Jones v. Goodman (114 F. Supp. 110, 1953)

MELLOTT, Chief Judge.

Defendants’ motion to dismiss the second amended complaint raises several questions which have been discussed by counsel at oral hearings and in lengthy, well-prepared briefs. A summary of the facts pleaded and the actions heretofore taken by the parties and the court may bring into focus the issues presented.

George V. Jones, a 36-year-old citizen of Iowa in the employ of a citizen of Nebraska as a transport truck driver, received severe injuries on January 13, 1948, in a collision of vehicles on a Kansas highway, which, it is averred, resulted from the negligence of another truck driver, a citizen of Kansas and a member of the partnership which owned the truck he - was driving. After the collision, Jones was confined in a hospital in Kansas City, Kansas until September 11, 1948, on which date he was removed to a hospital in Omaha, Nebraska, where he died on October 25, 1948. His “sole and only heirs at law and next of kin; all of whom were partially dependent upon * * * [him] for support” were two brothers and three sisters, ranging in age from 43 years to 52 years, the eldest of whom, a resident of Iowa, was appointed, in that State, administrator of his estate and is one of the plaintiffs.

The plaintiff, Howerter, was the employer of the deceased at the time of his injury. It is averred he was operating under the Nebraska Workmen’s Compensation law, his co-plaintiff, American Motorists Insurance Co., being his insurer. They, it is alleged, “have joined in this action as party plaintiffs by mutual consent, for the purpose of being subrogated and reimbursed out of any damages that may be recovered in this action by said plaintiff administrator, to the extent of the financial loss sustained by them * * The amount so claimed under Count Three of the second amended complaint is:

Weekly compensation paid deceased ...................... $ 722.00

Medical and hospital expenses ... 7,826.30

Burial expenses ............... 150.00

Amount paid to Nebraska Compensation court for benefit Second Injury Fund ............ 500.00-

Total ..................... $9,198.30

The original complaint was filed in this case September 1, 1949. It included, as a defendant, Hawkeye Casualty Co., an Iowa corporation, which had issued a policy of insurance covering the operation by the defendants of trucks on the highways of Kansas. G.S.Kan.1935, 66-1,128. The time to plead was enlarged by order of court and a motion to dismiss was filed by the defendants on April 25, 1950. That motion was not argued or briefed. While it was pending, counsel for the plaintiffs moved to dismiss as to Hawkeye because of lack of diversity. The motion was sustained on November 17, 1950, and amended complaint was filed on that date. Hawkeye was not named as a party defendant in that pleading; but references in it to Hawkeye and the issuance of the policy were attacked by a motion to strike. A motion to dismiss was also filed. The motions were argued and briefs submitted. On January 14, 1952, the court entered an order sustaining in part and denying in' part the motion to strike- and directing that a complete amended complaint be filed. The second amended complaint was filed January 25, 1952. Additional briefs upon the questions raised in the motion to dismiss have now been filed.

Each of the three complaints contains three separate counts. Counsel for plaintiffs, in their reply brief, characterize the action as follows:

“This is an action to recover damages against negligent third parties for wrongful death as a result of injuries received in this state predicated upon G.S.Kans. § 60-3201 [G.S.1935 as amended by Sec. 1, Ch. 233, L.1939] the survival statute and § 60-3203 [G. S.Kans.1935 as amended by Sec. 2, Ch. 233, L.1939; L.1947, Ch. 319] 4 and 60-3204 [G.S.Kans.1935]4 wrongful death statutes. The action is brought by an Iowa administrator of the deceased for the benefit of his estate and next of kin under authority of G.S. Kans. [1949?] 59-1708. The plaintiffs, Howerter and American Motorists [Ins. Co.] have joined in this action by virtue of their rights of subrogation arising in the state of Nebraska.”

It will be sufficient for present purposes to summarize the allegations of the second amended complaint. In Count One, after alleging the acts of negligence relied upon, it is stated the administrator’s right to recover damages is predicated upon laws of the State of Iowa, set out therein, which, it is averred, are “similar” to sections 60-3201, 60-3203 and 60-3204 of the Kansas Code, supra. In the concluding paragraph of this count it is stated that, by reason of the wrongful acts of the defendants, the injuries received and the damages sustained by the deceased during his lifetime for ho-spitalization and medical expense, pain and suffering, disfigurement and humiliation and loss of earnings, his estate and his heirs and next of kin suffered damages in the total sum of $11,500.

In Count Two it is alleged that the estate of the deceased and his heirs and next of kin suffered damages in the total amount of $3,500, consisting of funeral and burial expenses of $500 “which the estate * * *, his heirs and next of kin, became liable to pay” and $3,000 for the loss suffered by his surviving brothers and sisters and next of kin for the “reasonable present and prospective pecuniary benefits accruing to them from said estate; * * * [and for their] mental anguish and bereavement, loss of his society and companionship and loss of his comfort and protection * * The averments in Count Three of the second amended complaint have been summarized above. (See Paragraph 3.) Recapitulating, the aggregate amount of $15,-000 is sought by the administrator under the survival statute and the death by wrongful act of Kansas, while his co-plaintiffs Howerter and American Motorists Insurance Co. claim “a lien upon and to re^ceive reimbursement from the proceeds * * * to the extent of * * * payments * * * made, under § 48-118 of * * * [the] Nebraska statutes.”

