Petition for Writ of Certiorari — N. & G. Taylor Co. v. Anderson

In the Supreme Court of the United

States.

Ocroper Term, 1926.

N. & G. Taylor Co., Inc., Petitioner (Plaintiff below),

Against

John A. Anderson and C. A. Gustafson, doing business

under the name of Anderson & Gustafson, copartners,

Respondents (Defendants below).

PETITION FOR WRIT OF CERTIORARI TO RE-

VIEW THE DECISION OF THE CIRCUIT COURT

OF APPEALS FOR THE SEVENTH CIRCUIT.

To rut Honorastes, Tue Cuter Justice AND THE As-

SOCIATE JUSTICES OF THE SUPREME COURT OF THE

Unitep States:

The petition of N. & G. Taylor Company, Inc., respect-

fully shows unto this Court as follows:—

1. The Court which rendered the decision here in ques-

tion consisted of Judges Page, Alschuler and Evans, all

three of whom wrote separate opinions. The majority

opinion is by Judge Page, with a concurring opinion by

2

Judge Alschuler. Judge Evans dissented; his dissenting

opimon clearly and concisely states the principal reasons

on which petitioners rely in contending both that the

majority decision is erroneous and that the important ques-

tion involved is one on which such confusion of thought

and decision exists in the Federal courts as to call for an

authoritative decision by this Court. The majority and

dissenting opinions each rely on Federal decisions as sus-

taining their diametrically opposite conclusions.

2. The suit was brought in the Illinois District, by N. &

G. Taylor Co,, Inc., a Maryland corporation, against two

citizens of Illinois, for breach of a written contract, made

in November, 1916, to deliver to plaintiff 1,200,000 gal-

lons of fuel oil over the following eight months.

J Suit was begun in 1918, the declaration setting out

the contract im hace verbs, The tral was not held until

1924, more than six years after the cause of action ac-

crucd,

4. At the tral it developed that when the contract was

made in November, 1916, X & C. Taylor Company was

a partnership, consisting of II. N. Taylor and W. W.

Justice, Jr., that on January 31, 1917, when defendants

were in default under the contract but before its final

breach. the partners had incorporated their business. The

TWH partners had then organized the plaintiff corporation,

to which they transferred all the assets of the partnership,

including its rights under the contract, the corporation as-

sumung all its liabilities, All the stock in the corporation

was held by the two partners, the name remained the same

with the addition of the word “Inc.” and the personnel

of the organization continued unchanged. From the rec-

ord it does not appear that defendants knew, until the trial,

that plaintiff had ever been a partnership. From one of

their letters in December, 1916, it would appear that they

then beliewed it to be 2 corporation.

3

5. Section 18 of the Illinois Practice Act permits a suit

by the assignee of a chose in action but requires that the

declaration set out “how and when he acquired title.”

Smith and Hurd Revised Statutes, Illinois, 1925,

Chapter 110, Section 18, page 1954; quoted in

full in Judge Evans’ opinion.

6. The original declaration set out the written contract

in haec verba, but did not contain an averment alleging

the incorporation of the business and the assignment of,

/ the contract to the corporation. When at the trial the

above facts came out, Judge Cliffe allowed an amendment

inserting the above averments but then sustained a plea of

the Statute of Limitations, which ruling was sustained by

the majority of the Circuit Court of Appeals,

7. The basis for the majority decision is that the ques-

tion involves the construction of a local statute on which

the Federal courts are bound by the interpretation of the

State court “however otherwise my inclination would be

without the Illinois interpretation.” (Judge Alschuler’s

opinion, Ree. p. 191.) srs

& The Illinois Supreme Court has held that where a

declaration lacks any averment whose absence would render

it game. the insertion of such averment, however

technical and lacking in real information, results in the

statement of a different cause of action. This rule has been

followed by the Illis courts in cases involving the inser-

tion of averments to comply with Section 18 of the Practice

Act alleging how and when an assignee acquired title to

the chose in action sued on.

9. The Federal courts, on the other hand. recognize that

there may be both a defective and a proper statement of

the same cause of action, and that the insertion of an

allegation which did not “set up any different state of

facts as the ground of action” (M. X. & J. R. vs. Wulf,

226 U.S. §70, 576), does not state a new cause of action,

m REARS EIA Sh SES ARSE SE RENIN IER c *

4

but “merely expanded or amplified what was alleged in

support of the cause of action already asserted.” (. J“.

Cent. Ry. vs. Kinney, 260 U. S. 340, 346.)

10. The position of petitioners is that the question in-

volved is neither the construction by a State court of a

State statute nor mere matter of State practice, pleadings

or forms and modes of proceedings in civil cases. The

Hines decisions holding that the insertion of a necessary

technical averment results in the statement of a different

cause of action do not constitute a construction of Section

iS of the Ilias Act, but the pronouncement of a general

rule of law of which the applicatiem under Section 18 ts

bot an illustration Nor do such decisions involve a ques-

tion of State pleadings and practice within the meaning of

Section gig of the Kevised Statutes. The pleadings as

amended conform precisely to Indus practice, the ques:

tion being as to the effect of making them so conform,

and as to the effect of amendments, which the Federal

courts are permutted to allow liberally, under Kev. Stat,

Section 654. quite independently of any State statute

Finally, ewen if the case did involve a question of State

procedure, Secon o14 does not require a slavish adherence

by the Federal courts to every State practice decision where

such would result in gross injustice and confusion, but

permits the latitude involved in the requirement of con-

formuty “as near as may be.”

tt. Pursuant to petitioner's obligation to present reasons

why the present case is one which this Court should review

on cerheran, petitioner respectfully suggests that, entirely

apart from the manifest injustice which both the majority

amd minority recognize wouk! otherwise result, the case

involves broad principles essential to the admunistration of

justice in the Federal Courts, the confusion as to which

in the Federal Courts can be no more forcibly illustrated

than by the decisions cited in the majonty and minority

opinions and by the fact that such eminent judges rely on

Federal decisions,—some of them the same decisions,-—as

5

supporting Opposite conclusions. As said by Judge Evans

at the conclusion of his dissenting opinion (Ree. p. 199) :—

“Undoubtedly, Sec. 914 R. S. was enacted to

harmonize the holdings in state and Federal courts

when dealing with the same subject. And there is a

lack of harmony when the Federal courts of Illinois

hold that a certain amendment to a pleading does not

constitute a new cause of action and the state court

decisions of Illinois hold that it does. The Federal

court, to harmonize its decisions with the Illinois court,

would, however, be getting out of harmony with the

other Federal courts, and the Supreme Court of the

United States. This Court of Appeals would be in

the anomalous situation where it would be compelled

to hold that such an amended pleading would not state

a mew cause of action in Indiana and Wisconsin, but

would in Illinois, Greater confusion could hardly be

conceived. And worse than such confusion is a deci-

sion not only contrary to the weight of authority, but

one for which the court must apologize.”

12. A certihed copy of the transcript of record as pre-

pared in connection with the writ of error in the Circuit

Court of Appeals, together with the further proceedings

had in said Court, is presented herewith.

Wherefore, vont petitioner respectfully prays that a Writ

of Certiorari may be issued out of and under the seal of

this Honorable Court directed to the United States Circuit

Court of Appeals for the Seventh Circuit commanding the

sud Court to certify and send to this Court for its review

amd determination on a day certain to be therein designated,

a full and complete transcript of the record of all pro-

ceedings in the said Circuit Court of Appeals in the said

case entitled in that Court, X & 6. Taylor Company, Inc,

a corporation, Plaintiff in Error t John A. Anderson and

CA. Gustafson, doing business under the name of Anderson

& Gustafson, copartners, Defendants in Error, Number

3586, October Term, 1926, April Session, 1926: and that

— FFP rer kb.

*

ee.

6

the said Decree of the Circuit Court of Appeals made and

entered in said case on the Fourth day of June, 1926, may

be reversed by this Honorable Court and that your peti-

tioner may have such other or further relief or remedy

in the premises as to this Honorable Court may seem mect

and just.

And your petitioner will every pray, etc.

N_& G. Toten Company, Inc,

By

HON. TAYLOR,

Preendewt

Henxey S Dieinken, Ik,

(eee for Petitioner

ComMonwrattih or Pexnsyis ANtA}

County oF Pattapririga if

Hortinsmean No Tayiog, being duly sworn according

to law, depewes and savs that he is the President of the

Petshemer corporation; that he has read the foregoing

Petition and has knowledge of this higation, and that the

matters herrin set forth are true to the best of his know!

edge, information and belief

HON TAYLOR

Sworn to ard sebecrthed before me this oth day ot

Angust, tga

Kerns 8 Tarrs

t i Notary Paha

Cram Eup fan 21, 19

Ll hereby certify that the foregomg petition in my option

ts well founded and entithed to the favoralde consideration

of the Court, and that it 1 not Bled for the purpose of

delay

HENKY S DRINKER, Ie.

