Case Name: HEIDEL v. SHUTE
Court: Oregon Supreme Court
Jurisdiction: Oregon
Decision Date: 1917-09-25
Citations: 86 Or. 210
Docket Number: 
Parties: HEIDEL v. SHUTE.
Judges: Mr. Chief Justice McBride, Mr. Justice Burnett and Mr. Justice Harris concur.
Reporter: Oregon Reports
Volume: 86
Pages: 210–221

Head Matter:
Argued September 20,
reversed September 25,
rehearing denied November 6, 1917.
HEIDEL v. SHUTE.
(167 Pac. 586; 168 Pac. 298.)
Equity — Cross-bill—Matters of Defense.
1. The cross-bill of H. against S., in action by S. to recover for advances for payment of land made by S. under agreement of H. to repay half of them, states matters of defense, entitling H. to equitable relief, and not of mere counterclaim; it averring the money advanced. was to be repaid out of the profits from resale of the land; that it had been resold, and the proceeds received and disposed of by S., who has refused to account therefor; that H. does not know what the profits are, and cannot know what, if anything, is still due S. on his advances; and asking for an accounting.
[As to nature and objects of cross-bills, see note in 83 Am. Dee. 251.]
Account — Complaint—Demand.
2. Averment of the complaint that defendant has at all times refused to render to plaintiff a statement of account implies a previous demand, and is equivalent to an allegation of demand and refusal.
ON PETITION POE EEHEAEING-.
Appeal and Error — Presumptions—Demurrer—Admission.
3. Where the decree appealed from involves only the' cross-bill, a demurrer to the cross-bill, and a ruling sustaining the demurrer, it must be assumed on appeal that the cross-bill correctly states the facts.
Equity — Cross-bill—Matters of Defense — Counterclaim—Statute.
4. Matters constituting a counterclaim may not be pleaded as a cross-bill.
Equity — Pleading—Complaint in Nature of Cross-bill — Statute.
5. The relief sought in a suit in equity in the nature of a cross-bill must operate as an entire or partial defense to an action at law, and the mere faet that defendant states a cause of action entitling him to equitable relief does not warrant filing of such complaint.
From ‘Washington: James A. Eakin, Judge.
Suit by a cross-bill in equity by F. M. Heidel against J. W. Shute in which a demurrer to the cross-bill was sustained, a decree entered dismissing the suit and plaintiff appealed.
Reversed with directions.
Department 1. Statement by Me. Justice Benson.
The facts of this case are as follows: Defendant Shute began an action at law against plaintiff Heidel seeking to recover upon two causes of action. The first was upon a promissory note for $50 which has no connection with the questions submitted upon this appeal, and the second stating the cause of action as follows:
“That on or about the 15th day of June, 1907, the plaintiff herein and the defendant entered into an agreement, wherein and whereby it was understood and agreed that the plaintiff herein should pay to F. C. King of Portland, Oregon, the sum of $2,500, for the purchase price of certain interests of said F. C. King in and to certain lands in Washington County, Oregon; and wherein and whereby F. M. Heidel, undertook, promised and agreed, to repay and reim burse the plaintiff to the extent of one half of the moneys so advanced and paid by the plaintiff to said F. C. King, as aforesaid, together with interest thereon from the date of such advance until repaid, at the rate of ten per cent per annum.”
This paragraph is followed by allegations of advances aggregating $1,167.50, no part of which has been paid except $349.75, and a prayer for judgment.
Heidel filed an answer admitting the execution of the fifty-dollar note, admitting, substantially, the allegations of the paragraph above set out. It is then alleged that plaintiff has already received from the defendant, and from moneys belonging to defendant, more than enough to fully pay both causes of action. Then follow allegations to the effect that defendant has further matters of defense which are cognizable only in a court of equity and tenders and files a cross-bill in equity, wherein Heidel is plaintiff and Shute is defendant. To this cross-bill defendant demurred and the trial court sustained the demurrer, whereupon, plaintiff having declined to plead over, a decree was entered dismissing the suit and plaintiff appeals.
