UNITED SERVICES LIFE INSURANCE COMPANY v. DELANEY

NORVELL, Justice.

This is a suit for a declaratory judgment brought under the provisions of the Uniform Declaratory Judgments Act (Article 2524-1, Vernon's Ann.Tex.Stats.) by United Services Life Insurance Company against Joan Flores Delaney, the beneficiary named in an insurance policy issued by United Services covering the life of her deceased husband, Robert H. Delaney. The trial court dismissed the suit for want of jurisdiction. The Court of Civil Appeals affirmed, holding that under the facts and circumstances of this case, the suit was one instituted for the purpose of procuring an advisory opinion and hence was a proceeding over which the judicial branch of government had no jurisdiction. 386 S.W.2d 648. We affirm the judgments of the lower courts.

History of the Litigation

The litigation of which the present suit is a phase is highly involved, but a recitation of the circumstances that brought about the filing of the present proceedings is essential to an understanding of the jurisdictional problem presented.

The insurance policy which is the subject matter of this suit was issued by petitioner United Services on October 1, 1957. On May 8, 1959, the insured, Lieutenant Robert H. Delaney, died of injuries received as the pilot and only occupant of an aircraft owned and operated by the United States government. The policy contained the following clause:

The company asserted that this limitation was applicable to the case and denied liability. Mrs. Delaney thereupon filed suit in the United States District Court for the Western District of Texas. On December 27, 1961, the judge of said court handed down his opinion supporting the proposition that Lieutenant Delaney's death was covered by the policy. 201 F.Supp. 25. Judgment was rendered awarding Mrs. Delaney a recovery.

In the course of his opinion the District Judge said:

Upon appeal to the Fifth Circuit Court of Appeals, the case was referred to a panel of three judges and the judgment of the District Court was affirmed by a vote of two to one. 308 F.2d 484 (1962). The majority agreed with the District Court and held that, "After a close study of that case [Continental Casualty Co. v. Warren, 152 Tex. 164, 254 S.W.2d 762, 1953] we conclude that the principles of law established by it control the decision of this case and we affirm the judgment of the court below." The dissenting judge was of the opinion that the Delaney case could be distinguished from Warren. It is evident, however, that he did not consider that Warren was a sound decision. He said:

Upon rehearing, this case was considered by the Court of Appeals en banc, along with the case of Paul Revere Life Insurance Company v. First National Bank, Administrator, 5 Cir., 328 F.2d 483. By a vote of five to four, the Court, relying upon Railroad Commission of Texas v. Pullman Co., 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971, and Louisiana Power & Light Co. v. City of Thibodaux, 360 U.S. 25, 79 S.Ct. 1070, 3 L.Ed.2d 1058, invoked the so-called "abstention doctrine". In concluding its opinion the Court said:

In the Paul Revere Life Insurance Company case, the Supreme Court of the United States denied a petition for certiorari, 377 U.S. 935, 84 S.Ct. 1335, 12 L.Ed.2d 798. Mr. Justice Douglas was in favor of granting the writ.1

The minority took the position that, "The mandate from Congress that we decide diversity cases, Title 28 U.S.C.A., § 1332; Meredith v. City of Winter Haven, 1943, 320 U.S. 228, 64 S.Ct. 7, 88 L.Ed. 9, makes plain our duty to decide these matters," and pointed out that Texas, unlike Florida, has made no provisions for the certification by federal courts of doubtful questions to its Supreme Court for resolution. Judge John R. Brown filed a special concurring opinion in answer to the dissent in which he expressed the opinion that the Uniform Declaratory Judgments Act, Art. 2524-1, provides a Texas solution for the problem of allowing a state court to decide a question of Texas law involved in a case pending in the federal Court of Appeals.

Opinion

The question of whether or not the federal court should stay its hand in diversity cases2 pending state action is a federal question which was settled insofar as this case is concerned by the action of the Supreme Court of the United States in denying the petition for certiorari in the Paul Revere Life Insurance case.3

