Consolidated Petroleum Corporation (Consolidated) hired Golosov to act as a broker to secure financing for an oil drilling rig. Golosov subsequently contacted International Paper Credit Corporation (IPCC). IPCC proposed a loan in the form of a lease agreement. Contemporaneously with the letter of proposal from IPCC, Consolidated and Golosov entered into an agreement under which Consolidated paid a commission of $13,500 to Golosov which was to be returned, "[i]f, for any reason, [IPCC] does not grant a loan or loans to us. . . ." There was also a provision in the agreement which caused the commission to be earned should Consolidated "refuse to complete the proposed loan after accepting the commitment of [IPCC]. . . ." IPCC, in its letter of proposal, expressly reserved the right to "decline the transaction." It did so decline when the president of IPCC refused to approve the loan. It follows that the provisions requiring the return of the commission apply and that the judgment in the amount of the broker's commission to Consolidated, with statutory costs and interest, was correct. The defendant Golosov raised the issues of fraud and bad faith with respect to Consolidated's nondisclosure of certain information, which had not been requested. The trial judge found that the nondisclosure by Consolidated's president of his prior personal bankruptcy and of a divorce was not fraudulent and concluded that it did not provide the defendant with a defense to the plaintiff's action. The record does not provide a basis upon which to reverse that finding or to substitute a finding of bad faith on the part of the plaintiff's president acting on behalf of the plaintiff corporation. See Creed v. Apog, 6 Mass. App. Ct. 365 , 374-375 (1978).
The plaintiff sought a declaration that the motor vehicle liability insurer for the defendant All American Rental, Inc. (AAR), or , if it has no insurer, AAR itself, is primarily liable for defending and for satisfying any judgment recovered in a tort action for property damage pending against AAR and the defendant Thomas. The complaint alleged that Thomas, a minor, is the owner of a car insured by the plaintiff but was driving a car leased from AAR at the time of the collision which is the subject of the pending tort action. AAR
has demanded that the plaintiff defend the action; the plaintiff's assertion that AAR's insurer is primarily liable and is obligated to defend was answered (allegedly) by AAR's assertion that it is not required by law to maintain compulsory insurance or to defend or indemnify Thomas. AAR did not file an answer but only a motion to dismiss on several grounds. The plaintiff appeals from a judgment dismissing the action pursuant to Mass.R.Civ.P. 12(b)(6), 365 Mass. 755 (1974).
A motion to dismiss an action seeking declaratory relief for failure to state a claim normally raises only the question whether a controversy has been alleged. Morgan v. Banas, 331 Mass. 694 , 698 (1954). County of Dukes County v. New Bedford, Woods Hole, Martha's Vineyard & Nantucket S.S. Authy., 333 Mass. 405 , 406 (1956). Greenberg v. Assessors of Cambridge, 360 Mass. 418 , 423 (1971). A controversy over which of two insurers is obligated to defend an action is properly the subject of declaratory relief. Improved Mach., Inc. v. Merchants Mut. Ins. Co., 349 Mass. 461 (1965). See also Transamerica Ins. Co. v. Norfolk & Dedham Mut. Fire Ins. Co., 361 Mass. 144 (1972); Barnstable County Mut. Fire Ins. Co. v. Lally, 374 Mass. 602 (1978). This action is governed by that principle: whether AAR was obligated to maintain compulsory insurance or give a motor vehicle liability bond or deposit (see G. L. c. 90, Sections 32E and 34A) and whether it has the obligations of an insurer if it did not are simply subsidiary questions bearing on the principal question of primary responsibility to defend the action. Disagreement with the plaintiff's legal position is no basis for dismissal if there is a controversy. Egnet v. Commissioner of Pub. Safety, 5 Mass. App. Ct. 188 , 190 (1977). Merchants Mut. Cas. Co. v. Leone, 298 Mass. 96 (1937), relied on by AAR, was "decided before the enactment of G. L. c. 231A by St. 1945, c. 582, Section 1, when declaratory relief was more restricted than it is today." Magoun v. Liberty Mut. Ins. Co., 346 Mass. 677 , 684 n.6 (1964). See United States Fid. & Guar. Co. v. Koch, 102 F.2d 288, 295 (3d Cir. 1939), criticizing the decision in Merchants Mut. Cas. Co. v. Leone.
The judgment is reversed. The order allowing the motion to dismiss is reversed, and a new order is to enter denying the motion insofar as it seeks dismissal under Mass.R.Civ.P. 12(b)(6). The case is to stand for further proceedings consistent herewith.