Kansas City, M. & O. Ry. Co. v. Shutt

In this case the alleged assignment to the insurance company purported to cover only that portion of the loss paid the assured (assignor) by the assurer.

Section 4224 (Code Civ. Proc. § 26) Wilson's Rev. Ann. St. Okla. 1903, was borrowed from Kansas. Section 4103, (Code Civ. Proc. § 26) Gen. St. Kan. 1889 (Gen. St. Kan. 1868, c. 80, § 26). At the time said section was adopted by the Legislature of Oklahoma Territory, section 4516, Gen. St. Kan. 1889 (Code Civ. Proc. § 420), provided:

"In addition to the causes of action which survive at common law, causes of action for mesne profits, or for an injury to the person, or to real or personal estate, or for any deceit or fraud, shall also survive; and that the action may be brought, notwithstanding the death of the person entitled or liable to the same." (Gen. St. Kan. 1868, c. 80, § 420.)

See, also, section 4609 (Code Civ. Proc. § 411) Wilson's Rev. Ann. St. 1903. Section 4226 (Code Civ. Proc. § 28) Wilson's Rev. Ann. St. Okla. 1903, was also taken from Kansas. Section 4105 (Code Civ. Proc § 28) Gen. St. Kan. 1889 (Gen. St. Kan. 1868, c. 80, § 28).

In the case of Kansas Midland Ry. Co. v. Brehm, 54 Kan. 755, 39 P. 690, which involved the assignment under said statute of right of action against a party for wrongfully destroying property by fire, the court said:

"The general doctrine, both at law and in equity, is that the right of action for a pure tort is not the subject of assignment. This rule has been changed to some extent by statute, and the provisions with reference to what choses in action will survive or abate by the death of either or both of the parties have been held to modify this rule, so that everything which survives and can be transmitted to the executor or administrator of the assignor, in case of death, is assignable. Smith v. Railroad Co., 28 Barb. (N.Y.) 605, and cases cited. Sections 420 and 421 of our Code (Wilson's Rev. Ann. St. 1903, §§ 4618, 4619), prescribe what actions may survive to the personal representatives of the party in case of his death, and if these provisions stood alone, it might, perhaps, be said that the Legislature intended to modify the common-law rule so that all rights of action which survive might pass by assignment. Such provisions have been held to have the effect in other states. We have another provision, however, adopted at the same time, which clearly indicated a legislative intent to restrict the assignment of choses in action to those arising out of contract. In section 26 of the Code (section 4224) it is provided that 'every action must be prosecuted in the name of the real party in interest, except as otherwise provided in section 28; but this section shall not be deemed to authorize the assignment of a thing in action not arising out of contract.' Evidently this provision recognizes the limitation which existed at common law when the Code was adopted, and, inferentially at least, provides that a chose in action arising out of a pure tort is not assignable. To meet the objection that a right of action arising out of torts of this character is not assignable defendant in error relies uponStewart v. Balderston, 10 Kan. 131. While some of the language of the opinion in that case might seem to warrant the view taken by the defendant in error, it is manifest that the case cannot be regarded as an authority that a right of action arising out of a tort is assignable. The subject-matter of that action was a claim for money wrongfully taken; but, as the party injured in such a case can waive the tort and sue as upon an implied contract (Challiss v. Wylie, 35 Kan. 506, 11 P. 438), and as there was an implied agreement to pay the money, it was treated as a chose in action arising out of a contract, and was therefore assignable. Shortly afterwards the same subject was under consideration, when it was said: 'At common law no chose in action was negotiable, or even assignable. In equity every chose in action, except a tort, was assignable; but it was assignable subject to all equities that might be set up against it. Under our statutes every chose in action is assignable except a tort, the same as it was in equity. Code Civ. Proc. § 26.' McCrum v. Corby, 11 Kan. 464, 470."

It may be insisted that section 4163 (chapter 65, art. 6, § 146) Wilson's Rev. Ann. St. 1903, which provides that:

"A thing in action arising out of the violation of a right of property, or out of an obligation may be transferred by the owner. Upon the death of the owner, it passes to his personal representatives, except where, in the case provided by law, it passes to his devisees or successors in office" —

renders an action, growing out of a tort pure and simple, assignable. But when we consider said section in connection with the provisions of section 4224, supra, wherein it is provided that said section shall not be deemed to authorize the assignment of a thing in action not arising out of a contract, such contention seems to be ill founded, especially in the light of the case of the Kansas Midland Ry. Co. v. Brehm,supra. These two sections are construed together, and, section 4224 being taken from Kansas, the decisions of the Supreme Court of that state construing said section, even after its adoption here, should at least be persuasive. We conclude that an action growing out of a tort pure and simple, like the one involved in this case — the destruction of property by fire alleged to have been wrongfully set out — is not assignable. We take it that section 4163, supra, in view of sections 4224 and 4609, supra, covers actions growing out of contracts, or arising out of violations of rights of property, where such violation partakes, not only of the nature of a tort, but also of an implied contract, being in the nature of assumpsit, as, for instance, the unlawful taking and conversion of money or of other personalty to one's use, as in the case of Stewart v.Balderston, 10 Kan. 131, which was an action based on a claim for money wrongfully taken and converted. The right of action growing out of this character of torts not being assignable, under this assignment the insurance company could not have maintained an action in its own name on said assignment. Such an action on such assignment would have to be brought in the name of the assignor for the use and benefit of the assignee.

