McCluskey v. Galland, 10772

• Decision Date: 22 June 1973
• Docket Number: No. 10772,10772
• Citation: 95 Idaho 472,511 P.2d 289
• Parties: Alfred H. McCLUSKEY, d/b/a McCluskey Commissary, and McCluskey Commissary, Inc., an Idaho corporation, Plaintiffs, Cross-Defendants and Respondents, v. Leonard A. GALLAND and Lorna K. Galland, husband and wife, Defendants-Cross-Plaintiffs and Appellants, v. Harry McCLUSKEY and McCluskey Commissary, Inc., Cross-Defendants and Respondents.
• Court: Idaho Supreme Court

Page 289

511 P.2d 289

95 Idaho 472

Alfred H. McCLUSKEY, d/b/a McCluskey Commissary, and McCluskey Commissary, Inc., an Idaho corporation, Plaintiffs, Cross-Defendants and Respondents, v. Leonard A. GALLAND and Lorna K. Galland, husband and wife, Defendants-Cross-Plaintiffs and Appellants, v. Harry McCLUSKEY and McCluskey Commissary, Inc., Cross-Defendants and Respondents.

No. 10772.

Supreme Court of Idaho.

June 22, 1973.

Gerald L. Weston, Miller, Weston & Tunnicliff, Caldwell, for appellants.

David L. Whitney, Alexanderson, Davis & Rainey, Caldwell, for respondents.

BAKES, Justice.

This is an appeal from a judgment in favor of an individual plaintiff, Alfred H. McCluskey, doing business as McCluskey Commissary, and a corporate plaintiff, McCluskey Commissary, Inc., an Idaho corporation, against the defendants, husband and wife, who allegedly executed three separate promissory notes and incurred an open account debt to the individual plaintiff. The defendants appeal from the judgment insofar as it is in favor of the individual plaintiff against the defendants and also appeal from an order of the trial court denying a motion to discharge and dissolve a writ of attachment.

The individual plaintiff initially filed a complaint against the defendants on February 27, 1969, upon two of the promissory notes made payable to 'Alfred H. McCluskey, dba McCluskey Commissary,' and upon the open account. After a crossclaim of the defendants against the initial plaintiff and others was dismissed by stipulation of the parties, the plaintiff then filed an amended complaint on January 23, 1970, which added another count on a third promissory note made payable to this plaintiff. When the action came for trial before the court in June of 1970, the plaintiff 'moved the Court to join as an additional party plaintiff McCluskey Commissary, Inc., as a corporation.' The trial court granted leave to amend and 'ordered that McCluskey Commissary, Inc., as a separate entity be added as an additional party plaintiff to the Amended Complaint,' and vacated the trial setting.

A second amended complaint was thereafter filed listing both the individual plaintiff and the corporate plaintiff as coplaintiffs in the action and alleging that the individual plaintiff assigned the alleged promissory notes and open account to the corporate plaintiff in 1966, which is prior to the initial commencement of this action. Upon the subsequent trial of the action, the trial court, sitting without a jury, expressly found that 'there has been sufficient assignment as to both the promissory notes and open account to the corporation.' Neither party contests this finding upon this appeal.

At the conclusion of the trial no formal findings of fact and conclusions of law were made by the court, but the trial court gave its ruling from the bench in favor of both plaintiffs. The following inquiry was made to the court:

'MR. WESTON: (Attorney for Defendants) Who does the judgment run in favor of?

'THE COURT: I am going to have the judgment run in favor of both party plaintiffs. That will protect the defendants.'

Pursuant to this ruling judgment was rendered against the defendants in favor of both plaintiffs, Alfred E. McCluskey, an individual doing business as McCluskey Commissary, and McCluskey Commissary, Inc., a corporation.

The first assignment of error by the defendants is that the trial court erred in granting judgment in favor of the individual Alfred H. McCluskey doing business as McCluskey Commissary, based upon the plaintiffs' allegations and proof that all of the promissory notes and open accounts, sued upon had been previously assigned to the corporate plaintiff. Accordingly, the defendant contends that the plaintiff Alfred H. McCluskey as an individual no longer had any right, title or interest in the promissory notes and open account, and was not a real party in interest in the action and therefore not entitled to judgment.

Contrariwise, the plaintiffs contend that the principles of common law permit an assignee to sue in the name of an assignor and in fact even required it. Assuming, without deciding, that plaintiffs' statement of the common law is correct, the plaintiffs overlook the fact that such common law rule has been modified twice in modern times in the State of Idaho by statute and rule of this Court.