Ff C ommeed for Petetroner

}

7

ARGUMENT.

The presence of Judge Evans’ admirable opinion and his

review of the cases makes extended argument unnecessary

on the present petition.

The Illinois decisions relied on by the majority were not

based on à construction of Section 18 of the Illinois Practice

Act, but involved the pronouncement of a fundamental

principle of general law,—that the addition of any aver-

ment necessary to a complete technical cause of action

results in a different cause of action from that alleged

without such averment. The leading Illinois cases involv-

ing Uns principle were cases involving the necessity, in

personal imjury suits against mumeipalities, of an averment

of written notice of the injury by the plaintiff to the city

within à year after the accident. The Court held that

the notice was essential to the right of action and must

therefore be averred, and that where the original declaration

failed to contain it, an amendment after the limitation

peruaxl, alleging that the notice had in fact been given,

subjected the declaration to the plea of the Statute of

Linutations

Walters vs. City of Ottawa, 240 III. 259;

Prouty vs. City of Chicago, 250 IM. 222.

These decisions were followed by the Iinois Court in

cases involving amendments to conform to Section 18 of

the Practice Act.

They did not involve the construction of the Illinois

Statute nor indeed the form and mode of State procedure,

fut the fundamental question of general law as to what

constitutes a different cause of action

The reasoning of the Illinois Court is that since the

technical averment in question is essential to a statement

of a legal cause of action, and since no statement of cause

of action is valid without it, its addition must result in

the statement of a different cause of action. Such reason-

ing, as Judge Evans points out, is worthy of the

Elizabethan era, but happily, is rare in modern times,

aN FFF

*

particularly in the Federal Courts which, under Section

sa. “may at any time permit either of the parties to amend

any defect in the process or pleadings upon such conditions

as it shall, or by its rules prescribe.“

As Aid In re Griggs, 233 Fed. 243, 2460, the very pur-

pose of Section 954 was “to free the administraton of

justice in the Federal Court from all subtle, artitietal. and

technical rules and males of proceeding in any way calcu-

lated to hinder and delay the determination of causes im

those courts upon their very merits”

The Federal power is further defined by the Act of

February 26, 1914, 40 St at l. 1181.—

“On the hearing of any appeal, certioran, wot of

error, of motion for a new tral, in any case, civil or

crummal, the court shall ge judgment after an cx-

anunation of the entire record betore the court, with-

out regard to technical errors, defects, of exceptions

which do mot affect the substantial rights of the

parties.”

When a plaintiff in the Federal Court has, from the

institution of the ut, fully advised the defendant in the

pleadings as to the particular transaction on which the claim

is based, the Federal Courts do not permit defendant to

defeat a just claim merely because of the original omission

of some fact, which, while necessary to make the pleading»

conform to State practice, was totally unnecessary to advise

defendant adequately of the essential nature and basis of

the claim

The fumdamentally different view taken by this Court

as to what constitutes the allegatvon of a different cause

ef action in connection with a plea of the Statute of

Limitations, and the distinction between this question and

that of a matter of pleadings and forms of procedure is

forcihly Mustrate! by the decisions in demencan Katiroad

vs Mirch, 224 U 8 S47. ant VK & 7 Ry vs Half,

S tro

OEE EE IL d ͤ IIS EE PORE PAR — 1

7

In the first this Court held that an action under the

Federal Employers Liability Act could not be maintained

by the widow but only by the personal representative. In

the second case the Court sustained the allowance of an

amendment, after the limitation period, substituting the

personal representative for the widow who had instituted

the suit. The Court said that the amendment did not “set

up any different state of facts as the ground of action,

and therefore it related back to the beginning of the suit.”

So also in XN. . Cent. K. Ro vs. Kinney, 260 U. S. 340,

this Court, speaking through Mr. Justice Holmes, in deal-

ing with the effect of an amendment inserting the essential

averment that the carrier was engaged in interstate coim-

merece, Aid:

“The amendment ‘merely expanded or amplified

what was alleged in support of the cause of action

already asserted * * and was not affected by the

intervening lapse of time.” Seaboard Air Line Ry. vs.

Renn, 241 U. S. 200, 293. “The facts constituting

the tort were the same, whichever law gave them that

efiect.” Seaboard Aw Line Ry. vs. Koennecke, 239

U.S. 382, 354 See also St, Louis, J. F. & J. Ry.

Co vs. Swath, 243 U. S. 630. Of course an argu-

ment can be made on the other side, but when a de-

fendant has had notice from the beginning that the

plaintiff sets up and ts trying to enforce a claim against

it because of specified conduct, the reasons for the

statute of limitations do not exist, and we are of

union that a liberal rule should be applied.”

In the case at bar, the defendants were notified in writ-

ing by the plaintiff corporation on March 20, 1917, that

plaintiff intended to hold them legally responsible for the

breach of the only contract which ever existed between

the parties (Kee, pp. SK, see also letter of January

ith, Rec, h. §7).

In March, 1918, defendants were officially advised, by

the suit instituted, of plaintiff's determination to hold them

. SES DSTO REA ote: SR A POR See

ae

eee

10

hable, the declaration setting out the contract and the

breach, in six counts, with every conceivable ramification.

There is no thought in this case, but that the defendants

had notice of this very claim from the beginning. To

permit the plea of the statute to avail defendants would

be to return to the days of Lord Coke when “the funda-

mental principles of right and justice which courts were

created to uphold and enforce were esteemed of minor

importance compared to the quibbles, refinements, and

technicalities of special pleading.”

Caldwell, J., in McDonald vs. State of Nebraska, 101

Ped. 1721, 182.

This is not a mere question of State pleading, practice

or form and mode of procedure. The local requirement

as to the form of the pleadings was completely satistied

and the pleadings as amended would stand the criticism

of the most technical Hlinots practitioner

Finally, even if the question were one of following State

procedure, the Federal Courts are not bound by Section

ot4 to adhere slavishly to every technicality engrafted by

the State Courts into their forms of practice The insert;

tion by Congress into the Conformity Statute of the

words “as near as may be” gave to the Federal Courts the

power to reject, “as Congress expected they would do, an)

subordinate provissom in such state statutes which, in

their judgment, would unwisely incumber the admunistra

thom of the law, of tend to defeat the ends of justice, in

their trilarmals

Van Doren vs Penna Ro Co, 94 Fed 260, 25),

Railroad vs. Horst, 93 US aot

The history, purpose and effect of the liberalization ot

amendments in the Federal Courts are nowhere more

clearly surmmarized than in McDonald vs Nebraska, to:

Fed apt, 176-282. which was cited with approval by this

Courtin X IT Ry ws Wall, 2260S p srr. supra

This was a suit by the State Treasurer of Nebraska im

his official capacity, to which defendant demurred on the

ground that suit should have been brought in the name of

PER PEROT, ec NRT WO, OF ooeete mate —

the State. The trial Court having allowed an amendment

after the period of the statute of limitations, substituting

the name of the State as plaintiff, it was held that this was

not error, the Court stating that the amendment made no

change in the cause of action or in the real parties to the

suit. In the course of the opinion Judge Caldwell said:—

“But, independent of the Nebraska Code and the

decisions of the supreme court of that state, we would

have no difficulty in upholding the judgment of the

lower court in this case both upon principle and author-

ity. The right and duty of the federal courts to allow

amendments does not rest on state statutes only. It

is conferred on them by the judiciary act of 1789

That act was framed by the great statesman and law-

vers who had actively participated in the struggle to

establish the political independence of their country

When this object had been achieved, and the constitu-

tion adopted, they framed an act for the organization

and government of the national courts, which has re-

mained for more than a century a monument to their

great wisdom, foresight, and sense of justice. The

thirty-second section of that act was designed to free

the administration of justice in the federal courts from

all subtle, artificial, and technical rules and modes of

proceeding in any way calculated to hinder and delay

the determination of causes in those courts upon their

very merits “This act emancipated the judicial depart-

ment of the government from the shackles of artificial

am! technical rules, which had theretofore been inter-

posed to obstruct the administration of justice, as com-

pletely as the Revolution had emancipated the political

department of the government from foreign domina-

tem This was done by investing the federal courts

with plenary power to remove by amendment all such

impediments to the attainment of justice From the

first, the supreme court of the United States grasped

the object and purpose of this enactment. In referring

NS TS eR FP Nps EY SE Hep a eT Ee aR gy.

