Brillhart v. Excess Ins Co of America, No. 772

CourtUnited States Supreme Court
Writing for the CourtFRANKFURTER
Citation316 U.S. 491,86 L.Ed. 1620,62 S.Ct. 1173
PartiesBRILLHART v. EXCESS INS. CO. OF AMERICA
Decision Date01 June 1942
Docket NumberNo. 772

316 U.S. 491
62 S.Ct. 1173
86 L.Ed. 1620
BRILLHART

v.

EXCESS INS. CO. OF AMERICA.

No. 772.
Argued April 8, 1942.
Decided June 1, 1942.

Mr. Clarence C. Chilcott, of Kansas City, Mo., for petitioner.

Messrs. Dick H. Woods and Paul R. Stinson, both of Kansas City, Mo., for respondent.

Page 492

Mr. Justice FRANKFURTER delivered the opinion of the Court.

The Excess Insurance Company of America, the respondent here, brought this suit for a declaratory judgment to determine its rights under a reinsurance agreement made in 1932 with the Central Mutual Insurance Company of Chicago, Illinois. By that contract the respondent agreed to reimburse Central, within specified limits, for any 'ultimate net loss' (defined as 'the sum actually paid in cash in settlement of losses') sustained by Central under automobile public liability policies thereafter to be issued. Central undertook to notify the respondent of any accident that might be covered by the reinsurance agreement. In 1934 Central issued a public liability policy to Cooper-Jarrett, Inc. Later in that year the petitioner's decedent was killed by a truck leased by Cooper-Jarrett, Inc., and suit was brought against the latter in a Missouri state court. Central refused to defend the suit, however, claiming that the policy did not cover the accident.

While the suit was pending both Central and Cooper-Jarrett, Inc., encountered financial difficulties. By order of an Illinois state court Central was liquidated and all claims against it barred. Cooper-jarrett, Inc., filed a petition for reorganization under § 77B, Bankr.Act, 11 U.S.C.A. § 207, in the Missouri federal district court, and the final decree in that proceeding discharged it from any judgment that had been or might be obtained by the petitioner. Cooper-Jarrett, Inc., having abandoned defense of the suit, the petitioner obtained a default judgment of $20,000 against it on April 22, 1939, and subsequently instituted garnishment proceedings against Central in a Missouri state court. Being unable to recover any part of the judgment from either Cooper-Jarrett, Inc., or Central, the petitioner on May

Page 493

29, 1940, made the respondent a party to the garnishment proceeding through service on the Missouri superintendent of insurance.

But in the meantime the respondent had filed this suit for a declaratory judgment in the federal District Court for Kansas. Its bill showed diversity of the parties' citizenship and the requisite jurisdictional amount. It alleged, inter alia, that when the bill in the federal suit was filed, the respondent was not a party to the garnishment proceeding in the state court; that, in violation of the terms of the reinsurance agreement, Central had never notified the respondent either of the accident resulting in the death of the petitioner's decedent or of the suit brought against Cooper-Jarrett, Inc.; that the respondent's only obligation under the reinsurance agreement was to indemnify Central against loss for sums actually paid in cash in settlement of losses for which Central was liable, and since Central had never satisfied the claim against Cooper-Jarrett, Inc., the respondent could not be obligated in any way under the reinsurance agreement; that Cooper-Jarrett, Inc., was not liable to the petitioner for the death of his decedent; that even if it were, Central was obligated to defend the suit, and its failure to do so discharged the respondent of any liability under the reinsurance agreement; that even if it were originally liable, the discharge of Central and Cooper-Jarrett, Inc., had the effect of releasing the respondent; and that in any event the default judgment against Cooper-Jarrett, Inc., had been fraudulently obtained.

The petitioner moved to dismiss the suit, principally on the ground that the issues involved in the suit could now be decided in the garnishment proceeding pending in the Missouri state court. The District Court dismissed the bill, apparently because of a reluctance to prolong the

Page 494

litigation,1 without considering whether the claims asserted by the respondent could under Missouri law be raised in the pending garnishment proceeding. The Circuit Court of Appeals held that dismissal of the suit was an abuse of discretion, but instead of remitting the cause for a proper exercise of the District Court's discretion, reversed the judgment with directions that the District Court proceed to a determination on the merits. 10 Cir., 121 F.2d 776. In view of the important question affecting the interrelationship of the state and federal courts in the administration of the Federal Declaratory Judgments Act, 28 U.S.C.A. § 400, we brought the case here. 314 U.S. 606, 62 S.Ct. 482, 86 L.Ed. —-.

Although the District Court had jurisdiction of the suit under the Federal Declaratory Judgments Act, 28 U.S.C.A. § 400, it was under no compulsion to exercise that jurisdiction. The petitioner's motion to dismiss the bill was addressed to the discretion of the court. Aetna Casualty & Surety Co. v. Quarles, 4 Cir., 92 F.2d 321; Maryland Casualty Co. v. Consumers Finance Service, 3 Cir., 101 F.2d 514; American Automobile Ins. Co. v. Freundt, 7 Cir., 103 F.2d 613; see Note, 51 Yale L.J. 511. Compare Canada Malting Co. v. Paterson Co., 285 U.S. 413, 422, 423, 52 S.Ct. 413, 415, 76 L.Ed. 837; Douglas v. N.Y., N.H. & H.R. Co., 279 U.S. 377, 49 S.Ct. 355, 73 L.Ed. 747. The motion rested upon the claim

Page 495

that since another proceeding was pending in a state court in which all the matters in controversy between the parties could be fully adjudicated, a declaratory judgment in the federal court was unwarranted. The correctness of this claim was certainly relevant in determining whether the District Court should assume jurisdiction and proceed to determine the rights of the parties. Ordinarily it would be uneconomical as well as vexatious for a federal court to proceed in a declaratory judgment suit where another suit is pending in a state court presenting the same issues, not governed by federal law, between the same parties. Gratuitous interference with the orderly and comprehensive disposition of a state court litigation should be avoided.

