Commercial & Savings Bank v. Ward , 146 S.C. 77 ( 1928 )

June 2, 1928. The opinion of the Court was delivered by This action is for the foreclosure of a mortgage executed by the defendant to the Commercial Savings Bank of Lake City, S.C., securing a note of $2,000, dated February 12, 1924, due February 12, 1925, with interest from date at 8 per cent. per annum and 10 per cent. attorney's fees.

The complaint is in the usual form, alleging that the plaintiff, the Commercial Savings Bank of Lake City, S.C. (hereinafter referred to as the Lake City Bank), "was and still is a banking corporation duly organized and existing under and by virtue of the laws of the State of South Carolina, with its principal place of business at Lake City in the County and State aforesaid."

The answer contains a specific denial of the foregoing allegation of the complaint, and certain other defenses which need not be at this time considered.

The case was referred to the Master of Florence County to hear and determine all issues. He reported in favor of the plaintiff, recommending foreclosure and sale, which report, upon exceptions by defendant, was confirmed by a formal decree in foreclosure, signed by his Honor, Judge Bonham. From this decree, the defendant has appealed.

From the view which we take of the matter, it is only necessary to consider a single point which we shall endeavor to develop. At the reference before the Master the plaintiff's counsel admitted that the Lake City Bank was not at the time of the service of the original summons and complaint a corporation as alleged in the complaint, whereupon the defendant moved for a nonsuit, which motion was refused. The plaintiff's counsel then moved for an amendmentof the complaint in the following language:

"That at the time of the institution of the suit it was not an individual corporation, but was a branch of the Commercial Savings Bank of Florence, S.C. a South Carolina corporation, but functioning as an independent institution."

The motion was granted, over the objection of the defendant's counsel. The transcript contains this statement:

"The hearing being continued with the substituted Commercial Savings Bank of Florence as party plaintiff."

The testimony then developed the fact that since the commencement of the present action, there had been organized and chartered a banking corporation under the name of the Commercial Savings Bank of Lake City, S.C., which under an agreement entered into on August 3, 1925 (subsequently to the commencement of the present action), with the Commercial Savings Bank of Florence, S.C., had become assignee of the entire assets of the branch bank which had been conducted by the Commercial Savings Bank ofFlorence, under the name of the Commercial Savings Bank of Lake City.

The plaintiff's counsel then moved for a second amendment of the complaint substituting the lately incorporated Commercial Savings Bank of Lake City in the place, as plaintiff, of the Commercial Savings Bank of Florence, which, by previous amendment, as stated, had been substituted for the original plaintiff, the Lake City Bank. The motion was granted over the objection of defendant's counsel.

The appeal involves alleged errors in refusing the defendant's motion for a nonsuit, and in allowing the amendments to the complaint referred to above. The defendant's motion for a nonsuit could not properly have been granted, for the reason that the action was onein equity, and in such cases such a motion cannot be entertained.Southern Railway v. Beaudrot, 63 S.C. 266;41 S.E., 299. However, the objection is really to the jurisdiction of the Court, which may be entertained at any stage of the case, even sua sponte by this Court.

It is clear that the action was instituted under the misapprehension that the Lake City Bank was a corporation and the owner of the note and mortgage. It manifestly was not apprehended that the Lake City Bank was but a branch of the Florence Bank. If the case had been one simply of misnomer, naming the Florence Bank which was really the owner, as the Lake City Bank, intending that the action should be for the benefit of the Florence Bank, the error might have been corrected by amendment, but that does not appear to have been the case.

The general rule is thus stated in 30 Cyc., 27:

"But if there is a lack of legal entity, the whole action fails. * * * If an action is brought in the name of that which under the lex fori has no legal entity, it is as if there was no plaintiff in the record and therefore no action before the Court"; which presents an instance of want of jurisdiction.Western A.R. Co. v. Dalton Co., 122 Ga. 774;50 S.E., 978. Proprietors of Mexican Mill v. Yellow JacketSilver Min. Co., 4 Nev., 40; 97 Am. Dec., 510.

The distinction is defined in Cyc., as follows:

"Although an action brought in the name of that which has no legal entity is a nullity, an action in which a legallyexisting plaintiff has been misnamed is still a true action, to which the Court can give full effect, subject only to defendant's right to object at the threshhold for misnomer." 30 Cyc., 28.

The first amendment should have been refused for these reasons: The action being a nullity, there was nothing to amend by. "In strictness of principle, if there be no legal entity, there is no foundation upon which to base an amendment." 30 Cyc., 27. The summons not having been amended, the amendment to the complaint was null.

The second amendment should have been refused for the reason that it presented a cause of action which did not exist when the action was commenced. If permissible at all, it could only have been effected by an order allowing a supplemental complaint, if then.

"Plaintiff can recover only upon the cause of action existing when suit was commenced; and therefore in an action for the recovery of real property, he cannot, by supplemental complaint, set up a legal title acquired after suit brought."Moon v. Johnson, 14 S.C. 434.

The judgment of this Court is that the judgment of the Circuit Court be reversed and the complaint dismissed.

MESSRS. JUSTICES BLEASE and STABLER concur.