U.S. Fire Ins. Co. v. Farris

• Decision Date: 12 June 1978
• Docket Number: No. 55729,55729
• Citation: 146 Ga.App. 177,245 S.E.2d 868
• Parties: UNITED STATES FIRE INSURANCE COMPANY v. FARRIS et al.
• Court: Georgia Court of Appeals

Page 868

245 S.E.2d 868

146 Ga.App. 177

UNITED STATES FIRE INSURANCE COMPANY v. FARRIS et al.

No. 55729.

Court of Appeals of Georgia.

Argued April 4, 1978.

Decided May 22, 1978.

Rehearing Denied June 12, 1978.

Kirby G. Bailey, Decatur, for appellant.

Peek & Whaley, James Garland Peek, J. Corbett Peek, Jr., Long, Weinberg, Ansley & Wheeler, Arnold J. Wright, Jr., F. Clay Bush, Atlanta, for appellees.

DEEN, Presiding Judge.

" Only parties to the proceeding below may be parties on appeal." Samples v. Greene, 138 Ga.App. 823, 827, 227 S.E.2d 456, 459 (1976); Coogler v. Berry, 117 Ga.App. 614, 161 S.E.2d 428 (1968). Although United States Fire Insurance Company was the original sole plaintiff in the trial court, the petition was amended to add as parties plaintiff Crum & Forster Insurance Companies and Wendell Drive Associates, a partnership. A second amendment was filed to "substitute Wendell Drive Associates a party plaintiff instead of U. S. Fire Insurance Co., so that hereafter the plaintiff shall be designated as follows: Wendell Drive Associates for the use and benefit of United States Fire Insurance Company." This eliminated United States Fire Insurance Company as a party to the action, and was in fact a correct procedure since the testimony on the trial of the case established that the injured party in this damage suit was the insured partnership Wendell Drive Associates; that the partnership had been reimbursed by the insurance company, and that they had given the latter a loan receipt for the amount of the claim. A loan receipt agreement "operates, as respects the right of the insured to sue as the real party in interest, as a loan, and not as a payment of the loss effecting subrogation to the insurer." Green v. Johns, 86 Ga.App. 646(2), 72 S.E.2d 78 (1952) and see Greenbriar Shopping Center v. Lorne Co., D.C., 310 F.Supp. 303, 308. Such a loan receipt does not amount to an assignment. Southeast Transport v. Hogan Livestock, 133 Ga.App. 825, 827(1), 212 S.E.2d 638 (1975). Under the covalent Federal Rule 17(a), in states where as in Georgia, the state substantive law validates the loan receipt, the insurance company is not a real party at interest under federal common law and "the loan receipt is still a valid method of keeping the insurance company out of the litigation as a party." 3A Moore's Fed. Practice, § 17.09 (2. 4), p. 17-119; 6 Wright & Miller, Federal Practice and Procedure, Civil § 1546. In such case the insured is the proper plaintiff. Luckenbach v. W. J. McCahan Sugar Ref. Co., 248 U.S. 139, 39 S.C. 53, 63 L.Ed. 170, 1 A.L.R. 1522; and see cases cited in Waterway Terminals Co. v. P. S. Lord Mechanical Contractors, 242 Or. 1, 406 P.2d 556, 13 A.L.R.3d 1 (1965).

In view of the state of Georgia law, which clearly establishes that where an insurance company pays a claim of its insured and takes a loan receipt rather than an assignment, the right of action against the tortfeasor remains in the insured, we originally held that the directed verdict in favor of the defendants in this case should be affirmed. However, on further examination it becomes obvious that the operative reason why the appellant insurance company cannot prevail under any circumstances, here is that it was stricken, and properly so, in the trial court by the second amendment to the petition substituting Wendell Drive Associates, suing for its benefit as the party plaintiff.

The...