## Facts

- A tractor owned by Ellis Canning Co. was serviced by International Harvester Co., and the servicing allegedly caused a fire that damaged the tractor.
- Ellis Canning carried insurance with a policy containing a subrogation clause.
- The insurer paid Ellis Canning the full amount of the claimed loss ($479.79).
- Ellis Canning then filed a negligence action against International Harvester in Ellis Canning’s name “for the use and benefit” of the insurer.
- International Harvester asserted in its answer that, because the insurer fully compensated the loss, the insurer was the real party in interest and Ellis Canning lacked the right to maintain the action.
- The trial court denied Ellis Canning’s motion to strike that defense and overruled Ellis Canning’s demurrer to it; Ellis Canning appealed those rulings.

## Issues

1. When an insurer fully indemnifies an insured for a loss under a policy with a subrogation clause, may the insured sue in its own name “for the use and benefit” of the insurer, or must the insurer sue as the real party in interest?
2. Did the defendant’s pleading that the insurer was the real party in interest state a valid defense sufficient to survive a motion to strike and a demurrer?

## Decision

- The Kansas Supreme Court affirmed the trial court’s rulings.
- Because the insurer paid the loss in full, the insurer became the real party in interest as to the entire claim against the alleged tortfeasor.
- Ellis Canning, having no remaining uncompensated loss, could not maintain the action in its own name solely for the insurer’s benefit.
- The challenged paragraph of the defendant’s answer adequately asserted a real-party-in-interest defense; the motion to strike and demurrer were properly denied.

## Legal Principles

- An action must be prosecuted in the name of the real party in interest: the party who possesses the substantive right to be enforced and who will be directly benefited or harmed by the judgment.
- Upon full payment of the insured’s loss, the insurer is subrogated to the entire claim against the responsible third party and holds the exclusive right to sue for that loss.
- An insured that has been fully indemnified lacks a direct financial interest in the claim and cannot proceed as a nominal plaintiff “for the use and benefit” of the insurer.

## Conclusion

Where an insurer fully compensates an insured for a loss, the insurer owns the subrogated claim and must bring suit in its own name; the insured is not the real party in interest and cannot maintain the action merely for the insurer’s benefit.


Ellis Canning Co. v. Int'l Harvester Co., 174 Kan. 357, 255 P.2d 658 (Kan. 1953)