Opinion
13020.
OCTOBER 11, 1939. REHEARING DENIED NOVEMBER 17, 1939.
Petition to remove cause. Before Judge Candler. Hall superior court. July 12, 1939.
Brandon, Hynds Tindall and Furman Smith, for plaintiff in error.
Kelley Brannon, Boyd Sloan, and Joseph G. Collins, contra.
The petition for reformation of an insurance contract and other relief containing no separable controversy between citizens of different States, the court properly denied the application of the defendant to remove the suit to the United States court.
No. 13020. OCTOBER 11, 1939. REHEARING DENIED NOVEMBER 17, 1939.
American Fidelity and Casualty Company, a non-resident corporation, brought this writ of error from a refusal, on its petition, to remove a suit there pending to the Federal court. Lula Elder and Margaret Byrd as assignees of Thomas W. Fox, and Fox himself, suing for their use and in his own behalf, all residents of this State, filed a petition against the non-resident company and against Oscar H. Hendrix Jr., Joe Hendrix, and Claude H. Roark, residents of Hall county, to reform, on account of alleged mutual mistake and fraud, a contract of public liability automobile insurance, as expressed in a written binder and insurance policy issued by the company, so as to change the description and names of the insured persons stated therein, and to enforce against the contract as thus reformed two judgments for $5000 each, previously obtained in Hall superior court by the plaintiff assignees separately against Fox, the plaintiff assignor, as an individual, on account of the negligent operation of his automobile.
The case as alleged by the petition was as follows: Fox, the assignor, and the two Hendrixes and Roark, operators of taxicabs in Gainesville, being required by the city manager to obtain liability insurance for protection of passengers, applied, on October 10, 1937, to the company's agents at Atlanta for such insurance for themselves as individuals owning and operating their cars separately, and keeping their expenses and profits separately, but maintaining one office for convenience and for sharing of expense. They were thus operating, not as partners, but as individuals under the trade-name of Imperial Cab Company; they so informed the agents of the Company, who agreed to so issue a policy if the company approved; the company did so approve, and so informed the city manager on October 11, 1937, by a telegram describing by number and make the four automobiles owned by the four individuals. On the same date the company issued a written binder, with a limit of $5000 damage, covering the four automobiles, but erroneously describing the persons insured as "Oscar H. Hendrix Jr., Joe Hendrix, Thomas W. Fox, Claude H. Roark, operating as Imperial Cab Company, a partnership," whereas, according to the previous agreement as alleged, and reformation prayed, the language describing them as a partnership should be stricken, and Imperial Cab Company be stated only as a trade-name for the four individuals. On the night of October 11, 1937, or early morning of October 12, injuries occurred from the automobile of Thomas W. Fox, resulting in the $10,000 of judgments in favor of the plaintiff assignees. In the afternoon of October 12 the agents of the company telegraphed to the city manager that they were withdrawing the binder as to Thomas Fox and his automobile; and afterward the company issued a policy, dated October 11, stating the names of the assured as "Oscar H. Hendrix Jr., Joe Hendrix, and Claude H. Roark, operating as Imperial Cab," describing their three automobiles, but omitting Fox and his automobile, and making the errors alleged as to the manner of operation of the business and cars; and further stating that the liability "for any and all loss from an accident resulting in bodily injuries to or in the death of one person is limited to $5000, and subject to the same limit for each person; the total liability of the company for any and all loss from any one accident resulting in bodily injuries to or in death of more than one person is limited to $5000," with a $1000 limit for property destruction or damage.
The petition by the non-resident company for removal of the suit to the Federal court is based upon the following averments and contentions: that the matter in controversy, involving more than $3000 exclusive of interest and costs, contains a separable controversy entirely between the plaintiffs on the one side and the company on the other; that the individual defendants, who are residents of Georgia, have no interest to be affected, and are merely nominal parties; and that the court should so rearrange the parties that these individual defendants be treated as plaintiffs.
1. While it is true that in determining whether a suit contains a separable controversy wholly between citizens of different States, so as to be removable to the United States court (U.S. Code Ann., §§ 41, 71, title 28, the court may disregard a merely nominal or proper party (Ex parte State of Nebraska, 209 U.S. 436, 28 Sup. Ct. 581, 52 L. ed. 876; Davidson v. Montana-Dakota Power Co., 22 F.2d 688), and the court may also look beyond the formal alignment of the parties as they appear on the face of the pleading, and rearrange them according to their actual interests with respect to the controversy in question (Removal Cases, 100 U.S. 457, 568, 25 L. ed. 593; Pacific Railroad Co. v. Ketchum, 101 U.S. 289, 298, 25 L. ed. 932; Carson v. Hyatt, 118 U.S. 279, 286, 6 Sup. Ct. 1050, 30 L. ed. 167; NilesBement-Pond Co. v. Iron Moulders Union, 254 U.S. 77, 41 Sup. Ct. 39, 65 L. ed. 145; Brooks v. Brooks, 185 Ga. 549, 555, 195 S.E. 869; Joseph Dry Goods Co. v. Hecht, 120 Fed. 760), it is nevertheless true that, even after giving effect to these rules, in order for a cause to be removable there must still "exist in the suit a separate and distinct cause of action, on which a separate and distinct suit might properly have been brought and complete relief afforded as to such cause of action, with all the parties on one side of that controversy citizens of different States from those on the other," and "which can be fully determined without the presence of any of the other parties to the suit as it has been begun." Accordingly, if upon an application for removal, after disregarding the presence of mere nominal parties, and after any possible realignment of parties according to their true and actual interest, the petition still does not present a separable controversy where the essential parties on one side and the essential parties on the other side are not diverse as to citizenship, the cause is not removable. Fraser v. Jennison, 106 U.S. 191, 194 ( 1 Sup. Ct. 171, 27 L. ed. 131), and cit.; Torrence v. Shedd, 144 U.S. 527, 530 ( 12 Sup. Ct. 726, 36 L.ed. 528), and cit.; Ayres v. Wiswall, 112 U.S. 187 ( 5 Sup. Ct. 90, 28 L. ed. 693); Louisville c. R. Co. v. Ide, 114 U.S. 52 ( 5 Sup. Ct. 735, 29 L. ed. 63); In re Winn, 213 U.S. 458, 464 ( 29 Sup. Ct. 515, 53 L. ed. 873); Pullman Co. v. Sutherlin, 150 Ga. 652 ( 104 S.E. 782); Pacolet Mfg. Co. v. Weiss, 185 Ga. 287, 292 ( 194 S.E. 568); 23 R. C. L. 673, 674, § 68.
