Orkin Exterminating Co. v. O'Hanlon

• Decision Date: 03 February 1956
• Docket Number: No. 606,606
• Citation: 91 S.E.2d 222,243 N.C. 457
• Parties: ORKIN EXTERMINATING COMPANY, Inc. v. I. H. O'HANLON, Edward A. Rasberry, James Montgomery and Antex Exterminating Company, Inc.
• Court: North Carolina Supreme Court

Page 222

91 S.E.2d 222

243 N.C. 457

ORKIN EXTERMINATING COMPANY, Inc. v. I. H. O'HANLON, Edward A. Rasberry, James Montgomery and Antex Exterminating Company, Inc.

No. 606

Supreme Court of North Carolina.

Feb. 3, 1956

Tally, Tally & Brewer, Fayetteville, and McKenzie, Kaler & Shulman, Atlanta, Ga., for plaintiff, appellee and plaintiff, appellant.

Rose, Sanford & Weaver and Nance & Barrington, Fayetteville, for defendant, appellee and defendants, appellants.

PARKER, Justice.

Appeal by Defendants O'Hanlon, Rasberry and Montgomery.

The defendants assign as error the order of the court in striking out the name of the Orkin Exterminating Company, Inc. as plaintiff and in substituting in lieu thereof the name of the Orkin Exterminating Company of Raleigh, Inc. as plaintiff.

Orkin Exterminating Company, Inc., and Orkin Exterminating Company of Raleigh, Inc. are different corporations, and each one has a distinct legal entity. Hogsed v. Pearlman, 213 N.C. 240, 195 S.E. 789; 18 C.J.S., Corporations, § 4.

This assignment of error presents for decision this question: Under the broad powers of amendment in the discretion of the court authorized by G.S. § 1-163, did the lower court have the power to substitute Orkin Exterminating Company of Raleigh, Inc., as plaintiff, in lieu of Orkin Exterminating Company, Inc., thereby working an entire change of parties plaintiff, and introducing a new cause of action?

This order of amendment affects a substantial right of the appellants, and is appealable. Snipes v. Estates Administration, Inc., 223 N.C. 777, 28 S.E.2d 495.

The facts here do not present a case of a misnomer or defect in the description of a party, where an amendment is permissible, as was the case in Propst v. Hughes Trucking Co., 223 N.C. 490, 27 S.E.2d 152, and Clevinger v. Grover, 212 N.C. 13, 193 S.E. 12, 124 A.L.R. 82.

In Justices of Camden County v. Sawyer, 9 N.C. 61, the Court was considering the general provisions for amendment given by the Act of 1790. That Act, which appear, in Laws of North Carolina, Iredell, page 696, reads in part: 'And the said courts respectively shall * * * and may at any time permit either of the parties to amend anything in the process or pleadings, upon such conditions as the said courts respectively shall in their discretion and by their rules prescribe.' The Court said: 'But comprehensive as the words are, they can scarcely be thought to warrant a total change of parties, except in a case where the parties were merely nominal, and the person concerned in interest had also been a party from the beginning.'

This Court said in Snipes v. Estates Administration, Inc., supra [223 N.C. 777, 28 S.E.2d 497]: 'It has been held, as stated in the case of Street v. McCabe, 203 N.C. 80, 164 S.E. 329, 330, that 'Whenever objection is made, the court has no authority to convert a pending action which cannot be maintained into a new and independent action by admitting a party who is solely interested as plaintiff. It is not permissible, except by consent, to change the character of the action by the substitution of one that is entirely different. Merrill v. Merrill, 92 N.C. 657; Clendenin v. Turner, 96 N.C. 416, 2 S.E. 51; Hall v. Southern R. Co., 146 N.C. 345, 59 S.E. 879; Bennett v. North Carolina R. Co., 159 N.C. 345, 74 S.E. 883; Reynolds v. [Loyd] Cotton Mills, 177 N.C. 412, 99 S.E. 240, 5 A.L.R. 284; Jones v. Vanstory, 200 N.C. 582, 157 S.E. 867."

The Court said in Bailey v. McPherson, 233 N.C. 231, 63 S.E.2d 559, 562: 'Ordinarily, an amendment of process and pleading may be allowed in the discretion of the court to correct a misnomer or mistake in the name of a party. [Citing authorities.] But not so where the amendment amounts to a substitution or entire change of parties.'

In Clendenin v. Turner, 96 N.C. 416, 2 S.E. 51, 53, it is said: 'The court has no authority to allow such amendments as to parties, or as to the cause of action, as make a new or substantially a new action, unless by consent of the parties. Indeed, this would not be to amend, in any proper sense, but to substitute a new action by order for and in place of a pending one, which the court cannot do.'

