Peerless Ins. Co. v. Superior Court

• Decision Date: 06 April 1970
• Citation: 6 Cal.App.3d 358,85 Cal.Rptr. 679
• Parties: PEERLESS INSURANCE COMPANY, Inc., a corporation, Petitioner, v. SUPERIOR COURT of the State of California FOR the COUNTY OF LOS ANGELES, Respondent; A. E. ACKROYD, Real Party in Interest. Civ. 35882.
• Court: California Court of Appeals

Page 679

85 Cal.Rptr. 679

6 Cal.App.3d 358

PEERLESS INSURANCE COMPANY, Inc., a corporation, Petitioner, v.SUPERIOR COURT of the State of California FOR the COUNTY OF LOS ANGELES, RespondentA. E. ACKROYD, Real Party in Interest.

Civ. 35882.

Court of Appeal, Second District, Division 4, California.

April 6, 1970.

[6 Cal.App.3d 359] Arthur Wasserman, Los Angeles, for petitioner.

No appearance for respondent.

Le Roy L. Center, Redondo Beach, for real party in interest.

ALARCON, Associate Justice pro tem.^*

The Peerless Insurance Company, Inc., has filed a petition before this court seeking a peremptory writ of mandate to order the Superior Court of Los Angeles County to vacate its order requiring the petitioner to join Alfred Lee as a partyplaintiff or defendant and to serve a summons upon him.

FACTUAL BACKGROUND

The petitioner(hereinafter referred to as plaintiff) filed a complaint on January 19, 1965 to recover $8,719.88 which was paid under its insurance policy to Alfred Lee for damage to an airplane owned by Lee, caused by the alleged negligence of A. E. Ackroyd, the real party in interest (hereinafter referred to as defendant).The complaint alleges that the total damage to the aircraft was in the amount of $14,109.10.An answer was filed by the defendant containing denials of liability or damage.By amendment, the defendant alleged that Alfred Lee, through misrepresentation or negligent use of words, had caused the defendant to believe that the insurance policy issued by the plaintiff covered the defendant from all liability during the time the defendant rented the airplane from Lee.The defendant did not raise the issue of non-joinder of parties-plaintiff either by answer or demurrer.

The court's minutes show that the matter went to trial on February 29, 1969.By stipulation the issues raised by the affirmative defenses were to be tried first.The defendant testified.The minutes for February 24, 1969 indicate that on the court's own motion 'trial is ordered off-calendar to permit counsel to properly prepare for trial.'

The matter again came on for trial on September 16, 1969.The trial judge on his own motion raised the issue of nonjoinder of Alfred Lee and ruled that in a subrogation matter the insured is an indispensable party.

The trial court held '(1) That the Plaintiff, Insurer, asserting a right of subrogation to a portion only of its Named Insured's alleged cause of action, without having made the Named Insured a partyPlaintiff or Defendant(CCP § 382), his absence will prevent the Court from rendering any effective Judgment between the parties without inequitably affecting and jeopardizing his interest, and his interests must necessarily be inequitably affected and jeopardized, he retaining the remainder of his alleged cause of action against Defendants, Plaintiff attempting to split that cause of action which is but a single cause of action or a single tort, for damages to a single item of personal property, to wit, the Cessna, this Court has no jurisdiction of or over or to proceed with the trial of this cause; and

'(2)This Court will order Plaintiff to join the said Albert (Alfred) Lee as a partyPlaintiff or Defendant, and for that purpose to amend the Complaint herein and to cause Summons (if he be a partyDefendant) to issue and be served upon him, either personally or by publication; and

'(3) If Plaintiff refuse so to do, * * * it will dismiss the cause as being one over which it has no jurisdiction (CCP § 389).'

PROBLEM

Under the facts set forth in the complaint, Alfred Lee could assert a cause of action against the defendant for total damages in the amount of $14,109.10.The plaintiff insurance company seeks to recover only that portion of the total damages paid to its insured under the policy.Is an insured an indispensable party to a subrogation action where the loss to the insured is greater than the amount of insurance paid?

DISCUSSION

Indispensable parties under California law are defined as follows: 'A person is an indispensable party to an action if his absence will prevent the court from rendering any effective judgment between the parties or would seriously prejudice any party before the court or if his interest would be inequitable affected or jeopardized by a judgment rendered between the parties.'(Code Civ. Proc. § 389.)

The trial court has held that the insured is an 'indispensable party.'If this is so, then it is a matter of jurisdiction which may be raised at any time by the trial court or even the appellate court on its own motion (Hardie v. Chew Fish Yuen, 258 Cal.App.2d 301, 303, 65 Cal.Rptr. 594), and the court must dismiss the action if the indispensable party is not joined.(Code Civ. Proc. § 389.)On the other hand, the non-joinder of a necessary party is not jurisdictional, may be reversible error dependent upon the circumstances (Harrington v. Evans, 99 Cal.App.2d 269, 271, 221 P.2d 696), and appears to be a matter which may be and in fact is waived unless timely and proper objection (usually by demurrer or answer) is made.

In Offer v. Superior Court, 194 Cal. 114, 118--119, 228 P. 11, 13, it is stated: 'It may be suggested that to permit the insurer to sue at law in cases where the extent of the loss is not covered by the insurance policy would result in splitting a cause of action sounding in tort, and thus subject the defendant to two suits upon a single cause of action.It seems, however, that this result may be avoided by joining the insured as a coplaintiff * * * or as a codefendant * * * and if the plaintiff fails to do so the defendant may protect himself by pleading such defect of parties, either by demurrer or by plea in abatement.* * * It would seem to follow that, if the wrongdoer in an action against him by the insurer for the amount of damages covered by the insurance does not demur or enter a plea in abatement because of nonjoinder, the defect is waived, and he might be held liable to the insured in another action for the amount of the loss not covered by the insurance policy.'

In the instant matter defendant did not object by demurrer or answer.The record indicates that trial actually commenced on February 24, 1969 with no objection of any kind as to the jurisdiction of the court.When trial resumed on September 16, 1969, defendant apparently moved that the cause be tried as governed by the law of New Mexico.Defendant contends that the transcript shows that he raised the issue of non-joinder by motion at that time.However, the partial transcript does not show this.It appears that defense counsel was presenting argument related to the...