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GEORGIA CASUALTY & SURETY COMPANY v. TURNER et al.
34049.
Petition for declaratory judgment; from Bibb Superior Court-- Judge A. M. Anderson. November 21, 1951.
WORRILL, J.
1. The purpose of the Declaratory Judgment Act of 1945 (Ga. L. 1945, p. 137) as declared in section 13 thereof, is to settle and afford relief from uncertainty and insecurity with respect to rights, status, and other legal relations, and the act is to be liberally construed.
2. The allegations of the petition as amended showed an actual justiciable controversy between the plaintiff insurance company and the defendants, and presented a case for a declaratory judgment as to the rights of the parties, and the court erred in sustaining the general and special grounds of demurrer.
3. To entitle one to a declaratory judgment, it is not necessary that he show in his petition that his rights are as he claims them to be; but, if an actual justiciable controversy is presented, he is entitled, upon a hearing, to a declaratory judgment as to his rights whether or not his contention be correct.
Georgia Casualty & Surety Company filed in the Superior Court of Bibb County, Georgia, a petition seeking a declaratory judgment, and naming as defendants the following: Clyde Barrett, Flanders Mitchell, Mrs. Charles E. Turner, and Mrs. Mary E. Bond. The petition alleged substantially the following: On July 14, 1950, the plaintiff issued to Clyde Barrett, doing business as B. & L. Service Station, a policy of automobile liability insurance, No. 24,215, effective for the period of one year beginning July 14, 1950, covering a described Ford pick-up truck, a copy of the policy being attached to the petition and made a part thereof. On May 29, 1951, the said Clyde Barrett rented the Ford truck to the defendant Flanders Mitchell. On the said date and while the truck was in the possession and control of Flanders Mitchell, it was involved in an accident in which Mrs. Bond and Mrs. Turner claim to have received personal injuries. Clyde Barrett had no interest whatsoever in the mission on which Flanders Mitchell was engaged at the time. He was not an agent or employee of Clyde Barrett, and was not engaged in the business of Clyde Barrett, but was operating the truck by virtue of having leased it from Clyde Barrett. On June 14, 1951, Mrs. Bond and Mrs. Turner each filed an action in the Superior Court of Bibb County against Flanders Mitchell, seeking damages on account of injuries alleged to have been sustained by the negligence of Flanders Mitchell in running the truck into them on the sidewalk on Second Street in the City of Macon. The suits were served on Flanders Mitchell, and he and Clyde Barrett have called upon the plaintiff insurance company and are demanding that it defend the said suits and also pay off any judgments within the limits of the policy which might be obtained in such suits. On June 14, 1951, shortly after it had been notified of the alleged injuries to Mrs. Bond and Mrs. Turner, the insurance company entered into a reservation-of-rights agreement with Clyde Barrett and Flanders Mitchell, a copy of which was attached to the petition as Exhibit "B." In the agreement the company agreed to undertake the investigation of the alleged collision between the truck driven by Flanders Mitchell and Mrs. Turner and Mrs. Bond, and in the course of the investigation it became necessary to file defenses in the suits, brought by the two ladies, for the purpose of securing additional time in which to complete the investigation, and the company filed defensive pleadings in such suits. The company has now reached the definite conclusion that it is not liable under the tends of its policy to continue the defense and is desirous of withdrawing from the defense in each case. If it defends the cases, it will incur additional expense of at least $1000, and if there is no coverage under its contract of insurance then in equity and in good conscience it should not be called upon to make this outlay of money. It is faced with a dilemma, namely: if it withdraws without protection of the court as to its rights as herein sought, it faces the hazard of having a large verdict rendered, which it may be called upon to pay under the terms of its policy; and, on the other hand, if it does not withdraw, it will incur the expense of defending the suits in two trials at a cost of at least $1000.
The policy of insurance contained, among other provisions, the following: "Exclusions: This policy does not apply: (a) while the automobile is used as a public or livery conveyance, unless such use is specifically declared and described in this policy and premium charged therefor."
The renting of the truck to Mitchell was not an isolated occurrence or instance, but Clyde Barrett had frequently rented the truck to various parties for a monetary consideration, all of which was unknown to the plaintiff. The above-quoted provision of the policy by its tends relieves the plaintiff from the payment of any damage which may be assessed against Clyde Barrett in either or both of the pending suits hereinbefore mentioned, for the reason that the truck was being operated as a public or livery conveyance at the time of the accident and alleged injuries to Mrs. Turner and Mrs. Bond. If the truck at the time and place involved is covered by the said contract of insurance, the plaintiff is obligated by its terms to defend the said suits and to pay damages assessed within the limits of the policy; and an actual controversy exists between the plaintiff and Flanders Mitchell and between the plaintiff and Clyde Barrett with respect to the vital and material question of the coverage afforded by the said contract of insurance. The plaintiff has no adequate remedy at law, and this is a proper case in which the court should declare the rights and liabilities of the parties to the end that the plaintiff may be afforded relief from uncertainty and insecurity with respect to its rights, status, and future conduct, and may know whether or not the insurance contract hereinbefore described imposed upon the plaintiff the duty of defending the pending suits and the further duty of paying damages, if any, which may be assessed against the said Mitchell, and this court should take jurisdiction of the controversy and declare the rights of the interested parties.
