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National-Ben Franklin Fire Insurance Co. v. Camden Trust Co.

Decided: June 17, 1955.

NATIONAL-BEN FRANKLIN FIRE INSURANCE COMPANY, A PENNSYLVANIA CORPORATION, AND MERCURY INSURANCE COMPANY, A MINNESOTA CORPORATION, PLAINTIFFS-APPELLANTS,
v.
CAMDEN TRUST COMPANY, A CORPORATION ORGANIZED UNDER THE BANKING LAWS OF NEW JERSEY, AS SUCCESSOR TRUSTEE UNDER AN INDENTURE OF MORTGAGE, AND ASSOCIATED REALTIES CORPORATION, A NEW JERSEY CORPORATION, DEFENDANTS-RESPONDENTS



Clapp, Jayne and Francis. The opinion of the court was delivered by Clapp, S.j.a.d.

Clapp

This is an action brought in the Superior Court, Chancery Division, by two insurance companies against Camden Trust Company, as trustee under an indenture of mortgage, and another party, asking for a declaratory judgment as to the effect of a prior judgment taken against the insurers by the trustee. The court under R.R. 4:12-2(e), dismissed the action holding that plaintiff insurers should seek the relief they were after, not through an action for a declaratory judgment, but by motion in the prior cause to have the prior judgment corrected, modified or clarified. 33 N.J. Super. 340 (Ch. Div. 1954). Plaintiffs appeal.

The prior judgment was secured in the Superior Court, Law Division, for fire losses as to certain property covered by the indenture. In the Law Division action the insurers admitted liability to the trustee for the losses. The only question in that case was as to the effect of the mortgagee clause in the fire insurance policies -- in particular as to a provision thereof that became applicable by reason of the insurers' denial of any liability to the owner of the mortgaged premises.

The Law Division, dealing with that question, adjudged that the insurers were

"entitled to receive from the [trustee] an assignment of an interest in" the trustee's "bond and mortgage"; "but that said assignment * * * shall be junior in lien and right of collection to the rights of the" trustee.

By such assignment subsequently executed by the trustee, the trustee assigned to the insurers -- "subject to the conditions set forth in [the Law Division] judgment" -- the following:

"* * * an interest * * * in [the] Indenture of Trust Mortgage * * *

Together with the * * * Bonds or Obligations in said Indenture of Mortgage mentioned * * * to the extent of" the sums paid by the insurers on the Law Division judgment.

The complaint in the declaratory action in the Chancery Division, filed three years later, seeks a declaration as to whether the judgment and assignment give the insurers the rights and status of bondholders under the trust mortgage. The bonds have been in default since 1939.

Plaintiffs do not seek a correction of the Law Division judgment such as is contemplated by R.R. 4:62-1, or relief from the judgment under R.R. 4:62-2, or an alteration or amendment of it under R.R. 4:61-6. Nor are they attempting to relitigate the former cause or collaterally to attack the judgment. Admittedly they are bound by the terms of the judgment, which is res judicata as to the issues there decided, Aetna Life Ins. Co. v. Martin , 108 F.2d 824 (8 th Cir. , 1940); they desire now, not to evade, but to determine the effect of the judgment. Cf. Roberts v. Hetrick , 125 N.J.L. 633 (E. & A. 1941); Developments in the Law -- Declaratory Judgments , 62 Harv. L. Rev. 787, 840 (1949); 154 A.L.R. 740, 743.

The distinction between a correction or modification of a jural act and a determination as to its meaning and effect is too familiar in the law to require consideration here. 62 Harv. L. Rev., supra , at 841 (1949). We do not correct wills; we construe them (i.e. , determine their meaning and effect). The processes are different in character and scope, though both might serve to bring clarity out of obscurity.

The authorities establish that a court can entertain a declaratory action in order to determine the significance and effect of a judgment. Talcott v. Talcott , 54 Cal. App. 2 d 743, 129 P. 2 d 946 (D. Ct. App. 1942); Lloyd v. Weir , 116 Conn. 201, 164 A. 386 (Sup. Ct. Err. 1933); Connecticut Savings Bank v. First Nat. Bank & Trust Co. , 133 Conn. 403, 51 A. 2 d 907, 911 (Sup. Ct. Err. 1947); Ex Parte County Board of Education , 260 Ky. 246, 84 S.W. 2 d 59 (Ct. App. 1935); Stavros v. Bradley , 313 Ky. 676, 232 S.W. 2 d 1004 (Ct. App. 1950); Beach v. Beach , 57 Ohio App. 294, 13 N.E. 2 d ...


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