Summary
construing declaratory judgment act's indispensable party requirement in conjunction with statute permitting class actions and explaining declaratory judgment statute "does not exclude the procedure of representative defense of the interests of a class from an action for declaratory relief"
Summary of this case from Sanitary Improvement Dist. No. 2 of Knox Cnty. v. FischerOpinion
October 6, 1960 —
November 1, 1960.
APPEAL from an order of the circuit court for Milwaukee county: MYRON L. GORDON, Circuit Judge. Affirmed.
For the appellant there was a brief and oral argument by Michael D. Preston of Milwaukee.
For the respondent there was a brief by Shea Hoyt of Milwaukee, and oral argument by Hamilton T. Hoyt.
On August 19, 1959, plaintiff, Emanuel S. Lozoff, brought action for a declaration of the proper construction of deed restrictions in Park Ridge subdivision. Paul J. Warga, the present appellant, and 23 others were named as defendants. Warga and seven other defendants demurred to the amended complaint on the ground that there is a defect of parties defendant. The circuit court overruled the demurrer, and Warga has appealed.
The amended complaint alleges, in substance, the following facts:
Plaintiff has made a contract to buy lots 7, 17, 18, and 19 in block 4 in Park Ridge. He plans to erect a restaurant and cocktail lounge on lots 17, 18, and 19. Certain recorded restrictions are applicable to Park Ridge, and item XII thereof provides that "None of said lots . . . shall . . . be used. . . for. . . selling. . . intoxicating beverages. . ." Plaintiff set forth his claim that there are several theories of construction of the instrument under which the restriction in item XII would not apply to the lots which he has contracted to purchase. Eighteen of the defendants are owners of the lots most immediately in the neighborhood of lots 17, 18, and 19. These are all the lots in block 4 except those which plaintiff has agreed to purchase, and the lots along the west edge of block 3. The owner of certain other lots in block 3 has given plaintiff written consent to the use of lots 17, 18, and 19 in the manner intended by plaintiff. Block 3 is just east of block 4; lots 17, 18, and 19 are on the north side of block 4; and no part of Park Ridge lies north or west of block 4.
Defendants Paul and Dorothy Warga are the owners of two lots in block 19, and Paul Warga is an officer of defendant Park Ridge Better Homes Association. The association is a corporation formed for the purpose of protecting the owners of lots in Park Ridge against violation of the restrictions, and the membership of the association includes a large proportion of the owners of lots in Park Ridge.
Park Ridge covers most of a 40-acre tract, and contains 514 lots. Seven hundred twenty-eight persons have ownership interests in the lots other than those to be purchased by plaintiff. The restrictions purport to confer upon any owner the right to enforce the restrictions, but it is alleged that because there are 728 of them it would be impracticable to bring them all before the court, and that plaintiff is suing the named defendants as representatives of all owners of lots in the subdivision. It is alleged that the defendants who own lots in blocks 3 and 4 are suitable representatives because their property is located closest to lots 17, 18, and 19; that the association is a proper and suitable representative of the class, and that a number of the named individual defendants have expressed their opposition to the contentions of plaintiff, and six of them have entered an appearance in the action. The complaint prays for declaratory judgment binding upon the owners of all lots in Park Ridge, as to whether the restrictions with respect to sale of intoxicating beverages are applicable to lots 17, 18, and 19 in block 4.
The complaint sets forth a second cause of action substantially repeating the allegations of the first cause of action, and plaintiff prays in the alternative for a declaratory judgment binding upon only the named defendants.
1. Defense by representation in an action for declaratory judgment. Sec. 260.12, Stats., provides that "when the parties are very numerous and it may be impracticable to bring them all before the court, one or more may sue or defend for the benefit of the whole."
The parties defending for the class must have a right or interest in common with the persons represented, and must fairly represent the interest or right involved so that the issue may be fairly and honestly tried. Pipkorn v. Brown Deer (1960), 9 Wis.2d 571, 577, 101 N.W.2d 623. The question of whether it is impracticable to bring all interested persons before the court is largely a matter of discretion for the trial court. In the Pipkorn decision, at page 579, where the class represented consisted of property owners numbering less than 200, we held that the court did not abuse its discretion in permitting defense by representation.
