365 F.2d 802 (3rd Cir. 1966), 14589, Provident Tradesmens Bank & Trust Co. v. Lumbermens Mut. Cas. Co.
|Citation:||365 F.2d 802|
|Party Name:||PROVIDENT TRADESMENS BANK AND TRUST COMPANY, Administrator of the Estate of John R. Lynch, Also Known as John Roberts Lynch, Deceased, (Plaintiff) and John Landis Harris and Sarah B. Smith, Administratrix of the Estate of Thomas W. Smith, Deceased (Party Plaintiffs) v. LUMBERMENS MUTUAL CASUALTY COMPANY and George M. Patterson, Administrator of the|
|Case Date:||August 30, 1966|
|Court:||United States Courts of Appeals, Court of Appeals for the Third Circuit|
Argued Oct. 6, 1964.
Reargued June 9, 1966.
Norman Paul Harvey, Philadelphia, Pa., for appellant.
Avran G. Adler, Philadelphia, Pa. (Abraham E. Freedman, Freedman, Landy & Lorry, J. Willison Smith, Jr., Bayard M. Graf, Philadelphia, Pa., on the brief), for appellees.
Before KALODNER, GANEY and FREEDMAN, Circuit Judges.
Reargued before STALEY, Chief Judge, and McLAUGHLIN, KALODNER, HASTIE, GANEY, SMITH and FREEDMAN, Circuit Judges.
KALODNER, Circuit Judge.
The instant declaratory judgment proceeding 1 was brought by Lynch's Estate 2 to determine whether the coverage of a public liability policy issued by the defendant, Lumbermens Mutual Casualty Company, to an owner of an automobile, one Edward S. Dutcher, extended to the deceased Donald Cionci, who was driving the car at the time it was involved in an accident. The policy by its terms extended its coverage to any person operating Dutcher's automobile with his permission at the time of the accident. The critical fact issue to be determined in the declaratory judgment action was whether the automobile was being operated by Cionci within the scope of the permission granted to him by Dutcher when it collided with a truck driven by one
Thomas W. Smith. Smith, Cionci and John R. Lynch, who was riding with Cionci, were killed; John Landis Harris, who was also a passenger in the Cionci car, was injured.
Lynch's estate sued Cionci's estate in the District Court for the Eastern District of Pennsylvania in Civil Action No. 25149, seeking damages under the Pennsylvania Wrongful Death and Survival Statutes. 3 The defendant insurance company refused to defend Cionci's estate on the ground that Cionci had deviated beyond the use authorized by Dutcher, viz., to drive from Bryn Mawr to Ardmore, some two miles southeast, provided he return in half an hour, whereas Cionci had instead driven some twelve miles in an opposite direction to Media. Lynch's estate obtained a default judgment against the Cionci estate and then brought this declaratory judgment action against the insurance company. Damages allowed on the judgment were subsequently fixed at $50,000.
Smith's estate, which had brought suit against Dutcher and the Cionci and Lynch estates, in the Common Pleas Court of Delaware County, Pennsylvania, and Harris who had sued all three in the Delaware County Court, were joined as parties in the instant declaratory judgment action on Lumbermens' motion. Dutcher was not joined.
At the trial in the instant declaratory judgment action, the District Court ruled that Dutcher was incompetent to testify with reference to the scope of permission granted to use his car, under the Pennsylvania Dead Man's Act, 28 P.S. § 322, as far as the Lynch and Smith estates were concerned, on the ground that his interest was adverse to that of the two estates because the coverage of the policy was limited and he had an interest in maintaining its coverage for his own protection in view of the pending actions against him in the state court. The District Court then directed verdicts in favor of the Cionci and Lynch estates since no evidence had been introduced to rebut the Pennsylvania presumption that a dead man operates a borrowed automobile within the scope of his permissive use. Dutcher was, however, permitted to testify in the Harris phase of the trial, and the jury found that Cionci had not deviated from his permitted use of the automobile.
Pursuant to the verdicts stated the District Court entered a judgment declaring that 'Donald Cionci was driving the motor vehicle owned by Edward S. Dutcher and insured by the Lumbermens Mutual Casualty Company under its policy * * * with the permission of Edward S. Dutcher * * *' and that Cionci 'was an insured as defined in the policy'.
