Opinion
Dimmers & MacRitchie and William MacRitchie, Hillsdale, Mich., for plaintiff.
Alexander, Cholette, Buchanan, Perkins & Conklin and Paul E. Cholette, Grand Rapids, Mich., for defendant.
Before STARR, Chief Judge, and KENT, District Judge.
PER CURIAM.
Plaintiff brings this action to recover damages for personal injuries sustained in a motor-vehicle accident, which he alleges was caused by defendant's negligence. Defendant answered denying the charge of negligence and plaintiff's right to the relief sought.
It appears that at the time of the accident plaintiff was an employee of the village of Quincy, Michigan, and was entitled to and has been paid workmen's compensation benefits by the Michigan State Accident Fund as the workmen's compensation insurance carrier for the village. The defendant has filed a motion for an order requiring the insurance carrier to join in this action as a party plaintiff or, upon its refusal to so join, making it a party defendant. Arguments on this motion were heard by District Judges Starr and Kent sitting en banc, and able briefs have been filed.
The question presented is whether the Michigan State Accident Fund, which has paid plaintiff benefits under the Michigan workmen's compensation act, Comp.Laws 1948, § 411.1 et seq., can be compelled upon defendant's motion to join as a party in this action. Defendant's motion requires determination of two questions: First, whether the insurance carrier has a substantive right in plaintiff's claim for damages so as to make it a real party in interest and, if so, second, whether Federal procedure requires its joinder on defendant's motion. The question as to whether the insurance carrier is a real party in interest must be determined under the Michigan law, since this depends upon whether it has a substantive right in plaintiff's claim for damages which is legally protected. However, the question in whose name the right may be enforced, is a procedural one to be determined under the Federal Rules of Civil Procedure. Gas Service Co. v. Hunt, 10 Cir., 183 F.2d 417, 419.
To ascertain if the Michigan State Accident Fund is a real party in interest, we must first consider the provisions of the Michigan workmen's compensation act, Comp.Laws Mich.1948, 1956 Supp., § 413.15, which provides as follows:
Under the above provisions of the compensation act the plaintiff as an injured employee of the village of Quincy can maintain an action for damages against the defendant. If he had failed to commence an action within one year after the occurrence of the injury, the village of Quincy or tis compensation insurance carrier could have commenced an action in his name. Under the act any recovery of damages by the plaintiff in his present action shall first reimburse his employer or its insurance carrier for any amounts paid or payable to the date of recovery, and the balance will be paid to the plaintiff as an advance payment by the employer on account of future payment of compensation benefits. By providing that any recovery by plaintiff should first go to reimburse his employer or its insurance carrier for any amount paid or payable under the workmen's compensation act to the date of the recovery, it is clear that the act makes the employer or its insurance caarrier a partial subrogee. We therefore conclude that under the provisions of the act both the plaintiff and the State Accident Fund as insurance carrier for the village of Quincy are real parties in interest in the present action. See Muskegon Hardware & Supply Company v. Green, 343 Mich. 340, 72 N.W.2d 52.
The remaining question is whether the Federal Rules of Civil Procedure require that the insurance carrier be made a party to the action upon motion of the defendant. Rule 17(a) of the Federal Rules, 28 U.S.C.A., provides:
Rule 19(a) provides as follows:
Rule 21 of the Federal Rules provides that parties may be dropped or added by order of the court on motion of any party at any stage of the action. In the present case the State Accident Fund is subject to the jurisdiction of this court as to both service of process and venue and can be made a party to the action without depriving the court of jurisdiction of the plaintiff and defendant. Although there is some conflict in the Federal decisions, the greater weight of authority clearly holds that a workmen's compensation insurance carrier as a partial subrogee is a real party in interest under Rule 17 of the Federal Rules of Civil Procedure and, being a real party in interest, it may under Rules 19 and 21 be compelled to join upon timely motion by the defendant. See United States v. Aetna Casualty & Surety Co., 338 U.S. 366, 70 S.Ct. 207, 94 L.Ed. 171; Gas Service Co. v. Hunt, 10 Cir., 183 F.2d 417; National Garment Co. v. New York, C. & St. L.R. Co., 8 Cir., 173 F.2d 32, 34, 35; Carlson v. Glenn L. Martin Co., D.C. 103 F.Supp. 153; Slauson v. Standard Oil Co., D.C., 29 F.Supp. 497; DuVaul v. Miller, D.C., 13 F.R.D. 197; Koepp v. Northwest Freight Lines, D.C., 10 F.R.D. 524; State of Maryland to Use of Carson v. Acme Poultry Corporation, D.C., 9 F.R.D. 687; Williams v. Powers, D.C., 2 F.R.D. 362; 3 Moore's Federal Practice, 2d Ed., page 1348.
Certain district courts have denied joinder of the insurance carrier under circumstances substantially similar to those in the present case. King v. Cairo Elks Home Association, D.C., 145 F.Supp. 681; Braniff Airways v. Falkingham, D.C., 20 F.R.D. 141; Shumate v. Wahlers, D.C., 19 F.R.D. 173; Jenkins v. Westinghouse Electric Company, D.C., 18 F.R.D. 267. With due deference to the courts denying joinder of the insurance carrier, we nevertheless conclude that the courts which have denied joinder have misconceived the effect of the following language of Rule 17(a) of the Federal Rules of Civil Procedure:
We are convinced that this language in Rule 17(a) does not create an exception to the provisions of Rule 19 regarding the joinder of necessary parties. 2 Barron and Holtzoff, Federal Practice and Procedure, page 6; 3 Moore's Federal Practice, 2d Ed., page 1372.
The precise questions before us in the present case were determined in Carlson v. Consumers Power Co., D.C., 164 F.Supp. 692. In that case it was alleged that plaintiff's decedent, an employee of a construction company was fatally injured as a result of the defendant's negligence. The Auto-Owners Insurance Company, the employer's workmen's compensation insurance carrier, had paid and was still paying the plaintiff benefits under the Michigan workmen's compensation law. The defendant moved for an order making the insurance carrier a party plaintiff or, upon its refusal to join as a party plaintiff, that it be made a party defendant. In granting this motion and ordering that the insurance carrier be made a party to the action, the court said in part:
The decision in the above Carlson case is clearly determinative of the question presented by the defendant's motion in the present case, and we conclude that its motion should be granted. It is accordingly ordered that the Michigan State Accident Fund be made a party plaintiff in this action or, if it refuses to join as a party plaintiff, that it be made a party defendant. No costs are allowed in connection with defendant's motion.