Turk v. Illinois Cent. R. Co.

• Decision Date: 04 November 1914
• Docket Number: 2493.
• Citation: 218 F. 315
• Parties: TURK et al. v. ILLINOIS CENT. R. CO. et al.
• Court: U.S. Court of Appeals — Sixth Circuit

218 F. 315

TURK et al. v. ILLINOIS CENT. R. CO. et al.

No. 2493.

United States Court of Appeals, Sixth Circuit.

November 4, 1914

J. S Laurent, of Louisville, Ky., for plaintiffs in error.

E. F Trabue, of Louisville, Ky., for defendants in error.

Before WARRINGTON, KNAPPEN, and DENISON, Circuit Judges.

DENISON Circuit Judge.

The only question argued is whether the court below acquired jurisdiction through removal proceedings from the state court, and a record which presents only that question must be reviewed by the Supreme Court; but the assignments of error also involve the ultimate merits, so giving this court jurisdiction over both questions (Phillips Co. v Railway, 195 F. 12, 15, 115 C.C.A. 94); and we think the jurisdiction so acquired is not lost by a failure to argue the merits, nor by the fact that we do not find the nonjurisdictional assignments to be vital.

The claim is that property belonging to Turk was damaged in the amount of about $6,700 by fire due to the negligence of the railroads. To the extent of about $4,200, his loss was covered by a policy in the Insurance Company, and it had paid that amount to him. This action was brought in a state court of Kentucky to recover from the railroads the full amount of the fire loss, and the declaration named as plaintiffs the Insurance Company, Turk in his own right and Turk individually and as trustee for the Insurance Company. The Insurance Company was a citizen of New York; Turk was a citizen of Kentucky; the defendant the Illinois Central Company was a citizen of Illinois; and the defendant the Chicago, St. Louis & New Orleans Company was a citizen of Kentucky. The latter company was made defendant because it was the lessor owning the railroad, through the negligent operation of which by the Illinois Central Company, as lessee, the loss was charged to have occurred. The Illinois Central removed the case to the court below, alleging that the lessor railroad had been joined as a defendant only with the fraudulent purpose of defeating the right of removal, and alleging that the Insurance Company was not a necessary or proper plaintiff. In the court below, the plaintiffs moved to remand for the reasons: First, that the Insurance Company was properly joined as plaintiff, and therefore the western district of Kentucky was not the district in which the plaintiffs resided; and, second, that the joinder of the Kentucky corporation as defendant was rightful. The court below overruled the motion to remand, and, upon the eventual trial on the merits, instructed a verdict for defendants. Both the overruling of the motion and the directing of the verdict are assigned as error.

It must be taken as decided that, if the Insurance Company is to be treated as a party plaintiff, the case could not have been brought in the court below, because that was not the district of residence of all the defendants or of all the plaintiffs (Smith v. Lyon, 133 U.S. 315, 10 Sup.Ct. 303, 33 L.Ed. 635); that the case, over the seasonable objection of plaintiffs, could not be removed to the court below, if it could not have been brought there (Ex parte Wisner, 203 U.S. 449, 27 Sup.Ct. 150, 51 L.Ed. 264; In re Moore, 209 U.S. 490, 28 Sup.Ct. 585, 706, 52 L.Ed. 904, 14 Ann.Cas. 1164); and that when removed from a state court, in a case at law, the question of the plaintiff's rightful status is to be determined by the law of the state (Thompson v. Railroad, 73 U.S. (6 Wall.) 134, 138, 18 L.Ed. 765).

The Kentucky Code provides (section 18) that 'every action must be prosecuted in the name of the real party in interest,' and (section 24) that 'parties who are united in interest must be joined as plaintiffs or defendants. ' The Code also abolishes the distinction between actions at law and in equity.

We will get a clearer approach by first considering whether, when the insurer has paid the entire loss and so has been subrogated to the whole of the insured's cause of action for negligence, it can itself bring an action. We find no Kentucky decision covering this question. The same situation was before us in a case from Ohio, in Travelers' Co. v. Great Lakes Co., 184 F. 432, 107 C.C.A. 20, 36 L.R.A. (N.S.) 60. The controlling provisions of the Ohio Code were, apparently, the same as those of Kentucky, and we reached the conclusion, after a review of the authorities, that the insurer can maintain such an action in his own name. We see no reason why the same rule should not prevail in Kentucky, and, accordingly, we must assume that if the Insurance Company, plaintiff here, had been liable for and had paid the whole loss, it could have maintained this suit in its own name and without joining Turk as a party.

It is equally clear that the Insurance Company could not have brought a separate action to recover its separate portion of the entire loss. This results from that rule of necessity which forbids the splitting of a cause of action (see cases cited in Travelers' Co. v. Great Lakes Co., supra).

The present case is not within either of these principles. The Insurance Company is not seeking to do the thing which would be clearly right nor the thing which is clearly forbidden. It propounds only its right to demand that it may be a joint party plaintiff. It seems entirely reasonable that it should have that right. It is unquestionably the beneficial owner of a part of the cause of action; it is, in a very fair sense, pro tanto, the 'real party in interest;' and, certainly in equity, and therefore in the action which was brought in the Kentucky court and in which distinctions between law and equity were unknown, the defendants could exonerate themselves by discharge from the Insurance Company, as far as its interest went. If, before the fire, the Insurance Company had been the owner of a $4,200 interest in the property destroyed, a corresponding fraction of the cause of action against the railroads would have accrued to it, and it unquestionably could have joined with Turk as plaintiff. It is difficult to see why, under the rule of the Kentucky Code, it should not have the same right when the same fractional cause of action accrues to it in another way. So, also, it is hard to believe that an insurer, who beneficially owns nine-tenths of the cause of action, must stand helplessly by, and see its rights sacrificed by mismanagement of the suit or by imprudent compromise on the part of the insured; in a court of equity-- and in an action under the Code-- such an insurer would seem to have at least as much right to be upon the record and to control the action as has the insured with a comparatively nominal beneficial interest. For these reasons, we must think, unless the weight of authority is to the contrary, that the Insurance Company was a real, substantial, and rightful party.

In spite of this conclusion, it must be conceded that the insurer is not, in such case, an indispensable party, as the Kentucky Code is interpreted by the Court of Appeals of that state. In Railroad v. Hicklin, 131 Ky. 624, 115 S.W 752, 23 L.R.A. (N.S.) 870, it appeared that the entire loss for which plaintiff sued had been covered by insurance which had been paid to the plaintiff, and the defendant pleaded that the right of action was thereby gone from plaintiff and vested in the insurer, so that the plaintiff could not maintain the action. The court overruled this plea, holding...