12

to this section of the judiciary act, the supreme court

of the United States, speaking by Mr. Justice Story,

sand: Pee

Ihe authority to allow such amendments is very

broadly given to the courts of the United States by the

thirty-secund section of the judiciary act of 1789, c.

20 (now section 954, Rev. St U.S.) and quite as

broadly, to say the least, as it is possessed by any other

courts in England or America, and it ts upheld upon

principles of the soundest protective policy.” Marhe-

son's Adm’'rs. vs. Grant's Adm'rs, 2 How. 263, 281,

il. Ed 261

“And Mr. Justice Miller, speaking from the Circuit

Bench, declared:

his section makes more liberal provision for the

amendment of process, pleadings, and all procedings

in the federal courts, than any of the modern codes

It ts founded on commen sense and justice, and ought

to be regarded by the circuit courts as mandatory.”

“A defendant has an undoulted right to insist that

the person entitled te recover on a cause of action set

forth in a petition shall be brought on the record as

the plaintiff in the action, to the end that he shall not

be compelled to respond twice to the same demand;

and that the one suit shall bar all others for the same

cause of action Hut it has come to be the settled law

that where, either by mistake of law or fact, a sat

us browght in the name of the wrong party, the real

rt, im interest, entitled to sue upon the cause of

action declared on, may be substituted as plaintiff, and

the defendant dene no benefit whatever from such

mistake, but the substitution of the mame of the proper

Plamnff has relation to the commencement of the cust,

and the same legal effect as if the suit had been orig

inally commenced im the mame of the proper plant

The name of the proper plaintiff may be brought on

the record at any time during the progress of the

13

cause, and may even be inserted after verdict and judg-

ment. When a wrong party has been named as plain-

tiff, the action will never be dismissed, and the proper

plaintiff required to bring a new action, when the effect

would be to let in the bar of the statute of limitations.”

* * * * * *

At the close of the opinion the Court contrasts forcibly

the practice of the law as it was in Lord Coke's day, and

as it is in the Federal Courts today :—

“There are in the history of the jurisprudence of

every country certain epochs which mark the beginning

of distinct trains of legal ideas and judicial concep-

tions of justice. There was a time in England and in

this country when the fundamental principles of right

and justice which courts were created to uphold and

enforce were esteemed of minor importance compared

to the quibbles, refinements, and technicalities of special

pleading. In that period the great fundamentals of

the law seemed little, and the trifling things great.

The Courts were not concerned with the merits of a

case, but with the mode of stating it. And they adopted

so many subtle, artificial and technical rules governing

the statement of actions and defenses—for the entire

system of special pleadings was built up by the judges

without the sanction of any written law—that in many

cases the whole contention was whether these rules had

been observed, and the merits of the case were never

reached, and frequently never thought of. Happily

for mankind, and for the law itself, that epoch is past

in England and in this country, and we now have an

epoch in which substance ts more considered than form,

in which the, justice and right of the cause determines

its decision, and not some technical error or mistake

in the pleadings. In England today the amendment

complained of in this case would be allowed quite as

a matter of course, and the suggestion that the defend-

14

ant had gained some advantage by the mistake would

not be entertained for a moment. There, as here, every

error or mistake in the pleadings which does not affect

the substantial rights of the adverse party may be

cured by amendment; and what is meant by substantial

right is a right going to the actual merits of the case.

Such a right is not acquired by a mistake or error in

pleadings which has not misled the other party to his

prejudice. And the prejudice must be actual and

irreparable, and not merely theoretical, At this day

the party who seeks to profit by an error or mistake

in pleading must be able to invoke the principle upon

which the law of estoppel is founded. And the emo-

tien of surprise, once so assiduously cultivated by law-

vers, has lost its virtue Extreme sensitiveness to that

emotion no longer avails to turn a suitor out of court,

or to delay justice.”

The other considerations which lead to the conclusion

that the majority opinion ts beth erroncous and conducive

to confusion and the defeat of justice in the Federal Courts

are so clearly pointed out in Judge Evans’ opinion as to

require no further comment

Respectfully submitted,

ROBERT M CHILDs,

WALTER EF. BEEBE,

HENRY S DRINKER, Je,

EDWIN A. LUCAS,

For Petitioner

‚—² A — e-, gige a

Supreme Court of the United States

N. & G. TAYLOR co., MC., Paint in Error,

.

JOHN A. ANDERSON and C. A. GUSTAFSON, doing

business under the name of ANDERSON & GUSTAFSON,

Copertners, Defendants in Error.

a

INDEX.

PAGE

Rerexence to Orricia, Report or Orixioxs Bevow................. 1

Srarement of Grounps on Wich tee Junispicnon or Tas Court

ws Invoxep. .. . f 7 2

STATEMENT or THE Cask 2

ReecrricaTion oF Assignep Exgous To ne Unoep.... _ usereee ©

AKGUMENT 7

TABLE OF CASES AND STATUTES CITED.

Act of Congress Feb. 26, 1919, c 48, 40 St. at L. 1181 12

Alls-Chalmers Co. rs. Chicago, 207 Ill. 444 10

American Railroad es, Birch, 224 1 8 547 18

Bowden rs Burnham, 50 Fed. 752, 754 f 5

Dittgen ze Racine Paper Goods Co., 164 Fed 85, 171 Fed. 631 30

Friedenchaen os. Renard, 247 U 8 207 22

Uhnow Practice Act II Laws 1907, 443; Smith-Hurd Ill. Rev. St. 1925,

¢. 110, See 1S, p 1954). u

Itnow Surety Co. ee. Peeler, 240 1 8 214, 222 13, 21

In re Griggs, 233 Fed. 243, 246 12

Johnson & Co os Staenglen & Muller, 85 Fed 603 30

Judiciary Act of 1789 (Act of Cong. Sept. 24, 1789, C 20 Sec. 32, 1 Stat. 91;

Vol 3U S Compiled Statutes Annotated, Sec, 1591, p. 3180)

LaBare N.Y, Sus A M KR R Co, 218 Pa 261

Mexican Cent Ry. re Duthie, 180 U 8 76

Middlesex Banking Co. os Smith, 83 Fed 133

Mun k 4 T Ry Co. „ Wulf, 226 U 8 570, 576 13, 18, 21, 24

McDonald re State of Nebraska, 101 Fed 171, 176-182 :

Norton te Larney, 45 Sup Ct. 145, 147

N.Y¥.C Ry. „ Kinney, 2600 8. 340, 346

Patillo e Allen Weet Co , 131 Fed. 680

Prouty e City of Chicago, 250 I 222

Quaker City Cab Co re Pinter, 4 Fed (2nd) 327

Railroad e Horst, a US 29)

Underwood Co. re Davies, 287 Fed 776, 770

VanDoren Pennsyivama R R. 3 Fed 260

Walters rs, City of Ottawa, 240 Ill 259

Willits & Patterson rs. Texas Refining Oo 2 Fed. (2nd) 547

ae ene eens ate ‘ A b

IN THE

Supreme Court of the United States.

No. 605. Octoser TERM, 1926.

V. & G. Taylor Co., Inc., Plaintiff in Error,

Vs.

John A, Anderson and C. 4. Gustafson, Doing

~~ Business under the name of Anderson & Gustafson,

Copartners, Defeundants in Error...

Ox Writ or CERTIORARI TO THE UNITED States

Crmevrr Covurr or APPEALS FOR THE SEVENTH

Emcebr.

BRIEF FOR PLAINTIFF IN ERROR.

—

REFERENCE TO OFFICIAL REPORT OF

OPINIONS DELIVERED BY THE

COURT BELOW.

The majority opinion by Judge Page is reported

in 14 Fed. (2nd) 353.

Judge Alschuler’s concurring opinion in 14 Fed.

(2nd) 355.

Judge Evans’ dissenting opinion in 14 Fed. (2nd)

355.

323 ee

SP RS RRS i en ta me

—

2

STATEMENT OF GROUNDS ON WHICH THE

JURISDICTION OF THIS COURT

IS INVOKED.

(1) The judgment herein reviewed was entered

January 6, 1925 (Ree. 41), and, upon review, was

affirmed June 4, 1926, by the majority of the Circuit

Court of Appeals (Rec. 186), Judge Evans dissent.

ing (Ree. 191),

(2) This suit in the District Court of the United

States for the Northern District of Illinois, Eastern

Division, was by a citizen of Maryland against a

citizen of Illinois invelving more than three thousand

dollars.

