Court Opinion

ID: 9419257
Source: CourtListenerOpinion
Date Created: 2023-08-02 22:48:07.961132+00
Date Added: 2024-06-11T17:22:16.837869
License: Public Domain

Mr. Justice Douglas,
concurring:
If we had here only the question as to whether the issues framed by respondent in this suit could be litigated in the statutory garnishment proceeding in Missouri, I would agree with the views expressed by the Chief Justice. But there is the further, and for me the controlling, question whether, as stated by the majority, the claims raised by respondent had been “previously foreclosed” under Missouri law. It is a fair inference from this record that respondent, like Central, received notice and had an opportunity to defend the suit brought against Cooper-Jarrett, although all of the attendant circumstances do not clearly appear. Under Missouri law the general rule seems to be that notice and opportunity to defend binds the reinsurer on judgments against the reassured. See e. g. Strong v. Phoenix Ins. Co., 62 Mo. 289; Gantt v. American Central Ins. Co., 68 Mo. 503; City of St. Joseph v. Union Ry. Co., 116 Mo. 636, 643, 22 S. W. 794; Finkle v. Western Auto. Ins. Co., 224 Mo. App. 285, 300, 26 S. W. 2d 843. By statute (6 Mo. Stat. Ann. §§ 5898, 5899) the liability of the insurance company becomes absolute when loss occurs; and judgment against the insured establishes privity between the injured party and the insurer. See Schott v. Auto Ins. Underwriters, 326 Mo. 92, 31 S. W. 2d 7; Lajoie v. Central West Casualty Co., 228 Mo. App. 701, 71 S. W. 2d 803; Taverno v. American Auto Ins. Co., 232 Mo. App. 820, 112 S. W. 2d 941. The problem is whether by reason of the insurer’s liability under the policy and the statute, and *499respondent’s liability under its reinsurance contract (see e. g. Homan v. Employers Reinsurance Corp., 345 Mo. 650, 136 S. W. 2d 289), notice and opportunity to defend the earlier suit were sufficient (Schott v. Auto Ins. Underwriters, supra) to bind respondent as reinsurer. Respondent’s charges of fraud center on the adequacy of the notice which it received and the failure of the insured and the insurer to defend. That seems to be but one phase of the question whether under Missouri law respondent was bound by the judgment in the earlier suit.
The exercise of jurisdiction under the Federal Declaratory Judgments Act is certainly not compulsory; it is discretionary. Borchard, Declaratory Judgments (2d ed.), p. 312. If it may fairly be said under Missouri law that respondent was bound by its failure or refusal to defend the earlier suit after notice, then it would clearly be an abuse of discretion for the District Court to take or at least to retain jurisdiction of the cause in case it appeared after a hearing on that issue that respondent was so bound.