Where a district court is presented with a claim such as was made here, it should ascertain whether the questions in controversy between the parties to the federal suit, and which are not foreclosed under the applicable substantive law, can better be settled in the proceeding pending in the state court. This may entail inquiry into the scope of the pending state court proceeding and the nature of defenses open there. The federal court may have to consider whether the claims of all parties in interest can satisfactorily be adjudicated in that proceeding, whether necessary parties have been joined, whether such parties are amenable to process in that proceeding, etc.

We do not now attempt a comprehensive enumeration of what in other cases may be revealed as relevant factors governing the exercise of a district court's discretion. It is enough that it appears from the record before us that the District Court did not consider whether, under applicable local law, the claims sought to be adjudicated by the respondent in this suit for a declaratory judgment had either been foreclosed by Missouri law or could adequately be tested in the garnishment proceeding pending in the

Page 496

Missouri state court. This was a matter for determination, certainly in the first instance, by the District Court. Nor did...

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2386 practice notes
  • Allstate Ins. v. Valley Physical Medicine & Rehab., No. 05-5934(DRH)(MLO).
    • United States
    • United States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)
    • February 21, 2007
    ...Seven Falls Company, 515 U.S. 277, 282-83, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995), and Brillhart v. Excess Insurance Company of America, 316 U.S. 491, 494, 62 S.Ct. 1173, 86 L.Ed. 1620 (1942), Defendants argue that this Court should abstain from determining Allstate's ninth cause of action.......
  • LaShawn A. v. Barry, No. 94-7044
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • July 9, 1996
    ...U.S. 800, Page 1403 [318 U.S.App.D.C. 394] 817-19, 96 S.Ct. 1236, 1246-47, 47 L.Ed.2d 483 (1976); Brillhart v. Excess Ins. Co. of America, 316 U.S. 491, 494-95, 62 S.Ct. 1173, 1175-76, 86 L.Ed. 1620 A natural place to start is with the origin, the way the Court spoke of Gibbs step two in Gi......
  • Plum Creek Timber Co., Inc. v. Trout Unlimited, No. CV02-365-C-EJL.
    • United States
    • United States District Courts. 9th Circuit. District of Idaho
    • March 31, 2003
    ...(1961); Public Service Commission v. WycoffCo., 344 U.S. 237, 241, 73 S.Ct. 236, 97 L.Ed. 291 (1952); Brillhart v. Excess Insurance Co., 316 U.S. 491, 494-98, 62 S.Ct. 1173, 86 L.Ed. 1620 (1942)). The Supreme Court has noted, and the Ninth Circuit recognized, that "district courts possess d......
  • Clark v. Valeo, No. 76-1825
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • June 6, 1977
    ...question presented; Samuels v. Mackel, 401 U.S. 66, 73, 91 S.Ct. 764, 768, 27 L.Ed.2d 688, 693-694 (1971); Brillhart v. Excess Ins. Co., 316 U.S. 491, 495, 62 S.Ct. 1173, 1175, 86 L.Ed. 1620, 1625 (1942); Maryland Cas. Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510, 512, 85 ......
  • Request a trial to view additional results
2355 cases
  • Allstate Ins. v. Valley Physical Medicine & Rehab., No. 05-5934(DRH)(MLO).
    • United States
    • United States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)
    • February 21, 2007
    ...Seven Falls Company, 515 U.S. 277, 282-83, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995), and Brillhart v. Excess Insurance Company of America, 316 U.S. 491, 494, 62 S.Ct. 1173, 86 L.Ed. 1620 (1942), Defendants argue that this Court should abstain from determining Allstate's ninth cause of action.......
  • LaShawn A. v. Barry, No. 94-7044
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • July 9, 1996
    ...U.S. 800, Page 1403 [318 U.S.App.D.C. 394] 817-19, 96 S.Ct. 1236, 1246-47, 47 L.Ed.2d 483 (1976); Brillhart v. Excess Ins. Co. of America, 316 U.S. 491, 494-95, 62 S.Ct. 1173, 1175-76, 86 L.Ed. 1620 A natural place to start is with the origin, the way the Court spoke of Gibbs step two in Gi......
  • Plum Creek Timber Co., Inc. v. Trout Unlimited, No. CV02-365-C-EJL.
    • United States
    • United States District Courts. 9th Circuit. District of Idaho
    • March 31, 2003
    ...(1961); Public Service Commission v. WycoffCo., 344 U.S. 237, 241, 73 S.Ct. 236, 97 L.Ed. 291 (1952); Brillhart v. Excess Insurance Co., 316 U.S. 491, 494-98, 62 S.Ct. 1173, 86 L.Ed. 1620 (1942)). The Supreme Court has noted, and the Ninth Circuit recognized, that "district courts possess d......
  • Clark v. Valeo, No. 76-1825
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • June 6, 1977
    ...question presented; Samuels v. Mackel, 401 U.S. 66, 73, 91 S.Ct. 764, 768, 27 L.Ed.2d 688, 693-694 (1971); Brillhart v. Excess Ins. Co., 316 U.S. 491, 495, 62 S.Ct. 1173, 1175, 86 L.Ed. 1620, 1625 (1942); Maryland Cas. Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510, 512, 85 ......
  • Request a trial to view additional results

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