State Farm Mutual Automobile Ins. Co. v. Bonwell

• Decision Date: 05 November 1957
• Docket Number: No. 15767.,15767.
• Citation: 248 F.2d 862
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, a Corporation, Appellant, v. Roy A. BONWELL, Shelton A. Mick, Samuel T. Shaffner and Willie Marie Shaffner, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

248 F.2d 862 (1957)

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, a Corporation, Appellant, v. Roy A. BONWELL, Shelton A. Mick, Samuel T. Shaffner and Willie Marie Shaffner, Appellees.

No. 15767.

United States Court of Appeals Eighth Circuit.

November 5, 1957.

Thomas E. Deacy, Kansas City, Mo., (Deacy & Deacy, Kansas City, Mo., O. W. Watkins, Jr., and Watkins & Watkins, St. Joseph, Mo., on the brief), for appellant.

Jack B. Robertson, Kansas City, Mo. (Rogers, Field, Gentry & Jackson, Kansas City, Mo., on the brief), for appellee Roy A. Bonwell.

Ronald L. Somerville, Chillicothe, Mo., (Pross T. Cross and Gerald Cross, Lathrop, Mo., on the brief), for appellees Samuel T. Shaffner and Willie Marie Shaffner.

J. B. Beavers, Cameron, Mo. (W. T. Harbison, Plattsburg, Mo., on the brief), for appellee Shelton A. Mick.

Before GARDNER, Chief Judge, and VOGEL and VAN OOSTERHOUT, Circuit Judges.

VAN OOSTERHOUT, Circuit Judge.

This is an appeal by plaintiff insurer from judgment dismissing without prejudice its petition for declaratory judgment to determine its obligations under an automobile liability insurance policy issued by it. The question for our determination is whether the trial court abused its discretion in dismissing the petition. Jurisdiction based upon diversity of citizenship and the requisite amount is established.

Plaintiff alleged in its complaint that it issued to defendant Bonwell an automobile liability insurance policy, which contains, among other things, an exclusion (d) as follows: "Coverage A, to bodily injury of any employee of the insured arising out of and in the course of the insured's employment * * *," and further provides in the insuring agreement under "Definition of Insured" (subparagraph (2) of paragraph (a) of paragraph II) that "the insurance with respect to any person * * * other than the named insured * * * does not apply to * * * any employee with respect to bodily injury of another employee of the same employer injured in the course of such employment arising out of the maintenance or use of the automobile in the business of such employer." Plaintiff further alleged that on August 19, 1955, the Bonwell car covered by the policy was being driven by defendant Mick, and one Don Shaffner was riding with him; that the automobile was involved in an accident in which Don Shaffner received injuries which caused his death; that both Mick and Don Shaffner were employees of Bonwell at the time of the accident and that the accident arose out of and in the course of such employment; and that separate actions were instituted by the parents of Don Shaffner in the State Court of Missouri against Bonwell and Mick, seeking damages in each instance for the wrongful death of Don Shaffner. Plaintiff also alleged that the defendants, Bonwell and Mick, contend that the plaintiff is liable for any judgment against them in the state court actions. Plaintiff further asserted that it is not obligated under its policy because the pleaded facts fall within the liability exclusions of the policy. Plaintiff prayed for judgment declaring that it is under no obligation to appear and defend state court actions against Bonwell and Mick, and that it is under no liability to pay any judgment for damages that may be rendered in such actions. Bonwell, Mick, and the parents of Don Shaffner were all made parties defendant in this action.

Bonwell filed a verified motion to dismiss, alleging that the court lacked jurisdiction because of prior pending state court suits; and contending further that, if jurisdiction exists, the trial court, in the sound exercise of its judicial discretion, should decline to accept jurisdiction, pointing out that in the state court action for wrongful death of Don Shaffner it is alleged that said decedent was not an employee of Bonwell at the time of the fatal accident; that plaintiff is bound to defend the state court action against Bonwell even if groundless; that plaintiff has appeared in the state court on behalf of Bonwell and filed motion for more specific statement; and that plaintiff, having undertaken the defense of the state court action, should not be permitted to maintain this action. Mick filed a similar verified motion to dismiss, but, in addition, contended that there was no controversy between the plaintiff and Mick because plaintiff had previously disclaimed any liability to Mick under its policy. The defendants Samuel T. Shaffner and Willie Marie Shaffner filed similar motion to dismiss. Plaintiff and Bonwell signed an agreement to the effect that the plaintiff, by defending the state court action against Bonwell, did not waive its right to deny liability under the policy.

On the jurisdiction issue, the trial court stated:

"* * * The plaintiff is a nonresident, the defendants are residents of Missouri, the statutory amount exists, and there is a justiciable controversy between the parties. Of course, the plaintiff has an adequate remedy at law under the laws of the State of Missouri, but that fact of itself does not prevent this court from accepting jurisdiction, if, in the interest of justice and the exercise of sound discretion, it ought to do so."

We agree with the trial court's conclusion that it had jurisdiction.

The trial court, in the exercise of its judicial discretion, determined that it should not accept jurisdiction.

Federal courts have a discretionary power to determine whether or not to exercise jurisdiction in declaratory judgment actions. We believe that the trial court followed the proper legal standards in this case in reaching the conclusion that it did.

The Supreme Court in Brillhart v. Excess Insurance Co., 316 U.S. 491, at pages 494-495, 62 S.Ct. 1173, at page 1175, 86 L.Ed. 1620, states:

"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. * * * The motion rested upon the claim 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."

In Kerotest Manufacturing Co. v. C-O-Two Fire Equipment Co., 342 U.S. 180, 72 S.Ct. 219, 96 L.Ed. 200, which involved multiple litigation in the federal judicial system, the Court states that the Federal Declaratory Judgments Act, 28 U.S.C.A. §§ 2201, 2202 has created many complicated problems and indicates that each case must be determined on its own peculiar facts. The Court lays down for guidance the following general principles (342 U.S. at pages 183-184, 72 S.Ct. at page 221):

"* * * Wise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation, does not counsel rigid mechanical solution of such problems. The factors relevant to wise administration here are equitable in nature. Necessarily, an ample degree of discretion, appropriate for disciplined and experienced judges, must be left to the lower courts. * * *"

In Aetna Casualty & Surety Co. v. Quarles, 4 Cir., 92 F.2d 321, Judge Parker deals extensively with the history and purpose of the Declaratory Judgments Act. The court states (at page 324):

"As said by Judge Knight in the case of Automotive Equipment Co. v. Trico Products Corporation D. C., 11 F.Supp. 292, however, 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 * * * 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 of relief where needed, not to furnish a new choice of tribunals or to draw into the federal courts the adjudication of causes properly cognizable by courts of the states. * * *"

Indemnity Insurance Co. of North America v. Schriefer, 4 Cir., 142 F.2d 851, deals with a declaratory judgment action by an insurer. The factual situation there is quite similar to that in the present case. Declaratory relief was denied. In response to the insurer's contention that it would not be liable for a judgment against its insured because of a policy exclusion, the court states (at page 853):

"* * * this is a defense which, if controverted by the insured, can be asserted as well after the conclusion of the suit in the state court, as it can now, and, if the company prevails in that suit, there will, of course, be no occasion to assert it at all. There could be no possible justification for dragging into the federal court the litigation of the issues pending in the state court, for the sake of obtaining a declaratory judgment as to a matter which will have no practical significance if the defendants prevail in the state court, and which the company can litigate as well after the termination of the

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