There are serious difficulties on the state side of the question. The Uniform Declaratory Judgments Act (Article 2524-1) provides a plenary remedy. A court having jurisdiction to render a declaratory judgment has power to determine issues of fact, issues of state law and issues of federal law if such questions be involved in the particular case. It was not intended to provide for the piecemeal trial of a lawsuit. It is the obvious purpose of the federal Court of Appeals to secure a decision upon an issue of state law so that it may thereafter render a final judgment between the parties. See, East Coast Lumber Terminal, Inc. v. Town of Babylon, 2 Cir., 174 F.2d 106, 8 A.L.R.2d 1219 (1949), 73 Harvard L.Rev. 1358, 1. c. 1360. We have a situation therefore in which a cause or at least portions thereof are pending in two courts, one of which (the state court) is not empowered to render a final enforceable judgment. The Declaratory Judgment procedure is ill adapted to accomplish the objective sought by the federal appellate court.4

From a state standpoint, a fatal impediment to the Texas court's assuming jurisdiction of this litigation in the present posture of the case arises from constitutional considerations. In Douglas Oil Co. v. State (Whiteside case),5 81 S.W.2d 1064 (Tex.Civ.App.1935), Chief Justice McClendon writing for the Austin Court of Civil Appeals, discussed at some length the nature and history of advisory opinions. He pointed out that in a few states advisory opinions have been given by judicial tribunals in the absence of constitutional authority and that in a small number of states advisory opinions have been given without either supporting constitutional or statutory authorization. However, the opinion stated that:

There are numerous Texas authorities which hold that the giving of advisory opinions is not a judicial function. In Alamo Express, Inc. v. Union City Transfer, 158 Tex. 234, 309 S.W.2d 815 (1958), this Court said, "It is well settled that [Texas] courts will not give advisory opinions." See also, California Products, Inc. v. Puretex Lemon Juice, Inc., 160 Tex. 586, 334 S.W.2d 780, affirming Puretex Lemon Juice, Inc. v. California Products, Inc., 324 S.W.2d 449 (Tex.Civ.App.1959); Board of Water Engineers v. City of San Antonio, 155 Tex. 111, 283 S.W.2d 722 (1955); Orange Independent School District v. West Orange Independent School District, 390 S.W.2d 81 (Tex.Civ.App.1965, ref. n. r. e.).

The present suit was originally filed in the district court but it is readily apparent from the order of the Circuit Court that the purpose of its directive is to obtain a decision by this Court upon a point of Texas law so that under the doctrine of Erie Railway Company v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487, the federal court may render a judgment in accordance therewith.

We have no doubt that, in keeping with the Erie decision, the federal court would render a judgment in keeping with our interpretation of Texas law in this case, but the question is not one of comity, nor of federal policy. It is a question of the power, authority and jurisdiction of the state courts under the Texas Constitution. In Board of Water Engineers v. City of San Antonio, supra, we pointed out that as a prerequisite to the declaratory judgment process, "(a) there shall be a real controversy between the parties, which (b) will be actually determined by the judicial declaration sought." (Italics supplied.) If the state court is to entertain a suit for declaratory relief, it must have the power and jurisdiction to settle the controversy by entry of a final judgment. This is not a case in which a federal suit has been stayed in order that some other and different lawsuit pending in the state courts may be determined. Here, in effect, the same suit is pending in both the state and federal courts by reason of a directive which contemplates that the final judgment will be rendered by a federal court. The Circuit Court's reservation of jurisdiction to render final judgment renders these proceedings advisory in nature.

The leading case upon the point is Morrow v. Corbin, 122 Tex. 553, 62 S.W.2d 641 (1933), opinion by Chief Justice Cureton. The 43rd Legislature adopted two acts. One related to a judicial stay of foreclosure of liens. Acts 1933, 43rd Leg., Ch. 102, p. 225, Article 2218b, Vernon's Ann. Tex.Stats. The other related to the certification of constitutional questions by the district and county courts to the Courts of Civil Appeals. Acts 1933, 43rd Leg., Ch. 71, p. 147, Article 1851a, Vernon's Ann. Tex.Stats.

Acting under the provisions of the latter act, the judge of one of the district courts of Tarrant County certified to the Fort Worth Court of Civil Appeals the question of whether or not the act providing for a judicial stay order (Art. 2218b) was constitutional. In turn, the Court of Civil Appeals certified the question to this Court. The certificate was dismissed for want of jurisdiction. This Court held the 1933 Act of the Legislature was unconstitutional in that it sought to vest the Courts of Civil Appeals with a non-judicial function contrary to the Texas Constitution.