The plaintiffs in the pending suits are also interested in the controversy and are necessary and proper parties to this proceeding, in order that they may be bound by the judgment of the court in this matter; and it is necessary that they be enjoined from further prosecuting the pending suits until the rights of the parties be declared. If they should prevail in the pending actions, they would be unable to collect their judgments from Flanders Mitchell because he is insolvent, and both of them have threatened, in this event, to bring suits against the plaintiff here. The prayers were: (a) That the court declare the plaintiff's rights, status, and other legal relations with each of the defendants in connection with the policy of insurance and the pending suits; and the plaintiff specifically desires that the court enter a judgment declaring that the plaintiff is not bound by the terms of the policy to defend any of the pending suits or to pay any damages which may be assessed in any one or more of the suits. (b) That Mrs. Mary S. Bond and Mrs. Charles E. Turner be enjoined from further prosecuting the pending suits and from taking any further steps in connection therewith until the final adjudication by the court of the matters here set forth. (c) For process. (d) For such further relief as may be meet and proper.
The court granted a temporary injunction as prayed. The defendants, Mrs. Bond and Mrs. Turner, filed general and special grounds of demurrer, which were sustained, and the exception here is to that judgment.
(After stating the foregoing facts.) The petition in the present case was brought under the Declaratory Judgment Act of 1945 (Ga. L. 1945, p. 137; Code, Ann. Supp., 110-1101), seeking also under the same act (Code, Ann. Supp., 110-1102) to enjoin a tort action pending the rendition of the desired declaratory judgment. The trial court granted the injunction, and the only question in the case, transferred to this court by the Supreme Court ( Georgia Casualty & Surety Co. v. Turner, 208 Ga. 782, 69 S. E. 2d, 771), is whether or not the allegations of the petition are subject to the general and special grounds of demurrer of Mrs. Mary S. Bond and Mrs. Charles E. Turner, two of the defendants in the present action. "The statute under which the petition is brought (Ga. L. 1945, p. 137) provides in section 1 that the superior courts of the State shall have the power upon petition in cases of actual controversy to declare rights of any interested party petitioning for such declaration, and that such declaration shall have the force and effect of a final judgment or decree. Section 2 of the act empowers the court to maintain the status pending the adjudication of the questions by the grant of an injunction or oiler interlocutory extraordinary relief." Brown v. Mathis, 201 Ga. 740, 743 (41 S. E. 2d, 137). See also Bond v. Ray, 83 Ga. App. 817, 818 (65 S. E. 2d, 30). The purpose of the act is, as declared in section 13 thereof, to settle and afford relief from uncertainty and insecurity with respect to rights, status, and other legal relations, and the statute is to be liberally construed. Mensinger v. Standard Accident Ins. Co., 202 Ga. 258 (1) (42 S. E. 2d, 628); Greene v. Golucke, 202 Ga. 494 (4) (43 S. E. 2d, 497). The petition here shows an actual justiciable controversy with respect to whether or not, under the provision of the policy quoted in the statement of facts hereinbefore, the insurance company is obligated to defend the suits brought against the insured and pay off any judgments within the limits of the policy which might be rendered against him. It is of vital importance to the insurance company that its rights be declared, so that it will not have to decide at its peril whether or not it should defend the suits as insisted by the insured. The general demurrer challenged only the right of the plaintiff to have such a declaratory judgment rendered; and since, as we have demonstrated, the petition showed such a right, the court erred in sustaining the general demurrer.
