The question presented is whether the plaintiff may further amend complaint brought upon a partnership claim to join the remaining partners as parties plaintiff, after the period of the statute of limitations has run for the filing of a new cause of action. The action is for a refund of taxes paid to or collected by
From 1939 to June 1945, Domenic De Franco was a member of a partnership comрosed of himself and two sons, doing business as The New England Tomato Co. On July 1, 1945, the three partners brought into the firm a third son of De Franco, and continued to operate under the same name until June of 1947. The period here in issue is from January 1, 1943 through the quarter ending March 31, 1947.
In May of 1947, assessments were made by the Internal Revenue Service of withholding taxes which the Service asserted the partnerships failed to deduct and withhold from the wages of their employees. On May 29, 1950, a claim for refund was filed in the name of Domenic De Franco, doing business as New England Tomato Co., for taxes paid covering the years 1943, 1944 and 1945. On the same date claims for refund were also filed in the name of all the partners doing business as The New England Tomato Co., for taxes paid from October 1, 1945 to December 31, 1945, for the year 1946, and first quarter of 1947.
On January 10, 1951, these claims were disallowed by the Servicе and notice of the disallowance was given to the “New England Tomato Co.”
On December 22, 1951, Domenic De Franco filed suit for refund in the District Court on all the claims. He alleged he brought the action individually and as a member of the partnership, New England Tomato Co., and named the othеr partners. Defendant, United States, filed its answer on May 1, 1952, alleging as an affirmative defense that plaintiff was not proper party plaintiff. In March of 1954
It is one of the government’s contentions that the original plaintiff, Domenic De Franco, had no legal capacity to institute the suit; that being without capacity to sue, no cause of action was pending, and that therefore no amendment could be made adding parties in whose favor the cause of action existed, after the running of the statute of limitations. Defendant argues that: Federal Rule 17(b) of Fed.Rules Civ.Proc. Title 28 U.S.C.A. is applicable, which provides that, “The capacity of an individual, other than one acting in a representative capacity, to sue or be sued shall be determined by the law of his domicile. * * * In all other cases capacity to sue or be sued shall be determined by the law of the state in which
The court, in the eаse of Lewis v. Hayes, supra, held the partners must be joined; and that plaintiff-partner could not recover in a separate suit, damages caused to her as a member of a partnership as plaintiff was seeking to do in that case. Lewis v. Hayes, supra, is not the law in California. It is generally true that severance of a joint obligation should not be permitted. Liability if any should be determined in one suit. In view of the fiduciary relationship of partners, however, one partner should be allowed to recover the partnership claim in full. As early as 1895, in the case of Williams v. Southern Pac. R. Co.,
Although the law of California permits a partner to recover the partnership claim in full, such holdings do not resolve any question of capacity, but rather the question of the court’s exercise of jurisdiction, i. e. whether partners are or are not indispensable parties. “Capacity” raises only the question of whether the plaintiff is free from general disability such as infancy, insanity or some other form of incompeteney, or if he sues in a representative. capacity, whether he actually possesses the character in which he sues. Magee v. McNany, D.C.Pa.1950,
The pivotal question urged by the United States is therefore whether or not the amendment to plaintiff’s complaint in fact sets up a new and distinct cause of action, thus barred by the Statute of Limitations.
The general purpose of the Federal Rules of Civil Procedure is to see that actions are tried on the merits, and to dispense with technical procedural problems. To fall back on a technicality and refuse to permit a case to come to issue on the merits is to sap the very heart out of the rules and to obviate the very purpose for which they are intended.
An amendment substituting parties should not, in every instance, be permitted to override a plea of the statute of limitations. An amendment which by substitution of parties sets up a new and distinct cause of action should be disallowed. However, the “ ‘cause of action’ ” is the wrong done, American Fire & Cas. Co. v. Finn, 1950,
In the case at bar, the defendant has had notice from the start that Domenic De Franco was seeking to recover on the partnership claim for tax refund. The partners should have brought suit rather than the individual member; but such requirement is an incidental provision of the law, distinct from the wrong done and the amendment adding the remaining partners is in no way prejudicial to the rights of the defendant. Notice to defendant of the claim asserted or the wrong done, as thе paramount consideration in ruling on a motion to amend after the period for bringing a new and independent action has expired, is illustrated in numerous instances.
The plaintiff is generally permitted to change by amendment the theory or statute under which recovery is sought. See New Yоrk Cent. & H. R. R. v. Kinney, 1922, supra; Tiller v. Atlantic Coast Line, 1944,
The federal courts have furthermore, with consistency, permitted amendments to correct the name of a party already in court with relationship back to thе date of the original complaint, thereby circumventing a plea of the statute of limitations. Porter v. Theo J. Ely Mfg. Co., supra; Godfrey v. Eastern Gas & Fuel Ass’n, D.C.Mass.1947,
To the same effect are those cases in which the plaintiff originally lacked capacity to sue or sued in his individual
There are also a number of decisions in which an actual substitution or addition of parties plaintiff has been permitted after the statutory period. In American Fidelity & Cas. Co. v. All-American Bus Lines, 10 Cir., 1951,
In the case of substitution of parties plaintiff we have a situation where the original plaintiff had in fact no cause of actiоn; however, since the defendant knew an attempt was being made to enforce a claim against him, the court permitted the amendment. Where the addition or substitution of party plaintiff introduces a new claim or sets out a different wrong done against defendant, we have a different matter. See Iocono v. Anastasio, D.C.N.Y.1940,
In the case at bar the adding of parties plaintiff did not set up a new claim against defendant; the wrong was the same. Defendant was awarе from the first that De Franco sought to enforce particular tax refund claims, three of which, involving a major portion of the money in question, named all four partners as claimants. The amendment should, therefore, be allowed to stand.
Notes
. Thus, for the quarter of October 1, 1945, to Decembеr 31, 1945, two claims are involved.
. The statute of limitations ran January 10, 1953. It was not until November 2, 1953 that present counsel were substituted in the case. Plaintiff’s original counsel became ill, and died February 1, 1953.
The problem is further complicated by the fact, and in other tax proceedings the United States bad been consistently contending that Domenic De Franco, the original plaintiff herein, had at all times been operating the business known as New England Tomato Co., as an individual. But on December 19, 1950, the Tax Court of the United States held that “Respondent erred in not recognizing that Petitioner, Domenic De Franco, and bis sons have continuously operated a bona fide partnership from December 13, 1939 throughout the taxable year 1946.” [Domenic De Franco v. C. I. R. No. 50,-311-PH. Tax Court memo.]
. “It does no good to have liberalizing rules * * * if, after they are written, their arteries are hardened by this Court’s resort to ancient common-law concepts.” Justice Black dissenting in Ackerman v. United States, 1950,