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NORTHBORO APTS., INC. v. WHEATLAND TUBE CO.

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF PENNSYLVANIA


July 11, 1961

NORTHBORO APARTMENTS, INC., Holland Development Corporation, Wachtel Plumbing Co., Inc., Isaac Prussin, Simon R. Bregman and Irving H. Stolz
v.
WHEATLAND TUBE COMPANY

The opinion of the court was delivered by: DUSEN

This action was brought to recover from defendant sums paid in settlement of third party claims for personal injuries and wrongful death arising out of an explosion at the Northboro Apartment, Bronx, New York, and counsel fees expended in connection therewith, on the theories of indemnity, contribution and breach of warranty. *fn1" The complaint also contains direct claims against the defendant for loss of good will, loss of rental and the cost of repairing the building, these claims being based on allegations of negligence and breach of warranty. The plaintiffs are owners and lessees of the land on which the building which exploded was located and the contractor and subcontractor who built it. The defendant supplied pipe for the building, which pipe plaintiffs claim was defective.

The case is presently before the court on defendant's Motion that Security Mutual Insurance Company of New York be made a party plaintiff under F.R.Civ.P. rule 17(a), 28 U.S.C.A.

 Plaintiffs' answers to interrogatories disclose that they were insured by Security Mutual Insurance Company at the time of the explosion (see answer 16 to Documents Nos. 9, 10 and 11) and that the insurance company, not the present plaintiffs, paid the settlements of the claims arising out of the explosion (see exhibits attached to Document No. 14). *fn2" Defendant asserts that because of these payments, the insurance company is a real party in interest and should be joined as a party plaintiff.

 The 'real party in interest' within the meaning of Rule 17(a) is the party who, under the applicable substantive law, has a legal right to enforce the claim. Capo v. C-O Two Fire Equipment Co., D.C.D.N.J.1950, 93 F.Supp. 4, 6; Du Roure v. Alvord, D.C.S.D.N.Y.1954, 120 F.Supp. 166, 168. The law of New York is the substantive law applicable *fn3" and, under that law, an insurance company which pays part of a loss incurred by its insured becomes joint owner with the insured of the cause of action. Moore v. Taylor, 1916, 175 App.Div. 37, 161 N.Y.S. 480, 481-482. See Porter v. Lane Const. Corporation, 1925, 212 App.Div. 528, 209 N.Y.S. 54, 57, affirmed 1926, 244 N.Y. 523, 155 N.E. 881. Hence, Security Mutual Insurance Co. has the substantive right under New York law to assert a claim for the amount it paid in settlement of the third party claims. *fn4"

 Once it has been established that under the applicable substantive law the party sought to be joined has the right to maintain the action, whether or not such a party should be joined under Rule 17(a) depends on federal procedural standards. *fn5" This is a case of partial subrogation *fn6" and, in such cases, both the insured and the insurer are real parties in interest within the meaning of F.R.Civ.P. rule 17(a). United States v. Aetna Casualty & Surety Co., 1949, 338 U.S. 366, 381, 70 S. Ct. 207, 94 L. Ed. 171. Although an action can be instituted by either party, *fn7" the other should be joined upon timely motion of the defendant. St. Paul Fire & Marine Ins. Co. v. Peoples Natural Gas Co., D.C.W.D.Pa.1958, 166 F.Supp. 11, 12. This motion is timely *fn8" and there is no reason to deny defendant its right to join Security Mutual Insurance Company of New York as a party plaintiff. *fn9"

 The order attached to defendant's motion (Document No. 16), making The Security Mutual Insurance Company of New York a party plaintiff, will be signed. The briefs of counsel have been filed as Nos. 18 and 19 in the Clerk's file.


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