The certification act which was held invalid provided that any district or county court should be empowered to certify to the Court of Civil Appeals any question or questions of the constitutionality of "any law or any order, rule or regulation of any officer, board or other State Commission." The act also provided that the Court of Civil Appeals could in its discretion "forth-with certify said question or questions immediately to the Supreme Court * * *." Section 4 of the act provided that, "The trial court may hold the trial of said cause in abeyance until its questions have been certified and answered. * * *"

This Court said:

It was held that before a power could be classified as judicial under our constitution, the trial tribunal must have the authority to hear the facts, to decide the issues of fact made by the pleadings, to decide the questions of law involved, and possess the power to enter a judgment on the facts found in accordance with the law as determined by the court. It follows that a tribunal which is not empowered to render a final judgment is not functioning in a judicial capacity. Since the federal court will enter the final decree, any decision we may make in this case will be advisory in nature.

As to the Texas appellate courts, it was directly held in Morrow that the constitutional provisions relating to this Court and the Courts of Civil Appeals do not authorize said courts to render advisory opinions. It was said:

We are aware of the fact that the Supreme Court of Louisiana in Leiter Minerals, Inc. v. California Co., 241 La. 915, 132 So.2d 845 (1961) in effect rendered an advisory opinion in the form of a declaratory judgment pursuant to a directive of the United States Supreme Court. The majority opinion frankly acknowledged that an advisory opinion was called for. It was said that:

The majority opinion also recognized that the case was pending in two courts of different jurisdictions at the same time. It is said:

Because of this circumstance, the Louisiana opinion is highly tentative in nature. For example, it is said:

Perhaps the Leiter case presents a more usual litigable situation than does the present case. In Leiter it was conceded that there were questions for federal court decision and perhaps, depending upon the federal action taken, there might be questions involving interpretation of state law. Here, the parties seemingly treat the case as involving a question of state law only, such question being whether or not the decision of this Court in Continental Casualty Company v. Warren, 152 Tex. 164, 254 S.W.2d 762, should be followed. However, the circumstance that there seems to be no disputed fact issue or question of federal law involved should not obscure the controlling factors in the case. Should we here answer the question which is propounded to us upon the theory that we have a declaratory judgment case before us, we would be compelled, as a logical proposition, to take the same position as that taken by the majority of the Louisiana court. That position recognizes that a tribunal of the judicial branch of government may constitutionally render an advisory opinion and, consequently, in the usual case (i. e. one involving fact issues), we would trim the plenary remedy of declaratory judgment to something less than the rendition of a final judgment in a lawsuit by eliminating all decisions involving fact issues and questions of federal law. We believe it axiomatic that in diversity cases, no federal court can constitutionally cede to a state court, jurisdiction to decide fact issues or questions of federal law. What the Louisiana court did in Leiter was to adopt an advisory opinion practice.7 The Louisiana majority opinion contains no discussion of constitutional questions and we must necessarily assume that under the Louisiana decisions, no constitutional inhibition against the advisory opinion is recognized. We have a contrary situation existing in this state. In Douglas Oil Co. v. State (Whiteside case), 124 Tex. 232, 76 S.W.2d 1043 (1934), this Court dismissed a certified question from a Court of Civil Appeals because, "The certificate calls upon the Supreme Court to give an advisory opinion, which is not permitted. Morrow v. Corbin, 122 Tex. 553, 62 S.W.2d 641."

Since the rendition of advisory opinions by courts is unauthorized by our constitution, it is undoubtedly sound law to say that the directive of a federal court could no more operate to vest this Court with jurisdiction to render an advisory opinion than it could empower this Court to try and determine a criminal case contrary to the peculiar provisions of the Texas Constitution which vest that jurisdiction in the Court of Criminal Appeals. Under our judicial set-up, some matters are settled by constitutional provision, others are determined by statute, while still others are controlled by court decisions or court promulgated rules. We are here confronted with a constitutional lack of power.

Any action we might take in this proceeding could not operate as res judicata in the federal court. It is a rule of general application that the pendency of an in personam action in a state court is not a ground for abatement or injunctive relief against the prosecution of the same suit in a federal court. This, because, "Whenever a judgment is rendered in one of the courts and pleaded in the other, the effect of that judgment is to be determined by the application of the principles of res adjudicata by the court in which the action is still pending in the orderly exercise of its jurisdiction, as it would determine any other question of fact or law arising in the progress of the case." Kline v. Burke Construction Co., 260 U.S. 226, 43 S.Ct. 79, 67 L.Ed. 226, 24 A.L.R. 1077 (1922). Obviously, any answer which we should give as to the bindingness of our holding in Continental Casualty Company v. Warren would not control federal court action under the doctrine of res judicata. Actually what we are called upon to do is to answer a question and not render a judgment. As above stated, this case is now pending in two separate courts at one and the same time8 with the power vested in one court only (the Circuit Court of Appeals) to render a final judgment. The rule of Erie Railroad Company v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487 (1938) is involved, but that doctrine is essentially one of precedent or stare decisis and wholly unrelated to res judicata.

