Case Name: DAVIS v. FIRST NAT. BANK OF ALBANY
Court: Oregon Supreme Court
Jurisdiction: Oregon
Decision Date: 1916-11-28
Citations: 86 Or. 474
Docket Number: 
Parties: DAVIS v. FIRST NAT. BANK OF ALBANY.
Judges: Mr. Chief Justice McBride, Mr. Justice Moore and Mr. Justice McCamant concur.
Reporter: Oregon Reports
Volume: 86
Pages: 474–488

Head Matter:
Motion to dismiss appeal denied November 28, 1916.
Argued on the merits November 21,
modified December 4, 1917.
DAVIS v. FIRST NAT. BANK OF ALBANY.
(161 Pac. 931; 168 Pac. 929.)
Appeal and. Error — Notice of Appeal — Adverse Parties.
1. Defendants sued as makers of a note secured a cross-decree against certain parties as the real maker and as sureties, with the cross-complainants thereof, and plaintiff payee and one of the said sureties appealed. Held, that other alleged sureties were not adverse parties upon whom notice of appeal must be served, for a reversal would benefit them.
ON THE MEBITS.
Injunction — Enjoining Action at Law — Grounds.
2. Under Section 390, L. O. L., providing that where the defendant in an action at law is entitled to relief arising out of facts requiring the interposition of a court of equity and material to his defense, he may, upon filing his answer, also, as plaintiff, file a complaint in equity in the nature of a cross-bill which shall stay the proceedings at law, and that such proceedings may be perpetually enjoined by the final decree, the facts requiring the interposition of a court of equity must be material to the defense of the law action, and the mere fact that defendant has a cause for suit against plaintiff or other parties entitling him to equitable relief will not warrant the filing of a complaint under that section unless the relief sought would operate as an entire or partial defense to the action at law.
[As to nature and objects of cross-bills, see note in 83 Am. Dec. 251.]
Injunction — Enjoining Action at Law — Grounds.
3. Section 390, L. O. L., authorizing a defendant entitled to equitable relief arising out of facts material to his defense to file a complaint in equity staying the proceedings at law, upon filing his answer, presupposes that the answer filed in the law action will raise an issue requiring equitable relief to sustain.
Injunction — Enjoining Action at Law — Grounds—-“Holder”—“Accommodation Party” — “Primarily Liable” — “Secondarily Liable.”
4. Section 6023, L. O. L., provides, relative to negotiable instruments, that “holder” means the payee or indorsee of a bill or note who is in possession of it or the bearer thereof, and that the person primarily liable is the person who, by the terms of the instrument, is absolutely required to pay it, and that all other parties are secondarily liable. Section 5862 defines an accommodation party, and provides that such party is liable to a holder for value, though the holder knew him to be an accommodation party. Held that, where the payee of a note was a holder for value, the faet that the makers were accommodation sureties for a corporation to which the loan evidenced by the note was made, as between themselves and certain other persons interested in the corporation, was not a defense to an action on the note, and such action should not have been enjoined in a suit in equity filed by the makers against the payee and the other parties under Section 390.
Action — Error as to Form of Action — Waiver of Objections.
5. Where the defendant in an action at law filed a complaint in equity, under Section 390, L. O. L., against the plaintiff in the action at law and other parties, a party who answered to the merits and defended against the complaint, without demurring to it or to the jurisdiction of equity to try the cause, made the equitable forum a matter of his own selection, and could not afterwards insist that the action should have been tried at law.
Evidence — Parol Evidence — Liability of Cosureties.
6. An agreement between cosureties for the payment of a note, limiting and fixing the proportion and extent of their several liability, may be established by parol.
Principal and Surety — Actions for Contribution — Conditions Precedent.
7. Where plaintiffs executed a note for the amount of a loan to a corporation on the agreement of other persons interested in the corporation that they would be cosureties for its payment with plaintiffs, and in evidence of their agreement they executed an indemnity- note to plaintiffs, and the amount which plaintiffs would be required to pay on the principal note was definite and certain, plaintiffs were not bound to suffer the whole burden of payment in the first instance at great loss and hardship to themselves and trust to future litigation for reimbursement, but, in equity, could sue for contribution before payment of the debt.
Principal and Surety — Actions for Contribution — Conditions Precedent.
8. The corporation being insolvent, plaintiffs were not required to pursue their remedies against it.
From Linn: William Galloway, Judge.
Cross-bill in equity by W. H. Davis and Worth Huston against the First National Bank of Albany, Ore goix, Alfred C. Schmitt and others. From á decree in favor of plaintiffs, the named defendants appealed. On respondent’s motion to dismiss appeal.
Motion Denied.
Messrs. Hewitt & Sox and Messrs. Hill & Marks, for the motion.
Messrs. Schmitt é Schmitt, contra.

Opinion:
Opinion
Per Curiam.
The First National Bank of Albany, Oregon, commenced an action against W. H. Davis and Worth Huston to recover the amount of their promissory note. They answered admitting the allegations of the complaint and as plaintiffs also filed a cross-bill in equity, making as parties defendant Alfred C. Schmitt, Linnhaven Orchard Company, a corporation, E. C. Roberts, Chas. H. Wieder, Geo. M. Crowell, Owen Bean, F. J. Fletcher and J. M. Hawkins, admitting the execution of the note, but alleging it was in fact the note of the Linnhaven Orchard Company and that the makers and the defendants who were made parties to the suit were sureties for that company. The trial court rendered a decree granting the relief prayed for in the cross-bill and the First National Bank and Alfred C. Schmitt appealed, but they did not cause the notice to be served upon the defendants Wieder, Crowell or Hawkins. The plaintiffs ' counsel, contending that the parties who were not served with the notice are adverse, move to dismiss the appeal for that reason.
By the decree Alfred C. Schmitt and the other parties who were made defendants in the cross-bill were held to be jointly and severally liable for the payment of the promissory note which was executed by the plaintiffs to the bank. A reversal or modification of that decree would be an advantage to the parties who were not served with the notice of the appeal, and for that reason they are not adverse: Lane v. Wentworth, 69 Or. 242 (133 Pac. 348, 138 Pac. 468); United States National Bank v. Shefler, 77 Or. 579 (143 Pac. 51, 152 Pac. 234).
The motion to dismiss the appeal is denied.
Motion Denied.