In rendering judgment sustaining the general demurrer and dismissing the petition, the court said in a written opinion: "Under the view I take of this case, the question whether the plaintiff's petition meets the requirements of the Declaratory Judgment Act is not necessarily controlling, for the petition does not affirmatively show that the plaintiff would be entitled to a declaration in its favor and should be dismissed for that reason, even though it may otherwise set forth a proper case for a declaratory judgment." The court then proceeded to construe the exclusion provision of the policy and found that it did not exclude coverage under the allegations of the petition and sustained all grounds of demurrer for that reason alone. In other words, the court was of the opinion that, even though a plaintiff brings himself within the provisions of the Declaratory Judgment Act, he will not be entitled to a declaratory judgment if it could be deduced from the pleadings, in advance of any hearing of evidence, that the ultimate judgment should be unfavorable to him. In this the court erred. Whether or not the plaintiff is entitled to a declaratory judgment upon a hearing, is not dependent upon a determination of whether or not his contention in the controversy be a correct one. It may be found untenable upon the hearing, but he will not for that reason be sent from court, but is entitled to have the court, upon evidence and not upon the hearing of a general demurrer, declare his rights or lack of any right in the premises. To withstand a general demurrer it is only necessary that the plaintiff show an existing justiciable controversy, as provided by the Declaratory Judgment Act. It is not necessary that the petition go farther and show that the plaintiff's contention is correct. As said in Felton v. Chandler, 75 Ga. App. 354, 362 (43 S. E. 2d, 742), the judge "was concerned merely with the question of whether the plaintiff should be given an opportunity to prove the allegations of his petition and whether under any of the circumstances, if proved, the court should enter some judgment." (Italics ours.) In Bruckman v. Bruckman Co., 60 Ohio App. 361 (21 N. E. 2d, 481), it was said: "An examination of the record causes us to conclude that facts were alleged in the amended petition sufficient to state a cause of action under the statutes providing for a declaratory judgment. This does not mean that the plaintiff has stated facts entitling him to a declaration of rights as he claims them to be, but it means that the court is required to state what rights, if any, the plaintiff has under the facts stated. If the plaintiff is entitled to no relief under those facts, the court must so state. The effect of sustaining the demurrer is to find that the plaintiff has not, brought himself within the provisions of the declaratory judgment statutes . . . We, therefore, conclude that the judgment of the Court of Common Pleas should be reversed, and the cause remanded for further proceedings in accordance with law, after the overruling of the demurrer." (Italics ours.) The rule is stated in Anderson, Declaratory Judgments (2d ed.), p. 744, 318: "The test of the sufficiency of a complaint in a declaratory judgment proceeding is not whether the complaint shows that the plaintiff is entitled to the declaration of rights in accordance with his theory, but whether he is entitled to a declaration of rights at all, so that even if the plaintiff is on the wrong side of the controversy, if he states the existence of a controversy which should be settled, he states a cause of suit for a declaratory judgment. And where a complaint in a proceeding for a declaratory judgment stated a justiciable controversy, a demurrer should have been overruled, and after the filing of an answer, a decree containing a declaration of right should have been entered." This statement of the rule
is abundantly supported in various jurisdictions, some of the cases being as follows: Rockland Power & Light Co. v. City of New York, 289 N. Y. 45 (43 N. E. 2d, 803); Merchants Mutual Casualty Co. v. Leone, 298 Mass. 96 (9 N. E. 2d, 552); Cabell v. City of Cottage Grove, 170 Ore. 256 (130 Pac. 2d, 1013, 144 A. L. R. 286); Central Oregon Irrigation District v. Deschutes County, 168 Ore. 493 (124 Pac. 2d, 518, 523); City of Cherryvale v. Wilson, 153 Kan. 505 (112 Pac. 2d, 111, 115); Maguire v. Hibernia Savings &c. Society, 23 Cal. 2d, 719 (146 Pac. 2d, 673, 151 A. L.R. 1062).
In reversing the judgment on the general demurrer that no cause of action was set forth, we express no opinion as to whether or not the trial judge was correct in his finding that the provision of the policy, as alleged in the petition, did not exclude liability of the insurance company. Such a ruling would at this time be beyond the issue here presented, namely, whether or not the petition set forth an actual judiciable controversy, regardless of whether or not the contention of the plaintiff as to the meaning of the policy provision be correct.
The other grounds of demurrer are without merit, but no discussion is deemed necessary except with respect to the ground that the plaintiffs were not proper parties, not being in privity with either of the other defendants, etc. These injured passengers have a material interest in the outcome of the action, and the insurance company is entitled to have a declaratory judgment affecting the interests of all the defendants. They are necessary and proper parties. Central Surety & Ins. Corp. v. Caswell, 91 Fed. 2d, 607, 609; Mensinger v. Standard Accident Ins. Co., 202 Ga. 258 (2), supra.
Judgment reversed. Sutton C. J., concurs. Felton, J., concurs specially.
FELTON, J., concurring specially. I concur in the judgment of reversal for the reason that the court made what I denominate a technical error in sustaining the demurrer to the petition. However, the court did not sustain the demurrer on the ground on which its judgment is being reversed. In the ruling on the demurrer the court in effect ruled on the merits of the justiciable controversy shown in the petition and declared the rights of the parties. The procedural trouble with the ruling is that it was rendered on demurrer and not on the merits of the questions raised by the petition. In view of the foregoing, the court's ruling should be considered as a judgment on the merits of the controversy, and this court should on this appeal decide whether the judgment of the court on the real issue was right or wrong. If this is not done, the case will have to be retried in the court below and appealed again to this court in order to have determined the identical question which I think under the facts should be determined now.
Miller, Miller & Miller, contra.
Martin, Snow & Grant, for plaintiff in error.
DECIDED JUNE 20, 1952 -- REHEARING DENIED JULY 3, 1952.
Saturday May 23 04:45 EDT


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