STATE EX REL SLOVAK v DISTRICT CO

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No. 12970 I N THE SUPREME COURT O THE STATE O MONTANA F F 1975 STATE ex r e l . , ROGER SLOVAK, Relator, THE DISTRICT COURT O THE THIRTEENTH J U D I C I A L DISTRICT O THE F F STATE OF MONTANA, i n and f o r t h e COUNTY O Y L O S O E and F E L WT N t h e HONORABLE CHARLES B. SAMDE, Judge of t h e Thirteenth J u d i c i a l D i s t r i c t , Judge Presiding, Respondents. ORIGINAL PROCEEDING: Counsel oft Record : For Relator: Cate, Lynaugh and F i t z g e r a l d , B i l l i n g s , Montana Jerome 3. Cate and Thomas Lynaugh argued, B i l l i n g s , Montana For Respondents: Crowley, Kilbourne, Haughey, Hanson and Gallagher, B i l l i n g s , Montana Jack Ramirez argued, B i l l i n g s , Montana Submitted: A p r i l 7, 1975 Honorable E. Gardner Brownlee, D i s t r i c t J u d g e , s i t t i n g i n p l a c e of M r . Chief J u s t i c e James T. H a r r i s o n , d e l i v e r e d t h e o p i n i o n of t h e C o u r t . Roger S l o v a k , r e l a t o r h e r e i n , f i l e d a n a c t i o n i n Yellows t o n e County d i s t r i c t c o u r t wherein he a l l e g e d t h e named d e f e n d a n t w a s g u i l t y of n e g l i g e n t d r i v i n g and c a u s e d damage t o r e l a t o r ' s a u t o m o b i l e i n t h e sum o f $2,000 a s w e l l a s e x t e n s i v e i n j u r i e s t o h i s person. Subsequent t o f i l i n g t h e a c t i o n , r e l a t o r ' s i n s u r - a n c e c a r r i e r reimbursed r e l a t o r f o r a l l b u t $100 of t h e p r o p e r t y Defendant i n t h e d i s t r i c t c o u r t a c t i o n moved t o d i s m i s s damage. t h a t p o r t i o n of t h e p r o p e r t y damage c l a i m which had been p a i d by t h e i n s u r a n c e company f o r t h e r e a s o n t h a t a s t o t h a t amount p l a i n tiff ( r e l a t o r ) was n o t t h e r e a l p a r t y i n i n t e r e s t and t h e r e f o r e was n o t e n t i t l e d t o p r o s e c u t e t h e a c t i o n p u r s u a n t t o Rule 17 ( a ) , M.R.Civ.P. A h e a r i n g on t h e motion was h e l d and t h e d i s t r i c t c o u r t then entered t h i s order: " I T I S , THEREFORE, ORDERED t h a t t h e p l a i n t i f f ' s i n s u r a n c e c a r r i e r must w i t h i n t w e n t y (20) d a y s from t h e d a t e of t h i s o r d e r be j o i n e d a s a p a r t y plaintiff or f i l e written r a t i f i c a t i o n i n t h i s a c t i o n ; a n d , upon i t s f a i l u r e t o do s o i n t h e t i m e s p e c i f i e d , t h e a c t i o n w i l l be d i s m i s s e d , without prejudice, a s t o i t s subrogation i n t e r e s t . " R e l a t o r h a s a p p l i e d t o t h i s C o u r t f o r a w r i t of s u p e r v i s o r y c o n t r o l b e c a u s e h i s i n s u r a n c e company d o e s n o t d e s i r e t o be j o i n e d a s a p a r t y p l a i n t i f f i n t h e d i s t r i c t c o u r t a c t i o n . N e i t h e r d o e s i t d e s i r e t o r a t i f y r e l a t o r ' s a c t i o n n o r e x e c u t e an a s s i g n m e n t of i t s p o s s i b l e c l a i m a g a i n s t t h e d i s t r i c t c o u r t defendant. The r e a s o n i s t h e e x i s t e n c e of a b i n d i n g a r b i t r a t i o n agreement between i t and t h e i n s u r a n c e company r e p r e s e n t i n g t h e d i s t r i c t c o u r t defendant. The b a s i c q u e s t i o n p r e s e n t e d h e r e i s : Where a n i n s u r e r h a s p a i d a l l o r a p a r t of a l o s s s u s t a i n e d by i t s i n s u r e d and h a s t h e r e b y become s u b r o g a t e d t o t h a t e x t e n t t o any c l a i m a g a i n s t a t h i r d p a r t y