Nat'l Liberty Ins. Co. of Am. v. Silva New Brunswick Fire Ins. Co.

• Decision Date: 24 March 1939
• Docket Number: Nos. 4410, 4411.,s. 4410, 4411.
• Citation: 92 P.2d 161,43 N.M. 283
• Parties: NATIONAL LIBERTY INS. CO. OF AMERICAv.SILVA et al.NEW BRUNSWICK FIRE INS. CO., NEW BRUNSWICK, N. J.,v.SAME.
• Court: New Mexico Supreme Court

43 N.M. 283

92 P.2d 161

NATIONAL LIBERTY INS. CO. OF AMERICA

v.SILVA et al.NEW BRUNSWICK FIRE INS. CO., NEW BRUNSWICK, N. J.,

v.SAME.

Nos. 4410, 4411.

Supreme Court of New Mexico.

March 24, 1939.On Rehearing July 7, 1939.

Appeal from District Court, Bernalillo County; Harry L. Patton, Judge.

Actions by the National Liberty Insurance Company of America and the New Brunswick Fire Insurance Company, New Brunswick, N. J., against Felix Silva and others, all doing business as Silva Bros., for a declaratory judgment with respect to rights under fire insurance policies. From judgments in favor of defendants, plaintiffs appeal.

Reversed and causes remanded, with instructions.

A suit by insurer to determine liability for fire loss under disputed facts with respect to whether insured burned their own property is within purview of the Declaratory Judgment Act. Laws 1935, c. 143.

John F. Simms, J. R. Modrall, and Augustus T. Seymour, all of Albuquerque, for appellants.

Rodey & Dickason and William A. Sloan, all of Albuquerque, for appellees.

BRICE, Justice.

This action was brought under Ch. 143, N.M.Session L.1935, known as “The Declaratory Judgment Act,” the parts of which, material to this case, are as follows:

“In cases of actual controversy, the courts of record of the State of New Mexico shall have power, upon petition, declaration, complaint, or other appropriate pleadings, to declare rights and other legal relations of any interested party petitioning for such declaration, whether or not further relief is or could be prayed, and such declaration shall have the force and effect of the final judgment or decree and be reviewable as such.

“Further relief, based on declaratory judgment or decree, may be granted whenever necessary or proper. The application shall be by petition to the court having jurisdiction to grant relief. If the application be deemed sufficient, the court shall, on reasonable notice, require any adverse party, whose rights have been adjudicated by the declaration, to show cause why further relief should not be granted forthwith.”

The appellees agree that the appellants' “Statement of the Facts” is correct. It is as follows:

“On or about the 12th day of December, 1935, a grocery store and warehouse, located in the Town of Bernalillo, County of Sandoval, New Mexico, and owned by the defendants and appellee, were totally destroyed by fire. At said time appellee, that is, Silva Brothers, carried two policies of fire insurance covering this building, one with the appellant, National Liberty Insurance Company of America, and one with the appellant, New Brunswick Fire Insurance Company, New Brunswick, New Jersey. The policy of each of said companies is in litigation in an identical suit, and both suits are controlled by the same principles of law and are now in the same status on appeal to this court.

“Subsequent to the above mentioned fire, the Silva Brothers filed with the two insurance companies proofs of loss incurred in the fire, and the insurance companies refused to pay the loss. Two suits at law on the two policies were filed by the Silva Brothers in Sandoval County, asking recovery for loss under the terms of said policies. On Motion of the insurance companies the venue of said actions, after hearing, was changed to Bernalillo County. The insurance companies then filed answers in said causes setting up that said fire was a fraudulent one set with the knowledge, connivance, and consent of the defendants, Silva Brothers. The case came to trial upon the issues so framed and the jury failing to agree, a mistrial was declared. At the next term of court in Bernalillo County a second jury trial was had and, the jury failing to agree, a second mistrial was declared. The first of these trials was presided over by Judge Harry Patton and the second trial by Judge Irwin Moise.

“Subsequent to the second mistrial, the Silva Brothers dismissed their two causes in the District Court of Bernalillo County without prejudice, which orders of dismissal were entered on the 9th day of April, 1938.

“On the 16th day of April, 1938, National Liberty Insurance Company of America and The New Brunswick Fire Insurance Company, the two fire insurance companies involved in the general transactions, filed these two suits against the Silva Brothers setting up the fact of the fire aforesaid, the coverage of the Silva Brothers and the allegation of a fraudulent loss, both of which suits were identical with the exception of the plaintiff's name, and said suits asked for a declaratory judgment adjudicating the rights and liabilities arising out of the aforesaid fire in connection with the two fire insurance policies. Process in said suits was served upon the Silva Brothers on the 18th day of April, 1938. These suits were filed in Bernalillo County.