While in a one point case involving a matter of state law, some apparent plausibility may be marshalled to support an argument along lines suggested by the rule of res judicata, such argument wholly fails when applied to a case involving fact issues or questions of federal law. This, for the reason that the state court cannot under a procedure such as adopted in this case render a conclusive judgment as to such issues. England v. Louisiana State Board of Medical Examiners, 375 U.S. 411, 84 S.Ct. 461, 11 L.Ed.2d 440 (1964).

Seemingly both litigating parties are agreed that some form of effective communication should exist between the state and federal courts relating to cases involving questions of state law which come within the ambit of the Erie doctrine. However, the declaratory judgment procedure, necessitating as it does, the filing of a suit in a trial court and the prosecution of an appeal to an intermediate appellate court and thence to this Court, is highly cumbersome, expensive and time consuming. The process is rather like burning a house to roast a pig. A certified question practice, which in the light of the Texas experience,9 might be expected to present some attendant and vexatious problems, seems more advisable. The federal courts are only interested in decisions of this Court relating to questions of Texas law. As a practical matter, the question should come directly to this Court from either the Supreme Court of the United States or one of the Circuit Courts of Appeals. Because of the Texas Constitution and the decisions of this Court construing some of its provisions, it would be necessary to amend our fundamental law in order to accomplish the ends desired. However, if reform be advisable and the need for change be substantial, the legislative power is generally responsive even though constitutional amendment may be involved.10

Conclusion

For the reasons above stated, we hold that the trial court properly refused to assume jurisdiction of this case and the Court of Civil Appeals correctly affirmed its decision. The judgments of both courts below are affirmed.

CALVERT, C. J., and HAMILTON and STEAKLEY, JJ., dissenting.

POPE, J., not sitting.

STEAKLEY, Justice (dissenting).

Whether or not we agree in principle, the Federal Court of Appeals, while retaining jurisdiction "for the purpose of taking such further action as may be required," is standing by in a diversity case, in which no federal question is to be decided and no fact question is to be resolved, while the parties obtain an adjudication under our declaratory judgment procedure of a question of local law. I would test the question of whether the judgment of our courts would be advisory only, and hence whether or not we have jurisdiction, by two considerations: First, whether our courts in the declaratory judgment proceeding can enter final judgment granting the relief sought, and, second, whether the judgment of our courts will conclusively settle and terminate the controversy between the parties.

As to the first, this is simply a proceeding to obtain a declaration under local law of the legal rights of an insurance company and the beneficiary of a policy issued by the company. There is no impediment to state jurisdiction in the fact that a suit involving the same subject matter is pending in a federal court. It was held in Kline v. Burke Construction Co., 260 U.S. 226, 232, 43 S.Ct. 79, 82, 67 L.Ed. 226 (1922):

This was reaffirmed in McNeese v. Board of Education, etc., 373 U.S. 668, 673-674 n. 5, 83 S.Ct. 1433, 1436, 10 L.Ed.2d 622 (1963):

For an explication of the above rule, see Hart & Wechsler, The Federal Courts and the Federal System 1073-74 (1953); Gowen & Izler, Abstentation in Diversity Cases, 43 Tex.L.Rev. 194, 207 (1964).

Contrary, then, to the disparagement in the majority opinion, it is not a directive of a federal court which vests our courts with jurisdiction to declare the rights of the parties in this proceeding but, to the contrary, that which does so is the filing of a suit invoking the provisions of the Texas Declaratory Judgments Act, Article 2524-1, Vernon's Annotated Civil Statutes. The Act has been upheld by this Court and has been given a liberal construction to accomplish its purposes. Cobb v. Harrington, 144 Tex. 360, 190 S.W.2d 709, 172 A.L.R. 837 (1945); Guilliams v. Koonsman, 154 Tex. 401, 279 S.W.2d 579, 57 A.L.R.2d 97 (1955). Apparently the majority in its reliance upon Morrow v. Corbin, 122 Tex. 553, 62 S.W.2d 641 (1933), is of the view that the giving of consequential relief is essential to an exercise of the judicial function and prerequisite to the existence of jurisdiction in a court to enter a declaratory judgment. It is probably true that the later-enacted Texas Declaratory Judgments Act will not stand a literal application of the conditions to jurisdiction enumerated in Morrow in deciding the problem there presented. But the Texas Act is written in express contemplation of utilization of its procedures in situations where consequential relief cannot be given.