In Annotation 135 A.L.R. 326, where many cases from many jurisdictions are cited in support, it is said: 'As a general rule, either at common law or under amendment statutes not providing expressly that the cause of action may be changed, the right to amend pleadings by substituting a new plaintiff for the original one depends upon whether such amendment will introduce a new cause of action into the case. Where such substitution will introduce a new cause of action into the case it cannot be allowed, while if it will not introduce a new cause of action it may be permitted.' See also Elaborate Annotation 135 A.L.R. 325, et seq., entitled 'Substitution of plaintiff as proper subject for amendment of Complaint'; 39 Am.Jur., Parties, Sec. 98; 67 C.J.S., Parties, §§ 72, 85, 90, 91, pp. 1021-1022, pp. 1075-1077, p. 1089.

We have held in the following cases that one plaintiff may be substituted for another plaintiff, working an entire change of plaintiffs, by amendment, where no substantial change in the nature of the claim demanded in the complaint was involved. In Bullard v. Johnson, 65 N.C. 436, there was a substitution of the assignee as plaintiff in lieu of the assignor, original plaintiff: a decision in accord with the view generally adopted by the courts, Annotation 135 A.L.R. 340-347. In Talbert v. Becton, 111 N.C. 543, 16 S.E. 322, an action to recover land, a purchaser, after the commencement of the action, was substituted as party plaintiff on the ground that the action was based on the legal title alone. In Hill v. Norfolk Southern R. Co., 195 N.C. 605, 143 S.E. 129, a substitution of one administatrix in place of another administratrix in an action for damages for wrongful death was allowed by amendment, because it did not constitute a new cause of action. See also Justices of Camden County v. Sawyer, supra; Bray v. Creekmore, 109 N.C. 49, 13 S.E. 723; Commissioners of Madison County v. Candler, 123 N.C. 682, 31 S.E. 858; Gibbs v. Mills, 198 N.C. 417, 151 S.E. 864.

Orkin Exterminating Company, Inc., the original plaintiff, alleges in paragraph 5 of its complaint: '5. On 8 May 1945 plaintiff and defendant, O'Hanlon, entered into a written contract by which defendant O'Hanlon on that date entered into the service of plaintiff as an employee and specifically as Manager of its Raleigh, North Carolina office. On 5 September 1945 plaintiff and defendant O'Hanlon entered into a new contract of employment by which defendant O'Hanlon became Manager of plaintiff's Fayetteville, North Carolina office. * * * On 1 November 1954 plaintiff and defendant O'Hanlon entered into another contract terminating their previous contracts of employment * * *.' A contract dated 1 November 1954, and attached to the complaint as Exhibit A, contains the provisions as to competing activities copied in the remaining part of paragraph 5, and is a contract between Orkin Exterminating Company of Raleigh, Inc. and O'Hanlon, and not a contract between Orkin Exterminating Company, Inc. and O'Hanlon.

Orkin Exterminating Company, Inc. alleges a contract with the defendant Rasberry, and the contract attached to the complaint marked Exhibit B is a contract between Orkin Exterminating Company, Inc. and Rasberry. An identical factual situation exists as to the defendant Montgomery. It seems clear that the name of Orkin Exterminating Company, Inc. was not written as plaintiff by inadvertence, as plaintiff contends, instead of Orkin Exterminating Company of Raleigh, Inc., because of the allegations of the complaint as to the defendants Rasberry and Montgomery and their attached contracts.

The allegations of the complaint of the original plaintiff against O'Hanlon are neutralized by the contract attached to the complaint marked Exhibit A, which 'puts to naught the cause of action asserted' in the complaint against O'Hanlon. Hall v. Sinclair Refining Co., 242 N.C. 707, 89 S.E.2d 396. If the substitution of parties plaintiff here were permissible, the identical result would be reached as to the defendants Rasberry and Montgomery.

The substitution of parties plaintiff was an attempt to change the liability sought to be enforced against O'Hanlon from a contract alleged in the body of the complaint between O'Hanlon and the original plaintiff to an alleged contract between O'Hanlon and the substituted plaintiff, a wholly distinct and different contract, and an entirely different plaintiff, and to wipe out the conflict between the allegations of the complaint as to O'Hanlon and the contract attached thereto, marked Exhibit A. In other words, the complaint failing to state a cause of action in the original plaintiff against O'Hanlon, by substitution of parties plaintiff, an attempt is made to make the complaint state a cause of action against O'Hanlon by the substituted plaintiff, and a further cause of action by the substituted plaintiff against the corporate defendant as substantially the alter ego of O'Hanlon. See Sineath v. Katzis, 218 N.C. 740, 756, 12 S.E.2d 671; 67 C.J.S., Parties, § 72, p. 1022.

In Austin v. Hallstrom, 117 Vt. 161, 86 A.2d 549, 550, the Court said: 'The amendment asked for would change the parties and introduce a new cause of action. It would, in effect, substitute a plaintiff who could maintain trespass on the freehold for plaintiffs who cannot maintain this action. Such an amendment cannot be allowed and the court properly denied the motion to amend.'

Broad as are the provisions of G.S. § 1-163 as to amendments, and liberally as we construe them, Clevenger v. Grover, supra, they are not broad enough to permit the substitution of parties plaintiff under the facts here. This Court said in Goldston Brothers v. Newkirk, 234 N.C. 279, 67 S.E. 2d 69, 71: 'The lower court may allow or disallow such amendments as it may...