From the face of the complaint now before us, it cannot be said that the interests of those owners who are not joined as defendants would not be fairly represented by those who have been named and served.
Appellant's argument is that as a matter of law, there can be no action for declaratory judgment in which the defense of the interests of some of the members of a class is left to named defendants who are members of the same class.
Sec. 269.56, Stats., is the Uniform Declaratory Judgments Act. Sub. (11) provides that, "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 right of persons not parties to the proceeding. . . ."
As pointed out in the Pipkorn decision, the concept of a representative or class suit (initially in equity) arose out of necessity. We conclude that sec. 269.56(11), Stats., should be construed together with sec. 260.12, and that it does not exclude the procedure of representative defense of the interests of a class from an action for declaratory relief.
Appellant relies on a statement in State ex rel. Joyce v. Farr (1940), 236 Wis. 323, 327, 295 N.W. 21, that, "The prayer for a declaratory judgment cannot be considered at this time as all the parties in interest have not been made parties to the action." In that case, there appear to have been only three interested persons who were not made parties. Defense by representation was not an issue.
Appellant also relies on Wisconsin Pharmaceutical Asso. v. Lee (1953), 264 Wis. 325, 58 N.W.2d 700. There it was considered that the real controversy was between plaintiffs and a large group of persons, none of whom were joined as defendants and whose interests were presumably not sufficiently similar to be represented by defendants who were members of a state board.
In cases where the validity of an annexation proceeding and of a statute was challenged, this court has held that interested private individuals or bodies were not necessary parties to an action for declaratory judgment where their interests were deemed represented by public bodies or officers. Blooming Grove v. Madison (1957), 275 Wis. 328, 81 N.W.2d 713; White House Milk Co. v. Thomson (1957), 275 Wis. 243, 81 N.W.2d 725.
Courts in several other states have recognized the propriety of declaratory judgments construing deed restrictions and binding upon members of a numerous class although only representatives of the class were named as defendants. Dipboye v. Acchione (1958), 351 Mich. 550, 88 N.W.2d 611; Davis v. Congregation Shearith Israel (Tex.Civ.App. 1955), 283 S.W.2d 810; Garnick v. Serewitch (1956), 39 N.J. Super. 486, 121 A.2d 423.
For general statements as to the propriety of class actions and defense by representation in actions for declaratory judgments, see Borchard, Declaratory Judgments (2d ed.), p. 270, and 1 Anderson, Actions for Declaratory Judgments (2d ed.), p. 279, sec. 149.
We point out that at this stage, the facts are assumed to be as alleged in the complaint of course the present conclusion that no defect of parties defendant appears on the face of the complaint does not deprive the circuit court of its discretion to determine otherwise at a later stage and take appropriate action if developing circumstances so require.
2. Declaratory judgment binding only upon named defendants. Plaintiff's alternative cause of action is framed upon the theory that where all the persons having the most-obvious and substantial interests are joined as defendants and there are many others whose interests are apparently nominal or slight, it may be proper to seek a declaration which binds only the defendants named and served. The circuit court was of the opinion that there was merit to this approach.
The purpose of requiring that all interested persons be made parties or that their interests be suitably represented in an action for declaratory relief is to make it certain that the declaration will terminate the controversy; that the court will not find that it has resolved a question for some of the interested persons, only to have it relitigated by others who were not bound by the first declaration. See Borchard, Declaratory Judgments (2d ed.), p. 256.
If a situation were presented in which the court was fully satisfied that all those with substantial interests were before it and the interests of others were nominal or so slight as virtually to eliminate any hazard that new litigation would occur, we think a court might properly make a declaration binding only on those parties before it. Probably there are few situations calling for such procedure which could not be more satisfactorily treated as an action for declaratory judgment binding all members of a class represented by some of its members. We see no reason, however, why the possibility need be excluded.
By the Court. — Order modified so as to extend the time within which appellant may plead to ten days after filing of remittitur; order as modified, affirmed.