Franklyn Gesner Fine Paintings, Inc. v. Ketcham

• Decision Date: 25 April 1984
• Docket Number: No. 40738,40738
• Parties: FRANKLYN GESNER FINE PAINTINGS, INC. v. KETCHAM.
• Court: Georgia Supreme Court

Page 903

314 S.E.2d 903

252 Ga. 537

FRANKLYN GESNER FINE PAINTINGS, INC. v. KETCHAM.

No. 40738.

Supreme Court of Georgia.

April 25, 1984.

Rehearing Denied May 15, 1984.

Harmon W. Caldwell, Jr., Wade H. Watson, III, Johnson & Montgomery, Atlanta, for Franklyn Gesner Fine Paintings, Inc.

Gary G. Agnew, Richard C. Freeman, III, Atlanta, for Ray Ketcham, Jr.

MARSHALL, Presiding Justice.

Franklyn Gesner sued Ray Ketcham, Jr., claiming fraud and breach of contract in the sale of two paintings purportedly created by artist Martin Johnson Heade. During discovery, it became apparent that the purchaser was not Gesner, but his closely held corporation, Franklyn Gesner Fine Paintings, Inc. Ketcham's subsequent motion to dismiss was denied, and the trial judge then granted the plaintiff's motion to substitute Franklyn Gesner Fine Paintings, Inc., in place of Gesner individually, as party plaintiff. The trial judge denied the defendant's motion to strike the substitution and denied his renewed motion to dismiss. In the defendant's interlocutory appeal, a six-judge majority of the Court of Appeals reversed. Ketcham v. Franklyn Gesner Fine Paintings, Inc., 169 Ga.App. 329, 312 S.E.2d 639 (1983). We granted certiorari, and reverse.

OCGA § 9-11-17(a) (Code Ann. § 81A-117) provides in part: "Every action shall be prosecuted in the name of the real party in interest ... No action shall be dismissed on the ground that it is not prosecuted in the name of the real party in interest until a reasonable time has been allowed after objection for ratification of commencement of the action by, or joinder or substitution of, the real party in interest; and such ratification, joinder, or substitution shall have the same effect as if the action had been commenced in the name of the real party in interest." (Emphasis supplied.)

The Court of Appeals' majority opinion held that the above statute does not in and of itself authorize the substitution of parties or provide any method by which substitution may be accomplished, but merely postpones any dismissal of the action for lack of prosecution by the real party in interest by allowing the "erring party" a reasonable time to remedy its mistake by utilizing the appropriate procedure as provided "in the relevant statute." The majority opinion then concludes that the corporation was not added as a party by amending, but instead sought by its motion to substitute itself for the individual original named plaintiff; that the only statute authorizing such substitution of parties is OCGA § 9-11-25 (Code Ann. § 81A-125); and that that statute limits the use of substitution to instances involving the death or incompetency of a party, the transfer of interest in an action, or the transfer of an action to a successor in public office--none of which is applicable to the situation here.

In our opinion, the Court of Appeals' holding results from an overly restrictive construction of the term "substitution" in OCGA § 9-11-17(a) (Code Ann. § 81A-117). We do not read OCGA § 9-11-25 (Code Ann. § 81A-125) as limiting substitution of parties to just those instances enumerated therein, each of which involves a change in the status of a party. Under OCGA § 9-11-15(c) (Code Ann. § 81A-115), it is permissible to amend the original pleadings so as to change the party against whom a claim is asserted (and also the party plaintiff, Gordon v. Gillespie, 135 Ga.App. 369, 375, 217 S.E.2d 628 (1975) and cit.), which amendment relates back to the date of the original pleading if "the claim or defense asserted in the amended pleading arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading"; and if "within the period provided by law for commencing the action against him, the party to be brought in by amendment (1) has received such notice of the institution of the action that he will not be prejudiced in maintaining his defense on the merits, and (2) knew or should have known that, but for a mistake concerning the identity of the proper party, the action would have been brought against him."

In Block v. Voyager Life Ins. Co., 251 Ga. 162, 303 S.E.2d 742 (1983), we noted that "amendments to change the name of a party are permitted so long as the original party designation describes a person, firm or corporation [even though it is in fact not so]"; that "the pleadings are not an end in themselves but only a method to assist in reaching the merits of the case [Cit.]"; and that "[t]he courts shall construe the pleadings 'as to do substantial justice' ", citing OCGA § 9-11-8(f) (Code Ann. § 81A-108). "It is an elementary rule of pleading that substance, not mere nomenclature, controls." McDonald v. State, 222 Ga. 596, 597(1), 151 S.E.2d 121 (1966) and cits. Under the above rationale, our courts have permitted amendments of designations of parties plaintiff, e.g., from "Ferguson Tile & Terrazzo Co." to "Robert H. Ferguson, d/b/a Ferguson Tile & Terrazzo Co." (Powell v. Ferguson Tile etc. Co., 125 Ga.App. 683, 188 S.E.2d 901 (1972)), and from "Estate of Frank G. Bagley" (not a legal entity) to "Block" (the executor of the estate). Block, 251 Ga. 162, 303 S.E.2d 742, supra. In Block, we held that "where the party plaintiff named in a complaint is not a legal entity but is reasonably recognized as a misnomer for a legal entity which is the real party plaintiff, the misnomer may be corrected by amendment." As to the terminology of "amendment" as...