Schmidt v. Cullen , 15 Ohio Law. Abs. 562 ( 1933 )

OPINION

By THE COURT

The controlling statute is §11241 GC which, provides:

“An action must be prosecuted in the name oí the real party in interest s *

The language of the statute is conclusive that its requirement is mandatory and it has been so construed, Cox v Traction Co, 32 O.C.A. 187.

Is the plaintiff the real party in interest? At the inception of his action, upon the trial of the case and upon the record until the verdict, it clearly appears that he had an interest in the subject matter of the law suit, which he could assert against the defendant. The jury, by its verdict allowed him but $1800.00, upon which the trial court entered judgment. The plaintiff prosecutes no error. Admittedly his interest was representative of any sum in excess of $1800.00. The jury, determining that this was the amount and extent of his damage and his rights of recovery up to this sum, having been specifically assigned to the Travelers Insurance Co., there was left to him no interest whatever in the subject matter of the action and he was not a party in interest under the statute.

The question whether or not plaintiff was a party in interest was an issue of fact which the jury by indirection resolved against him. In Pettitt v Morton et, 28 Oh Ap, 227, (10 Abs 436; 11 Abs 168; 6 Abs 549), the right of a party to recover is said to be determined by whether he has an interest in the subject matter of the action.

In Blackwell v Insurance Co., 48 Oh St, 541, the right of plaintiff, an individual, was questioned to recover on a fire insurance policy containing a clause of forfeiture upon sale or transfer of the property insured when at the time of thn loss a partnership interest in the property insured had been sold by the insured. The last paragraph of the opinion, though supporting the right of plaintiff to institute the action and recover, used this significant language:

“Here the plaintiff alone is interested in the policy of insurance so set forth by him in his petition. The contract it contains is to indemnify him; He can recover, of course, only to the extent he has been damaged; but as no question is before us as to the proper measure, it will not receive consideration.”

The court in The L. E. & W. R. R. Co. v Falk and Phoenix Ins. Co., 62 Oh St, 298, states the following rule:

“In an action brought by the owner against the railroad company to enforce such liability an insurer, having before the termination of the action, made payment to the owner on account of such loss, should intervene for the purpose of being subrogated to the rights of the owner to the extent of such payment, and the amount recovered from the railroad company should be adjudged to the owner and the insurer according to their respective interests.”

In the cited case the insured had been paid in full by the insurance company and the court held that by reason thereof the right of subrogation followed, whether or not there had been an assignment of the policy. The court, though not carrying the proposition into the syllabus, indicates in the opinion that the insurer was a necessary and proper party. At page 306 Judge Shauck said:

“But the subject of the action was the loss sustained in consequence of the destruction of the property. The object of the suit was to recover the value of the property from the party ultimately liable, and t<? apportion the proceeds of the judgment recovered between the injured parties according to their interests in the amount recovered. The recovery sought was for a single wrongful act and the railroad company could have objected with more force if it had'been subjected to two actions by those interested in the recovery. This mode of asserting the rights of parties in the subject of a single cause of action, all being brought into the same suit and each asserting his own interest, is in .conformity with the requirements of modern procedure.” Swarthout et v Chicago & Northwestern Ry. Co., 49 Wis., 625; Insurance Company v Frost, 37 Ill., 333.”

Cox v Traction Co., supra, was an action brought by an individual who had been fully indemnified for his loss by a liability insurance company under a policy by the terms of which it was provided that the company should be subrogated to any claim that the plaintiff might have against any person for damages sustained by reason of any collision in the event that the company should pay the plaintiff the loss sustained by said collison. By answer the defendant asserted the subrogation clause of the policy and that the company had paid the loss in full and claimed that the plaintiff was not a proper party in interest in the action. To this defense a demurrer-was interposed which was overruled by the trial court and judgment entered for the plaintiff. The Court of Appeals, in reversing the lower courts, held that in the situation presented the action must be brought in the name of the subrogated insurer. The court, by Judge Mauck writing the opinion, cites ibo pertinent authorities outside of Ohio and though it is admitted that there is a difference of opinion in such jurisdictions, recognized the rule to be that where the insured had been fully compensated for his loss by his insurer, the sole party plaintiff should be the insurer. All of the authorities cited hold that where the insured has not been fully compensated by the insurer for his loss he is a proper party plaintiff. Some hold that the insurer should be joined as a party plaintiff and if refusing to so join should be made party defendant. The rule as stated in 14 R.C.L., 1410 is:

“Under code practice, however, where an action is required to be brought in the name of the real party interested, if the loss does not exceed the insurance the insurer must sue in its own name, and the insured is not a proper party to the action, but where (he loss exceeds the insurance the insurer cannot maintain an action in its own name; however, the assured may bring an action in his own name against the wrongdoer, and recover the full amount of the loss, holding the proceeds, so far as the insurer is subrogated, as a trustee, and it would seem that the insured owner is the only proper party to recover damages from the wrongdoer.”

The subject is discussed in notes to Cunningham v Seaboard Air Line Ry., 2 L.R.A. (N.S.), 921, Illinois C. R. Co. v Nicklin, 23 L.R.A., (N.S.) 870 and Wyker v Texas Co. L.R.A., 1918 F., 145 The heading of the annotation in this last cited case is:

“May one who destroys insured property defeat an action by the owner upon the ground that the right of action is in the insurer.”

The authorities cited are not uniform.

In the cited cases of Alaska Pacific S. S. Co. v Sperry Flour Co., 94 Wash. 227, 162 Pac. 26 and Swift & Co v Wabash R. Co., 149 Mo. App., 526, 131 SW 124, it was held (hat the insured was a proper party plaintiff although fully indemnified by payment from insurance companies with which the plaintiffs held policies. The theory of the opinions is that the defendant tort feasor cannot be heard to assert the right of the insurer against the insured as that is peculiar to the insurance company and the benefits of the subrogation of the insurance companies is not available to the defendant. Most of the cases cited, however, follow the rule that the individual insured is only the proper party plaintiff when he has not been fully indemnified for his loss.

The instant case differs from any authority cited or any which we have examined in that at the time of the institution of the suit the plaintiff by common understanding of himself and his insurer had not been fully paid for his loss, no assignment of all his ■ rights made to the insurer and thereby retained a substantial interest in the subject matter of an action against the defendant. Obviously, the insurance company could not, under the rule, have properly instituted its action as a party plaintiff because it could not be heard to say that it was subrogated to all of the rights of the plaintiff against the defendant. Clearly, then, the plaintiff had a right to recover to the extent of any interest which he retained in the subject matter of the action. But what interest in fact did he retain? He had a right to prosecute the action as he claimed in good faith damages in a sum in excess of $1800.00.

Plaintiff could have joined his insurance company as party plaintiff and had it refused to be so joined made it a party defendant. Likewise, defendant could have caused the Travelers Insurance Co. to be made a party to the suit. Had this been done upon issue properly drawn, the avails of the verdict of $1800.00 would have belonged to Travelers Insurance Co. and defendant could not be heard to complain.

But having elected to proceed alone, the plaintiff assumed the burden of securing a verdict in excess of $1800.00 before any interest in his behalf appeared. Both parties hazarded success on the verdict and chose to proceed without making the Travelers Insurance Co. a party.

The verdict fixes the rights and determines that the plaintiff, having no interest in the subject matter of the suit cannot retain the fruits of a judgment to no part of the proceeds of which he is entitled, nor does he, in our judgment, sustain the relation of a trustee for the Travelers Insurance Co. and protect the judgment in its behalf.

Without a discussion of the detailed-objections of the plaintiff in error, we are of opinion that the trial court did not err in refusing to give special charges Nos. 1 and 2 requested by defendant before argument, but that it erred in refusing to give defendant’s special charge No. 3 and. that the court erred in withdrawing the second defense of the answer from the jury.

The judgment will be reversed and remanded for further proceedings according to law.

HORNBECK, PJ, and BARNES, J, concur.