The trial Court directed a verdict for defendants

(Ree. 165) on the ground that the amendment

allowed by said Court at the trial resulted in the

statement of a new cause of action which was barred

by the statute of limitations.

(3) The jurisdiction of this Court is invoked under

Seetion 1217 of the Judicial Code, pursuant to which

this Court, on petition of plaintiffs below, on Novem

ber 23, 1926, granted certiorari to review the decision

of the Circuit Court of Appeals (47 Sup. Ct. Rep.

237).

STATEMENT OF THE CASE.

In the Fall of 1916, XN. 4 G. Taylor Company, then

a partnership composed of Hollinshead N. Taylor

and William W. Justice, was engaged in the manu

eee ; CC BEINN ERE A RYTON RTE eT wn — |

—

3

facture of tin plate, with their principal office in

Philadelphia, and their plant at Cumberland, Mary-

land (Rec. 107).

In November, 1916, the partnership, N. & G. Taylor

Company, entered into a contract to buy from defend-

ants their eight months’ requirements of fuel oil,

estimated at 1,200,000 gallons, at 514¢ per gallon,

deliverable at plaintiffs’ Maryland plant in fairly

equal monthly quantities (Rec. 47).

No sooner was the contract made than a phenomenal

rise began, both in the market price of oil, and in

the rental price payable for tank cars to haul the

oil from the refineries to plaintiffs’ plant (Rec. 160,

143; 162-4).

Defendants at the outset fell behind in their deliv.

eries, and by March 20th had delivered but 40,000

gallons—less than 6% of the quota to that date. This

defendants contended was due to car shortage, while

plaintiffs contended that it was due to defendants’

desire to get the higher price available by delivery

to other parties at the current market price, and to

avoid the payment of the current premiums charged

for tank cars.

The trial Judge having directed a verdict for

defendants, for the purposes of the present writ of

error defendants’ breach of the contract must be

regarded as Wholly unjustified, and as attributable

to their desire to reap the large profits available by

the sale of plaintiffs’ oi) to others at enhanced prices,

for delivery at nearby points, for which tank cars

were more readily available.

1 n e e ee C g TLE, reef g Hef rg

4

Although defendants fell behind in their deliveries

from the beginning, the actual legal breach of contract

by them did not occur ‘until March, 191 1917. Between

November, 1916, and March, 1917, defendants from

time to time shipped small quantities of oil under

the contract and by their letters to plaintiffs kept

holding out hope of a better performance in the

future. Plaintiffs continually urged more prompt

deliveries, until on March 20th, when, their patience

exhausted, they wrote defendants (p. 59) that in

view of defendants’ failure to perform their contract,

plaintiffs would buy ‘oii elsewhere; and Bold defend.

ants for the difference in price.

Meanwhile, as of January 31, 1917, the two partners

incorporated their ‘business by sect securing a Marvland

charter. Messrs. Taylor and Justice acquiring every

share of the stock of the corporation, which took over

all the partnership assets and assumed all its obliga

tions (Ree. 138, 150-8).

No change whatever occurred in the business or in

the personnel of those in charge of it (Ree. 150).

The name of N. 4 C. Taylor Company, under which

the business had been carried on for more than 100

years, was not changed, the word ** Incorporated”

being merely added to it (Ree, 107).

There is nothing in the record from which it could

be inferred that defendants knew, prior to the breach

of contract by them in March, 1917, whether plain.

tiffs were a partnership or a corporation.

After February 1, 1917, and until the final breach

—

5

on March 20th, the e parties continued their correspond-

ence, plaintiffs v writing on the letter heads of the

corporation and instead of signing as formerly 'N. &

G. Taylor Company,”’ the letters now being signed

N. & G. Taytor Co.,

II. N. Taylor,

President.“

The record shows at least three letters, dated

February 15, February 23 and March 1, 1917. so

signed (Rec. 147-149). The third of these letters so

signed was specifically acknowledged by defendants

in their letter of March 5, 1917 (Ree. 146).

These Jeffers all refer to the oil shipments being

made and in prospect under the existing contract

between the parties.

Suit was brought March 7, 1918, by N. & G. Taylor

Company, Inc.,“ against defendants, for breach of

this contract, the original declaration setting out, én

hace verba, the written contract. dated November 1,

1916, between N. & G. Taylor Company,“ and

Anderson & Gustafson (Ree. 7-9). The original

declaration having alleged that plaintiff was a Penn-

sylvania corporation, it was amended May 6, 1924,

without ee bx changing the word **Pennsyl

*

vunin Maryland.“

3 to a congested docket and to a postponement

requested by defendants, the trial was not held until

May 12, 1924, more than six years after the cause of

action accrued. It then developed from the testi-

mony that the contract was originally made with

m eee eee RR een ee xd eg

6

the partnership and assumed, prior to its final breach,

by the corporation.

Section 18 of the Illinois Practice Act (hereafter

quoted) permits the assignee of a chose in action to

sue in his own name, but requires him to allege in

his declaration that he is the actual bona fide owner

thereof, and to set forth how and when he acquired

title.

In order to comply with this provision and to avoid

a variance, plaintiffs at the trial asked leave to amend

their declaration by declaring on the identical con.

tract as made by the partnership and assumed by the

corporation.

Such amendment was actually allowed by the trial

Judge over defendants’ objection (Ree, 40),

The Court then directed a verdict for defendants

on the latter's pleas of the Statute of Limitations

(Ree. 165).

The judgment of the lower Court was affirmed

June 4, 1926, by the Cireuit Court of Appeals for

the Seventh Cirenit. Judge Page wrote the majority

opinion, Judge Alschuler a concurring opinion.

Judge Evans filed a dissenting opinion.

Thereafter this Court allowed a writ of certiorari

(Ree, 206).

SPECIFICATION OF ASSIGNED ERRORS TO

BE URGED.

Plaintiff in error contends that the fundamental

error of the trial Court, affirmed by the majority of

7

the Circuit Court of Appeals, consisted in the con-

clusion that the amendment stating when and how

the plaintiff corporation acquired title to the cause

of action sued on, resulted in the statement of a new

or different cause of action after the expiration of

the period of limitation.

ARGUMENT.

SUMMARY.

The Illinois Practice Act permits the assignee of a

chose in action to sue in his own name, but requires

him to aver in his declaration how and when he ge

quired title.

An amendment to a declaration alleging that the

plaintiff corporation succeeded to the rights of a

partnership, after the execution of the written con-

tract sued on, but before its final breach by defend-

ants, does not state a new or different cause of action,

but merely amplifies and expands the original aver-

ments,

The original declaration having set out, in hace

verba, the written contract sued on, and the name,

organization and personnel of the partnership re-

maining substantially identical after its incorpora-

tion by the two partners, who became the sole stock

holders, the effect of the amendment was merely to

make the pleadings comply with local practice, and

PAP eee „

when allowed the amendment related back to the

filing of the original declaration.

The Federal Courts are not bound slavishly to

follow State decisions relative to the allowance, scope

and effect of amendments to pleadings, this being

specifically covered by Section 954 of the Revised

Statutes.

The Conformity Statute does not require the Fed.

eral Courts to follow, against their better judgment,

decisions of the Illinois Court to the effect that the

insertion of any averment necessary to render a plead.

ing non-demurrable results in a new cause of action.

Such decisions involve but an inference from the

State Practice Statutes, by which the Federal Courts

are not bound.

In the Federal Courts, the test as to whether an

amendment states a new cause of action is whether

it sets up a different state of facts as the ground

eof ability. Hence, an amendment merely specify

ing the capacity in which the plaintiff sues, or ex

panding and amplifying the original averments, does

net result in the statement of a new cause of action.

When in a suit in the Federal Court a defendant

has had notice from the beginning that the plaintiff

sets up and is trying to enforce a claim against

him beeause of specified conduct, an amendment,

necessary to make the pleading conform to State

Practice, although unnecessary to advise defendant

adequately of the essential nature and basis of the

claim, may be allowed after the Limitation period.

-_

ATEN e

—

9

PLAINTIFFS HAVE FULLY COMPLIED WITH THE REQUIRE-

MENTS OF ILLINOIS PRACTICE.

Section 18 of the Illinois Practice Act (Ill. Laws

1907, 443; Smith-Hurd III. Rev. St. 1925 ¢ 110, See-

tion 18. p. 1954) provides as follows:

18. Suit on chose in action. Suit by subrogee.

The assignee and equitable and bona fide owner

of any chose in action not negotiable, heretofore

or hereafter assigned, may sue thereon in his

own name, and he shall in his pleading on oath,

or by his affidavit, where pleading is not re-

quired, allege that he is the actual bona fide

owner thereof, and set forth how and when he

acquired title; * .“

By the amendment allowed by the Trial Court,

plaintiff has fully complied with the requirements of

this provision.

