skowron (1951), 259 Wis. 17, 47 N.W.2d 326; Wis. Pharmaceutical Ass'n v. Lee (1953), 264 Wis. 325, 58 N.W.2d 700.

In analyzing the Declaratory Judgment Act, subsection (1) ² of sec. 269.56, Stats., defines the broad scope of the court's power to declare rights, status, and other legal relations. Subsecs. (2), (3), and (4) are examples of such power in particular cases but by subsec. (5) ³ are not exclusive and do not limit general powers in cases where the judgment will terminate the controversy or remove an uncertainty. We do not read this section to mean that therefore subsecs. this section to mean that therefore subsecs. relief may be given although the judgment will not terminate a controversy. A more reasonable construction is that subsec. (5) qualifies the specific powers enumerated in subsecs. (2), (3), and (4) as well as subsec. (1) and the discretionary power in subsec. (6) applies to all cases for declaratory relief. It is only by inverse implication that the Declaratory Judgment Act can be read as excluding the cases enumerated in subsecs. (1), (2), (3), and (4) of sec. 269.56 from the discretionary requirement of subsec. (6).

It may be conceded the complaint meets the test which a complaint for declaratory judgment must meet to state a cause of action. The complaint must state: (1) A justiciable controversy (2) ripe for judicial determination (3) between persons whose interests are adverse and (4) involving a legally protectible interest in the plaintiff. See State ex rel. La Follette v. Dammann (1936), 220 Wis. 17, 264 N.W. 627, and F. Rosenberg Elevator Co. v. Goll (1963), 18 Wis.2d 355, 359, 118 N.W.2d 858. But such a complaint is subject to the discretion of the court not to entertain the action at all because a judgment declaring rights would not settle the controversy and be merely an advisory opinion. Advisory opinions should not be given under the guise of a declaration of rights. Skowron v. Skowron, supra.

In Skowron, this court affirmed a dismissal of a complaint for declaratory relief which stated a cause of action under subsec. (2) in the exercise of discretion under subsec. (6), because a declaratory judgment would not terminate the controversy. In Wis. Pharmaceutical Ass'n v. Lee, supra, declaratory relief under sec. 269.56(2) was sought to interpret the Dangerous Drug Act. A demurrer to the complaint was sustained on the ground the judgment would be an advisory opinion and would not terminate the uncertainty or controversy giving rise to the proceedings. In State ex rel. La Follette v. Dammann, supra, the court relied on its discretionary power to sustain a demurrer to a complaint for a declaratory judgment.

A demurrer to a complaint in a declaratory judgment action normally does not...