Opinion ID: 1825740
Heading Depth: 1
Heading Rank: 2

Heading: Status of Le Mars Mutual as Defendant.

Text: The parties disagree over the status of Le Mars Mutual and its right to participate actively in the litigation. As already mentioned, this is a derivative action brought by two policyholders on behalf of Le Mars Mutual. Under such circumstances, the corporation for whose benefit the suit is brought, although actually the plaintiff, is a nominal defendant. Holi-Rest, Inc. v. Treloar, 217 N.W.2d at 523 and authorities there cited; Holden v. Construction Machinery Co., 202 N.W.2d at 367; Des Moines Bank & Trust Co. v. Bechtel & Co., 243 Iowa at 1083, 51 N.W.2d at 217. Le Mars Mutual should take no active part in the controversy, merely awaiting the outcome and reaping the fruits of any judgment for plaintiffs; but here the company asserted various cross-claims against the other defendants and took activeeven aggressivepart in the trial over the strenuous objections of the other defendants. In allowing this procedure, the trial court warned that the ruling was subject to reconsideration. Later the ruling was reversed as is shown by this quotation from the decree: The legal theories and rights to relief asserted by Le Mars Mutual were similar to the amended and recast petition which plaintiffs also asked permission to file. This Court, noting of record the importance of a plenary hearing to avoid retrial of any issues in this costly and protracted litigation, overruled objections and permitted Le Mars Mutual and plaintiffs to assert parallel claims for relief. Now, the submission of this case having been completed, the Court believes that Le Mars Mutual should not be permitted to assert independent claims against Iowa Mutual and other defendants. As nominal defendant in a derivative action, Le Mars Mutual has the duty to maintain strict neutrality in the struggle between policyholders and corporate personnel. Where, as here, the policyholders are represented by able and aggressive counsel, there is no reason to depart from the posture of neutrality. This Court believes that sound principles of judicial administration compel the conclusion that the proper role of independent counsel for Le Mars Mutual is established by the required neutrality of the corporate entity, and that the affirmative cross-claims urged by independent counsel are unnecessary and unwise as precedents for future derivative litigation. Accordingly, the cross-claims of Le Mars Mutual are stricken from the record of this case. We believe the trial court was right, and we affirm the dismissal of the cross-claims. We believe this makes it unnecessary, too, to decide whether Le Mars Mutual's notice of cross-appeal was timely, a matter reserved in our order of January 30, 1978. As a related issue arising out of Le Mars Mutual's participation in the trial, the other defendants insist they were prejudiced by having it as an additional foe. We cannot see how defendants can seriously claim prejudice. They were not required to meet any new issues or make any defenses they would not otherwise have made. Neither did they face any evidence which would not have been equally relevant without the participation of Le Mars. Defendants' claim of prejudice is without merit.