Orkin Exterminating Company v. O'HANLON

91 S.E.2d 222 (1956) 243 N.C. 457

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

No. 606.

Supreme Court of North Carolina.

February 3, 1956.

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

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

PARKER, Justice.

Appeal by Defendants O'Hanlon, Rasberry and Montgomery.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Broad as are the provisions of G.S. § 1-163 as to amendments, and liberally as we construe them, Clevenger v. Grover, supra, they are not broad enough to permit the substitution of parties plaintiff under the facts here. This Court said in Goldston Brothers v. Newkirk, 234 N.C. 279, 67 S.E.2d 69, 71: "The lower court may allow or disallow such amendments as it may think proper in the exercise of its sound discretion, G.S. § 1-163; Gilchrist v. Kitchen, 86 N.C. 20, bearing in mind, of course, that the nature of the cause of action as previously charted may not be substantially changed." The assignment of error by the individual defendants as to the substitution of parties plaintiff is good.

The order of amendment permitting a substitution of Orkin Exterminating Company of Raleigh, Inc. as plaintiff in lieu of Orkin Exterminating Company, Inc., having been improperly made without authority, and the amendment set aside here, the case stands as though never amended. Brooks v. Ulanet, 116 Vt. 49, 68 A.2d 701; Hill v. Jamieson, 16 Ind. 125, 79 Am.Dec. 414; 71 C.J.S., Pleadings, § 306, p. 694.

The individual defendants filed a written demurrer, which states as one ground thereof: "There is a misjoinder of parties in that the individual defendants are each being sued on separate contracts, the fact situation is different in each case, such joinder will confuse and obscure the respective defenses."

A demurrer is generally considered as a pleading. Wilkinson v. Cohen, 257 Ala. 16, 57 So. 2d 108; Inman v. Willinski, 144 Me. 116, 65 A.2d 1, 7 A.L.R. 2d 1390; 71 C.J.S., Pleading, § 211, p. 418. G.S. § 1-124 states: "The only pleading on the part of the defendant is either a demurrer or an answer."

G.S. § 1-151 provides: "In the construction of a pleading for the purpose of determining its effect its allegations shall be liberally construed with a view to substantial justice between the parties."

The written demurrer does not use the specific words, a misjoinder of both parties and causes, but a liberal construction of the words used in the written demurrer leads us to the conclusion that it substantially sets forth as a ground of demurrer a misjoinder of both parties and causes.

The individual defendants, and each one of them, assign as error the overruling of their written demurrer.

The allegations against these three defendants are based on the alleged violations of three separate and distinct contracts, each contract entered into at different times by different parties, each terminated at a different time, and if we consider alone the contracts attached to the complaint, two contracts entered into by the original plaintiff and one by the substituted plaintiff. It is clear that the alleged cause of action against O'Hanlon does not affect Rasberry and Montgomery; that the cause of action against Rasberry does not affect the other individual defendants, and the same applies to Montgomery. The several causes of action united in the complaint do not "affect all the parties to the action," as required by G.S. § 1-123.

State ex rel. North Carolina Utilities Commission v. Johnson, 233 N.C. 588, 64 S.E.2d 829, was a suit instituted by the Utilities Commission against five defendants, taxicab operators, to restrain alleged violation by each of them of G.S. § 62121.47. The Court said: "It is apparent that the plaintiff has improperly sought to unite in the same complaint separate and distinct causes of action against five different persons among whom there is no joint or common liability and no privity or community of interest. Suit against one of the defendants for the causes alleged in nowise affects the other four, and hence joinder may not be permitted under G.S. § 1-123 * * *."

The Court said in Snotherly v. Jenrette, 232 N.C. 605, 61 S.E.2d 708, 710: "It has been uniformly held by this Court that separate and distinct causes of action set up by different plaintiffs or against different defendants may not be incorporated in the same pleading, and that such a misjoinder would require dismissal of the action." See also Tart v. Byrne, 243 N.C. 409, 90 S.E.2d 692; Johnson v. Scarborough, 242 N.C. 681, 89 S.E.2d 420.

