Court Opinion

ID: 9723206
Source: CourtListenerOpinion
Date Created: 2023-08-26 10:06:38.172918+00
Date Added: 2024-06-11T18:24:45.515451
License: Public Domain

UHLENHOPP, Justice
(dissenting).
The issue is whether Smiths’ cause of action against Illinois Central Gulf Railroad is barred by the statute of limitations.
Prior to August 10,1972, a railroad corporation named Illinois Central Railroad Company (Illinois Central), which was organized in Illinois, operated a railroad upon tracks and a viaduct over Iowa Highway 416 about a half-mile west of Epworth, Iowa. A separate corporation named Gulf, Mobile & Ohio Railroad Company (Gulf) also owned and operated a railroad.
On the date named, those two corporations merged into one corporation, named Illinois Central Gulf Railroad (Illinois Central Gulf), which holds its charter from Delaware.
According to Smiths’ petition filed in 1976, on February 19, 1974, water, run-off, and slush had been drained and allowed to accumulate on the highway under the railroad viaduct as a result of the negligence of the railroad and the other defendants, whereby Dennis E. Smith was killed in an auto mishap. Smiths sought damages from defendants for wrongful death.
In the petition and accompanying original notice, Smiths named the railroad owning and operating the tracks and viaduct as “Ill. Central R. R. Co.”, which would appear to mean Illinois Central Railroad Company. (In the petition they referred to the railroad as “Illinois Central Railroad Co.”) Smiths also referred to the railroad at various places in the petition as an Illinois corporation. At the times of the auto mishap and the commencement of suit, however, the legal name of the corporation which owned and operated the tracks and viaduct was Illinois Central Gulf Railroad, by virtue of the merger. Moreover, Illinois Central Gulf was a Delaware, not an Illinois, corporation.
A sheriff’s deputy served the original notices with petition attached. Illinois Central appeared specially averring the facts as to the merger into Illinois Central Gulf and as to the nonexistence of Illinois Central thereafter. One of the original notices which the deputy served on this first occa*855sion he delivered to E. Fred Meeker. In his return the deputy stated that he delivered the notice to Meeker for Illinois Central Industries, one of the other defendants. Meeker, however, was the Dubuque Yardmaster of Illinois Central Gulf. That Illinois Central Gulf received actual knowledge of the institution of the action is shown by the facts (1) that one of the original notices was thus delivered to its Yardmaster, Meeker, (2) that Illinois Central Gulfs own attorneys, the O’Connor firm of Dubuque, filed the special appearance on behalf of Illinois Central, and (3) that Illinois Central Gulf’s own secretary-treasurer, John B. Goodrich, signed an affidavit attached to the special appearance.
The trial court sustained the special appearance.
Thereafter Smiths amended their petition to delete Illinois Central Railroad Company and add Illinois Central Gulf Railroad, to add “Gulf” between “Central” and “Railroad,” and to insert “Illinois Central Gulf Railroad” at various places in the petition. The sheriff’s deputy thereupon served another original notice, but the trial court found that notice insufficient for other reasons. The sheriff’s deputy then served a third original notice correctly naming Illinois Central Gulf Railroad.
By this time, however, the statute of limitations had run. Illinois Central Gulf appeared and moved to dismiss the amended petition as barred by limitations. The trial court sustained the motion, and Smiths appealed.
I. The first question is whether the use of the wrong name in the original petition is fatal.
Until 1975 this court was quite strict in the matter of correctly naming a defendant. Although a corporation actually knew of a suit from service of notice upon it, knew from the allegations of fact in the petition that it was the intended defendant, and suffered no harm such as default because of the misnomer, we permitted only trivial name deviations. Hickman v. Hygrade Packing Co., 185 N.W.2d 801 (Iowa).
Rule 4(h) of the Federal Rules of Civil Procedure states:
At any time in its discretion and upon such terms as it deems just, the court may allow any process or proof of service thereof to be amended, unless it clearly appears that material prejudice would result to the substantial rights of the party against whom the process issued.