In the case of Kansas City, Ft. Scott Memphis R. Co. v.Blaker et al., 68 Kan. 244, 75 P. 71, 64 L. R. A. 81, the court said:

"It is contended here that the evidence did not establish a right of action in B. F. Blaker Co., and that the court erred in not sustaining the railroad company's demurrer to the evidence. The fact that the insurance company was not a party plaintiff is the principal ground of this contention. The claim is that, as the insurance company had paid the greater part of the loss, it was a proper party, and, in fact, the only real party in interest in the result of the action. This question has already received the consideration of the court, and sanction has been given to the rule that where the value of the property destroyed exceeds the insurance money paid, the action must be brought in the name of the owner, and not in the name of the insurance company. Railroad Co. v. Insurance Co.,59 Kan. 432, 53 P. 459. The rule proceeds on the theory that the insured sustains toward the insurer the relation of trustee, and is well supported by the authorities. Norwich Union FireIns. Co. v. Standard Oil Co., 59 Fed. 984, 8 C. C. A. 433;Aetna Insurance Co. v. Hannibal St. Joseph R. R. Co., 3 Dill. (C. C.) 1, Fed. Cas. No. 96; London Assurance Co. v. Sainsbury, 3 Doug. 245; Rockingham Mut. Fire Ins. Co. v. Bosher, 39 Me. 253, 63 Am. Dec. 618; Hart v. Railroad Corp., 13 Metc. (Mass.) 99, 46 Am. Dec. 719; Conn. Mutual Life Ins. Co. v. N Y N.H. R. R. Co., 25 Conn. 265, 65 Am. Dec. 571; St. Louis, I.M. S. Railway Co. v. Commercial Ins. Co., 139 U.S. 223, 11 Sup. Ct. 554, 35 L.Ed. 154; Marine Ins. Co. v. St. Louis, I. M. S. Ry. Co. (C. C.) 41 Fed. 643. The rule stated is applicable here, as the value of the property destroyed exceeded the amount paid by the insurance company. In addition to the rule of law which holds the insured in such cases chargeable as trustee, there was a specific agreement between the insured and the insurance company that the former should act and account in the capacity of a trustee for the insurance company, and the recovery would necessarily conclude both parties, and effectively bar any other or further recovery against the railroad company for the loss."

In this case the alleged assignment to the insurance company covered only that portion of the total loss as was paid to the assignor by the insurance company. It is well settled that the wrongful act by the defendant company in the burning of the barn, etc., was single and indivisible, and gives rise to but one liability. Aetna Insurance Co. v. Hannibal St. Joseph R.Co., 3 Dill. 2, Fed. Cas. No. 96; Hesser v. Johnson,13 Okla. 53, 74 P. 320. See, also, Chicago, etc., v. Pullman, etc.,139 U.S. 79, 11 Sup. Ct. 490, 35 L.Ed. 97; Pennsylvania v.Mannheim (D.C.) 56 Fed. 303; Southern Bell Telephone Co. v.Watts, 66 Fed. 464, 13 C. C. A. 579; Sun. Mut. Fire Ins. Co. v.Mississippi Valley Co. (C. C.) 17 Fed. 923; In re Harris, 57 Fed. 247, 6 C. C. A. 320; Hall v. Railroad, 13 Wall. 367, 20 L.Ed. 594. Hence, it appears that in any event, whether as assignor of the alleged claim, or whether as subrogated to the rights of the assured, the plaintiff Franklin Shutt was a proper party plaintiff. As the assured he was the trustee for the assurer for whatever amount was paid by it to him under said policy. With the matter of adjustment or settlement between them the defendant had no concern. If the assurer did not elect to intervene and have the amount awarded to it in that action, but preferred to await the result of the action, relying upon an accounting with the assured as to its subrogated rights, that could not prejudice the plaintiff in error. Further, if the assured executed the assignment as alleged, he was a proper party to prosecute the suit for himself, and also for the use and benefit of the insurance company, as the action was single and indivisible, not being separable.

The defendant in its answer insisted that the entire action had been assigned. There was no evidence offered to that effect. The only attempt made tended to show an assignmentpro tanto; but in no event is the plaintiff in error in an attitude to complain. When the original petition was filed, the plaintiff Franklin Shutt and the St. Paul Fire Marine Insurance Company were joined as plaintiffs. Defendant then insisted that there was a defect of parties plaintiff, which contention was sustained. In the last-amended petition the insurance company is joined in the caption as a coplaintiff with Franklin Shutt and the relief prayed for is solely in behalf of Franklin Shutt. Under any contingency the plaintiff Franklin Shutt is a proper plaintiff to recover in this action, and, the insurance company being joined therein, under the record in this case the plaintiff in error is amply protected. The insurance company will not be heard in any other tribunal, in any other action to complain against the plaintiff in error. It is of no consequence to it as to what settlement may be made between the insurance company and the plaintiff Franklin Shutt. The insurance company was joined in the caption of the petition with the plaintiff Franklin Shutt, and there is no question raised, either by motion, demurrer, or answer, as to the last-amended petition in regard to misjoinder of parties or causes of action, or of defect of parties. Such question, not so taken advantage of in apt time, is waived. Choctaw, Oklahoma Gulf R. Co. v.Burgess, 21 Okla. 653, 97 P. 271.

There appearing no error in the record prejudicial to the rights of plaintiff in error, the judgment of the lower court is affirmed.

Kane, C. J., and Hayes and Turner, JJ., concur; Dunn, J., who, having been of counsel in the lower court, did not sit.