Union Ins. Soc. of Canton v. Sudduth

• Citation: 103 So. 845,212 Ala. 649
• Decision Date: 19 March 1925
• Docket Number: 6 Div. 151
• Parties: UNION INS. SOC. OF CANTON, Limited, v. SUDDUTH et al.
• Court: Supreme Court of Alabama

103 So. 845

212 Ala. 649

UNION INS. SOC. OF CANTON, Limited, v. SUDDUTH et al.

6 Div. 151

Supreme Court of Alabama

March 19, 1925

Rehearing Denied April 23, 1925

Appeal from Circuit Court, Jefferson County; C.B. Smith, Judge.

Action on fire insurance policies by E.W. Sudduth and H.L. Sudduth doing business as Sudduth Bros., against the Union Insurance Society of Canton, Limited. Judgment for plaintiffs, and defendant appeals. Reversed and remanded.

Lange &amp Simpson, of Birmingham, for appellant.

Black &amp Harris, of Birmingham, for appellees.

BOULDIN J.

The action is based upon four policies of fire insurance, issued by the defendant upon automobile trucks. A separate policy was issued upon each truck, and the claim for loss thereon is presented in separate counts. The defendant is sued as "Union Insurance Society of Canton, Limited," the name signed to the policies. The demurrer takes the point that the complaint does not show the character in which defendant is sued, nor that it is a proper legal entity to be made a party to a suit. Error is assigned on overruling this demurrer. The question is thus raised, whether the complaint, when challenged by demurrer must allege that the defendant is a corporation or a partnership.

In Cassells' Mill v. Strater Bros. Grain Co., 166 Ala. 274, 282, 51 So. 969, 972, it was said:

"It was not necessary for the plaintiff to sue the defendants as partners or as a corporation; they can be sued as individuals, or as partners, if they are partners. The complaint does not attempt to declare against them either as partners or as corporators. There is nothing in the complaint or in the evidence to show that this was necessary. The defendants are in a better position to know whether they are individuals, partnerships, or corporations, than the plaintiff. The character in which they do business would come better from them in the form of a plea, than in that of a demurrer."

From the report of this case it does not seem entirely clear how the defendants were styled in the complaint. An examination of the original record shows defendants were sued as "Cassells' Mill and T.M. Cassells." The demurrer took the point that it was not shown whether Cassells' Mill was an individual, a corporation, or a partnership. The case appears to be in point here.

Our statutes have wrought several changes in the right of action against a partnership as such, and as to pleading and burden of proof in actions against both partnerships and corporations. A partnership may be sued under its partnership name, summons be served on any partner, and the judgment binds the partnership property only. Code 1923, § 5722. This statute makes no change in the form of action by a partnership. The complaint, in such case, must set out the names of the partners. The names need not be set out in a suit against the firm, seeking no judgment against the partners, individually. Sims, Harrison & Co. v. Jacobson & Co., 51 Ala. 186.

In a suit by or against a corporation or a partnership, the existence of same need not be proven, unless denied by sworn plea. Code 1923, § 7665.

The primary purpose of naming the parties is identification--certainty as to the party suing or being sued. Stephens on Pleading (Tyler's Ed.) p. 284.

The defendant must be so informed as to give opportunity to defend, and to be able to present his appropriate defense. The judgment or decree must show against whom and whose property it operates.

The nature of the suit may render it essential to show whether it grew out of partnership or corporate relations, as in actions between partners or between stockholders and officers of a corporation. Where, as in Alabama, each is sued upon its contracts in its common name, where the plea raising the issue of its existence is the same, where the execution runs against the company property only, it is difficult to see wherein injury can result from suit in the name by which it operates and does business.

In 4 Fletcher's Cyclopedia Corporations, § 3042, it is said:

"Pleading the name of the corporation is one thing and pleading that it is a corporation is quite another. The first identifies the party; the second ascribes a legal character or capacity to it. The first is essential. The second may not be. As previously stated, it depends on whether the incorporate character of the party is essential in the cause of action, and also whether capacity to sue or defend must affirmatively appear. And even in those states which originally held that the allegation of the corporate character was necessary for one of the reasons just stated, statutes have sometimes dispensed with the necessity or relieved plaintiff from the burden of proving incorporation unless an affirmative denial was put in with such verification as might be required. *** The general rule in the majority of states is that the allegation is not a necessary one in ordinary actions on contract or tort by or against third persons, and does not inhere in the cause of action."

See Seymour v. Thomas Harrow Co., 81 Ala. 250, 252, 1 So. 45; Head v. Robinson, 191 Ala. 353, 67 So. 976.

As stated in Cassells' Mill v. Strater Bros. Grain Co., supra, the nature of the business organization under which defendant operates is within its own knowledge. It may be difficult, in these days, for the plaintiff to ascertain the facts before bringing suit. The names used in modern business often afford little suggestion as to form of organization. Dealing with companies organized under the laws of other states or foreign countries, we cannot assume the word "Limited" implies a partnership. There is therefore reason for the rule laid down in the above case that if the defendant has any defense by reason of the nature of its business organization, it should be set up by plea. We are not constrained to overrule Cassells' Mill v. Strater Bros. Grain Co., and so hold there was no error in overruling the demurrer on the ground stated.

The rule is different where the corporation or partnership is plaintiff.

The demurrer to the complaint further challenged the right of the plaintiffs, Sudduth Bros., to maintain the suit, upon the ground that it affirmatively appears the American Trust & Savings Bank is the proper party in interest to maintain the suit.

The policies are made exhibits to the several counts of the complaint. The "name of assured" therein is "L.T. & H.W. Lavender &/or Sudduth Brothers."

Under the "Incumbrance" clause, except in one policy, is named: "Sudduth Bros., as their interest may appear."

Count C avers:

"Plaintiffs further allege that at the time of said covenant of insurance being made and at the time of said fire, the plaintiffs were the owners of an insurable interest in said truck, which interest arose and was as follows:

"On, to wit, July 25, 1922, H.W. and L.T. Lavender entered into a

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