In 1974, following our Hygrade Packing case, our advisory committee on rules recommended that we adopt federal rule 4(h) as part of the Iowa Rules of Civil Procedure. Accordingly in January 1975 we filed it with the legislature as our proposed rule 59.1. The legislature did not disapprove the proposal, and so rule 59.1 became one of our rules on July 1, 1975.
Under federal rule 4(h) and the predecessor statute, 28 U.S.C. § 767, the federal courts have pursued a course described as one of extreme liberality in allowing amendments where no hardship results and no injustice is done. United States v. Van Dusen, 78 F.2d 121 (8 Cir.). Examples are Hirsch v. Bruchhausen, 284 F.2d 783 (2 Cir.) (amendment to allow partners substituted for corporation); Grandey v. Pacific Indem. Co., 217 F.2d 27 (5 Cir.) (name change); United States v. A. H. Fischer Lumber Co., 162 F.2d 872 (4 Cir.) (no one misled by misnomer); In re National Student Marketing Litigation, 413 F.Supp. 1159 (D.C.) (trust named defendant rather than trustee bank); Infotronics Corp. v. Varian Associates Corp., 45 F.R.D. 91 (S.D.Tex.) (actual defendant had assumed all obligations of erroneously-named defendant); Bowles v. Marx Hide & Tallow Co., 4 F.R.D. 297 (W.D.Ky.) (corporation erroneously named defendant although it had been dissolved and business was operating as partnership).
The present case is a classic one for application of new rule 59.1. It again gives us the choice of whether we will or will not apply the more liberal view which the new rule contemplates. See Patten v. City of Waterloo, 260 N.W.2d 840 (Iowa).
Rule 59.1 contains a different approach on wrong names. The principal emphasis under the rule is upon the consequences of *856the mistake: an amendment may be allowed unless it “clearly appears” that “material prejudice” would result to the “substantial rights” of the defendant.
In determining whether prejudice would result, the Nevada Supreme Court devised some useful inquiries in Servatius v. United Resort Hotels, Inc., 85 Nev. 371, 455 P.2d 621: Does the defendant have actual notice of the institution of the action? Does the defendant know that it is the proper defendant in the action? Was the defendant misled to its harm by the mistake?
The misnomer before us raises two problems. Smiths should have stated that “Illinois Central Gulf Railroad” was the name of the railroad-defendant. One problem is whether the omission of “Gulf” in the name and the addition of “an Illinois corporation” instead of “a Delaware corporation” caused material prejudice to Illinois Central Gulf Railroad.
Returning to the inquiries in the Servati-us case, Illinois Central Gulf was not prejudiced from lack of notice of the action; it had actual notice. It was not prejudiced in having to wonder whether it was the defendant actually intended to be sued; the allegations of the petition dealt with the railroad operating the tracks and viaduct over Highway 416 about a half-mile west of Epworth, Iowa; Illinois Central Gulf must have known it owned and operated those tracks and that viaduct. See Western Union Tel. Co. v. State, 82 Md. 293, 33 A. 763 (true defendant knew the telephone pole belonged to it). Nor was it misled to its harm by the mistake, as by permitting default in the honest belief that the different name must refer to some other railroad — it again knew that it operated the tracks and viaduct in question and it knew that it was the successor to Illinois Central and Gulf.
Indeed, Smiths’ whole course of action, including addition of the unnecessary words, “an Illinois corporation,” must have told Illinois Central Gulf that Smiths were mistaken. Under new rule 59.1, fairness dictates that Illinois Central Gulf, which could hardly have been misled, should not be able to interpose the statute of limitations against Smiths, who plainly were laboring under mistake.
The other problem is whether Illinois Central Gulf is right that this is simply a case of suing the wrong party. For example, if a plaintiff intentionally sues and serves notice on X Corporation of Chicago as the manufacturer of a defective product and, after the statute of limitations has run, learns that unrelated Y Corporation of Philadelphia manufactured the product, the plaintiff cannot then save himself from the statute of limitations by bringing in Y Corporation as a defendant. 51 Am.Jur.2d Limitation of Actions § 294 at 805; 54 C.J.S. Limitation of Actions § 277 at 317.
