1. To support a suit under the Declaratory Judgment Act, the
facts must show a substantial controversy, real and immediate,
between parties having adverse legal interests. P.
312 U. S.
273.
2. An insurer issued a policy covering liability of the insured
for personal injuries caused by automobiles "hired by the insured."
Under the policy and the state law, an injured party could keep the
policy from lapsing by serving notice of the accident, etc., if the
insured failed to do so; and, if successful in obtaining judgment
against the insured, could enforce it by supplementary proceedings
against the insurer. The insured having been sued in the state
court for personal injuries sustained in a collision between a
truck driven by an employee of the insured and the automobile of
the claimant, the insurer brought suit in the federal court against
the insured and the claimant, alleging that the truck was not
"hired by the insured" and contending that it was not bound to
defend the state court suit or to indemnify the insured.
Held:
Page 312 U. S. 271
(1) That diverse citizenship and jurisdictional amount being
present, the insurer's suit involved an "actual controversy"
cognizable under the Declaratory Judgment Act. P.
312 U. S.
273.
(2) An injunction to restrain the proceedings in the state court
is prohibited by § 265 of the Judicial Code. P.
312 U. S.
274.
111 F.2d 214 reversed.
Certiorari, 311 U.S. 625, to review the affirmance of a decree
in a suit for a declaratory judgment.
MR. JUSTICE MURPHY delivered the opinion of the Court.
Petitioner issued a conventional liability policy to the
insured, the Pacific Coal & Oil Co., in which it agreed to
indemnify the insured for any sums the latter might be required to
pay to third parties for injuries to person and property caused by
automobiles hired by the insured. Petitioner also agreed that it
would defend any action covered by the policy which was brought
against the insured to recover damages for such injuries.
While the policy was in force, a collision occurred between an
automobile driven by respondent Orteca and a truck driven by an
employee of the insured. Orteca brought an action in an Ohio state
court against the insured to recover damages resulting from
injuries sustained in this collision. Apparently this action has
not proceeded to judgment.
Petitioner then brought this action against the insured and
Orteca. Its complaint set forth the facts detailed above, and
further alleged that, at the time of the collision, the employee of
the insured was driving a truck sold to him by the insured on a
conditional sales contract.
Page 312 U. S. 272
Petitioner claimed that this truck was not one "hired by the
insured," and hence that it was not liable to defend the action by
Orteca against the insured or to indemnify the latter if Orteca
prevailed. It sought a declaratory judgment to this effect against
the insured and Orteca, and a temporary injunction restraining the
proceedings in the state court pending final judgment in this
suit.
Orteca demurred to the complaint on the ground that it did not
state a cause of action against him. The District Court sustained
his demurrer, and the Circuit Court of Appeals affirmed.
Maryland Casualty Co. v. Pacific Coal & Oil Co., 111
F.2d 214. We granted certiorari , 311 U.S. 625, to resolve the
conflict with the decisions of other Circuit Courts of Appeals
cited in the note.
*
The question is whether petitioner's allegations are sufficient
to entitle it to the declaratory relief prayed in its complaint.
This raises the question whether there is an "actual controversy"
within the meaning of the Declaratory Judgment Act, Judicial Code §
274d, 28 U.S.C. § 400, since the District Court is without power to
grant declaratory relief unless such a controversy exists.
Nashville, C. & St.L. Ry. Co. v. Wallace, 288 U.
S. 249,
288 U. S. 259;
Constitution, Art. III, § 2.
Page 312 U. S. 273
The difference between an abstract question and a "controversy"
contemplated by the Declaratory Judgment Act is necessarily one of
degree, and it would be difficult, if it would be possible, to
fashion a precise test for determining in every case whether there
is such a controversy. Basically, the question in each case is
whether the facts alleged, under all the circumstances, show that
there is a substantial controversy, between parties having adverse
legal interests, of sufficient immediacy and reality to warrant the
issuance of a declaratory judgment.
See Aetna Life Ins. Co. v.
Haworth, 300 U. S. 227,
300 U. S.
239-242. It is immaterial that frequently, in the
declaratory judgment suit, the positions of the parties in the
conventional suit are reversed; the inquiry is the same in either
case.