Admittedly plaintiff's declaration, as amended,

fully satisfied the requirements of the local practice,

as construed by the Illinois Courts. The most techni-

eal Illinois practitioner could now find no fault

with it.

The Illinois decisions which the majority of the

Court below felt bound to follow, “however otherwise

my inclination would be without the Illinois inter-

pretation“ (Judge Alschuler’s opinion, R. 191) did

not involve the construction of this Section 18 of the

Ilinois Practice Act, which is too clear for construc-

tion. These decisions did not, by construing a State

statute, prescribe the form or mode of State pro-

cedure, but dealt with the question as to what con-

. n TT ² . ·—

10

stitutes a different cause of action,—a matter of gen-

eral fundamental law,—and with the effect of amend-

ments,—a matter regulated by the Federal Statutes.

Prior to any question of the kind involving Section

18, the Illinois Supreme Court had held, in several

eases, that where a declaration lacks any averment

the absence of which would render it demurrable, the

insertion of such averment, however technical and

lacking in real information, results in the statement

of a different cause of action.

These decisions were not based on Section 18 of

the Illinois Practice Act. They were cases involving

the necessity, in personal injury suits against munici—

palities, of an averment of written notice of the

injury by the plaintiff to the city within a year after

the accident. The Court held that the notice was

essential to the right of action and must therefore

be averred, and that where the original declaration

failed to contain it, an amendment after the limita

tion period, alleging that the notice had in fact been

given, subjected the declaration to the plea of the

Statute of Limitations.

Walters vs. City of Ottawa, 240 III. 259;

Prouty vs. City of Chicago, 250 III. 222.

Having so held, it followed that where an original

declaration lacked the averment required by Section

18 of the Practice Act, the addition of such averinent

by amendment resulted in a new cause of action.

Allis Chalmers Co. vs. Chicago, 297 III. 444.

11

This latter decision did not involve the construc-

tion of Section 18 of the Practice Act. It merely

applied to a case involving an assigned chose in

action the general principle of law pronounced in the

earlier cases,—that the addition of any averment

necessary to a complete technical cause of action re-

sults in a different cause of action from that alleged

without such averment.

At best it was, as Judge Evans clearly shows in

his dissenting opinion, but an inference from the pro-

cedure statute, which inference the Federal Courts

ure not bound to follow against their better judg-

ment, in view of the specific Federal Statutes pre-

scribing liberality in the allowance of amendments

and the decisions of this Court defining the effect

of amendments of this nature.

The question in the case at bar is not one rela-

tive to the form of the pleadings, which in every

respect conform to the pattern prescribed by Section

18, but as to the effect of an amendment, which is

governed, not by State decisions, but by Section 954

of the Revised Statutes, as construed by this Court.

The reasoning of the Illinois Court is that sinc

the technical averment in question is essential to a

statement of a legal cause of action, and since no

statement of cause of action is valid without it, its

addition must result in the statement of a different

cause of action. Such reasoning, as Judge Evans

points out, is worthy of the Elizabethan era, but

happily, is rare in modern times, particularly in the

ee FEEL LES NE TEI

12

Federal Courts, which, under Section 954, may at

any time permit either of the parties to amend any

defect in the process or pleadings upon such condi

tions as it shall, or by its rules, preseribe.““

As said In re Griggs, 233 Fed. 243, 246, the very

purpose of Section 954 was to free the administra.

tion of justice in the Federal Court from all subtle,

artificial, and technical rules and modes of proceed.

ing in any way calculated to hinder and delay the

determination of causes in those courts upon their

very merits,”

The Federal power is further defined by the Act

of Congress February 26, 1919, c. 48, 40 St. at J.

1181 :—

“On the hearing of any appeal, certiorari,

writ of error, or motion for a new trial, in any

ease, civil or criminal, the court shall give judg

ment after an examination of the entire record

before the court, without regard to technical

errors, defects, or exceptions which do not affect

the substantial rights of the parties.“

FPevenat Counts ane Fot Bot Nh py State Decisions

Re.ative to THE ALLOWANCE AND EFFECT OF

AMENDMENTS,

While the Illinois Courts thus apparently hold

that the insertion of any essential averment results

in n “new cause of action.“ the Federal courts, on

the other hand, recognize that there may be both a

defective and a proper statement of the same cause

of action, and that the insertion of an allegation

C. ¹ w SAN a HEF IRI TIA ANE eer ere ARAL SE

13

which did not “set up any different state of facts

as the ground of action’? (M. K. & T. R. vs. Wulf,

226 U. S. 570, 576), does not state a new cause of

action, but merely expanded or amplified what was

alleged in support of the cause of action already

asserted’’ (N. y. Cent. Ry. vs. Kinney, 260 U. S.

340, 346).

The power of the Courts of the United States to

allow amendments, and the liberal practice adopted

\ by them in exercising this power, do not depend on

State Statutes or on State Practice, but are based

on the paramount authority derived from the Federal

Statutes :—

“The right of the federal court to allow amend-

ments under Section 954 of the Revised Statutes

of the United States is well settled. The right

\ exists quite independently of any state statute

and may be exercised at any stage of the cause,

even after submission, and extends to the verdict

and judgment * * *,""

Bowden vs. Burnham, 59 Fed. 752. 754

(C. C, A. 8th Cir.);

Mexican Cent. Ry. vs. Duthie, 189 U. S. 76:

Illinois Surety Co. vs. Peeler, 240 U. 8.

214. 222

——2 2

Norton s. Larney, 45 Sup. Ct. 145. 147.

Amendments, when allowed, relate back to the

date of the filing of the pleading which they amend.

Missouri K. & T. R. Co. vs. Wulf, 226 U. 8.

570, S76:

Underwood Co. vs. Davies, 287 Fed. 776, 779

(C. C. A. Sth Cir.).

J ͤ bbb 55 :

14

Chapter 20 of the Judiciary Act of 1789 (later

Section 954 of the Revised Statutes) provides as

follows (Act of Cong. Sept. 24, 1789, C. 20, 632,

1 Stat. 91; Vol. 3 U. S. Compiled Statutes Annotated,

Section 1591, p. 3180) :—

No summons, writ, declaration, return, pro-

cess, judgment, or other proceedings in civil

causes, in any court of the United States, shall

be abated, arrested, qua hed, or reversed for

any defect or want of form; but such court shall

proceed and give judgment according as the

right of the cause and matter in law shall appear

to it, without regarding any such defect, or want

of form, except those which, in cases of de

murrer, the party demurring specially sets down,

together with his demurrer, as the cause thereof;

and such court shall amend every such defect

and want of form, other than those which the

party demurring so expresses; and may at any

time permit ether of the parties to amend any

defect in the process or pleadings, upon such

conditions as it shall, in its diseretion and b

its rules, preseribe.””

Tur Present Catse or Action Accent, Dinect te

THY PLAINTIFE ConPporRATION,

This is not a ease (like the [hinotis decisions relied

on by the other side in the Court below) where one

party to a contract, after a breach by the other,

has assigned his completed cause of action to a

distinet third party.

15

In the case at bar, the corporation stepped into

the shoes of the partnership while the contract was

betug performed and before the breach was complete.

The testimony in the present record was ample to

justify the jury in finding that, after the formation

of the corporation, it took the place of partnership

in connection with the performance of the contract

with defendants, and that, before the breach, con-

tractual relations existed directly between the cor-

poration and defendants.

The correspondence leading up to the breach was

carried on between defendants and the corporation

and the final breach, when it occurred in March,

was with the corporation.

While defendants fell. behind in their agreed

deliveries prior to the reorganization, this delay was

apparently acquiesced in by plaintiffs until March

20, 1917. when, plaintiffs refused further to condone

defendants’ scanty deliveries and wrote defendants

(R. 59) that in view of defendants’ failure to keep

up the agreed schedule of deliveries, plaintiffs would

buy this oil elsewhere and hold defendants for the

difference in price. It was not until March 20, 1917,

therefore, that this present cause of action accrued,

and it then accrued to the corporation, which had

taken over the business of the partnership almost

two months before,

The letters from plaintiff in February and March,

prior to the breach, but after the incorporation,

16

acknowledged by defendants, written on the letter-

heads of the corporation, were signed

N. & G. Taxon Co.,

II. N. Tayvor,

President.’