The present case differs from the illustration in several respects. First, in law only one corporation and one railroad exists, now named Illinois Central Gulf. Second, Smiths did not intend to sue an unrelated corporation, but rather the very railroad which ran trains over this trackage and viaduct. Viewed practically and liberally as rule 59.1 contemplates, the change which the merger wrought was not really so much an alteration in identity of the Illinois Central Railroad as a continuation of that railroad joined with another one with “Gulf” added to the name. Thus Smiths’ error was more of a mistake of name than a mistake of identity. Third, Illinois Central Gulf had actual notice of the action. And fourth, the allegations of the petition attached to the notice gave Illinois Central Gulf knowledge that the trackage and viaduct were properties which it owned and operated; hence Illinois Central Gulf must have known it was the intended defendant.
Whether Smiths’ mistake would have been fatal when the Hygrade Packing case was law, query. To hold it fatal under new rule 59.1 would frustrate the rule’s objective of turning the result on presence or absence of material prejudice. Cases dealing with somewhat similar problems include the Hirsch, National Student Marketing, Infotronics, and Bowles decisions, supra, and Graves v. General Ins. Corp., 412 F.2d 583 (10 Cir.); Bates v. Wagon Wheel Country Club, Inc., 132 Ill.App.2d 161, 266 *857N.E.2d 348; Nelson v. Glenwood Hills Hospitals, 240 Minn. 505, 62 N.W.2d 73; Dart Drug Corp. v. Hechinger Co., Inc., 272 Md. 15, 320 A.2d 266; Dunlevy v. Martin Dennis Co., 30 N.J.Super. 446, 104 A.2d 870; Pepsi-Cola Metropolitan Bottling Co. v. Miller, 50 Misc.2d 40, 269 N.Y.S.2d 471. See generally Anno. 8 A.L.R.2d 6.
II. Since Smiths’ original petition was not fatally deficient as to Illinois Central Gulf, the petition saved the case against that defendant from the statute of limitations. This follows from rule 48, R.C.P. (“A civil action is commenced by filing a petition with the court.”). But did Smiths let Illinois Central Gulf out of the case and then sue it again after the statute had run, by virtue of the form of their amendment to the petition?
In the first place, Illinois Central Gulf did not so contend in the trial court or here. That should end consideration of this question.
In the second place, assuming arguendo that Illinois Central Gulf had raised this contention, the argument is not meritorious. True, Smiths stated in the amendment that they amended the caption of the petition so that “Illinois Central R.R. Co., an Illinois Corporation shall be deleted” and “Illinois Central Gulf Railroad, a Delaware Corporation should be added”, but the whole of the proceedings demonstrates that Smiths were not dismissing out the true defendant but were changing names. This follows from paragraphs 2 through 8 of the amendment in which Smiths changed the petition throughout from Illinois Central to Illinois Central Gulf and inserted “Gulf” between “Central” and “Railroad.” It follows from Illinois Central Gulf’s special appearance, which does not state that Smiths dismissed Illinois Central out but rather is based on the contention that Illinois Central Gulf was not originally a defendant. It follows from Smiths’ resistance to special appearance in which they recite that their amendment changes “all reference to Illinois Central Railroad Co. to Illinois Central Gulf Railroad.” It follows from the trial court’s sustaining the special appearance which was based on the contention that Illinois Central Gulf was not originally a defendant. And it follows from the failure of Gulf, in the trial court or this court, to contend that Smiths dismissed out the true defendant by the form of their amendment.
Under new rule 59.1 Smiths’ misnaming the true defendant was not fatal, and Smiths did not dismiss that defendant from the case. Smiths’ petition tolled the statute of limitations and the trial court should have overruled the motion to dismiss.
HARRIS and McCORMICK, JJ., join in this dissent.