Nashville, C. & St.L. Ry. Co. v. Wallace, supra,
p.
288 U. S.
261.
That the complaint in the instant case presents such a
controversy is plain. Orteca is now seeking a judgment against the
insured in an action which the latter claims is covered by the
policy, and sections 9510-3 and 9510-4 of the Ohio Code (Page's
Ohio General Code, Vol. 6, §§ 9510-3, 9510-4) give Orteca a
statutory right to proceed against petitioner by supplemental
process and action if he obtains a final judgment against the
insured which the latter does not satisfy within thirty days after
its rendition.
Compare Maryland Casualty Co. v. United
Corporation, 111 F.2d 443, 446;
Central Surety &
Insurance Corp. v. Norris, 103 F.2d 116, 117;
United
States Fidelity & Guaranty Co. v. Pierson, 97 F.2d 560,
562. Moreover, Orteca may perform the conditions of the policy
issued to the insured requiring notice of the accident, notice of
suit, etc., in order to prevent lapse of the policy through failure
of the insured to perform such conditions.
Hartford Accident
& Indemnity Co. v. Randall, 125 Ohio St. 581, 183 N.E.
433;
see also Lind v. State Automobile Mutual Insurance
Association, 128 Ohio St. 1, 190 N.E. 138;
Page 312 U. S. 274
State Automobile Mutual Insurance Association v.
Friedman, 122 Ohio St. 334, 171 N.E. 591.
It is clear that there is an actual controversy between
petitioner and the insured.
Compare Aetna Life Ins. Co. v.
Haworth, supra. If we held contrariwise as to Orteca because,
as to him, the controversy were yet too remote, it is possible that
opposite interpretations of the policy might be announced by the
federal and state courts. For the federal court, in a judgment not
binding on Orteca, might determine that petitioner was not
obligated under the policy, while the state court, in a
supplemental proceeding by Orteca against petitioner, might
conclude otherwise.
Compare Central Surety & Insurance
Corp. v. Norris, supra, p. 117;
Aetna Casualty &
Surety Co. v. Yeatts, p. 670.
Thus, we hold that there is an actual controversy between
petitioner and Orteca, and hence, that petitioner's complaint
states a cause of action against the latter. However, our decision
does not authorize issuance of the injunction prayed by petitioner.
Judicial Code § 265, 28 U.S.C. § 379;
see Central Surety &
Insurance Corp. v. Norris, supra, p. 117;
Maryland
Casualty Co. v. Consumers Finance Service, Inc., 101 F.2d 514,
516;
Aetna Casualty & Surety Co. v. Yeatts, supra, p.
670.
The judgment of the Circuit Court of Appeals is reversed, and
the cause is remanded for further proceedings in conformity with
this opinion.
Reversed.
MR. JUSTICE BLACK did not participate in the consideration or
decision of this case.
*
Maryland Casualty Co. v. United Corporation, 111 F.2d
443;
Central Surety & Insurance Corp. v. Norris, 103
F.2d 116;
Maryland Casualty Co. v. Consumers Finance Service,
Inc., 101 F.2d 514;
Aetna Casualty & Surety Co. v.
Yeatts, 99 F.2d 665;
United States Fidelity & Guaranty
Co. v. Pierson, 97 F.2d 560;
Associated Indemnity Corp. v.
Manning, 92 F.2d 168.
See also Employers' Liability
Assurance Corp., Ltd. v. Ryan, 109 F.2d 690;
C. E. Carnes
& Co. v. Employers' Liability Assurance Corp., Ltd., 101
F.2d 739;
Standard Accident Insurance Co. v. Alexander,
Inc., 23 F. Supp.
807;
United States Fidelity & Guaranty Co. v.
Pierson, 21 F. Supp.
678;
Builders & Manufacturers Mutual Casualty Co. v.
Paquette, 21 F. Supp.
858;
Travelers Insurance Co. v. Young, 18 F. Supp.
450;
Commercial Casualty Insurance Co. v.
Humphrey, 13 F. Supp.
174.