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 Yellow-
s 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
damage. 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
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 de-
fendant. 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 sub-
j 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 Plain-
t 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 respon-
s 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 assign-
ment or subrogation. But despite the great vari-
ation 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 re-
cover 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 inter-
est. 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 -- who
g e t s t h e money? 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 com-
pany 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