Gaugler v. Chicago, M. & P. S. Ry. Co.
Gaugler v. Chicago, M. & P. S. Ry. Co.
Opinion of the Court
Upon the merits defendant contends that the insured seeks to maintain an action at law and the insurers one in equity, which cannot be blended in, nor deprive the defendant of its right to remove the insured’s law action to this court.
It further contends that the insurers are not more than proper parties whose citizenship is not to be regarded on removal. Plaintiffs contend that the Montana laws require all actions to be prosecuted in the name of the real party in interest, and that the insurers are such parties and indispensable parties, that there is no separable controversy, and, though the insurers’ interests are the creations of equity, the action is properly at law, and that, even if not compelled to join, they may join, and that such joinder is fatal to jurisdiction of this court on removal.
In denying the motion to remand, the decision went on the ground that the action must be prosecuted in the name of the insured, and that the insurers were not necessary nor indispensable parties, and their citizenship would be disregarded.
The point here involved does not seem to have been expressly decided by the Montana Supreme Court, but in Caledonia Insurance Co. v. Railway Co., 32 Mont. 46, 79 Pac. 544, an insurance company appears to have maintained without question an action, in its own name and alone, against a trespasser for recovery for a partial loss payment by it made to the insured. And it is common knowledge of' the bench and bar of Montana that, on the theory that assignees in whole or in part of a chose in action are real parties in interest within the statutes of the state, since the enactment of said statutes,.assignees of the entire chose have sued in their own names and assignees of part thereof have sued jointly with their assignors in the names of both, either without question or questioned unavailingly. Statutes like Montana’s are for the purpose of changing the common-law rule that rights of action are not transferable, and that all actions should be prosecuted by or in the name of the holder of the legal title to the cause of action, under which rule an assignee of the whole was compelled to sue at law in the name of the assignor, and an assignee of part had no standing in a court of law, but in some cases could resort to equity. Blending law and equity in one form of civil action, such statutes adopt the equity rule in respect to parties — the action to be prosecuted in the name of and by the owner of the beneficial interest in the chose, who is entitled to the thing sued for, and by reason thereof is the real party in interest. See 30 Cyc. 47 et seq. 83. Under such statutes, the assignor of a chose cannot maintain an action therefor in the face of the debtor’s objections, and if a debtor with knowledge of the assignment fails to object or to require the assignee to be made a party or fails to defend on the score of the assignment,, though the assignor secures judgment, the assignee may thereafter successfully prosecute an action against the debtor for the chose. The judgment in favor of the assignor is not res judicata. See 23 Cyc. 1165, 1260. If but a part of a right of action is assigned, assignor and assignee may join at law for its recovery. See 30 Cyc. 51. If it be said that at common law a partial assignee was not recognized, and could proceed only in equity, and that state statutes cannot change this rule to the prejudice of the equity jurisdiction of the' federal courts, it may be observed that an entire assignee could also resort to equity, and yet, where the latter may sue at law in his own name by virtue of state statutes, so may he in the federal courts. See cases supra.
- A partial assignee’s interest is the same in quality as that of -an entire assignee — equitable, but less in quantity. It is believed that at
I am of the opinion that the plaintiffs herein, co-owners of the insured’s right of action, were not only authorized by the state law to sue jointly as they did, hut were compelled to do so. One compelled to join and joined in an action, and having a substantial interest therein; is not a nominal, hut a necessary or indispensable, party, whose citizenship must be regarded when jurisdiction depends on citizenship ; for he sues not by a representative nor by representation binding him and bound- for him, but in his individual capacity. He is a real party in interest.
The corporations plaintiff being citizens of states other than Montana and objecting to the jurisdiction of this court, the cause should be remanded. Leave to renew the motion to remand and said motion arc both granted and order accordingly. Costs to plaintiffs.
Reference
- Full Case Name
- GAUGLER v. CHICAGO, M. & P. S. RY. CO.
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- 13 cases
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- Syllabus
- 1. Removal oe Causes (§ 107*) — Motion to Remand — Renewal. That a former federal district judge overruled a motion to remand the cause to a state court, does not preclude his successor from granting leave to renew the motion; the court’s jurisdiction being always oi>en to challenge. [Ed. Note. — For other eases, see Removal of Causes, Cent. Dig. ,§§, 178, 225-234; Dec. Dig. § 107.*] 2. Courts (§ 322*) — Federal Courts — Jurisdiction—“Resident.” A complaint stating that plaintiff is a “resident” of a specified state is insufficient to show that he is a citizen of that state as affecting the question of jurisdiction of a federal court. [Ed. Note. — For other eases, see Courts, Cent. Dig. §§ 876-8S1, 887; Dec. Dig. § 322.* For other definitions, see Words and Phrases, vol. 7, pp. 6161-6166; vol. 8, p. 7788.]: 3. Removal of Causes (§§ 31, 51*) — Separable Controversies. An action by a citizen of Montana as insured under four fire policies issued by nonresident companies, who having paid less than a total loss joined to recover the total loss in, an action against a railway company for having negligently destroyed 'the insured’s property, the insurance companies having been subrogated pro tanto to the rights of the insured, does not state a separable controversy authorizing defendant to remove the cause to a federal court on the ground of diversity of citizenship on the theory that insured seeks to sue at law, while insurers ask equitable relief, nor authorize removal on the ground that insurers are not necessary parties, since the statutes of Montana, where the suit was brought, provide that there shall be hut one form of action to be prosecuted in the name of the real party in interest. [Ed. .Note. — For other eases, see Removal of-Causes, Cent. Dig. §§ 71, 101;. Dec. Dig. §§ 31, 51.* Separable controversy as ground for removal of cause, see notes to Robbins v. Ellenbogen, 18 C. C. A. 86; Meeke v. Valley town Mineral Co., 35 C. C. A. 155; Pollitz v. Wabash R. Co., 100 C. C. A. 4.] 4. Insurance (§ 606*) — Fire Dosses — Subrogation—Rights of Insurer. Where fire insurers who paying less than the amount of a total loss .negligently caused by a railway company are subrogated pro tanto to insured’s rights, they become equitable assignees; tbe assignment having the aspect, in effect, of one by the most formal and express deed. [Ed. Note. — For other cases, see Insurance, Cent. Dig. §§ 150A-1511, • 151A-1516; Dee. Dig. § 606.*] 5. Courts (§ 359*) — Federal Courts — Applicability of State Daw. In common-law causes, the federal courts follow the laws of the states wherein the coiirts are held. [Ed. Note. — For other cases, see Courts, Cent. Dig. §§ 939-949; Dec. Dig. § 359.* State laws as rules of decision in federal courts, see notes to Wilson 1 v. Perrin, 11 Q.. C. A., 71;. Hill v. Hite, 29 C. C. A. 553.] 6. Assignments (§ 127*) — Jurisdiction—Unliquidated Demands. Except under extraordinary circumstances, the assignee of part of an unliquidated demand sounding in tort cannot sue the tort-feasor in equity. [Ed. Note. — For other cases, see Assignments, Cent. Dig. §§ 193, 194; Dec. Dig. § 127.*] . 7. Assignments (§ 127*) — Jurisdiction—Equitable Assignments. Equity has no jurisdiction of a joint action by an equitable assignee and his assignor. [Ed. Note.- — For other cases, see Assignments, Cent. Dig. §§ 193, 194; Dec. Dig. § 127.*]