Home Fire & Marine Ins. Co. v. Pan Am. Petroleum Corp.

Decision Date13 May 1963
Docket NumberNo. 7193,7193
Citation72 N.M. 163,381 P.2d 675,1963 NMSC 94
PartiesHOME FIRE AND MARINE INSURANCE COMPANY, Plaintiff-Appellant, v. PAN AMERICAN PETROLEUM CORPORATION and Curtis V. Myers, Defendants-Appellees.
CourtNew Mexico Supreme Court

McAtee, Toulouse, Marchiondo, Ruud & Gallagher, Albuquerque, for appellant.

Atwood & Malone, R. D. Mann, Robert A. Johnson, Rowell, for Pan American Petroleum Corp.

Neal & Fort, Carlsbad, for Curtis V. Myers.

MOISE, Justice.

Home Fire and Marine Insurance Company, hereinafter referred to as the 'insurer' filed suit to recover amounts paid by it to Frank M. Late, Cactus Drilling Company, and Clark-Dale Drilling Company, hereinafter referred to as 'insureds' under a policy of insurance against loss of a certain drilling rig and equipment by fire. Upon receiving the amount of the loss the insureds executed two identical instruments denominated 'loan receipt' the material portions of which read as follows:

'Received from the Home Fire and Marine Insurance Company, hereinafter referred to as 'Company', the sum of _____ Dollars, as a loan, without interest, repayable only in the event and to the extent of any net recovery the undersigned may make from any person, persons, corporation or corporations, or other parties, causing or liable for the loss or damage to the property described below, or from any insurance effected on such property and as security for such repayment the undersigned hereby pledges to the said 'company' all his, its or their claim or claims against said person, persons, corporation or corporations, or other parties, or from any insurance carrier or carriers, and any recovery thereon, and hereby delivers to said 'company' all documents necessary to show his, its or their interest in said property.

'The undersigned covenants that no settlement has been made by the undersigned with any person, persons, corporation or corporations, or other parties against whom a claim may lie, and no release has been given to anyone responsible for such loss and that no such settlement will be made, nor release given without the written consent of the said company; and the undersigned covenants and agrees to cooperate fully with the said company, to promptly present claim and, if necessary, to commence, enter into and prosecute suit against such person or persons, corporation or corporations, or other parties, through whose negligence or other fault the aforesaid loss was caused, or who may otherwise be responsible therefor, with all due diligence, in his, its or their own name.

'In further consideration of said advance the undersigned hereby guarantees that he, it or they are the owners of said property and entitled to recover upon said claim for loss or damage thereto, and hereby appoints the managers and/or agents of the said 'company' and their successors, severally, his, its or their agents and attorneys-in-fact, with the irrevocable power, to collect any such claim or claims, and to begin, prosecute, compromise or withdraw in his, its or their name, but at the expense of the said 'company', any and all legal proceedings that the said 'company' may deem necessary to enforce such claim or claims, and to execute in the name of the undersigned, any documents that may be necessary to carry the same into effect for the purposes of this agreement.

'Any legal proceedings are to be under the exclusive direction and control of said 'company."

The complaint filed by the insurer asserted a right to recover from Pan American Petroleum Corporation, hereinafter referred to as 'owner' and Curtis V. Myers, the welding contractor on the job, hereinafter referred to as 'Myers' claiming that the fire which destroyed the drilling rig and equipment resulted from the negligence of the owner and of Myers, and that the insurer was subrogated to the rights of the insureds. The specific facts giving rise to the lawsuit need not be detailed in connection with the first issue to be considered.

As already noted, the insurer was the only plaintiff in the original complaint. The defendants (owner and Myers) answered the complaint and filed a motion to dismiss asserting that the plaintiff (insurer) was not the real party in interest authorized to bring suit. After a pretrial conference, an amended complaint was filed in which the insureds were joined with the insurer as parties plaintiff. No objection was made to the continued presence of the insurer as a party plaintiff. Amended answers were filed by both the owner and Myers and in due time the cause came on for trial before a jury on the issue of liability only, the issue of damages being postponed to a later hearing. The trial resulted in a directed verdict for both the owner and Myers. Thereafter, timely appeal was taken by the insurer, but not by the insureds. The owner and Myers, by motion to dismiss the appeal, present for decision here the question of (1) whether the insured is a proper party to appeal under Supreme Court Rule 5(1) (Sec. 21-2-1(5)(1), N.M.S.A.1953) since it was not a real party in interest in the lower court; and (2) whether, since the insureds have not appealed, the judgment has become final as to them and the issues sought to be raised here are accordingly moot.

