NO. 

### i3114 TN THE SUPREME COURT OF THE STATE OF MONTANA 19

### 75

S'I'ATE 3fi MON'I'HNA ex re1 NAWD'S 

### T.V. AND APPLIANCE INC., etal., Relators,

'CHL DlSTRICT COURT OF THE THIRTEENTH JUDICIAL DISTRICT OF THE STATE OF MONTANA, INAND FOR THE COUNTY OF YELLOWSTONE, and theHON. ROBERT H. WILSON, Judge of the ThirteenthJudicial District, Jcdge presiding,

Counsel of Record: For Relators: McNamer, Thompson and Cashmore, Billings, Montana Charles Cashmore argued Billings, Montana

Crowley, Kilbourne, Haughey, Hanson 6 Gallagher,

Billings, Montana Allen J. Lerner argued, Billings, Montana

Submitted: October 30, 1975



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# fl ClerkMr. Justice Frank I. Haswell delivered the Opinion of the Court. Relators seek a writ of supervisory control to review and modify a district court order requiring substitution and joinder of several parties plaintiff in a damage action. Specifically, the district court of Yellowstone County ordered substitution of fully subrogated insurers for their respective insureds asplaintiffs, and ordered joinder of partially subrogated insurers as additional plaintiffs. Relators herein filed an action for damages against the manufacturer of Magnavox television sets and its subsidiary as a result of a fire onNovember 5, 1971,on the premises of one of its franchised retailers in Billings,Montana. The complaint alleges the fire was caused by a defectively designed and manufactured TV set. Recovery is sought on the basis of negligence, breach of warranty and strict liability in tort. Damages claimed includeproperty damage,personal injuries and business losses. Plaintiffs in the damage action, relators here, have been compensated, in whole or in part, by their respective insurance carriers and each carrier has become subrogated, to the extent of its payment, to the rights of its insured againstdefendants. Defendants in the damage actionmoved (1) for summary judgment against the plaintiffs who had been fully compensated by their respective insurance carriers,and (2) for partial summary judgment against those plaintiffs who had been partially compensated by their respective insurance carriers, or in the alternative for joinder of such carriers as real parties in interest. Plaintiffs responded by requesting the district court to permit ratification in lieu of substitution or joinder for both classes of carriersunder Rule 17(a), M.R.Civ.P. On September 10, 1975,the district court entered an order: (1)Denying defendants' motions for summary judgment and partialsummary judgment, (2) requiring fully subrogated carriers substituted for their respective insureds,and (3)requiring partially subrogated carriers joined as additional parties plaintiff. The issue before this Court iswhether the district court's order is correct. There is no issue in this proceeding court

## 's concerning the district/ denial of summary judgment or partial summary judgment. The controlling statute on the remainder of the district court's order is Rule 17(a), M.R.Civ.P., which provides in pertinent part: "(a) Real Party in Interest. Every action shall be prosecuted in the name of the real party in interest

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## *. No action shall be dismissed on the ground that it isnot prosecuted in the name of the real party in interest until a reasonable time has been allowed after objection for ratification of commencement of the action by, or joinder or substitutionof, the real party in interest; and such ratification, joinder,or substitution shall have the same effect as if the action had been commenced in the name of the real party in interest." At the outsetwe note that subrogated insurance carriers are real parties in interest within the meaning of Rule 17(a), M.R.Civ.P., and governed by its provisions. State ex rel. Slovak

v. Dist. Ct., Mont

# . , 534 P.2d 850, 32 St.Rep. 420;Bergh

V. Rogers, Mont

# . , 536 P.2d 1190, 32 St.Rep. 644. The general rule is that a fully subrogated insurer is the real party in interest and must bring suit in its own name against the wrongdoer responsible for the loss. The reason for this rule is that when a loss is fully paid by an insurer and the insurer becomes subrogated to the insured'sclaim against the wrongdoer, the insured no longer has a right of action against the wrongdoer. United Statesv. Aetna Casualty & Surety Co., 338 U.S. 366, 70 S.Ct. 207, 94 L ed 171; J. C. Livestock Sales Inc.

v. Schoof, 208 Kan. 289, 491 P.2d 560; Connor v. Thompson Con-structionand Development Co., (Iowa 1969), 166 N.W.2d 109. 46 C.J.S. Insurance 5 1209(c)(2)(b)