In the case at bar, there was no assignment to a

distinct third party. The tuo partners merely

changed the form of their organization. Even this

change was complete before the final breach by

defendants, which breach was with the plaintiff

corporation,

In such a case, an amendment merely setting out

the history of the transaction did not in any way

change the cause of action sued on, much less intro

duce a new cause of action, but merely, in order

to comply with the State Practice and to prevent a

‘It is to be noted that even mm December, %%, before the

incorporation was complete, defendants evidently did not regard

plaintiff as a partnership, since in their letter of December 18h

(Ree. 120), addressed to plaintiff. they say

“Replying to your letter of the igth mer, will say that we

have now rated the contract unf your company which had

been misplaced”

If defendants had thought plaintiff a partnership consesting of

bat two partners, they would naturally have sant “the contract

with your hem

In this connection, reference i ale made to defendants’ plea

to the orginal declaration, which alleged the contract as having

been made by the corporation To the defendants in their plea

say (Ree po a) “and the defendants further allege that shortly

after the making of the alleged contract mentioned im the first

and fifth counts” ete

Here, while not admitting that the transaction in question was

a contract, defendants distinctly adaut that the transaction took

place between them and the corporation

Wann fs 1

N N *

Were e

17

variance between the pleadings and the proof,

amplified the averments in the cause of action insti-

tuted long before the statutory period expired.

If the declaration, which set out in full the con-

tract sued on, had alleged that it had been made

on plaintiff's behalf by its President, this allegation

would not be supported by proof that the Secretary

had been the officer who acted for it, and an amend-

ment would be necessary to prevent a variance, but

such an amendment would obviously not introduce

a new cause of action, the suit still being on the

sane contract, and would, of course, be allowed after

the Limitation period. As in the case at bar, it

would merely describe more accurately how the cause

of action originally sued on arose.

It is such amendments which the Federal Courts

are most liberal in allowing.

When a defendant in the Federal Court has, from

the institution of the suit, been fully advised by

the pleadings as to the particular transaction on

which the claim is based, the Federal Courts do not

permit him to defeat a just claim merely because

of the original omission of some fact, which, while

necessary to a complete technical cause of action’

or required to make the pleadings conform to State

For example, an absolute essential to _a cause of action i the

Federal Courts, no Federal question beine involved, is the requisite

diversity of citizenship, yet such an averment may be inserted by

amendment after the statutory period

Bison Bank zu Billington, 228 Fed. 116:

B X O. K K Co. ta. Mclaughlin, 73 Fed. sig;

Carnegie vs. Hurlburt, 70 Fed. 209:

Bowden t Burnham, Sy Fed. 752

TS PPP eee ee eee

18

practice, was totally unnecessary to advise defendant

adequately of the essential nature and basis of the

claim.

As administered by the Federal Courts in the

year 1925, the practice of the law is no longer a

game between opposing lawyers, but an instrument

designed to do substantial justice between the parties.

Tue Test in tur Fepernat. CouRTS as TO WHEN AN

AMENDMENT [INTRODUCES A New Cause or Action,

The fundamentally different view taken by this

Court as to what constitutes the allegation of a

different cause of action in connection with a plea

of the Statute of Limitations, and the distinction

between this question and that of a matter of plead.

ings and forms of procedure is forcibly illustrated

by contrasting the decisions in American Railroad

vx. Birch, 224 U.S. 57, and in M. X. & T. Ry. vs.

Walf, 226 K. S. 570.

In the first, this Court held that an action under

the Federal Employers’ Liability Act could not be

maintained by the widow, but only by the personal

representative. In the second case, the Court sus

tained the allowance of an amendment, after the

limitation pened, substituting the personal repre

sentative for the widow who had instituted the suit.

This latter case (Ry. vs. Wulf) was an action

„riginally brought by the plaintiff individually under

the laws of Kansas for the death of her son, through

defendant's neghgence while in its employ. Subse-

quently, after the running of the two years limitation

——

19

period prescribed by the Employers’ Liability Act,

plaintiff was allowed to amend so as to sue under

the Federal Statute, and as the personal representa-

tive of the deceased. This Court held that in spite

of the fact that the amendment for the first time

set_up the Federal Statute as a basis for her recovery,

and for the first time based her claim as administratix

instead of in her own right as mother of the deceased,

nevertheless the amendment did not state a new or

different cause of action, since the original declara-

tion had set out all the basic facts on which plaintiff

relied for her recovery.

In the course of the opinion Justice Pitney said

(p. 575) :—

“The argument for reversal rests wholly on

the mode of procedure followed in the Cireuit

Court. It is contended that the plaintiff's

original petition failed to state a cause of action,

because she sued in her individual capacity and

based her right of recovery upon the Kansas

statute, whereas her action could legally rest

only upon the Federal Employers’ Liability Act

of 1908, which requires the action to be brought

in the name of the personal representative of

the deceased; that the plaintiff's amended peti-

tion, in which for the first time she set up a

right to sue as administratrix, alleged an entirely

new and distinct cause of action, and that such

an amendment could not lawfully be allowed so

as to relate back to the commencement of the

action, inasmuch as the plaintiff's cause of action

was barred by the limitation of two vears before

she undertook to sue as administratrix.

—_— FFF Co BA BE ABI LIN ER RE ONE NY

It seems to us, however, that, aside from the

capacity in which the plaintiff assumed to bring

her action, there is no substantial difference

between the original and amended petitions. In

_ the Tormer, as in the latter, it was sufficiently

averred that the deceased came to his death

through injuries suffered while he was employed

by the defendant railroad company in interstate

commerce; that his death resulted from the

negligence of the company and by reason of

defects in one of its locomotive engines due to

its negligence; and that since the deceased died

unmarned and childless, the plaintiff, as his

sole surviving parent, was the sole beneficiary

of the action. It is true the original petition

i eee of action under the laws of

Kansas, without making reference to the act of

Congress. But the court was presumed to be

cognizant of the enactment of the Employers’

Ciahitity Act, and to know that with respect. to

the responsibility of interstate carriers by rail

road to their employes injured in such commerce

after its enactment, it had the effect of super,

seding state laws upon the subject. Second

Kimplovers 7 Cases, 223 UL S. 1. 53.

Therefore the pleader was not required to refer

tu the Federal Act, and the reference actually

‘made to the Kansas statute no more vitiated

f |) the pleading than a reference to any other

repealed statute would have done.

It is true that under the Federal Statute the

plaintiff could net, although sole beneficiary,

maintain the action except as personal represen

tative. So it was held in Amertean Railroad

Co. vs Bireh, 224 . S. 57. But in that case

W Hs HD Be Neeber TER Tasos —

21

there was no offer to amend by joming or sub.

stifuting the personal ative, and this

court, While reversing the judgment, did so with

out prejudice to such rights as the personal repre-

sentatives might have. The decision left un-

touched the question of the propgiety of such

an amendment as_w ied for and allowed

in the case before us; an amendment that, with

out in any way modifying or enlarging the facts

upon which the action was based, in effect merely

indicated the capacity in which the plaintiff was

to prosecute the action. The amendment was

clearly within Section 954, Rev. Stat.

Nor do we think it was equivalent to the

commencement of a new action, so as to render

it subject to the two years’ limitation prescribed

by Section 6 of the Employers’ Liability Act.

The change was in form rather than in substance.

Stewart vs. Baltimore & Ohio Railroad Co., 168

U. S. 445. It introduced no new oF “different

S of action, nor did it set up any different

state of facts as the ground of action, and there-

fore it related back to the beginning of the suit.“

llinois Surety Company es. Peeler, 240 . S. 214,

222. was a suit on a contractor's bond. The original

complaint failed to allege the completion and final

settlement of the contract between the contractor and

the United States, which, under the statute, was a

pre-requisite to recovery, This Court approved the

allowance, after the limitation period, of an amend.

ment inserting such an allegation, citing Section 954

and Missours K. 4 T. Ry. vs. Wulf. 226 l. S. 570.

Clearly such an allegation was as essential to the

* . d A ] A ˙ ⁰¹ © PET) ot re

statement of a valid cause of action as was the

allegation of a compliance with Section 18 of the

Illinois Practice Act in the Illinois cases relied on

by defendants in error, and clearly also, if the Peeler

ease had been in the Illinois State Courts, it would

have been decided the other way.

Similarly, in Friederichsen vs. Renard, 247 U. 8.

207, this Court, in discussing a transfer, by amend

ment filed after the Statute of Limitations, of a suit

in equity for annulment of a contract, to one at law

for damayes, said that to refuse this right would be

“to subordinate substance to form of procedure;

. allegations of fact are precisely the same

in substance, and almost the same in form, as they

were in the original bill and therefore looking to sub-

ance and realities, they cannot be regarded as stat-

mq anew cause of action.”” (b. 213.)

