Federal Procedure – Realignment of Parties in Non-Diversity Case

Plaintiff (S1), a surety for the subcontractor, brought an action against the subcontractor and the prime contractor to compel them to set off their respective counterclaims in order to diminish the liability of S1. The subcontractor had another surety (S2) on a different obligation arising out of the same construction job, and the prime contractor, uncertain where liability should be placed, impleaded S2. On S1‘s motion to vacate the impleader order, held, denied, and the court on its own motion directed realignment of the parties, ruling that the main issue was division of liability between the subcontractor’s two sureties, S1 and S2, to the prime contractor. The prime contractor was made plaintiff and the other parties, the subcontractor, S1 and S2, defendants, with the result that all matters in controversy could be settled in one action with one trial. In directing this order, the court stated that it relied on its inherent power to require realignment for convenience and expediency. Travelers Indemnity Co. v. J. S. Ramstad Construction Co., (D.C. Alaska 1954) 118 F. Supp. 423.