Northwestern National Insurance v. Samuel R. Rosoff, Ltd.

Marbury, C. J., delivered the opinion of the Court. These two cases are samples of 40 odd cases in which the same questions have been raised below. Appeals in the other cases are contingent, as to their completion, upon the decision in the cases before us. All of the cases are suits by homeowners against their insurance companies for damages to their premises alleged to have been caused by explosions in the period from February through July, 1948.

The several insurance companies in each case filed motions to implead Samuel A. Rosoff, Ltd., a corporation, and the Mayor and City Council of Baltimore City, contending that the explosions occurred during the construction of a water tunnel in the City of Baltimore by the use of dynamite and other explosive materials by Rosoff, the contractor. The City and Rosoff were made third party defendants, declarations were filed against them by the insurance companies, and, thereafter, motions were filed by the City and Rosoff to strike out the orders impleading them. The motions in the two cases before us were heard by Chief Judge Smith in the Superior Court of Baltimore City. Other ⁴²⁵ similar motions in the other eases were heard by Judge Moser in the Court of Common Pleas, and by Judge Sayler in the Baltimore City Court.

No opinions were filed in any of these cases, but two of the cases were removed to the United States Court and similar motions were heard there by Judge Chesnut who filed an opinion which will be hereafter referred to. All of the judges hearing all of the cases granted the motions to strike out the impleading orders, and appeals were taken in the cases in the city courts to this Court. The only two which have been perfected are the two now before us. It may be noted that in some of the cases the plaintiffs also filed motions to strike out the impleading orders, but we are advised that these were all withdrawn with the exception of two.

In case No. 163, the plaintiff did not file such a motion. In case No. 164, the plaintiff did, but later withdrew it in open court at the hearing. The original suits are in contract, alleging that the plaintiffs were insured by their companies against explosions. The third party suits, which the defendants desired to have heard with the original suits, are in tort for damages done by the City and its contractor through the same explosions.

The plaintiffs in these cases have not attempted to bring separate tort actions against the City or the contractor, but the insurance companies say that if and when they are found liable to the plaintiffs, and have to pay the damages, they will then become subrogated to the rights of the original plaintiffs against the City and the contractor, and, therefore, the question of who is ultimately to pay the damages, if any are found, should be settled in one suit as to each house or building damaged. The theory of impleading third parties is an outgrowth of what was found to be a defect in the common law. There were frequent cases where it was necessary to give relief to a defendant when he had a genuine claim for exoneration against some person not a party to the suit. For example, when the payee of a note sued the ⁴²⁶ surety, and left out the maker.

The first efforts to bring all the parties into one suit was the old remedy of “vouching” which started in the English land laws. If A sold land to B with a warranty, and C claimed the land belonged to him and sued B, then B could give A notice of the pendency of the suit and an opportunity to join in the defense. Whether he did nor whether he did not, a judgment against B would then be conclusive in a subsequent action against the vouchee both as to plaintiff’s right to recover and as to the amount. This right was extended to chattels, and the theory of it has been generally applied to cover all claims for indemnity expressed or implied.

Where the vouching-in remedy was used, there might still have to be two suits. There were other situations where vouching-in did not apply, such as cases where several people committed the same wrong against the plaintiff, but he elected to sue only one. Statutes were passed giving one tort feasor against whom a judgment had been obtained, the right to sue the others for contribution, but this still required two suits. Subsequently, other statutes were passed giving the one sued the right to implead the others.

Without detailing further the history of the various efforts to give relief and to combine in one suit all parties whose rights arose out of the same matter, there was finally passed Federal Rules of Civil Procedure, rule 14, 28 U. S. C. A., which is the proto-type of our rule invoked in this case. It may be noted that the English third party procedure was started with the Supreme Court of Judicature Act of 1878, Chapter 66, paragraph 24(3) and paragraph 39 of the Consolidation Act of 1925, and that in the leading case of Jasperson v. Dominion Tobacco Co., [1923] A. C. 709, it was held that actions of contract and actions of tort could be impleaded in the same case. The old remedy of vouching-in is discussed in Consolidated Hand-Method Lasting-Machine Co. v. Bradley, 171 Mass. 127 , 50 N. E. 464 , 68 Am. St. Rep. 409 .

For the general historical background, see 33 Columbia Law Review 1147, 19 Minn. Law Review ⁴²⁷ 163, Moore’s Federal Practice, 2 Ed., Vol. 3, paragraph 14.02, pages 407-409. Our Rule 4 of the General Rules of Practice and Procedure, Part Two, III, is based upon Federal Rule 14. It will be found in the 1947 Supplement to the Annotated Code, pages 2042, 2043, and the explanatory notes on pages 2103-2105.

The procedure outlined in the Rule was followed in the cases before us, and the questions we are now called on to decide are first the right of immediate appeal from the order striking out the impleader, and, secondly, if such an appeal is now permissible, did the trial court abuse its discretion? The appellees in each of the cases have filed motions to dismiss the appeals on the ground that they were prematurely taken, because the orders are not final judgments. Article 5, Section 2, Code 1939, allows an appeal from any judgment or determination of any court of law in any civil suit or action. That has been construed to mean a final judgment or determination which settles the rights of parties.