Seo also in N. F. Cent. N. N. vs. Kinney, 260 U.S.

MO, this Court, speaking through Mr. Justice Holmes,

in dealing with the effect of an amendment inserting

the essential averment that the carrier was engaged

in interstate commerce, id:

The amendment ‘merely expanded or ampli

fled what was alleged in support of the cause of

action already asserted © ° and was net

affected by the intervening lapse of time.“ Fen-

heard Air Line Ry. vs. Renn, 241 l. S. 290, 293.

The facts constituting the tort were the same.

whichever law gave them that effect.’ Seaboard

Air Line Ry. vs. Koennecke, 239 l. S. 352. 354.

See also St. Louis, S. F. d T. Ry. Co. va. Smith,

243 . S. KW. Of course an argument can be

er

23

made on the other side, but when a defendani

has had notice from the beginning that the plain-

tiff sets up and is trying to enforce a claim against

it because of specified conduct, the reasons for the

statute of limitations do not exist, and we are of

opinion that a liberal rule should be applied.“

The decisions of this Court thus make it clear that

the assertion by suit of the cause of action, effective

to toll the Statute, consists in a clear statement of

the basic facts on which the claim is founded, and

not in a mere statement or elaboration of the history

of the controversy or of the precise capacity in which

the plaintiff sues.

In the case at bar, the defendants were notified by

the plaintiff corporation on March 20, 1917, that plain-

tiff intended to hold them legally responsible for

the breach of the only contract which ever existed

between the parties (Rec. p. 58-9; see also letter of

January I8th, Ree. p. 57).

In March. 1918, defendants were officially advised,

by the suit instituted, of plaintiff's determination to

hold them lable, the declaration setting out the con

tract and the breach, in six counts, with every con-

ceivable ramification.

There is no thought in this case, but that the de-

fendants had notice of this very claim from the

beginning. To permit the plea of the statute to avail

defendants would be to return to the days of Lord

Coke when the fundamental principles of right and

justice which courts were created to uphold and en-

foree were esteemed of minor importance compared

—

24

to the quibbles, refinements, and technicalities of

special pleading.”

Caldwell, J., in McDonald vs. State of Nebraska,

101 Fed. 171, 182.

The history, purpose and effect of the liberalization

of amendments in the Federal Courts are nowhere

more clearly summarized than in McDonald ys.

Nebraska, 101 Fed. 171, 176-182, which was cited

with approval by this Court in M. K. d. T. Ry. vs.

Wulf, 226 U.S. p. 577. supra.

This was a suit by the State Treasurer of Nebraska

in his official capacity, to which defendant demurred

on the ground that suit should have been brought in

the name of the State. The trial Court having

allowed an amendment after the period of the statute

of limitations, substituting the name of the State

as plaintiff, it was held that this was not error, the

Court stating that the amendment made no change

in the cause of action or in the real parties ta the

suit. In the course of the opinion Judge Caldwe!!

said :—

But. independent of the Nebraska Code and

the decisions of the supreme court of that state.

we would have no difficulty in upholding the

judgment of the lower court in this case both

upon principle and authority. The richt and

duty of the federal courts to allow amendment»

does not rest on state statutes only. It is con

ferred on them by the judiciary act of 1789.

That act was framed by the creat statesmen and

lawyers who had actively participated in the

SEI Oh OI OBL LT A RNPTS lw re we CIO LR PR SE TD

eo

25

struggle to establish the political independence

of their country. When this object had been

achieved, and the constitution adopted, they

framed an act for the organization and govern-

ment of the national courts, which has remained

for more than a century a monument to their

great wisdom, foresight, and sense of justice.

The thirty-second section of that act was designed

to free the administration of justice in the fed-

eral courts from all subtle, artificial, and technical

rules and modes of proceeding in any way cal-

culated to hinder and delay the determination

of causes in those courts upon their very merits.

This act emancipated the judicial department

of the government from the shackles of artificial

and technical rules, which had theretofore been

interposed to obstruct the administration of

justice, as completely as the Revolution had

emancipated the political department of the gov-

ernment from foreign domination. This was done

by investing the federal courts with plenary

power to remove by amendment all such impedi-

ments to the attainment of justice. From the

first, the supreme court of the United States

grasped the object and purpose of this enact-

ment. In referring to this section of the judiciary

act, the supreme court of the United States,

speaking by Mr. Justice Story, said:

he authority to allow such amendments is

very broadly given to the courts of the United

States by the thirty-second section of the judici-

ary act of 1789, c. 20 (now section 954, Rev. St.

U. S.) and quite as broadly, to say the least,

as it is possessed by any other courts in England

or America, and it is upheld upon principles of

_ _— Brees ms rr r dne EC aur

a, ; x rere z : ° 5

the soundest protective policy.’ Matheson’s

Adm’rs. vs. Grant’s Adm’rs., 2 Low. 263, 281,

11 L. Ed. 261.

And Mr. Justice Miller, speaking from the

Circuit Bench, declared:

This section makes more liberal provision

for the amendment of process, pleadings, and

all proceedings in the federal courts, than any

of the modern codes. It is founded on common

sense and justice, and ought to be regarded by

the circuit courts as mandatory.’

* . * * * 5

»A defendant has an undoubted right to insist

that the person entitled to recover on a cause of

action set forth in a petition shall be brought

on the record as the plaintiff in the action, to

the end that he shall not be compelled to re

spond twice to the same demand; and that the

one suit shall bar all others for the same cause

of action. But it has come to be the settled law

that where, either by mistake of law or fact, a

suit is brought in the name of a wrong party,

the real party in interest, entitled to sue upon

the cause of action declared on, may be sub-

stituted as plaintiff, and the defendant derives

no benefit whatever from such mistake; but the

substitution of the name of the proper plaintiff

has relation to the commencement of the suit,

and the same legal effect aa if the suit had been

originally commenced in the name of the proper

plantiff. The name of the proper plaintiff may

be brought on the record at any time during

the progress of the cause, and may even be in

serted after verdict and judgment. When a

wrong party has been named as plaintiff, the

27

action will never be dismissed, and the proper

plaintiff required to bring a new action, when

the effect would be to let in the bar of the statute

of limitations.“

* * * * * * *

At the close of the opinion the Court contrasts

forcibly the practice of the law as it was in Lord

Coke's day, and as it is in the Federal Courts today:

There are in the history of the jurisprudence

of every country certain epochs which mark the

beginning of distinct trains of legal ideas and

judicial conceptions of justice. There was a time

in England and in this country when the funda-

mental principles of right and justice which

courts were created to uphold and enforce were

esteemed of minor importance compared to the

quibbles, refinements, and technicalities of special

pleading. In that period the great fundamentals

of the law scemed little, and the trifling things

great. The Courts were not concerned with the

merits of a case, but with the mode of stating it.

And they adopted so many subtle, artificial and

technical rules governing the statement of actions

and defenses—for the entire system of special

pleading was built up by the judges without the

sanction of any written law—that in many cases

the whole contention was whether these rules had

been observed, and the merits of the case were

never reached, and frequently never thought of.

Happily for mankind, and for the law itself, that

epoch is past in England and in this country, and

we now have an epoch in which substance is more

considered than form, in which the justice and

right of the cause determines its decision, and

—— CCC 0 SAORI POY RB ROUGE EERE 8 Ra

not some technical error or mistake in the plead-

ings. In England today the amendment com-

plained of in this case would be allowed quite

as a matter of course, and the suggestion that

the defendant had gained some advantage by the

mistake would not be entertained for a moment.

There, as here, every error or mistake in the

pleadings which does not affect the substantial

rights of the adverse party may be cured by

amendment; and what ts meant by substantial

right is a right going to the actual merits of the

case. Such a right is not acquired by a mistake

or error in pleadings which has not misled the

other party to his prejudice. And the prejudice

must be actual and irreparable, and not merely

theoretical. At this day the party who seeks to

profit by an error or mistake in pleading must

be able to invoke the principle upon which the

law of estoppel is founded. And the emotion of

surprise, once so assiduously cultivated by law

yers, has lost its virtue. Extreme sensitiveness

to that emotion no longer avails to turn a suitor

*

out of court, or to delay justice.“

The Federal decisions are full of instances in which

the Courts of the United States, acting pursuant to the

broad powers and discretion conferred by Section 954,

have refused to permit a party to defeat a just claim

by taking advantage of a mere error in pleading by

the other side, not affecting the substantial rights of

the parties and not discovered until after the Limita

tion period had expired. A recent decision by the

Cireuit Court of Appeals for the Fifth Circuit is

directly in point.