The facts alleged in the complaint do not constitute a connected series of transactions connected with the same subject of action so as to invoke the rule laid down in Branch Banking & Trust Co. v. Pierce, 195 N.C. 717, 143 S.E. 524; Barkley v. McClung Realty Co., 211 N.C. 540, 191 S.E. 3; Leach v. Page, 211 N.C. 622, 191 S.E. 349; Pressley v. Great Atlantic & Pacific Tea Co., 226 N.C. 518, 39 S.E.2d 382; Erickson v. Starling, 233 N.C. 539, 64 S.E.2d 832.

It is obvious that in the instant case there is a misjoinder of both parties and causes, and such being the case the demurrer of the individual defendants should have been sustained, and the action dismissed. Tart v. Byrne, supra; Snotherly v. Jenrette, supra; Sasser v. Bullard, 199 N.C. 562, 155 S.E. 248.

Appeal by Plaintiff.

The plaintiff assigns as error the sustaining of the corporate defendant's demurrer.

The defendant Antex Exterminating Company, Inc. is a distinct legal entity, and is not a party to any contract not to engage in a competing business with either Orkin Exterminating Company, Inc., or Orkin Exterminating Company of Raleigh, Inc. There are no allegations in the complaint that the corporate defendant knew or had any notice of the alleged non-competitive contracts of Rasberry and Montgomery with Orkin Exterminating Company, Inc. The allegations as to them are that they entered into the contracts attached to the complaint with the original plaintiff, the termination of those contracts, the employment of them by the corporate defendant, and their competing activities.

The plaintiff relies upon this statement in Sineath v. Katzis, supra [218 N.C. 740, 12 S.E.2d 681], which it quotes in its brief: "However, a stranger to the covenant may properly be enjoined from aiding the covenantor in violating his covenant or receiving any benefit therefrom. Hence, a stranger to the covenant may well be enjoined from, in conjunction with the covenantor, or with his assistance, conducting a business in competition with the covenantee." A few sentences later on this opinion states: "Knowledge of the contract, of course, is a condition of liability."

The plaintiff further contends that the complaint alleges an interference by the corporate defendant with the alleged contract relationships of the individual defendants with itself, the original plaintiff, and cites in support thereof a quotation from 30 Am.Jur., Interference, Sec. 23, p. 75, and this statement from Annotation 84 A.L.R. 83: "It is not justification for knowingly procuring the breach of a contract that defendant acted without an improper purpose, and sought only to further his own interests. * * * thus, competition is not a justification for inducing one to commit a breach of a contract, and thereby to interfere with the business of the other party thereto."

In 30 Am.Jur., Interference, Sec. 22, p. 75, it is said: "Knowledge of the existence of a contract is a condition of liability for procuring its breach." In the same annotation from A.L.R. quoted by plaintiff, it is said on p. 49: "Knowledge of the contract is, of course, a condition of liability."

The complaint states no cause of action against the corporate defendant in respect to its relations with Rasberry and Montgomery, because there is no allegation to the effect that the corporate defendant had any knowledge or notice of the alleged contracts between them and Orkin Exterminating Company, Inc.

As we have stated above, the allegations of the complaint that O'Hanlon is a covenantor with Orkin Exterminating Company, Inc. are "neutralized" and "put to naught" by the contract attached to the complaint and marked Exhibit A. Therefore, the complaint states no cause of action against the corporate defendant so far as its connection with O'Hanlon is concerned, for it does not appear that O'Hanlon was a covenantor with Orkin Exterminating Company, Inc.

If we had adopted the view that, when the amendment substituting Orkin Exterminating Company of Raleigh, Inc. as plaintiff in lieu of Orkin Exterminating Company, Inc. was vacated here, the case did not stand as never amended, it would avail the original plaintiff nothing, because for lack of any plaintiff no action would be pending.

It is to be distinctly understood that we have not by anything said here expressed any opinion as to the validity or invalidity of the provisions in the contracts attached to the complaint as to non-competitive activities.

On plaintiff's appeal—Affirmed.

On individual defendants' appeal—Reversed and action dismissed.