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

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386007_0028%3A2

## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1928
- **Citation:** 275 U.S. 431

## Text

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.

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386007_0028%3A2. Public record. Not legal advice.