Opinion ID: 1502547
Heading Depth: 1
Heading Rank: 2

Heading: effect of the declaratory judgment

Text: Childress filed suit against Booth on May 17, 1976. Dairyland hired attorney Mark T. Davenport to defend Booth and paid him for his services. Davenport filed an answer for Booth on June 4, 1976. On June 15, 1976, Dairyland filed suit for declaratory judgment that the non-owner's policy did not provide Booth coverage for the collision with Childress. On January 17, 1977, an agreed judgment was rendered that Dairyland had no duty to defend Booth and that the non-owner's policy provided no coverage for Booth respecting the collision with Childress. On July 18, 1978, judgment was rendered for Childress in this suit against Booth. Dairyland relies upon the doctrines of res judicata and collateral estoppel to support its contention that Childress is bound by the declaratory judgment. Their argument is that Childress' suit is derivative of Booth's coverage and therefore they are in privity with Booth, citing Benson v. Wanda Petroleum Co., 468 S.W.2d 361 (Tex.1971); Kirby Lumber Co. v. Southern Lumber Co., 145 Tex. 151, 196 S.W.2d 387, 388 (1946); Cain v. Balcom, 130 Tex. 497, 109 S.W.2d 1044 (1937); and Davis v. Dairyland County Mutual Insurance Co. of Texas, 582 S.W.2d 591 (Tex.Civ.App. - Dallas 1979, writ ref'd n.r.e.). Our examination of the cases cited by Dairyland reveals that they are all distinguishable from the instant case on their facts. Kirby Lumber and Cain v. Balcom involved real estate title disputes. Both cases held that a grantee of a deed to real property is in privity with his grantor. In Davis v. Dairyland , the plaintiffs were attempting, as assignees of the insured to recover from the insuror. The court of civil appeals carefully limited its decision to the facts involving an assignee of the insured. Id. at 593. In Benson v. Wanda Petroleum Co ., the Bensons were passengers in an automobile involved in a collision with a truck owned by Wanda Petroleum. The driver and the Bensons sued Wanda but the Bensons took a nonsuit before trial. At trial, Wanda was exonerated of all negligence. The Bensons then refiled their suit against Wanda who contended that the suit was barred by res judicata or collateral estoppel. This Court rejected Wanda's contentions. We then stated the rule that there is no general definition of privity and that the determination of who are privies requires a careful examination into the circumstances of each case. The word `privy' includes those who control an action although not parties to it ... those whose interests are represented by a party to the action ... successors in interest. Id. at 363. In the present action, Childress could exercise no control over the declaratory judgment suit. Their interests were not represented by a party to the action nor were they successors in interest to a party. In fact the purpose of the suit was to work against their interest. The Uniform Declaratory Judgment Act was adopted by Texas in the enactment of Art. 2524-1, Tex.Rev.Civ.Stat.Ann. Section 11 of that statute states in pertinent part: When declaratory relief is sought, all persons shall be made parties who have or claim any interest which would be affected by the declaration, and no declaration shall prejudice the rights of persons not parties to the proceeding. No Texas appellate courts have considered the application of that statute to a fact situation such as the one before us. Those states which have addressed the precise question before us have unanimously held that a party in Childress' position is not barred by res judicata or collateral estoppel from pursuing a suit against the insuror to recover under the terms of the policy. Southern Farm Bureau Casualty Insurance Co. v. Robinson, 236 Ark. 268, 365 S.W.2d 454, 457 (1963); Shapiro v. Republic Indemnity Co., 52 Cal.2d 437, 341 P.2d 289, 291 (1959); Pharr v. Canal Insurance Co., 233 S.C. 266, 104 S.E.2d 394 (1958). Also see Appleman, Insurance Law and Practice, § 11371 (1981). We hold that Childress and Booth were not in privity respecting the declaratory judgment suit and the doctrine of res judicata to Childress' suit against Dairyland.