Stewart v. Price

— 192 — The opinion of the court was delivered by Greene, J. : The defendant in error, C. E. Price, commenced this action before a justice of the peace in Allen county against D. W. Stewart, doing business under the firm name of the People’s Telephone Company, to recover on two causes of action.' The first was on an account due from Stewart to himself; the second was on an account due from Stewart to Mrs. A. Thompson. The latter account was itemized, verified, and assigned in writing to Price. The assignment was regular and admitted. To this second cause of action the plaintiff in error answered that Price was not the owner of the account and, therefore, not the real party in interest. There was no defense to the account, nor was there any claim that it had been assigned for the purpose of acquiring or giving the court jurisdiction over the defendant when otherwise it could not have acquired such jurisdiction. The Thompson account was assigned to Price that he might join it with his own in an action he contemplated bringing against Stewart, and, when collected, he was to pay Mrs. Thompson the entire proceeds thereof. Mrs. Thompson testified that all money due on said account belonged to her ; that Stewart did not owe her anything; that it was due from Price. The plaintiff in error demurred to the evidence as to the second cause of action on the ground that it showed that the plaintiff was not the owner of the account, and, therefore, not the real party in interest. The demurrer was overruled, and judgment rendered in favor of Price on both causes of action. The only question presented for ,our consideration is whether Price can maintain this action in his own — 193 — name on the second cause of action. Gan the assignee of a verified itemized account, assigned in writing, where the assignment is regular and admitted, maintain an action thereon in his own name when, by a previous arrangement, he has agreed to pay the pro ceeds collected to his assignor? Section 26 of the civil code (Gen. Stati 1901, § 4454), provides that “every action must be prosecuted in the name of the real party in interest, except as otherwise provided in section 28.” It is not contended by either party that the case falls within any of the exceptions. It must, therefore, be considered solely with reference to the meaning of section 26. In examining this provision, it will be observed that it does not say that it is the person in whose name the right of action stands, or the person who holds the legal title thereof, that may prosecute the action, but that “every action must be prosecuted in the name of the real party in interest.” If Price failed to recover from Stewart, he would not be liable to Mrs. Thompson, and the loss would be wholly that of Mrs. Thompson. Is the real party in interest the person who is to be benefited or injured, ■or the person who holds the legal title to the thing in action? This section is plain and unambiguous and ■seems incapable of misunderstanding. By its terms, it excludes the idea that any person other than tin-one benefited or injured by the result of the litigation can be intended. To hold otherwise would appear to be doing violence to language. This question was before the supreme court of Indiana as early as 1858, in the case of Swift v. Ellsworth, 10 Ind. 205, 71 Am. Dec. 316, where it wa•ruled that the assignee of a promissory note, who was not entitled to the proceeds when collected, was not the real party in interest and could not maintain an — 194 — action thereon. Again, the same court, in Bostick et al. v. Bryant, 113 Ind. 448, 459, 16 N. E. 378, 383, where the answer pleaded that the note sued on was transferred and assigned to plaintiff by Anna S. Bloomer, the owner, without consideration, and solely for the purpose of suing on and collecting the same for the use and benefit of the real owner, said : “The answer shows clearly that Anna S. Bloomer is the owner of the note and the real party in interest. The plain provisions of the statute cannot be avoided. The plea must be held good.” "Without exception, this is the settled rule of interpretation of this provision of our code in Indiana. The same rule has been followed in Nebraska in the case of Mills v. Murry, 1 Neb. 327, and reaffirmed in the case of Hoagland v. Van Etten, 22 Neb. 681, 684, 35 N. W. 869, 870, in which case the chief justice said : “If a party having no interest in the subject-matter of the suit, who holds simply as assignee, and-is to deliver to his assignor the proceeds of the action, may maintain an action on such an assignment, then section 29 has no meaning whatever. We do not care to-enter into a discussion of the propriety, or impropriety, of requiring actions to be brought in the name of the real party in interest. The statute contains a plain provision which this court has no authority to disregard. We hold, therefore, that an assignee having no interest in the result of the suit and not entitled to any portion of the proceeds thereof is not entitled, under section 29, to maintain an action as the real party in interest.” This same case was again before the court on a motion for a rehearing, and upon reargument the court adhered to its former decision. (23 Neb. 462, 36 N. W. 755.) Perhaps the fullest and most able presentation of this question, while not the law of that state, is found — 195 — in Eaton v. Alger, 57 Barb. 179, 189. The defendant pleaded that the plaintiff was not the owner of the note and not the real party in interest. The court said: “It would, therefore, seem very clear that a defendant, on such an issue made by the pleadings, would have the right to show that the plaintiff was not the real party in interest, particularly'if he had1 pleaded a defense in the action good as against such pretended real party. The plaintiffs, however, insist that, notwithstanding this provision of the code, the indorsee of a note, or the holder of a note payable to bearer or indorser in blank, may maintain an action upon it, although not in fact the owner, nor, as between himself and the owner, entitled to the proceeds when collected. That such was the rule before the code is conceded; and the argument is, that it was abolished by the code, that the codifiers and legislature so intended. In their report to the legislature, the codifiers said: ‘ The rules respecting parties in the courts of law differ from those in the courts of equity; the blending of the jurisdiction makes it necessary to revise those rules to some extent; in doing so we have had a threefold purpose in view: 1st. To do away with the artificial distinctions existing in the courts of law, and to require the real party in interest to appear in court as such. 2d. To require the presence of such parties as are necessary to make an end to the controversy ; and 3d, to allow, otherwise, great latitude in respect to the number of parties who may be brought in. . . . The true rule undoubtedly is that which prevails in the courts of equity, that he who has the right is the person to pursue the remedy. We have adopted that rule.’ This section, now 111, was adopted by the legislature precisely as submitted by the codifiers, showing that they approved the reasons given by the codifiers for its adoption. It is therefore quite immaterial what was the rule previous to the code, if thereby the legislature intended to, and did, change the rule, by express enactment. That — 196 — they did so we think clear from the language of the statute and the reasons for its adoption. In their reasoning the codifiers alluded to the existing rules and the necessity for a revision, one purpose of the proposed change being to require the real person in interest to appear in court as such, followed by an act providing that ‘every action must be prosecuted in the name of the real party in interest.’ This reasoning and this enactment seem too plain for misconception. The act is emphatic; it uses the Saxon word ‘must’ (a verb which has not yet been twisted by judicial construction, like the words ‘may’ and ‘shall,’ into meaning something else) to place beyond doubt or cavil what is intended.” We heartily coincide with the reasoning and in the conclusion reached in the foregoing cases. We believe this is the true meaning of this section, as applied to actions on assigned accounts, and that the language is so obviously plain as to admit of no other interpretation or construction. Therefore, the decision of Krapp v. Eldridge, 33 Kan. 106, 5 Pac. 372, in so far as it expresses a doctrine contrary hereto, is overruled. This cause is reversed and remanded with instructions to sustain the demurrer to the evidence of the plaintiff in proof of the second cause of action. Smith, Ellis, JJ., concurring.