Title: Ellsaesser v. Mid-Continent Casualty Co.

State: kansas

Issuer: Kansas Supreme Court

Document:

195 Kan. 117 (1965)
403 P.2d 185
R.W. ELLSAESSER, Appellant,
v.
MID-CONTINENT CASUALTY COMPANY, INC., AMY DISTRIBUTING COMPANY and J.E. ARNOLD, Appellees.
No. 44,110

Supreme Court of Kansas.
Opinion filed June 12, 1965.
Thomas E. Brown, of Hill City, argued the cause, and W.H. Clark, Marion W. Chipman and Kenneth Clark, all of Hill City, were with him on the brief for the appellant.
Paul B. Watson, of Jetmore, argued the cause, and was on the brief for the appellees, Mid-Continent Casualty Company, Inc., and J.E. Arnold.
Tom Smyth, of Ness City, was shown on the record as attorney for the appellee, Amy Distributing Company.
The opinion of the court was delivered by
FONTRON, J.:
This action was brought by the plaintiff, R.W. Ellsaesser, to recover damages resulting to his automobile from the alleged negligence of defendant, J.E. Arnold. Joined as defendants with Arnold were his employer, Amy Distributing Company, and Amy's Insurance carrier, Mid-Continent Casualty Company, Inc.
An answer was filed by Amy alleging, among other matters, that plaintiff was not the real party in interest. Arnold and Mid-Continent filed both a joint answer denying liability and a joint counter-claim in which Arnold asked damages for personal injuries and Mid-Continent sought to recover the amount it had paid for damages to Arnold's car.
Arnold and Mid-Continent also filed a motion to dismiss the action on the ground that plaintiff was not the real party in interest. *118 At a hearing on this motion, it was disclosed that all but a small part of plaintiff's loss had been paid by his insurance company.
On this showing, the district court ruled that plaintiff and his insurance company were both real parties in interest and directed that the insurance company be made a party plaintiff in the case or, in the event the company did not desire to be a party plaintiff, that the action then be dismissed. The trial court also ordered that plaintiff's cause of action be tried separately from Arnold's counter-claim.
In compliance with Rule No. 5 of this court, the plaintiff thereupon filed his motion for permission to take an interlocutory appeal from the trial court's order, under the provisions of K.S.A. 60-2102 (b). Plaintiff's motion was granted, and this appeal then perfected.
The rule has long been established in this jurisdiction that an insured property owner, who has been but partly reimbursed for his loss, is the proper party to bring suit against a third party wrongdoer for the entire loss. In case of recovery, the insured is said to hold in trust for his insurer such part of the proceeds as has been paid him on his loss. (Railroad Co. v. Insurance Co., 59 Kan. 432, 53 Pac. 459; Insurance Co. v. Cosgrove, 85 Kan. 296, 116 Pac. 819, (reaffirmed on rehearing) 86 Kan. 374, 121 Pac. 488; Smith v. United Warehouse Co., 123 Kan. 515, 255 Pac. 1115; Clark v. Missouri Pac. Rld. Co., 134 Kan. 769, 8 P.2d 359; Watson v. Travelers Mutual Cas. Co., 146 Kan. 623, 73 P.2d 64.) In Watson, the court said:
For cases from other states applying the same rule see Flor v. Buck, 189 Minn. 131, 248 N.W. 743; York v. Cumberland Const. Co., 312 Ky. 797, 229 S.W.2d 970; Wyker v. Texas Co., 201 Ala. 585, 79 So. 7.
This rule is tempered by the qualification that in the event the insured has fully settled his loss with the wrongdoer, or has otherwise released his claim against him, or for any reason refuses to bring suit to recover the full loss, then the insurer may bring the action. (Insurance Co. v. Railway Co., 98 Kan. 344, 157 Pac. 1187.)
*119 Both the rule and the exception are clearly and succinctly stated in City of New York Ins. Co. v. Tice, 159 Kan. 176, 152 P.2d 836:
On oral argument, defense counsel acknowledged that such has been the rule in this state, but contended that the rule as to joinder was changed by the recently enacted code of civil procedure. We believe this contention is unfounded.
The following provisions of Kansas Statutes Annotated are pertinent to the question presented: "60-217. (a) Real party in interest. Every action shall be prosecuted in the name of the real party in interest; ..." This language is essentially the same as that contained in G.S. 1949, 60-401, and, in our view, effects no change in our former practice.
We believe it was never contemplated by those instrumental in preparing and drafting the code that sections 60-219 (a) and (b) should effect any fundamental change in the existing law pertaining to joinder of parties. The committee's notes appended to 60-219 which are found in Kansas Judicial Council Bulletin, November, 1961, Special Report, p. 27, read as follows:
Judge Gard in his valuable work, Kansas Code of Civil Procedure, annotated, makes this comment as to 60-219 (a):
On the following page, the author has this to say in explanation of 60-219 (b):
Our belief that enactment of 60-219 (a) and (b) intended no substantial change in the practice then current finds further support in the following sections of Vernon's Kansas Forms, annotated:
"§ 2.2626
..............
"§ 2.2641
Further documentation on this point is deemed superfluous. We are convinced that 60-219 (a) and (b) were not meant to supplant the rule enunciated years ago in Railroad Co. v. Insurance Co., supra, and consistently followed ever since. Nor do we perceive any compelling reason to depart from our prior holdings, for the rule not only accords with views long held by this court but affords adequate protection to the rights of everyone concerned, as well. Speaking on the latter subject, this court, in Smith v. United Warehouse Co., supra, said:
A like view is expressed in Braniff Airways v. Falkingham, (Minn.) 20 F.R.D. 141, wherein the court states:
Similarly, in King v. Cairo Elks Home Association, 145 F. Supp. 681, the court points out:
We recognize that there is disagreement among the several United States courts concerning the compulsory joinder of an insurer which has partially compensated its insured for his loss. This division of opinion is pointed out in 2 Barron and Holtzoff, Federal Practice and Procedure, § 513.6, p. 124, where it is said:
Although the majority federal rule does require joinder, on timely motion, of an insurance company which has partly paid a loss, except where its presence would destroy federal jurisdiction, the minority view is more consonant with the practice in this state and, hence, we find it preferable.
Accordingly, we are constrained to hold that the trial court erred in its order directing plaintiff's insurance company to be made a party plaintiff in this action or, in the alternative, that plaintiff's action be dismissed.
In view of this holding, the reasons assigned by the trial court for ordering plaintiff's cause of action tried separately from Arnold's counterclaim no longer exists, and we consider further discussion of the order to be unnecessary.
The judgment of the trial court is reversed and this cause is remanded for further action consistent with the views herein expressed.