Sections 5-301 and 5-302, Idaho Code, were adopted as early provisions of the statutory law of the State of Idaho requiring in part:

'Every action must be prosecuted in the name of the real party in interest, except as otherwise provided by this code.' I.C. § 5-301.

These sections of the code were construed in the early case of Brumback v. Oldham, 1 Idaho 709 (1878), in which the assignees brought action upon open accounts which had been assigned to them. One of the defenses raised by the defendant was the fact that the action was not brought in the name of the assignors. This Court reviewed the question of who was the real party in interest as between an assignor and an assignee in light of Sections 5-301 and 5-302, Idaho Code, and concluded:

'The object of the foregoing provisions in the code was to abolish the distinction between the former practice of courts of common law and chancery, and give full effect at law as well as in equity to assignments of rights in action, by permitting and requiring the assignee to sue in his own name. If, as between assignor and assignee, the transfer is complete, so that the former is devested (sic) of all control and right to the cause of action, and the latter is entitled to control it and receive its fruits, the assignee is the real party in interest, whether the assignment was with or without consideration, and notwithstanding the assignee may have taken it subject to all equities between the assignor and third persons.' 1 Idaho at 711.

In 1958 Rule 17(a), I.R.C.P., was adopted which was in all relevant respects identical to the then existing Federal Rule of Civil Procedure and expressly required that, 'Every action shall be prosecuted in the name of the real party in interest . . ..' ¹ The federal rule adopted as I.R.C.P. 17(a) has been construed in much the same manner as this Court had construed the statutory provisions of §§ 5-301 and 5-302, Idaho Code. One of the authorities summarizes the intent and purpose of the rule to the effect:

'An action shall be prosecuted in the name of the party who, by the substantive law, has the right sought to be enforced.' 3A Moore's Federal Practice, § 17.02, p. 53.

The federal courts in construing the federal rule have consistently and repeatedly held that the assignee of a chose in action is the real party in interest and that action must be brought in his name. 3A Moore's Federal Practice, § 17.09, p. 273. See also 2 Federal Practice and Procedure, Barron & Holtzoff, § 482, p. 16, and 6 Federal Practice and Procedure, Wright & Miller, § 1545, p. 651, which summarizes the rule as follows:

'At common law the assignee of a chose in action did not hold legal title to it and could not qualify as the real party in interest. Indeed, in large measure the real party in interest concept developed as a means of eliminating this restrictive rule. Under present law an assignment passes the title to the assignee so that he is the owner of any claim arising from the chose and should be treated as the real party in interest under Rule 17(a).'

We therefore hold that under Rule 17(a), I.R.C.P., as under the preceding Sections 5-301 and 5-302, Idaho Code, an assignee of a valid assignment is the real party in interest to bring an action, and that the assignor is not the real party in interest and has no standing to prosecute an action on the chose in action. Accordingly, the judgment is reversed as to the plaintiff Alfred H. McCluskey, doing business as McCluskey Commissary on the grounds that he is not a real party in interest. ²

The second assignment or error of the defendants is that the trial court erred in refusing to dissolve a writ of attachment issued in the action. Unfortunately, we do not have the benefit of examining either the affidavit in support of the writ of attachment or the writ of attachment itself, as they were not made a part of the record under the praecipe filed by the defendants-appellants. The only moving document with regard to the alleged writ of attachment is a 'Notice of Hearing' filed ten days after the judgment, in which the defendants moved for an order directing that the writ of attachment be discharged upon the ground that it was improperly and irregularly issued. ³

A hearing was held in the trial court pursuant to the notice of hearing and the motion to discharge or dissolve the writ of attachment was denied by order of the trial court. In this order the trial court makes reference to the writ of attachment issued on the 27th day of February, 1969, the date upon which the original complaint was filed. No other reference to this alleged writ of attachment can be found in the record. However, the statement in the order of the trial court, that the writ of attachment was issued on the 27th day of February, 1969, the date the original complaint was filed, is a part of the record and can be accepted for purposes of determining the validity of defendants' assignment of error.

It is the contention of the defendants that the affidavit in support of the original attachment must necessarily have been false in that at the time of the issuance of the writ of attachment, upon filing of the original complaint, only Alfred H. McCluskey was a party plaintiff in the action. At the time of the issuance of the writ of attachment upon the filing of the original complaint, the corporate plaintiff was not yet a party to the action. The defendants reason that the attachment on February 27, 1969, in order to be legally sufficient, would have required an affidavit that the defendants are indebted to the plaintiff, that is the individual Alfred H....