Louisville & N. R. Co. v. Mack Mfg. Corp.

• Decision Date: 23 June 1954
• Citation: 269 S.W.2d 707
• Parties: LOUISVILLE & N. R. CO. v. MACK MFG. CORP.
• Court: United States State Supreme Court — District of Kentucky

Page 707

269 S.W.2d 707

LOUISVILLE & N. R. CO. v. MACK MFG. CORP.

Court of Appeals of Kentucky.

June 23, 1954.

C. S. Landrum, C. E. Rice, Jr., Lexington, Craft & Stanfill, Hazard, for appellant.

M. B. Fields, Hazard, for appellee.

CULLEN, Commissioner.

The Louisville and Nashville Railroad Company appeals from a judgment against it, in favor of the Mack Manufacturing Corporation, in the sum of $4,500, for damages to a truck-tractor of the latter corporation sustained in a collision with an L. & N. freight train at a grade crossing.

The pleadings raised the question of whether the Mack corporation was the real party in interest, by reason of the fact that all of the damage to the truck-tractor, in excess of $100, had been paid to the Mack corporation by the Employers' Fire Insurance Company, under a $100-deductible collision insurance policy, and the Mack corporation had made an assignment to the insurance company. The railroad company maintains that the written assignment actually assigned to the insurance company the entire cause of action of the Mack corporation; however, construing the language of the assignment as a whole, and taking it with the terms of the insurance policy, we think that the assignment was not intended to include the Mack corporation's cause of action for the first $100 of the loss, which the insurance company did not pay.

The situation thus presented is one in which a person suffering property damage through the alleged negligence of another has been partially reimbursed for his loss by his own insurance carrier, and has assigned part of his cause of action to the in surance carrier. The question is, whether in such circumstances the person who suffered the loss has an unqualified right to bring action in his own name, against the alleged tortfeasor, for the entire claim.

In Works v. Winkle, 314 Ky. 91, 234 S.W.2d 312, 316, this Court endeavored to lay down some rules to determine the proper party plaintiff in cases involving assignment of tort claims. The rule governing partial assignments, before action, was stated thus:

'(3) Where only a part of a claim has been assigned before the action, the assignor may sue to recover the whole of the claim (if recovery therein will be a bar to the insurer's right of action), or the part unassigned, in which latter event the assignee may recover for the part assigned, either in the same or a separate action.'

We feel the necessity to reconsider this statement of the rule.

The basic question is one of real party in interest. Section 18 of the Civil Code of Practice, which governs the case before us, required that actions be prosecuted in the name of the real party in interest. Civil Rule 17.01 contains substantially the same requirement.

We think every one would agree that ordinarily the real party in interest is the person who is the beneficial owner of the cause of action sought to be prosecuted. Where the cause of action is assignable, and the entire cause has been assigned, clearly the assignee has become the owner of the cause and he is the real party in interest. Works v. Winkle, 314 Ky. 91, 234 S.W.2d 312; United States v. Aetna Casualty & Surety Co., 338 U.S. 366, 70 S.Ct. 207, 94 L.Ed. 171, 12 A.L.R.2d 444. In the case of a partial assignment, it should be equally clear that the assignee owns the part assigned to him, and the assignor owns the balance; therefore it would seem to follow that each would be the real party in interest as to his part of the claim, and each should sue separately. However, at this point a limitation of the real party in interest rule enters the picture, as will presently be discussed.

A fundamental rule of long standing is the one prohibiting the splitting of a cause of action. Obviously, this rule is for the benefit of the defendant, in order that he may not be subjected to a...