Title: Dean v. Exotic Veneers, Inc.
Citation: 531 P.2d 266
Docket Number: N/A
State: Oregon
Issuer: Oregon Supreme Court
Date: January 30, 1975

531 P.2d 266 (1975)
James P. DEAN, Appellant,
v.
EXOTIC VENEERS, INC., a Corporation, and George R. Thompson, Respondents,
Peter Boer et al., Intervenors.

Supreme Court of Oregon.
Argued and Submitted December 4, 1974.
Decided January 30, 1975.
*267 Richard V. Bayless, Bauer, Murphy, Bayless &amp; Fundingsland, Portland, argued the cause and filed briefs for appellant.
Donald H. Coulter, Myrick, Coulter, Seagraves &amp; Nealy, Grants Pass, argued the cause for intervenors. With him on the brief was Michael Henderson, Grants Pass, counsel for respondents.
Before O'CONNELL, C.J., and McALLISTER, HOLMAN, TONGUE, HOWELL, BRYSON and SLOPER, JJ.
HOLMAN, Justice.
This is an action at law to recover an amount alleged to be due plaintiff for services rendered as general manager of the defendant corporation from 1962 to 1972. The defendant Thompson is the court-appointed receiver for liquidation of the defendant corporation; intervenors are defendant corporation stockholders who are resisting plaintiff's claim. Because their interests are identical, all parties other than plaintiff will be termed defendants. Plaintiff's claim is stated in two counts: the first upon an express contract for plaintiff's services; the second upon quantum meruit for the reasonable value of those services. Plaintiff appeals from a judgment for defendants which was rendered pursuant to a directed verdict upon the ground of res judicata.
Prior to the commencement of the present action plaintiff had submitted a claim to the receiver for the payment of an amount due plaintiff under an alleged contract for services for the period in question. The receiver filed a petition with the circuit court having jurisdiction of the receivership for a determination of plaintiff's claim. A hearing on the merits was then held before the court which resulted in the court's directing the receiver to deny the claim. No appeal was taken from this determination. Plaintiff subsequently filed the present action.
*268 Plaintiff first contends, without citation of authority, that the receivership court's denial of his claim is not a "final order" disposing of his contract claim pursuant to ORS 19.010(2)(c) so as to be appealable and thus, is not the basis for a defense of res judicata. Assuming the trial court's determination would have to be appealable under the statute in order to support a defense of res judicata, plaintiff's position is not well taken and is refuted by Section 7924 of 16 Fletcher Cyclopedia of the Law of Corporations 660-61 (rev ed 1962):
Plaintiff's principal contention is that even if his first count on a specific contract may not be relitigated, he is not precluded from litigating a claim based on the reasonable value of his services. As we said in Gwynn v. Wilhelm, 226 Or. 606, 608, 360 P.2d 312, 313 (1961):
Plaintiff contends his claim upon quantum meruit is a different cause of action than his claim on the express contract. This brings into issue the definition of the term "cause of action" as it relates to the law of res judicata. "Cause of action" is a "slippery" term which is used to express different concepts in different contexts.[1]
The principal purposes of res judicata are prevention of harassment of defendants by successive legal proceedings as well as economy of judicial resources. Its scope is related to the limits upon the various forms of relief which may be requested in one proceeding and the limitations upon amendments to pleadings during trial. As permissible joinder of requests for various forms of relief and amendments during trial become broader and more liberal, the reasons behind res judicata dictate that parties to actions be required to make use of such liberal procedures and not be permitted to protract litigation through a multiplicity of suits or actions which can be disposed of in one proceeding. See Clark on Code Pleading 472-78 (2d ed 1947); also, Jarvy v. Mowrey, 235 Or. 579, 583, 385 P.2d 336 (1963). Therefore, with the advent of code pleading and the abandonment *269 of rigid common law forms, the definition of "cause of action" has tended to expand. As pointed out in Clark, supra at 127:
Having in mind the purposes to be served by the application of the doctrine of res judicata, we agree with Clark in the following:
Clark further states at 137:
If in the present case we apply Clark's concept of "cause of action" for res judicata purposes, it becomes apparent that there is but a single occasion for judicial relief, even though there are alternative contentions concerning the circumstances under which they were rendered and thus alternative grounds or theories for recovery. To the extent that a given state of facts is susceptible to alternative interpretation and analysis, plaintiff must seek and exhaust all alternative grounds or theories for recovery in one action.
Plaintiff claims to have rendered only one set of services. Nothing prevented him from presenting his claim against the receiver on the alternative theories of express contract and quantum meruit and from having them both adjudicated at the same time. Having once litigated his claim against defendant, he should be foreclosed from further litigation on all grounds or theories of recovery which could have been litigated in the first instance. The public policy to be served by the doctrine of res judicata prevents him from having two bites at the apple. In Developments in the Law  Res Judicata, 65 Harv.L.Rev. 818, 826 (1952), the following statement is found:
For a case which holds that an adverse judgment on an action on an express contract is a bar to a subsequent action on quantum meruit, see Golden v. Mascari, 63 Ohio App. 139, 25 N.E.2d 462 (1939). For the purposes of the application of the statute of limitations we have held that an amended complaint on quantum meruit is a restatement of the same cause of action as that in the original complaint on an express contract. Richardson v. Investment Co., 124 Or. 569, 571-572, 264 P. 458, 265 P. 1117 (1928).