777FFCCC C0 TTT. — Se

Willits & Patterson vs. Texas Refining Comp,

2 Fed. (2nd) 547, was a suit by Willits & Patterson,

a corporation, brought August 29, 1921, for breach of

a contract made in July, 1919. In May, 1924, after

the four years Limitation period had expired, plain-

tiffs asked leave to amend, alleging that Willits had

made the contract individually and that it had after-

wards been assumed by the plaintiff corporation which

he had incorporated after making the contract, to

take over the business theretofore conducted by him

individually under the same name, ‘Villits & Pat-

terson.

The Circuit Court of Appeals (Walker and Bryan,

(. J. and Dawkins, D. J.) held that the trial Court

had erred in sustaining exceptions to the allowance

of the amendment, saying (p. 549) :—

In our opinion the only effect of the amend-

ment in the present case was to permit the intro—

duction of evidence which otherwise might have

— objectionable under the petition as it stood.

Like the original, it still asserts that the claim

is the property of the corporation, and that it

grows out of the same contracts and circum-

stances which were alleged in the original peti-

tion. In other words, the claim or cause of action

is identical. We do not think that petitioner is

required to allege all of his evidence, and the

amendment in this case does nothing more than

to set forth the history of the entire matter, in-

cluding the nature of the title under which the

plaintiff now owns and secks to recover of the

defendant. A judgment in this case will be con-

30

clusive, both as to Willits and the corporation.

The petition fully advised the defendant of the

nature and circumstances of the demand, and,

whether it be the property of Willits or the cor-

poration, its rights can be fully safeguarded in

whatever decision may be made.

“Our conclusion, therefore, is that the lower

Court erred in sustaining the exceptions, and for

this reason the judgment is reversed, and the

cause remanded, to be proceeded with according

to law and views herein expressed.“

See also Middlesex Banking Co. vs. Smith,

83 Fed. 133;

Dittgen vs. Racine Paper Goods Company,

164 Fed. 85, 171 Fed. 631.

Another decision by the Circuit Court of Appeals

for the Fifth Circuit is instructive :—

Johnson & Co. vs. Staenglen and Muller, 85 Fed.

603, was a suit by Staenglen and Muller against

Johnson & Co. on a contract. At the trial it came out

that the contract had been made in the name of G. E.

Staenglen alone and plaintiff sought to amend, after

the limitation period had expired, alleging the making

of the same contract by one member of the firm and

its subsequent assumption by both. This amendment

having been permitted was alleged as error. The

Circuit Court of Appeals sustained the judgment for

plaintiff on the amended complaint, saying (p. 606):

It is further insisted that the cause of action

set up in defendants’ second amended original

petition, after plaintiff had taken a nonsuit and

the case had been reinstated, was barred by the

31

statute of limitation. The cause of action was

the same as set out in the pleadings after the

reinstatement of the case as had been made by

the pleadings prior to the nonsuit. The cause of

the action was the loss sustained by the plaintiffs

in weight, grade, and quality of cotton as classi-

fied and allowed in Europe, and the agreement of

November, 1886, was set out as the basis or

foundation for the claim of Johnson & Co.'s

liability for this loss. If the Court below ruled

correctly—and we hold that it did—in allowing

the contract to go in evidence as one which, under

the facts, pleadings and evidence, could be set

up by Staenglen & Muller as effective and bind-

ing between Staenglen & Muller and Johnson &

Co., then there was no such difference between

the case before and after the non-suit as would

make the latter a new cause of action. Staenglen

& Muller were the plaintiffs in the case as made

in both instances, and Johnson & Co. were the

defendants, the only difference in the two cases

being that in the first instance the agreement was

declared on as one that had been made originally

between Johnson & Co. and Staenglen & Muller,

and in the reinstated case as one made originally

between Johnson & Co. and G. E. Staenglen, and

assumed by Staenglen & Muller with the assent

and approval of Johnson & Co. We therefore

find no error in the refusal of the Court below

to sustain the plea of the statute of limitations.“

See also Patillo vs. Allen West Co., 131 Fed. 680,

where Judge Sanborn of the Eighth Circuit in refus-

ing to sustain defendants’ plea of the Statute of

um SSID oS Pe RRS HBSS RAPA ESET OSCR ie tee eae ce A ana NR

32

Limitations as applied to an amendment to the decla-

ration, said

idee The demand under the amended complaint is

for the same items and for the same amount as

that under the original complaint.”’ ne:

A recent decision by the Circuit Court of Appeals

for the Third Circuit reaches a similar conclusien-

under the Pennsylvania Death Statute, which, unlike

the Federal Act, requires suit to be brought in the

name of the widow, as such. In Quaker City Cab

Company vs. Fixter, 4 Fed. (2nd) 327, plaintiff had

sued as administratrix to recover damages under the

Pennsylvania Statute for the death of her son. She

was permitted to amend, after the statutory period,

so as to sue as widow, and this was held proper by

the Circuit Court of Appeals, the Court saving:

“We think that the amendment was one of

form, and not of substance, and in such case an

amendment may be made under sections 948 and

954 of the Revised Statutes of the United States

(Comp. St. Sections 1580, 1591). Federal Courts

are very liberal in allowing amendments to e-

vent a miscarriage of justice, MeDonald vs.

State of Nebraska, 101 F. 171, 41 C. C. A. 278;

Murphy vs. Stewart, 43 U.S. (2 How) 263, 281,

11 I. Ed. 114; Reardon vs. Balaklala Consol

dated Copper Co. (C. C.) 193 F. 189."

In an earlier decision, Van Doren vs. Pennsylvania

Railroad, 98 Fed. 260, the same Court had reached

the same conclusion, permitting the plaintiff, who had

õũ Re Sats Nec EBON Pr a NG URN os n TAR OL

1

33

brought suit in the Distriet Court of New Jersey for

death suffered in Pennsylvania, to amend by bringing

suit as widow instead of administratrix, although the

statutory period had run.

The Court said (p. 267) :—

There is abundant authority to the effect that

under a general power to allow amendments neces-

sary for the determination of the real question

in controversy between the parties, an amendment

touching the capacity in which the plaintiff sues

or declares should, when properly applied for,

be permitted where substantial justice requires

A.“

The Court then went on to discuss Section 954 per-

mitting the Federal Courts to amend the pleadings,

in its relation to Section 914, providing that the

practice, pleadings, and forms and modes of proceed-

ings in civil cases in the United States Court shall

conform Was near as may be“ to those in the State

Courts and thus states the rule :—

The circuit courts are not bound to conform

to state practice or pleadings in subordinate de-

tails where such conformity would result in gross

or substantial injustice to litigants.”

The Court cites decisions of this Court to the effect

that the conformity required by Section 914 is re—

quired to be not ‘tas near as may be possible, or even

as near as may be practicable,’’ but ‘‘as near as may

be“ thus giving the Federal Courts the “power to

* eee e.

34

reject, as Congress expected they would do, any sub-

ordinate provisions in such state statutes which in

their judgment would unwisely encumber the ad-

ministration of the law or tend to defeat the ends of

justice in their tribunals’? (Railroad vs. Horst, 93

U. S. 291).

The necessity for this discussion in the Van Doren

case lay in the fact that the State decisions in Penn

Sylvania are clear against the allowance of such an

amendment after the statutory period has expired.

In other words, if the Van Doren case had been

in the Pennsylvania State Courts it would have been

decided the other way.

See La Bar vs. N. V., Sus. & W. R. R. (.

218 Pa. 261.

The amendment did not introduce any new or differ-

ent demand, nor amount to the assertion of a new

‘cause of action.“ It was a mere historical clabora

tion of the ‘‘cause of action“ theretofore instituted

by the party properly entitled to bring suit on it.

While proper to avoid a variance between the plead

ings and the proof, it in no sense constituted the

equivalent of a new suit and when, in the exercise

of the discretion of the trial Judge, he allowed it, it

related back to the date of filing the original declara

tion in March, 1918. Clearly the subsequent ruling

of the trial Court in sustaining defendants’ plea of

the Statute of Limitations and directing a verdict for

defendants was erroneous, in that it gave effect to

form and not to substance, and departed from the

PUPUñſñſ³MU) UD et RO ee aa Chem NEN Bonsine® —

35

principles adopted by the Federal Courts with regard

to the amendment of pleadings.

It is respectfully submitted that the judgment of

the Court below was erroneous and should be reversed.

ROBERT W. CHILDS,

WALTER E. BEEBE,

HENRY S. DRINKER, In.,

EDWIN A. LUCAS,

Attorneys for Plaintiff in Error.