Rauh v. Fletcher Savings & Trust Co.

• Decision Date: 25 February 1935
• Docket Number: 26006
• Citation: 194 N.E. 334,207 Ind. 638
• Parties: RAUH v. FLETCHER SAVINGS & TRUST CO. et al
• Court: Indiana Supreme Court

194 N.E. 334

207 Ind. 638

RAUH v. FLETCHER SAVINGS & TRUST CO. et al

No. 26006

Supreme Court of Indiana

February 25, 1935

Appeal from Marion Circuit Court; Harry O. Chamberlin, Judge.

Smith Remster, Hornbrook & Smith, Paul Y. Davis, and Kurt F Pantzer, all of Indianapolis, for appellant.

Noel Hickam, Boyd & Armstrong, of Indianapolis, for appellees.

OPINION

TREANOR, Judge.

This action was brought under the Uniform Declaratory Judgments Act (Acts 1927, c. 81, p. 208; section 3-1101 et. seq., Burns' Ann. St. 1933) to obtain a declaration of the rights of appellant and appellee under a contract dated November 4, 1926, whereby appellant had agreed to sell and appellee's decedent, Leo Kahn, had agreed to buy certain shares of the capital stock of the American Sanitary Lock Corporation.

Errors assigned are: (1) The overruling of a demurrer to the complaint; and (2) the overruling of motion for new trial.

The first assignment of error presents the single proposition that the Uniform Declaratory Judgments Act is unconstitutional. It is contended that the act confers upon the courts jurisdiction over nonjudicial matters in violation of article 3, § 1, ^[1] and article 7, § 1, ^[2] of the Idiana Constitution.

While this court has had before it cases in which suit was commenced under the Uniform Declaratory Judgments Act, in none of these was the constitutionality of the act passed upon. In Zoercher v. Agler (1930) 202 Ind. 214, 221, 172 N.E. 186, 189, 907, 70 A. L. R. 1232, the validity of the act was assumed by both parties, but this court was required to decide whether plaintiff's complaint stated a cause of action for a declaration of rights under the act. We quote the following: 'It is also true under the Uniform Declaratory Judgments Acts (now in effect in more than twenty states, III Ind. L. J. 353) that the person bringing the action must have a substantial present interest in the relief sought, such as there must exist not merely a theoretical question or controversy but a real or actual controversy, or at least the ripening seeds of such a controversy, and that a question has arisen affecting such right which ought to be decided in order to safeguard such right.'

The state courts regularly have rejected the contention that a declaratory judgment act attempts to confer nonjudicial functions upon the courts, whenever the questions which can be submitted under the act are within the limits set in Zoercher v. Agler, supra. But the Supreme Court of the United States has held that the judicial power vested in United States courts extends only to 'cases' and 'controversies' which were recognized as justiciable at the time of the adoption of the United States Constitution. The view of the United States Supreme Court as it affects suits for declaratory judgments is well expressed by the following: 'But still the proceeding is not a case or controversy within the meaning of article 3 of the Constitution. The fact that the plaintiff's desires are thwarted by its own doubts, or by the fears of others, does not confer a cause of action. No defendant has wronged the plaintiff or has threatened to do so. Resort to equity to remove such doubts is a proceeding which was unknown to either English or American courts at the time of the adoption of the Constitution and for more than half a century thereafter. * * *' Willing v. Chicago Auditorium Association (1928) 277 U.S. 274, 48 S.Ct. 507, 509, 72 L.Ed. 880.

Earlier United States Supreme Court decisions also have been relied upon for the proposition that a declaratory judgment is not a judicial judgment, for the reason that it does not give consequential relief. The following statement from Gordon v. United States, 117 U.S. 697, Appendix, supports the proposition: 'The award of execution is a part, and an essential part of every judgment passed by a court exercising judicial power. It is no judgment, in the legal sense of the term, without it.'

But later decisions of the Supreme Court of the United States make clear that there may be a judicial judgment without consequential relief.

'The Federal courts have rendered opinions adversely to the validity of declaratory judgment acts, but it has recently been held that, while ordinarily a case for judicial controversy results in a judgment requiring the award of process of execution to carry it into effect, such relief is not an indispensable adjunct to the exercise of the judicial function. Fidelity Nat. Bank & T. Co. v. Swope (1927) 274 U.S. 123, 47 S.Ct. 511, 71 L.Ed. 959 (approved in Old Colony Trust Co. v. Commissioner of Internal Revenue (1929) 279 U.S. 716, 49 S.Ct. 499, 73 L.Ed. 918); Nashville, C. & St. L. R. Co. v. Wallace (1933) 288 U.S. 249, 53 S.Ct. 345, 77 L.Ed. 730 .