2. In an equitable proceeding, it is the general rule that all persons having a legal or equitable interest in the subject-matter of the suit must be made parties; and that "no court of equity should undertake to reform a written instrument . . in an essential matter, without having before it all the parties to be affected by the proposed reformation." Wyche v. Green, 32 Ga. 341; Holland v. Lawrence, 147 Ga. 479, 480 ( 94 S.E. 561); Lester v. Mathews, 58 Ga. 403 (3); Brown v. Brown, 97 Ga. 531, 542 ( 25 S.E. 353, 33 L.R.A. 816); Hamilton v. Cargile, 127 Ga. 762 ( 56 S.E. 1022); Roberts v. Moore, 136 Ga. 790 (3, a) (72 S.E. 239); Ison v. Nutting, 153 Ga. 682 (2), 687 ( 113 S.E. 197); 23 R. C. L. 358, 359, § 56; 53 C. J. 1003, 1005, §§ 156, 157. It is therefore the general rule that, where by a mistake a policy erroneously names a person as the insured, in lieu of one who should have been named, and petition is brought to reform the contract of insurance on account of such a mistake, so as to accord with an oral agreement (see Niagara Fire Ins. Co. v. Jordan, 134 Ga. 667, 671, 68 S.E. 611, 20 Ann. Cas. 363), the policy will not be reformed unless the person actually named as the insured is made a party to the suit. Trust Co. of Ga. v. Scottish Union c. Ins. Co., 119 Ga. 672 (3), 674 ( 46 S.E. 855). See, as to an exception in suits for reformation, where the person omitted from the petition, although a proper party, is not an essential one, and a decree of reformation "would redound to his benefit," Steadham v. Cobb, 186 Ga. 30, 41 ( 196 S.E. 730).
3. The plaintiff assignor and two assignees, as beneficiaries of an alleged oral insurance contract made by the assignor and the three individual defendants with the defendant insurance company, sought to reform the binder contract and the insurance policy on account of alleged mistake and fraud, so as to insert in the policy the name of the plaintiff assignor, in addition to the three individual defendants named therein as the insured, and so as to change the alleged erroneous description of the business as a partnership, in accordance with the alleged oral contract. The petition also sought a judgment on the insurance contract as thus reformed, to the extent of the $5000 maximum liability on the policy, for the benefit of the plaintiff assignees, holding $10,000 of judgments against the assignor. The plaintiffs and the three individual defendants were residents of Georgia. The non-resident defendant insurance company alone sought removal of the suit to the United States court, on the ground that there was a separable controversy between it on one side and the other parties on the other. The binder named the plaintiff assignor and the three individual defendants as the insured, and described their four automobiles, but insured them as operating under a trade-name as a "partnership." The policy described only the three individual defendants and their three automobiles as operating under a trade-name as a "copartnership," and entirely omitted any reference to the fourth individual, the plaintiff assignor, or his automobile. Without reformation, only the partnership could recover on the binder contract, since the plaintiff assignor and the three individual defendants were insured therein only as a partnership, and only the partnership, composed of the three individual defendants, could recover on the policy, and the plaintiffs would be excluded from such a recovery, since the writing insured only such defendants without referring to the plaintiff assignor or his automobile. Since no partnership was a party to the assignment to the plaintiffs, and they seek to reform the binder and the policy solely for their benefit as individuals, without any participation of the three individual defendants in the benefit of any present or future recovery from any loss, as a partnership or otherwise, and thus seek to change materially the status and rights of such individual defendants under the binder and the policy, it can not be said that their interests would not be affected by the decree prayed for, even though no money judgment is sought against them, so as to make them merely nominal parties, or under any view bring them within the exception stated in Steadham v. Cobb, supra. Nor could the parties be properly realigned, so as to place the three resident individual defendants on the side with the resident plaintiffs, and leave the non-resident company as the sole defendant, since the petition does not disclose any community of interest in the subject-matter of this suit between the present plaintiffs and the individual defendants. There being no separable controversy between citizens of different States, the court properly denied the application by the company for the removal of the suit.
Judgment affirmed. All the Justices concur.