The effect of the dismissal of Hawkeye, a proper, but not an indispensable or necessary, party may be passed without extended discussion. In the determination of this court’s jurisdiction on the ground of diversity of citzenship, only indispensable parties are to be considered. The action was brought within two years after the cause of action accrued. This court permitted the dismissal of Hawkeye, as contemplated by Rule 21, F.R.C.P., 28 U.S.C.A., retaining jurisdiction, (it is believed), with retroactive effect, of the indispensable parties, viz., the owners and operators of the truck alleged to have caused the injuries to the deceased. Some of the cases supporting this view are set out in the margin.

A question discussed by the parties at some length is whether the suit should be dismissed for misjoinder of parties plaintiff. Rule 21 states: “Misjoinder of parties is not ground for dismissal of an action.” In a recent opinion by Judge Delehant of Nebraska it was pointed out that “(t)he courts have applied the rule in accordance with its unmistakable language. [Citing cases.]” This court does likewise and declines to dismiss the action for misjoinder. But it is proper to determine whether the former employer of the deceased and his insurance carrier, or either of them, are, under the pleadings, proper parties. The present discussion will, however, be limited to the former employer, Howerter.

It is well established that an insurer, which has paid in accordance with its contract of insurance, becomes subrogated to the rights of the insured. If the loss insured against is paid in full, then an action against the wrongdoer to recover in tort must be maintained in the name of the insurer. If payment in full has not been made, “both the insured and the insurer own portions of the substantive right against the wrongdoer and should appear in the litigation in their own names.”

It seems to be obvious, from an examination of the present complaint, that all payments made to, and in behalf of, the injured workman were made by the insurance carrier, American Motorists Insurance Co., and that Howerter has not paid, or become obligated to pay, any additional amounts. The fact that the Nebraska statute, which is pleaded in the complaint, subrogates “the employer” to. the right of the employee or his dependents against a “third person” who caused the injury, does not, in this court’s judgment, make it necessary that he remain in the action as a plaintiff. However, no order dismissing him as a party is being entered at this time.

Before discussing the claimed right of the insurer to recover as a subrogee, consideration should be given to whether the action, in its present form, can be maintained by the Iowa administrator. Matters pertaining to the substantive right of recovery under a death by wrongful act statute are governed by the law of the state where the injury resulting in death occurred. This includes “the right to recover, the nature of the right, and the party in whom it is vested * * *.» While recognizing this rule, counsel for the plaintiffs espouse the view that the lex loci domicili should be applied in the distribution of the amount recovered in such an action. That, it is believed, is unsound. In subdivision “c” of the comment under § 393, Restatement, Conflict of Laws, it is stated:

“The distribution of damages recovered under a wrongful death statute is not determined 'by the law of the decedent’s domicile * * * because such damages constitute no part of his estate. They ordinarily represent a special fund to be distributed to certain designated beneficiaries, and the distribution depends upon the law of Idle state which, by its wrongful death statute, creates the cause of action.”

While the precise question has arisen seldom under the Kansas cases, it has many times been held that the special fund may be distributed only to the designated beneficiaries. The statute, it will be noted, specifically provides that the damages which may be awarded, “must inure to the exclusive benefit of the surviving spouse and children, if any, or next of kin”.

But, argue counsel for the plaintiffs, “recovery for wrongful death under the laws of both Kansas and Iowa inure to the benefit of the surviving spouse, children or parents free of debts. The only exception is that under the Iowa law when the recovery extends to the next of kin beyond parents that the 'free of debt’ provision does not apply.” Assuming, without deciding, that the statement is correct, recovery for the purpose of paying the debts of the estate in Iowa would contravene the repeatedly announced policy of the Kansas act. Moreover, the acts of the two states do not seem to be similar. The Kansas act16 is modeled after, and has the same general purpose as, Lord Campbell’s Act. The “right of action created by * * * [it] is founded on a new grievance, viz.: causing the death, and is for the injuries sustained thereby by the widow and children or next of kin of the deceased * * Under the Iowa statute, I.C.A. § 611.20, “unlike Lord Campbell’s Act, no new cáuse of action is created by the wrongful death, but rather, the cause of action accruing to the injured person survives his death. * * * An action under the Iowa death statute is in effect an action only to recover for the benefit of the heirs * * * what they might have inherited had the decedent lived out his normal expectancy, * * *. In effect, cognizance is only taken of what such decedent might have saved, not on what he -might have expended upon his heirs in his lifetime had his life not been