On this appeal, Lumbermens contends that the trial judge erred (1) in ruling that Dutcher was incompetent under the Pennsylvania Dead Man's Act as a witness against the Cionci and Lynch estates and in directing verdicts in favor of the Lynch and Smith estates; (2) in its instructions on the score of deviation in the Harris phase of the trial, and (3) 'that it was impossible for the jury to consider the Harris case impartially when it had been directed to find against Lumbermens in the Lynch and Cionci cases.'
We do not reach the contentions stated because in our view we are required to vacate the Judgment of the District Court and remand with directions to dismiss the instant action for these reasons:
First, there was a failure to join an indispensable party to this action, Dutcher, the named insured in Lumbermens' policy;
Second, the District Court erred in that in the appropriate exercise of its discretion it should have denied relief without consideration of the merits in view of the fact that two pending actions in a state court, earlier referred to, in which the here absent Dutcher, as well as the Cionci, Lynch and Smith estates, and Harris, were parties, presented the
critical mooted question as to the coverage of Lumbermens' policy at issue in the instant declaratory judgment action.
It must immediately be noted that the issue as to whether there was a failure to join an indispensable party to the action-- Dutcher-- was not presented by Lumbermens to the District Court, nor did Lumbermens urge the District Court to deny relief in the appropriate exercise of its discretion for the reasons we have stated.
First, as to the indispensable party issue:
Lumbermens' policy was one of finite limits, undisclosed in the record as a result of the District Court's pretrial ruling.
The District Court specifically held that the circumstance that the policy was one of finite limits made Dutcher's 'interest' in the policy 'adverse' to that of the plaintiff Lynch and Smith estates. It did so, in ruling that Dutcher was 'incompetent' to testify for that reason under the Pennsylvania Dead Man's Act insofar as the two estates were concerned. What the District Court held in that context is, of course, relevant in determining whether Dutcher was an indispensable party to the action under the indispensable party doctrine.
In its Opinion discussing its 'incompetency' ruling the District Court said:
'The subject matter of this suit is the coverage of Lumbermens' policy issued to Dutcher. Depending upon the outcome of this trial, Dutcher may have the policy all to himself or he may have to share its coverage with the Cionci Estate, thereby extending the availability of the proceeds of the policy to satisfy verdicts and judgments in favor of the two Estate plaintiffs. Sharing the coverage of a policy of insurance with finite limits with another, and thereby making that policy available to claimants against that other person is immediately worth less than having the coverage of such policy available to Dutcher alone. By the outcome in the instant case, to the extent that the two Estate plaintiffs will have the proceeds of the policy available to them in their claims against Cionci's estate, Dutcher will lose a measure of protection. Conversely, to the extent that the proceeds of this policy are not available to the two Estate plaintiffs Dutcher will gain. * * * It is sufficient for the purpose of determining adversity (of interest) that it appears clearly that the measure of Dutcher's protection under this policy of insurance is dependent upon the outcome of this suit. That being so, Dutcher's interest in these proceedings is adverse to the interest of the two Estate plaintiffs, the parties who represent, on this record, the interests of the deceased persons in the matter in controversy.' 218 F.Supp. 802, 805-806 (E.D.Pa.1963).
It has been settled for more than a century and a half that a party is indispensable when his rights may be affected and that a court 'cannot proceed to a final decision of the cause' until he is made a party. Russell v. Clark's Executors, 7 Cranch 69, 98, 3 L.Ed. 271 (1812).
The indispensable party doctrine is not procedural. It declares substantive law and accords a substantive right to a person to be joined as a party to an action when his interests or rights may be affected by its outcome. The indispensable party doctrine is beyond the reach of, and not affected by, Rule 19 of the Federal Rules of Civil Procedure, since the Rules, as later developed, cannot 'abridge, enlarge or modify any substantive right'. 28 U.S.C.A. § 2072.
Time and again, in cases later discussed, federal courts have held that Rule 19 does not apply to the indispensable party doctrine. Indeed, as subsequently developed, Rule 19 specifically excludes from its sweep 'indispensable parties', and Rule 12(b) in terms provides for dismissal of an action for 'failure to join an indispensable party'.
There is no precedent which affords nourishment to a contention that the indispensable party doctrine is nothing more than a procedural rule within the ambit of Rule 19.
It is true that several text writers have summarily treated the indispensable party doctrine as a procedural rule without considering whether it attains the proportion of substantive law. The existence of the...
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