“On the 19th day of April, 1938, the Silva Brothers filed two suits on the identical policies against the two insurance companies in the County of Santa Fe, State of New Mexico, which said suits were approximately duplicates of their original actions to recover under the policies, that is, they were suits at law against the insurance companies for the amount of their loss arising out of the fire. Immediately thereafter the Silva Brothers filed pleas in abatement in the two Bernalillo County suits, that is, the declaratory judgment suits brought by the insurance companies.

“The two suits seeking declaratory judgments were commenced and pending in the District Court of Bernalillo County and service had been had in said causes prior to the commencement of the two suits at law in Santa Fe County by the Silva Brothers.

“Hearing was had before Judge Harry Patton on said pleas in abatement and the court, having sustained the same, the insurance companies appealed from said order of the trial court as above set forth in appellant's statement of the case.”

The New Mexico declaratory judgment act is an adaptation of the Federal Act (Sec. 274d, Jud.Code, as amended, 28 U.S. C.A. § 400), and is identical in meaning; except there is in the Federal Act a specific provision for jury trials of suits at law. There was no settled construction of the Federal Act at the time of its adoption by New Mexico. It had been construed a number of times; but with considerable disagreement among the several Federal Courts, as well as among the individual judges of some of the courts.

The provisions of the Federal Act corresponding to the two sections of the New Mexico declaratory judgment act which we have quoted, are as follows:

“In cases of actual controversy except with respect to Federal taxes the courts of the United States shall have power upon petition, declaration, complaint, or other appropriate pleadings to declare rights and other legal relations of any interested party petitioning for such declaration, whether or not further relief is or could be prayed, and such declaration shall have the force and effect of a final judgment or decree and be reviewable as such.

“Further relief based on a declaratory judgment or decree may be granted whenever necessary or proper. The application shall be by petition to a court having jurisdiction to grant the relief. If the application be deemed sufficient, the court shall, on reasonable notice, require any adverse party, whose rights have been adjudicated by the declaration, to show cause why further relief should not be granted forthwith.” Sec. 274d, 28 U.S.C.A. § 400.

[1] The Supreme Court of the United States, in Aetna Life Insurance Co. v. Haworth et al., 300 U.S. 227, 57 S.Ct. 461, 465, 81 L.Ed. 617, 108 A.L.R. 1000, stated, “that the dispute turns upon questions of fact does not withdraw it *** from judicial cognizance. The legal consequences flow from the facts and it is the province of the courts to ascertain and find the facts in order to determine the legal consequences.” To this we agree.

The question of fact in this case, and the only question about which there is disagreement, is whether the defendants themselves, or through connivance with others, burned their own property. A determination of this question regarding which two juries of Bernalillo County have failed to agree, will determine the “actual controversy,” which is whether appellants are liable to appellees on the insurance policies mentioned in the statement of facts.

[2][3] The declaratory judgment act is an alternative means of presenting controversies to courts having jurisdiction thereof. The so-called “traditional remedies” are not substantive rights. They could be entirely abolished and others supplied. This is the holding of the Supreme Court of the United States in the Aetna Insurance case; with which we are satisfied. But that court has never passed on the question of whether the Federal district courts are compelled to take cognizance of every case filed under the Federal Act, of which those courts could take jurisdiction. The Fifth Circuit Court of Appeals, in Carpenter et al. v. Edmondson, 92 F.2d 895, seems to hold that the trial court was without discretion and cites Aetna Life Insurance Co. v. Haworth, supra, as supporting authority. But a careful reading of the opinion of the Supreme Court in that case satisfies us that no such question was presented to, or decided by the court. It was held by the trial court in the Aetna Life Insurance Company case, and concurred in by the Circuit Court of Appeals of the Eighth Circuit (see the same case in D.C., 11 F.Supp. 1016, and 8 Cir., 84 F.2d 695), that no “actual controversy” existed and therefore the district court was without jurisdiction. The Supreme Court held otherwise; and it was upon this question and not upon the question of discretion, that the Supreme Court rested its decision.

Appellants cite Western Casualty & Surety Co. v. Beverforden, 8 Cir., 93 F.2d 166, 168, as supporting their contention that the trial court was without discretion, and therefore could not dismiss a case of which it had...