### ,p. 171; 6Wright & Miller, Federal Practice and Procedure: Civil 51546, p. 656; 16Couch

on Insurance 2d, 561:26. Thus fully subrogated carrierswillbe allowed tobe substituted asthe realparties ininterest. The purpose of the last sentence of Rule 17(a),M.R.Civ.P., is toinsure that good faithamendments substituting the realparty ininterestwillbe allowed and willrelateback tothe filingof the original suit without being barred by the statuteof limitations. Courts are lenient inallowing substitution when an honest mistake has been made indetermining which party should filesuit. Substitution brings theparty actually entitledtorecover into the suit, making it res judicata and protecting the defendant from a subsequent suitby thisparty. 3A Moore's Federal Practice 2d, Para. 17.01[8], 17.02, pp. 24, 25, 53. We find no reason to hold otherwiseunder Montana's Rule 17(a)

# . When an insurance carrier pays onlypart of its insured's lossbecause the loss exceeds the coverage of the insurance policy

or thepolicy contains a deductible amount, both the insured and the carrier have a claim for relief against thewrongdoer and either may bring suitinhis own name tothe extent of his respective claim. In federal courts, inthe past, the rule generallyhas been thatwhen either the insured or the insurer

sues and the other party does not voluntarily join inbringing the suit, the defendant canmove tohave the absent party joined toprotect himself from multiple law suits. United Statesv. Aetna Cas. & Surety Co., supra; 6 Wright & Miller, Federal Practice and Procedure: Civil S1546, pp. 659, 660. Joinder, however, isno longer the onlymethod of protecting the defendant from multiple law suits. In 1966 thefederal Rule of Civil Procedure 17(a) was amended to allow "ratificationof commencement of the action by, or joinder or substitution of, the real party in interest"when the defendant objects to the absence of the real party in interest from the suit. Montana similarily amended its Rule of Civ. Procedure 17(a), by an order of this Court dated September 29, 1967, effective January 1, 1968. Since the federal amendment in 1966,ratification has principally been used to bind a partially subrogated insurance carrier to the law suit initiated by its insured. Southern National Bank of Houston, Tex. v. Tri Financial Corp., 317 F.Supp. 1173. Other cases approving ratification include: Honey

v. George Hyman Construction Co., 63 F.R.D. 443; Pacev. General Electric Company, 55 F.R.D. 215;Urrutia Aviation Enterprises, Inc. v. B.B. Burson & Asso. Inc., 406 F.2d 769. The present rule has been construed in this language in 6Wright & Miller, Federal Practice and Procedure Civil 

### B 1555, p. 709: "Formal joinder or substitution of the real party in interest will not be necessary when he ratifies the commencement of the action. 

## * * *" Ratification will bind the partially subrogated insurance carriers to the present litigation and allowdefendants to present all of their defenses aswell as protect them from subsequent law suits. Respondent contends that Rule 17(a) gives the district court the discretionarypower to determinewhether compliance will be by joinder or ratification. It is argued that since the district court has ordered complianceby joinder the judgment cannot be overturned unless the court abused its discretion. This contention is not supported by the plain language of the statute. In the construction of a statute, the functionof thecourt is simply to ascertain and declare what is in terms or substance contained in the statute and not to insertwhat has been omitted. Section 93-401-15,R.C.M. 1947; Dunphyv. Anaconda Co., 151Mont. 76, 438 P.2d 660. Rule 17(a), M.R.Civ.P., does not grant the district court discretionarypower to pick the method of complying with the rule. The ruleplainly provides that a reasonable timewill be given to allow the real party in interest to bind himself to the suit by ratification, joinder, or substitution, Themethod of compliance is optional with the real party in interest. For the district court to have the discretionary power to determine themode of compliance, the language of the rulewould have to be changed. The accomplishment of such change under the guise of constructionwould give the rule an added meaning not to be found in the plain and unambiguous languageof the rule. Montana Deaconess Hospital v. Cascade County, 164 Mont. 256, 521 P.2d 203; Ross v. City of Long Beach, 24 Cal.2d 258, 148 P.2d 649; Scottv. Society of Russian Israelites, 59 Neb. 571, 81N.W. 624. Defendants in the district courtwill be as adequately protected through ratification by partially subrogated insurance carriers as by joinder in the light of the purposes of the real party in interest requirement of Rule 17(a), M.R.Civ.P. The order of the district court ismodified to permit ratification at the option of partially subrogated insurance carriers. In all other respects, the writ isdenied.

Justice


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