f o r t h e l o s s , what i s t h e e f f e c t of Rule 1 7 ( a ) , M.R.Civ.P. on an a c t i o n b r o u g h t a g a i n s t t h e t h i r d p a r t y ? Rule 17 ( a ) p r o v i d e s : "Every a c t i o n s h a l l be p r o s e c u t e d i n t h e name of t h e r e a l p a r t y i n i n t e r e s t . An e x e c u t o r , a d m i n i s t r a t o r , g u a r d i a n , b a i l e e , t r u s t e e o f an e x p r e s s t r u s t , a p a r t y w i t h whom o r i n whose name a c o n t r a c t h a s been made, f o r t h e b e n e f i t of a n o t h e r , o r a p a r t y a u t h o r i z e d by s t a t u t e may s u e i n h i s own name w i t h o u t j o i n i n g w i t h him t h e p a r t y f o r whose b e n e f i t t h e a c t i o n i s b r o u g h t ; and when a s t a t u t e of t h e s t a t e o f Montana s o p r o v i d e s , an a c t i o n f o r t h e u s e o r b e n e f i t of a n o t h e r s h a l l be b r o u g h t i n t h e name of t h e s t a t e of Montana. N a c t i o n s h a l l be d i s m i s s e d on t h e o ground t h a t i t i s n o t p r o s e c u t e d i n t h e name o f t h e r e a l party i n i n t e r e s t u n t i l a reasonable t i m e h a s been a l l o w e d a f t e r o b j e c t i o n f o r r a t i f i c a t i o n o f commencement of t h e a c t i o n by, o r j o i n d e r or substitution of, the r e a l party i n interest; and such r a t i f i c a t i o n , j o i n d e r o r s u b s t i t u t i o n s h a l l have t h e same e f f e c t a s i f t h e a c t i o n h a s been commenced i n t h e name of t h e r e a l p a r t y i n interest. " R e l a t o r ' s p o s i t i o n i s well presented i n h i s b r i e f , wherein he s t a t e s : " I n c o n c l u s i o n it i s s u b m i t t e d t h a t t h e a d o p t i o n of t h e r u l e which p e r m i t s t h e i n s u r e d t o b r i n g s u i t f o r t h e e n t i r e amount o f h i s l o s s i n h i s own name, w i t h o u t r e q u i r i n g t h e j o i n d e r of h i s s u b r o g a t i n g i n s u r a n c e c a r r i e r , i s t h e o n l y view c o n s i s t e n t w i t h t h e p o l i c y of t h e Montana Supreme C o u r t a g a i n s t d i s c l o s u r e of i n s u r a n c e and t h e o n l y p o s i t i o n c o n s i s t e n t w i t h t h e law i n Montana t h a t t h e P l a i n t i f f h a s t h e r i g h t t o p r o v e and r e c o v e r f o r a l l of h i s a c t u a l damage under t h e c o l l a t e r a l s o u r c e r u l e whether p a i d f o r by h i s i n s u r a n c e o r t h e i n s u r a n c e of t h e Defendants. F u r t h e r , t h e a d o p t i o n of t h e r u l e h e r e proposed by P l a i n t i f f d o e s n o t p r e j u d i c e t h e Defendants i n any manner s i n c e t h e absence of t h e i n s u r e r a s a p a r t y does n o t d e p r i v e them of any d e f e n s e s n o r d o e s i t subj e c t them t o a m u l t i p l i c i t y of law s u i t s s i n c e t h e e n t i r e c l a i m i s p r e s e n t e d i n one s u i t , which i s a f t e r a l l t h e p u r p o s e of Rule 17 r e q u i r i n g j o i n d e r o f r e a l p a r t y i n i n t e r e s t . F u r t h e r , i t s h o u l d be s t a t e d t h a t the only r e s u l t i n joining t h e Plaint i f f ' s i n s u r e r would be t o p r e j u d i c e t h e j u r y by making a n i m p r e s s i o n i n t h e i r minds t h a t t h e P l a i n t i f f h a s a l r e a d y been compensated f o r a l l h i s s p e c i a l damages, which i s n o t t r u e by any means I' . I n f e d e r a l c o u r t s , i n t h o s e i n s t a n c e s where t h e i n s u r a n c e company h a s become p a r t i a l l y s u b r o g a t e d t o t h e c l a i m of t h e insured, the majority r u l e i s t h a t the insurer is the real p a r t y i n i n t e r e s t under Rule 17 o f t h e F e d e r a l Rules of C i v i l P r o c e d u r e and t h a t t h e d e f e n d a n t i n an a c t i o n b r o u g h t s o l e l y by t h e i n s u r e d can compel t h e j o i n d e r of t h e i n s u r a n c e company i f j u r i s d i c t i o n c a n be o b t a i n e d . 