Thus in the early case of Mitchell v. Smith, 2 Md. 271, 274 , which was an appeal from an order of the County Court consolidating two cases, the Court said that such an order was not a proper subject of appeal before trial, although it might form such a basis after the determination of the suit, the reason being that no right of the parties was finally settled by it. This rule has been generally followed, two of the latest cases being Dermer v. Faunce, 187 Md. 610, 613 , 51 A. 2d 76 , and Goodman v. Clark, 193 Md. 521 , 69 A. 2d 496 . The appellees contend that the orders appealed from do not deny the appellants the means of further prosecuting suits against appellees, as the orders complained of dismissed the third party complaints without prejudice. They further say that the right to implead is not absolute but is in the discretion of the trial court, and, therefore, the appellees have been denied no rights.

Appellants, on the other hand, say that the orders appealed from terminate finally the present litigation between appellants and appellees, that it is a matter vitally affect ⁴²⁸ ing them to be denied, as they have been, the opportunity to have the entire matter heard in one case, that there is a judgment for costs against them which satisfies the technical requirements, and that the third party litigation is a separate part of the case from the original litigation, and that, as to that part, there is a final determination. They further suggest the factual situation that as these original suits were not brought for more than a year after the explosions occurred, and the ensuing proceedings, although promptly taken, have consumed the balance of the second year, it is possible that if they have to try the cases without the appellees as parties defendant, it may readily happen that by the time the cases against them are finally determined and they are in a position to pay any judgments which may be obtained against them, their rights to sue the appellees will have expired by limitations, and they may, therefore, in fact, be deprived of their right to sue appellees, even in separate actions. In the case of Baltimore Transit Co. v. State to use of Schriefer, 188 Md. 674 , 39 A. 2d 858 , 156 A. L. R. 460, which was a tort action, the Transit Company obtained an order making the Mayor and City Council of Baltimore a third party defendant. The City subsequently moved to strike out this order.

This was granted, and the Transit Company appealed. The facts in the case were that an employee of the City, while collecting ashes, was struck by a street car and killed. His dependents filed a suit against the Transit Company. The Transit Company claimed that the truck with which the deceased was collecting ashes was being operated by a servant of the City, and that his negligence caused the accident.

In that case the claim was under the Maryland Joint Tort Feasor Act, Chapter 344 of the Acts of 1941, Art. .50, sections 21 to 30 of the 1943 Supplement to the Code. The City had been paying the employee compensation under an award of the State Industrial Accident Commission, and we held that under such circumstances the Workmens’ Compensation ⁴²⁹ Act limited the employer’s liability, and, therefore, the City was not a proper party. In that case no question was raised as to the immediate right of appeal from the order of the court striking out the City, but we considered the question, and affirmed the order. In the case of Standard Wholesale Phosphate & Acid Works v. Rukert Terminals Corporation, 193 Md. 20 , 65 A. 2d 304 , a workman was injured while working in the hull of a vessel, and brought suit against the owner of the appliance which injured him.

That owner, Standard, filed a third party complaint against Rukert, who employed the injured man, on the ground that it failed to provide him a safe place to work. Rukert had paid compensation in accordance with the Longshoremen and Harbor Workers Compensation Act, 33 U. S. C. A. § 901 et seq., and it filed a motion to vacate the order allowing the impleading, claiming it was not liable in damages. The motion was granted and the appeal was taken from the judgment entered for costs in favor of Rukert. We held that under our construction of such Federal cases as had decided the question, Standard had no right of contribution from such a joint tort feasor, and, therefore, affirmed the judgment.

In that case, also, no question was raised that the appeal was premature, because the order was not a final judgment. Our Rule, as we have stated, is based upon the Federal rule, and there is, so far, only one case which has directly decided this issue. That is the case of Baltimore & Ohio R. R. Co. v. United Fuel Gas Co., 154 F. 2d 545 , decided by the 4th Circuit Court of Appeals. In that case the Court held that the order dismissing the third party complaint was not appealable because it was an interlocutory order and not a final judgment.

Judge Dobie, delivering the opinion, said the problem of what constitutes, for the purpose of appeal, final judgment, is often difficult. Three cases are referred to in other circuits where the court, on appeal, considered the merits of a motion to implead, but none of these cases discussed whether the judgment on review was a final judgment. ⁴³⁰ One of the cases was General Taxicab Ass’n v. O’Shea, 71 App. D. C. 327, 109 F. 2d 671 , from the District of Columbia, and the Court said "that case was no authority, because, under the District rules, appeals were permitted to the Court of Appeals whenever it is made to appear to the Court that it will be in the interest of justice to allow them. The Court quoted Moore’s Federal Practice, Vol. 1, page 749, stating that it was certainly an. authoritative book. That text book said such an order would not be appealable, since it did not finally dispose of any of the rights of the defendant.

It is interesting to note that Professor Moore in his second edition of Federal Practice, Vol. 3, paragraph 14.19, page 450, repeats the statement made in the first edition, and cites as authority for it, Judge Dobie in the Baltimore & Ohio Railroad case, supra, and a Colorado State case, Burks v. Maudlin, 109 Colo. 281 , 124 P. 2d 601 , The last mentioned case was decided on local rules respecting appeals, and the Colorado court found that such an order did not come within the exceptions named in these rules. The sequel to the Baltimore & Ohio case is instructive. It was tried below without the United Gas Fuel Co. A judgment was entered against the Baltimore & Ohio, and a second appeal was taken. On that appeal the ruling declining to implead the United Gas Fuel Co. was considered by the court at some length.

The ground of the refusal by the District Court had been that the third parties sought to be impleaded were