' (page 365 of 319 U.S.,page 1118 of 63 S. Ct., 87 L. Ed. 1450.)
In Dewey & Almy Chemical Co. v. American Anode, 3 Cir., 137 F.2d 68, it was held that an action for declaratory judgment would lie to determine the validity of a patent. The same conclusion was reached in E. Edelmann & Co. v. Triple-A Specialty Co., 7 Cir., 88 F.2d 852, 854, in which Judge Lindley stated:
'It was the congressional intent to avoid accrual of avoidable damages to one not certain of his rights and to afford him an early adjudication without waiting until his adversary should see fit to begin suit, after damage had accrued.'
In Davis v. American Foundry Equipment Co., 7 Cir., 94 F.2d 441, 115 A.L.R. 1486, such an action was upheld for the purpose of adjudicating the validity of a contract.
In Perkins v. Elg, 307 U.S. 325, S. Ct. 884, 83 L. Ed. 1320, affirming 69 App.D.C. 175, 99 F.2d 408, an action for a declaratory judgment against the Secretary of Labor was held maintainable for the purpose of determining the plaintiff's citizenship.
In Tennessee Coal Co.v. Muscoda Local, 321 U.S. 590, 64 S. Ct. 698, 88 L. Ed. 949, the Supreme Court upheld an action for a declaratory judgment for the purpose of determining whether in computing the number of working hours in coal mines under the Fair Labor Standards Act, 29 U.S.C.A. § 201 et seq., it was proper to include time consumed by employees in traveling to the place of work from the entrance to the mine.
In Samuel Goldwyn, Inc., v. United Artists Corp., 3 Cir., 113 F.2d 703, it was held that an action would lie to secure a declaratory judgment that certain contracts had been terminated.
In Mississippi Power & Light Co. v. City of Jackson, 5 Cir., 116 F.2d 924, 925, an action was brought to secure a determination as to the validity and construction of certain contract provisions. In his opinion Judge Hutcheson made the following observations:
'While the declaratory judgment act has not added to the jurisdiction of the federal courts, is has added a greatly valuable procedure of a highly remedial nature. Extending by its terms to all cases of actual controversy 'except with respect to Federal taxes', it should be, it has been given a liberal construction and application to give it full effect. * * * a normal, indeed, a common use of it has been in the construction of contracts and the declaration of rights under them.'
The latest case on this point in this jurisdiction is Farrall v. District of Columbia Amateur Athletic Union, App. D.C., 153 'f.2d 647, in which the United States Court of Appeals upheld the right of a member of the District of Columbia Amateur Athletic Union to secure an adjudication as to his right to obtain a sanction to engage in an exhibition.
Accepting the foregoing principles and authorities as a guide, it is clear that a justiciable controversy exists in the instant case, warranting recourse to an action for a declaratory judgment. One of the conditions on which the plaintiff was admitted to membership in the Federal Reserve System, was that on demand of Board of Governors, the plaintiff would withdraw from the System if any of its shares of stock were acquired by the Transamerica Corporation, or any of its subsidiaries or affiliates. Supervening events have created a situation enabling the defendants to invoke this condition. The plaintiff claims that the condition is ultra vires and illegal, and has made a demand on the Board of Governors for its cancellation. The Board maintains the validity of the condition. In fact, counsel for the defendants, with commendable candor and disarming emphasis, so admitted in open court on the argument of this motion. In view of events that have transpired, the condition hangs over the bank like the sword of Damocles ready to strike whenever the Board of Governors chooses to wield the weapon at its command. In the words of Mr. Justice Douglas in Altvater v. Freeman, 319 U.S. 359, 365, 63 S. Ct. 1115, 1118, 87 L. Ed. 1450, 'It was the function of the Declaratory Judgment Act to afford relief against such peril and insecurity.'
The plaintiff is not seeking an answer to a hypothetical or abstract problem. In making its future plans and in protecting its business, it is essential from the standpoint of the plaintiff that the validity of the condition be adjudicated. Failure to enforce the condition thus far, would hardly estop or preclude the defendants or their successors from doing so at some future time. To say that no actual controversy exists between the parties is not realistic.
No reason is perceived why the defendants should oppose a decision on this issue at this time. If the matter were not subject to any judicial review under any circumstances, their attitude would be understandable. If, however, the defendants should at any time seek to enforce the condition, a judicial adjudication as to its validity could be secured by the plaintiff in an action for an injunction. It seems desirable as a matter of orderly administration and substantial justice that such a determination be had at an early stage of the controversy. It does not seem to the court that a governmental or quasi-governmental agency should interpose obstacles or place obstructions in the way of an early judicial determination of the validity of its potential actions, if their legality is challenged by a party subject to them. No prejudice to the defendants is discernible from such an adjudication.
The authorities on which the defendants rely do not dispose of the question. They may be divided into three groups. First, some of the cases involve statutes to which criminal sanctions are attached. Obviously, it is inappropriate to render a declaratory judgment for the purpose of determining whether a specific activity would constitute a crime. Such matters are left to determination by criminal prosecutions. Another group comprises cases involving attempts to secure determinations as to the validity of prospective actions of administrative bodies acting in a quasi-judicial capacity. To do so, however, would partially at least deprive administrative body of its jurisdiction, and would contravene the principle that if a specific mode of reviewing the action of such an agency is provided by statute, the prescribed remedy is exclusive. The third category comprehends cases in which the defendant had no final authority over the matter in dispute. Manifestly, in such instances, a declaratory judgment would deal with a moot case. None of the authorities cited by the defendants supports their contention that no justiciable controversy is presented in the instant case.
The defendants also call attention to Peoples Bank v. Federal Reserve Bank of San Francisco, D.C., 58 F.Supp. 25, decided by the District Court of the United States for the Northern District of California, in which an action was brought by the present plaintiff against the Federal Reserve Bank of San Francisco, the Federal Reserve Agent, the Board of Governors of the Federal Reserve System, to annul and enjoin the enforcement of the condition involved in this action. The action was dismissed as against the Board of Governors on the ground that the Board was not an inhabitant of the Northern District of California, and, therefore, might not be sued therein without its consent. It was dismissed as against the Federal Reserve Bank of San Francisco and against the Federal Reserve Agent on the ground that they had no authority to act and that there was no justiciable controversy as to them, inasmuch as the administrative power to expel banks from the Federal Reserve System is vested by law solely in the Board of Governors. The opinion did not pass either on the validity of the condition, or on the propriety of maintaining an action for a declaratory judgment against the Board of Governors of the Federal Reserve System in the jurisdiction in which they are subject to suit. Consequently, the case does not bear upon the issues presented in this action.
I conclude that the complaint presents a justiciable controversy which may be appropriately adjudicated in an action for a declaratory judgment.
Motion to dismiss the complaint is denied.