It is the position of the owner and Myers that the insurer was not the real party in interest entitled to prosecute the lawsuit (Sec. 21-1-1(17)(a), N.M.S.A.1953) and likewise is not a party aggrieved who may appeal from the final judgment entered herein. (Sec. 21-2-1(5)(1), N.M.S.A.1953).

Although insurer argues that it was a real party in interest, and relies heavily upon our decision in Sellman v. Haddock, 62 N.M. 391, 310 P.2d 1045, as so holding, it attempt to fortify its position here, as it did below, by moving to add the insureds as appellants under Supreme Court Rule 8. (Sec. 21-2-1(8), N.M.S.A.1953).

Inasmuch as the requirements for appeal within the time and in the manner provided by the rules is jurisdictional, Chavez v. Village of Cimarron, 65 N.M. 141, 333 P.2d 882; William K. Warren Foundation v. Barnes, 67 N.M. 187, 354 P.2d 126, the right to add parties must be contingent on an appeal having been perfected. Accordingly, we proceed to a consideration of the motion to dismiss the appeal.

Careful study of Sellman v. Haddock, supra, convinces us that it cannot be considered as authority for the proposition that an insurance company which has advanced money to an insured and has taken a loan receipt is the real party in interest entitled to sue a third party tort feasor. In that case, the insurance company was held to be a real party in interest. However, the loan receipt was not before the court and its terms were unknown. The insured testified that he had given the insurance company authority 'to collect from whoever caused the damage * * *.' The court pointed out that in considering the case, this was considerably more important in determining who was the 'real party in interest' than the simple statement that a loan receipt had been given.

The court stated that 'real party in interest' was to be determined by whether one was the owner of the right being enforced, and in position to discharge the defendant from the liability asserted in the suit, citing Reagan v. Dougherty, 40 N.M. 439, 62 P.2d 810, and concluded in the light of the facts noted above that the insurance company was a necessary and indispensable party.

The facts confronting us and the issue to be determined are somewhat different. The insurer was a party below. However, when the question of whether it was the real party in interest was raised by motion, the insureds were joined. Unquestionably, where it is determined that the loan receipt should be given effect according to its form as a loan, the courts hold that the insureds are the real party in interest, and suit must be brought in their name. 2 Barron & Holtzoff 23, Sec. 482; 3 Moore's Federal Practice, Sec. 17.09.

There are cases, however, holding the loan receipt to be payment resulting in subrogation of the insurance company to the rights of the insured. The cases so holding are, in our opinion, a small minority and involve only a relatively few jurisdictions. See notes in 1 A.L.R. 1528, 132 A.L.R. 607, and 157 A.L.R. 1261.

What we must determine is not whether the insurer was a 'real party in interest' but rather, was it a 'party aggrieved' by the decision of the trial court. (Supreme Court Rule 5, Sec. 21-2-1(5), N.M.S.A.1953). As early as 1912 in the case of Bass v. Occidental Life Insurance Company, 18 N.M. 282, 135 P. 1175, we held the person directly interested and whose interests are injuriously affected by the judgment may appeal therefrom as a party aggrieved. More recently, in Marr v. Nagel, 58 N.M. 479, 272 [72 N.M. 168] P.2d 681, we held that the defendant in a tort action by virtue of his right to obtain contribution from a joint tort feasor was aggrieved by a judgment exonerating his co-defendant from responsibility.

In our most recent pronouncement on the subject, we held that one having a tort claim against a decedent, and who had filed objections to the executor's final report, was a person interested in the estate and a party aggrieved so as to be entitled to appeal from a decision adverse to his position. Dunn v. Lindsey, 68 N.M. 288, 361 P.2d 328, 87 A.L.R.2d 1227.

We are convinced that parties may appeal only if they have a real and substantial interest in the subject matter before the court and are aggrieved or prejudiced by the decision, State ex rel. Simeon v. Superior Court of King County, 20 Wash.2d 88, 145 P.2d 1017; or, as stated by the Supreme Court of New Jersey in the recent case of Howard Savings Institution of Newark v. Peep, 34 N.J. 494, 170 A.2d 39, to be aggrieved, a party 'must have a personal or pecuniary interest or property right adversely affected by the judgment in question.' To like effect is In re Appeal of Town of Greenfield, 271 Wis. 442, 73 N.W.2d 580.

Although we...

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