Federal Civil Procedure: Third Circuit Rejects Flexible Approach to the Doctrine of Indispensable Parties Embodied in Amended Federal Rule of Civil

THE Third Circuit has impugned the premise and frustrated the goal. of the new Federal Rule 19 by holding that the indispensable party doctrine is substantive law and therefore unaffected by a rule of procedure.' Following a fatal automobile accident, the executor of a deceased passenger brought a declaratory judgment action to establish the liability of the insurer, which had denied that the policy covered the person driving the car at the time of the accident. The insurer joined the estate of another victim and a surviving passenger but did not join the insured owner. The determinative factual issue was whether the driver was acting within the scope of the owner's permission at the time of the accident. At the trial on the merits, the. district court judge found that because the policy was for a stated sum, any amount recovered by the estates would reduce the funds available to the insured on any claim arising from the accident. Thus, since the interests of the estates and the insured were adverse, the court invoked Pennsylvania's Dead Man's Act2 to prevent the insured from testifying as to the driver's permission in the suits brought by the estates. However, the owner was allowed to testify against the surviving passenger, who did not come under the act's restrictions. The jury found that the driver was within the scope of the owner's permission and rendered a verdict for the injured party. Similarly, the district court directed verdicts for the plaintiff estates,3 whereupon the insurer, protesting the application of the dead man's statute and the. propriety of the directed verdicts, appealed. The court of appeals, however, did not reach these questions since it sua sponte determined the insured owner to be an indispensable party, thus necessitating dismissal of the action. 4 Indispensable parties have been defined as