Borchard in his work on Declaratory Judgments 25 (2d ed. 1941), speaks of a declaratory judgment action as differing "in form in no essential respect from any other action, except that the prayer for relief does not seek execution or performance from the defendant or opposing party." The Supreme Court of Indiana speaks in terms of a declaratory judgment being "none the less an exercise of judicial power even though it does not carry with it, by force of the judgment itself, consequential relief." Rauh v. Fletcher Savings and Trust Co., 207 Ind. 638, 194 N.E. 334, 336 (1935).

This Court delineated the true advisory opinion situation in California Products, Inc. v. Puretex Lemon Juice, Inc., 160 Tex. 586, 334 S.W.2d 780 (1960), as one where an actual and real dispute was not before the court and a concrete case was not present; as a consequence, a judgment by the court would settle nothing and be binding on no one. But the situation before us here is as expressed by the Supreme Court of Michigan: "When an actual controversy exists between parties, [and] 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, 249 Mich. 673, 229 N.W. 618, 620, 68 A.L.R. 105 (1930).

The second of the conditions to jurisdiction which I pose is also present. Under the circumstances of this case—no federal or fact questions—the final judgment of our courts will be conclusive and further action in the federal courts may be only in accordance therewith. Erie R.R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487 (1938); West v. American Tel. & Tel. Co., 311 U.S. 223, 61 S.Ct. 179, 85 L.Ed. 139 (1940); Clay v. Sun Insurance Office, Ltd., 363 U.S. 207, 80 S.Ct. 1222, 4 L.Ed.2d 1170 (1960). The last word on a question of local law is the state forum. Railroad Commission of Texas v. Pullman Co., 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971 (1941). This is res judicata in principle if not in the conventional sense. Indeed, the Fifth Circuit Court of Appeals in its subsequent opinion in Clay [Sun Insurance Office, Ltd. v. Clay, 319 F.2d 505 (1963)], in reasoning to another problem, stated the view that an adjudication of the state court "in litigation inter parties during a federal court abstention" would constitute "a binding determination which became the law of the case and res judicata." A decision in the state court even on a federal question is res judicata where the litigant, though going to the state court involuntarily, does not reserve his right to return to the federal forum for a final adjudication. England v. Louisiana State Board of Medical Examiners, 375 U.S. 411, 84 S.Ct. 461, 11 L. Ed.2d 440 (1964); Propper v. Clark, 337 U.S. 472, 69 S.Ct. 1333, 93 L.Ed. 1480 (1949).1 The right of a litigant in a diversity case to a federal determination of federal or of fact questions may, in the abstention situation, be protected either by a reservation of jurisdiction by the federal court or by a reservation of such right by the litigant. But even in such circumstances neither the federal court nor a litigant can prevent the binding force of a decision of a state court on a question of local law. It was said in Guaranty Trust Co. v. York, 326 U.S. 99, 108, 65 S.Ct. 1464, 1469, 89 L.Ed. 2079, 2086, 160 A.L.R. 1231 (1945):

Policy considerations seem to have fathered the majority holding. The declaratory judgment procedure is described as "highly cumbersome, expensive and time consuming"; a certified question practice is said to be "more advisable" and "the question should come directly to this Court from either the Supreme Court of the United States or one of the Circuit Courts of Appeals." These are policy considerations, as is the question of whether this proceeding represents a sensible accommodation between the federal and state judicial systems. But I fail to see the relevance of these matters to the problem of jurisdiction. Nor do I feel that our decision here should be influenced by jurisdiction or policy problems which may be presented in the abstention case involving federal or fact questions where our courts will have only a fragment of a case pending in the federal courts. This is the "one point case involving a matter of state law" which gives the majority some pause [majority opinion page 864]. What is decided by our courts will terminate the controversy between the parties and in my view will be res judicata as to the entire case. Clearly, the judgment will be a decision made in adversary litigation in our courts and will leave nothing for the federal courts to decide.

CALVERT, C. J., and HAMILTON, J., join in this dissent.