Many cases decided on the specific question are contrary to the above conclusion *270 and authority. In Jarvy v. Mowrey, supra, a decedent's estate filed suit against decedent's sister to secure the return of certain bank accounts transferred to the sister by decedent. In defense, the sister alleged that the money was paid to her in payment of an indebtedness and attempted to prove she earned the money caring for the decedent. Her pleadings were ambiguous as to whether her claim was for the reasonable value of her services or upon her right under a specific contract, or both. Upon trial the sister lost and was required to return the money to the estate. Thereupon the sister brought an action on implied contract for the reasonable value of her services. In discussing the problem, the court said:
However, the opinion held the sister could not take advantage of the ambiguity of her pleadings in the first case and that the court in the first case necessarily passed upon her right to recover under the theories of both express and implied contract. The above quotation, therefore, is dictum. In so deciding, this court said:
This language sounds as if the court in the second case was taking the Clark definition of "cause of action," i.e., an aggregate of operative facts which compose a single occasion for judicial relief, and blending it with one of the many other definitions that have been offered, that is, if the evidence needed to sustain two proceedings is different, those proceedings do not involve the same cause of action. This latter definition of cause of action, the "same evidence" test, is discredited by Restatement of the Law of Judgments § 61 (1942), which states that if the evidence needed to sustain the second action would have sustained the first action, the causes of action are the same, but that the contrary is not true. Comment a. of that section contains the following:
As the quoted material from Jarvy points out, the usual basis for cases holding that proceedings upon express and implied contract involve a different cause of action, despite the unity of the underlying facts, is that the evidence necessary to sustain the two proceedings is different. Opinions of this court which illustrate that in order to be considered the same cause of action for res judicata purposes the two proceedings do not have to be sustained by the same evidence are: Barber v. Gladden, 215 Or. 129, 332 P.2d 641 (1958); Brown v. Brown, 142 Or. 275, 19 P.2d 428 (1933); Gust v. Edwards Co., 129 Or. 409, 274 P. 919 (1929); Salene v. Isherwood, 74 Or. 35, 144 P. 1175 (1914); Yuen Suey v. Fleshman, 65 Or. 606, 133 P. 803, Ann. Cas. 1915A 1072 (1913); Belle v. Brown, 37 Or. 588, 61 P. 1024 (1900). In Gust v. Edwards Co., supra, defendant first brought an action of replevin to recover possession of furniture and possession was taken under a bond. Plaintiff successfully defended but did not ask for damages for the wrongful detention of the furniture. Plaintiff (formerly defendant) then brought an action for such damages. The court held the second action was barred by res judicata and said at 410-411, 274 p. at 919:
In Belle v. Brown, supra, the court held that a decree partitioning the assets of an estate among the heirs was res judicata of a subsequent claim by some of the heirs that other heirs had received certain property from the decedent as advancements of their shares, even though this issue had not been litigated in the first case. At 37 Or. 592-593, 61 P. 1026, this court said:
However, in the case of Wagner v. Savage, as Adm'r, 195 Or. 128, 244 P.2d 161 (1952), plaintiff brought a suit for specific performance of an agreement. She contended she had entered into an oral agreement with defendant's decedent to keep house for him the rest of his life in return for his promise to leave his worldly goods to her upon his death. The case was tried and resulted in a decree for defendant. Plaintiff then brought an action for the reasonable value of her work arising out of the same services for defendant's decedent and defendant pleaded res judicata. With little if any discussion of the rationale of res judicata and for reasons which are not clear, this court held that plaintiff could recover. This was a direct holding which is contrary to our ruling here.
Although the vast majority of the cases in the United States hold, as demonstrated by Wagner and the dictum in Jarvy, that an adverse judgment on an action upon an express contract is not a bar to a subsequent action for the reasonable value of one's services, it is submitted that, when the rationales behind res judicata are taken into consideration, such holdings are out of step with the freedoms of modern practice and procedure. It is also submitted that the dictum in Jarvy and the holding in Wagner are incompatible with the rationale of other Oregon cases in the field of finality of judgments and must be overruled.
Since, however, we are unable to determine whether or not plaintiff relied upon the then state of Oregon law (the dictum in Jarvy and the holding in Wagner), the change in the law will be applied only prospectively; therefore, in this instance the judgment of the trial court is reversed and the case is remanded for a new trial on the theory of quantum meruit. This is one of those situations in which a trial judge is reversed for being right.
Reversed and remanded.
[1]  See Introductory Note to "What Constitutes the Same Cause of Action," Restatement of the Law of Judgments 239, ch. 3 (1942). Also see McGrath v. White Motor Corp., 258 Or. 583, 588, 484 P.2d 838 (1971); Elliott v. Mosgrove, 162 Or. 507, 543-545, 91 P.2d 852, 93 P.2d 1070 (1939).