Beversed With Directions.
For appellant there was a brief over the names of Mr. A. E. Clark and Messrs. Peters & Turner, with an oral argument by Mr. R. F. Péters.
For respondent there was a brief over the name of Messrs. Bagley & Fare, with an oral argument by Mr. William G. Fare.

Opinion:
Mr. Justice Benson
delivered the opinion of the court.
The sole question presented for our consideration is: Does the cross-bill state facts entitling plaintiff to equitable relief? The pleading under consideration is quite long and contains an elaborate recital of many involved transactions, which we find it unnecessary to mention in detail. Defendant contends that all of these matters are purely counterclaims and therefore not defenses and consequently not proper matters in a cross-bill. The first paragraph of the complaint herein reads as follows:
"That on or about the 20th day of June, 1907, the plaintiff and the defendant entered into an agreement wherein and whereby it was agreed that the defendant should advance the sum of twenty-five hundred dollars ($2500) in connection with the purchase of a large quantity of land known as the F. C. King land; and it was understood and agreed in connection there-' with that plaintiff should repay to the defendant one-half of the amount advanced, out of the profits to be derived from the sale of said land and premises; and about the same time, in connection with the same lands it was agreed, between plaintiff and the defendant and one M. J. Kinney, that upon the sale of said lands the profits- made upon the sale, over and above the purchase price and all legitimate expenses, should be divided as follows: To M. J. Kinney, fifty per cent; to J. W. Shute, twenty-five per cent; and to F. M. Heidel, twenty-five per cent."
This is followed by allegations to the effect that the lands in question were sold for $84,000; that these lands and others were combined as mortgage security for the purchase price; that the defendant, for himself and coadventurers, received the $84,000 kept the accounts himself, distributed the funds according to his own will and without consulting his associates, has at all times refused to render an account, and plaintiff does not know and therefore cannot state the amount of profits derived from the sale of the lands; but, upon information and belief alleges that plain tiff's share thereof "exceeds the sum of $-." The prayer is for an accounting, and that the court determine the amounts due to plaintiff and defendant and for general relief. As already suggested, the history of the transactions is much more extensive than we have now outlined and many matters are pleaded in which affirmative relief is sought, hut enough is indicated to disclose that the pleading contains sufficient statements of fact to render it invulnerable to attack by demurrer. It will be observed that it is averred that the money advanced by Shute was to be repaid out of the profits to be derived from the sale of the lands; that the lands have been sold, the proceeds received and disposed of by defendant, who has refused to account for the same; that plaintiff does not know what the profits are and cannot know what amount, if anything, is still due to defendant upon his advances in the purchase of the land. These allegations clearly distinguish the situation from a mere pleading of counterclaim and discloses matters material to plaintiff's defense in the law action.
Defendant also urges that the complaint is defective because there is no allegation of a demand for an accounting. This point is not well taken since the complaint alleges that the defendant "has at all times refused and neglected to render to this plaintiff a full, true and correct statement of the account between plaintiff and defendant herein." In the case of Brossard v. Williams, 114 Wis. 89 (89 N. W. 832), the court says:
' ' The defendant insists that the complaint is insufficient because it fails to allege a demand upon the defendant before the commencement of the suit. It is alleged that the defendant refuses and has ever refused to account or pay over the indebtedness sued for. Defendant's contention is completely answered by the case of Divan v. Loomis, 68 Wis. 150 (31 N. W. 760), in which it is said: 'An allegation of refusal implies a previous demand and is equivalent to an allegation of demand and a refusal.' "
The same conclusion is reached in the following cases: Ferguson v. Hull, 136 Ind. 339 (36 N. E. 254); Worth v. Wharton, 122 N. C. 376 (29 S. E. 370), and Mason v. Carter, 8 S. C. 103.
We conclude that it was error to sustain the demurrer. The decree is therefore reversed and the cause remanded with directions to overrule the demurrer. Reversed With Directions.
Rehearing Denied.
Mr. Chief Justice McBride, Mr. Justice Burnett and Mr. Justice Harris concur.