6 Wright & Miller Federal P r a c t i c e and P r o c e d u r e ; C i v i l S 1546; 6 Cyclopedia of F e d e r a l Procedure, § 21.25; and 3 A Moore's F e d e r a l P r a c t i c e S e c t . 17.09 With r e s p e c t t o d e c i s i o n s o f s t a t e c o u r t s p e r t a i n i n g t o s i t u a t i o n s i n which t h e i n s u r e d i s o n l y p a r t i a l l y compensated f o r t h e l o s s by i n s u r a n c e , a p p a r e n t l y f o u r d i f f e r e n t a p p r o a c h e s have been t a k e n . 4 4 Am J u r 2d § 1853, p. 782 c o n t a i n s t h i s analysis: "Under s t a t u t e s o r r u l e s p r o v i d i n g t h a t e v e r y a c t i o n must be p r o s e c u t e d i n t h e name of t h e r e a l p a r t y i n i n t e r e s t , it i s g e n e r a l l y held t h a t where t h e l o s s e x c e e d s t h e i n s u r a n c e and t h e i n s u r a n c e company t h e r e f o r e pays o n l y a p o r t i o n of t h e l o s s s u s t a i n e d by i t s i n s u r e d , b o t h t h e i n s u r e d and t h e i n s u r e r o r d i n a r i l y q u a l i f y a s r e a l p a r t i e s i n i n t e r e s t i n an a c t i o n a g a i n s t an a l l e g e d t o r t f e a s o r respons i b l e f o r t h e l o s s , s i n c e e a c h owns a p a r t of t h e c l a i m a g a i n s t such t o r t f e a s o r . "There a r e , however, a number of d i f f e r e n t views a s t o t h e proper p a r t y t o prosecute t h e a c t i o n a g a i n s t t h e t o r t f e a s o r . A l l of t h e views a r e based upon t h e d o c t r i n e p r o h i b i t i n g t h e s p l i t t i n g of a c a u s e of a c t i o n , b u t r e p r e s e n t d i f f e r e n t l i n e s of r e a s o n i n g . On t h e b a s i s of t h e u n d e r l y i n g reasoning, t h e cases a r e d i v i s i b l e i n t o t h r e e g r o u p s p r e s e n t i n g f o u r major views. One group c o m p r i s e s c a s e s w h e r e i n t h e c o u r t s a c c o r d more w e i g h t t o t h e d o c t r i n e of i n d i v i s i b i l i t y of a c a u s e of a c t i o n t h a n t o t h e r e a l p a r t y i n i n t e r e s t s t a t u t e o r r u l e . T h i s r e a s o n i n g h a s produced two major views which, b r o a d l y s t a t e d a r e : (1) t h e i n s u r e r ' s s u b r o g a t i o n r i g h t s s h o u l d be e n f o r c e d through t h e insured, s o t h a t t h e insured i s t h e only proper p a r t y t o prosecute an a c t i o n f o r t h e f u l l amount of t h e l o s s ; and ( 2 ) a n a c t i o n a g a i n s t t h e t o r t f e a s o r s h o u l d be p r o s e c u t e d by t h e i n s u r e d a.nd i n s u r e r j o i n t l y . The second g r o u p of c a s e s c o n s i s t s of t h o s e wherein t h e c o u r t s a c c o r d more weiqht t o t h e r e a l p a r t y i n i n t e r e s t s t a t u t e o r r u l e t h a n t o t h e d o c t r i n e of i n d i v i s i b i l i t y of a c a u s e o f a c t i o n . T h i s r e a s o n i n s h a s produced t h e major view, b r o a d l y s t a t e d , t h a t t h e i n s u r e d may prosecute an action for the full amount of the loss, or either the insured or the insurer may separately sue for his portion of the loss, and if the action is instituted by either one alone, the defendant can compel joinder of the other or may waive joinder. The