'* * * 'Whenever the law provides a remedy enforceable in the courts according to the regular course of legal procedure, and that remedy is pursued, there arises a case within the meaning of the Constitution, whether the subject of the litigation be property or status.' ^[3] 87 A. L. R. 1210, note.

The Constitution of Indiana does not define 'judicial power,' and nowhere limits the functions of courts to hearing and deciding cases and controversies. Consequently, our problem is not one of construing language but of determining whether a court is acting judicially in declaring 'rights, status and other legal relations,' as authorized by the Uniform Declaratory Judgments Act. We think it is clear that under the Indiana Declaratory Judgments Act the cases which may be considered by the courts are not moot and do not call for merely advisory opinions.

'A moot case is imaginary. It does not exist in fact; to decide it serves no useful purpose -- nothing is adjudicated, so nothing is affected. Whereas a declaratory judgment must always deal with a real dispute of a real fact. An advisory opinion is merely a giving of advice, it is not binding.' Ind. Law J. vol. III, No. 5 (February 1928), p. 357.

Furthermore under our act the declaration of rights is a final judgment, not only in form, but in effect; and as between the parties to the proceeding and their privies, in the absence of appeal, it constitutes an adjudication upon the subject-matter presented. ^[4]

We are in accord with the holdings in other jurisdictions that rendering a declaratory judgment is none the less an exercise of judicial power even though it does not carry with it, by force of the judgment itself, consequential relief. We quote with approval and adopt as expressing our own views the following:

'While the Legislature obtains legislative power and the courts receive judicial power by grant in the state Constitution, the whole of such power reposing in the sovereignty is granted to those bodies except as it may be restricted in the same instrument. There is no constitutional restriction on the power of the Legislature to recognize the complexity of modern affairs, and to provide for the settlement of controversies between citizens without the necessity of one committing an illegal act or wronging or threatening to wrong the other. There is no constitutional expression of limitation upon the power of the court to decide such disputes. * * * When an actual controversy exists between parties, it is submitted in formal proceedings to a court, the decision of the court is binding upon the parties and their privies and is res adjudicata of the issue in any other proceeding in court in which it may be involved, what else can the decision be but the exercise of judicial power?' Washington-Detroit Theatre Co. v. Moore (1930) 249 Mich. 673, 229 N.W. 618, 620, 68 A. L. R. 105.

'Turning to the function or duty imposed by our declaratory judgment act upon the superior court as set forth above, could it be claimed with any pretense of reason, that the function was legislative or executive? The answer is obvious. We must then conclude that the function is judicial, or that it falls outside of the three functions described as legislative, executive, or judicial. It would be a travesty to hold that this method of remedial justice could find no place in our system of government unless a place was made for it by an amendment to the Constitution. Such, of course, is not the fact as the case of Dawson v. Orange, supra [78 Conn. 96, 61 A. 101], discloses.

'We are not, therefore, required to hold that under our Constitution the General Assembly is forbidden to enlarge our customary method of remedial justice by authorizing the novel mode of judicial procedure of permitting courts to render declaratory judgments, and thus to close the door to the use in this state of a method of judicial procedure which for more than a half century has been used to the great benefit of the commonwealth and people by those using kindred methods of jurisprudence, as in Great Britain. To hold that the judicial power of this state is confined to the consideration of cases where consequential relief only is sought would be enforcing a limitation upon the judicial power, in accord with custom rather than with reason and logic.' Braman v. Babcock (1923) 98 Conn. 549, 120 A. 150, 152.

We hold that the Declaratory Judgments Act is constitutional, and that the facts alleged in the complaint state a cause of action for a declaration of rights under the contract.

The contract involved was one that was to be performed subsequent to the performance of a contract, made on November 7, 1925, referred to as the 'primary' contract, and concerning which the following allegations of appellee's complaint is undisputed:

'That prior to the 7th day of November, 1925, 314 shares of the stock of said corporation were owned by the following persons in the amounts set opposite their respective names, to wit:

Samuel T. Rauh

179 shares...