third group of cases embraces those wherein the real party in interest is deemed to be the person owning the entire cause of action, and wherein the view is taken that the name in which the action must be prosecuted depends upon the extent of the assignment or subrogation. But despite the great variation in the language enunciating the first three major views and their numerous variants, in the final analysis there is, from the practical viewpoint, very little difference between them, because under any of them (I) the insured may sue for the full amount of the loss in the absence of objection by the defendant, and except in those jurisdictions wherein the insurer is deemed a proper but not necessary party, the defendant may, on proper and timely objection, compel joinder of the insurer; (2) where either the insured or the insurer institutes a separate action to recover only its portion of the loss, the defendant can, on timely and proper objection, compel joinder of the other; (3) the insured and insurer may jointly prosecute an action for the full amount of the loss; and (4) joinder of the insured and insurer where either proper or necessary may be waived by the defendant.." (Emphasis supplied.) See also: Anno. 13 ALR3d 140. - The underlined portion of the above analysis represents the Montana law. Section 67-1103, R.C.M. 1947, specifically allows the assignment of "A thing in action, arising out of the violation of a right of property * * *." In Caledonia Ins. Co. v. N.P. Ry. Co., 32 Mont. 46, 79 P. 544, the Court stated: " * * * subrogation is merely an equitable assignment, or an assignment by operation of law." In the instant case an action has been filed to recover for the property damage. Upon defendant's proper objection that all the real parties in interest had not been joined the court ordered such joinder or dismissal. Relator argues that the collateral source rule precludes the insurance company from being joined as the real party in interest. The purpose of the collateral source rule is to prevent the reduction of the defendant's liability by the amount of collateral benefits received by the plaintiff. There is no effort here to r e d u c e t h e amount of damages which might be u l t i m a t e l y r e c o v e r able. Here t h e maximum amount o f r e c o v e r y f o r t h e p r o p e r t y damage i s t h e sum of $2,000, and t h e o n l y q u e s t i o n i s g e t s t h e money? -- who R e l a t o r i s n o t e n t i t l e d t o more t h a n $100 a n d , t h e r e f o r e , would n o t be a l l o w e d t o p r o v e a l o s s i n any g r e a t e r amount w i t h o u t some r a t i f i c a t i o n by t h e i n s u r a n c e company o f a c l a i m f o r a g r e a t e r amount. Relator f u r t h e r argues t h e d i s t r i c t c o u r t r u l i n g improperly i n j e c t s insurance i n t o the case. I f such i s t h e c a s e , i t i s b e c a u s e r e l a t o r s e e k s t o r e c o v e r on b e h a l f o f h i s i n s u r a n c e company o r h a s t a k e n s u c h s t e p s a s would r e q u i r e t h e j o i n d e r o f t h e i n s u r a n c e company and t h e r e f o r e i f he i s p r e j u d i c e d i n any manner i t i s e n t i r e l y b e c a u s e of h i s own a c t i o n s . R e l a t o r can a v o i d t h e i n j e c t i o n of i n s u r a n c e i n t o t h i s a c t i o n , t h e c h o i c e i s h i s . The a p p l i c a t i o n f o r a w r i t of s u p e r v i s o r y c o n t r o l i s denied. Hon. E . Gardner Brownlee, d i s t r i c t judge, s i t t i n g i n p l a c e of M r . Chief J u s t i c e James T . H a r r i s o n . W concur: e

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