Court Opinion

ID: 9625318
Source: CourtListenerOpinion
Date Created: 2023-08-22 07:36:15.367714+00
Date Added: 2024-06-11T18:06:06.184210
License: Public Domain

LUSK, J.,
dissenting in part.
The effect of filing an answer containing an equitable defense to an action at law is to stay the proceedings at law until the determination of the issues made by the equitable answer. If the proof sustains the equitable defense the proceedings at law may be perpetually enjoined or allowed to proceed in accordance with the final decree. If, after determining the equities, the case is allowed to proceed at law, the pleadings containing the equitable matter shall be considered withdrawn from the case and the court shall allow such pleadings in the law action as are provided for in actions at law. ORS 16.460. The fact that the trial is before the court without the intervention of a jury is immaterial on the question whether the case is one at law where the equitable defense fails. There is nothing to the contrary in Friedenthal v. Thompson, 146 Or 640, 646, 647, 31 P2d 643, cited by the majority. The dictum quoted from that case means merely that the court should dispose of the whole matter in the equitable proceeding where the equitable defense is sustained, but as we there said, “where the court finds against the defendant on the equitable defense, a decree may be entered accordingly and the case be allowed to proceed at law.” Whether it proceeds before *686a judge and jury or a judge alone does not determine the character of the proceeding.
Here the defendants in a forcible entry and detainer action filed a third amended answer setting up an equitable defense, the essence of which was that they were not holding the land as tenants but as purchasers under a vendor-purchaser contract. They alleged that a purported cancellation of that contract had been obtained by fraud, and that for this and other reasons the contract was still in effect, and prayed for equitable relief with respect to their rights under the contract. By way of reply to this pleading the plaintiff denied its material allegations and set up an estoppel based on facts not necessary to be stated here. The reply concludes: “Wherefore, plaintiff, having fully replied to the third amended answer of the defendants, renews the prayer of his complaint.” The prayer of the complaint was the usual prayer in an action in forcible entry and detainer, that is to say, “for judgment against the defendants for the restitution of said premises.” The plaintiff asked for no equitable relief, and, indeed, alleged no facts which would have entitled him to equitable relief. The entire reply was framed to meet the allegations of fact set up in the answer which, in the defendants’ view, constituted a defense and entitled them to the interposition of a court of equity. Hence, the statement from the Friedenthal case quoted in the opinion of the court, to the effect that when both plaintiff and defendant seek the aid of equity they thereby confer jurisdiction on the court to dispose of the entire case as in a suit in equity, is without application here. The only relief sought by the plaintiff was recovery of possession of the premises in an action at law. The reply was purely defensive in its nature.
The court found against the defendants on the equi*687table issues, and entered detailed findings of fact. With the equitable defense thus disposed of there was nothing left to be determined except the issue of the right to possession of land in a forcible entry and detainer action. What the parties or the court may have thought as to whether they were still in equity or at law could not convert that land of a ease into a suit in equity. There was nothing of equitable cognizance left after the court found against the defendants on the equitable issue.
Pacific General Contractors v. Slate Construction Co., 196 Or 608, 251 P2d 454, falls far short of supporting the court’s position. That was an action for money had and received in which the defendant interposed an equitable defense. Upon completion of the evidence on the equitable issues the judge announced that he would hold against the defendant on such issues. Counsel for defendant sought to have a decree entered to that effect, but the court refused to enter such a decree and thereafter proceeded with the trial of the issues at law and entered findings and a judgment for the plaintiff. In that state of the record we held that we could not review the questions raised by the equitable answer because no decree had been entered dismissing the equitable proceeding, and, of course, no appeal had been taken from such a decree. We called attention to the fact that entry of a decree dismissing the equitable defense could have been compelled by mandamus, but that the defendant had not resorted to that remedy. We therefore concluded that we could not consider assignments of error directed to the refusal of the court to enter a decree dismissing the equitable defense and to the court’s “withdrawing the equitable defense.”
The opinion of the court in the case at bar invokes this decision as authority for treating this case as a suit in equity and granting equitable relief to the de*688fendants, and says: “No judgment at law was ever entered in this cause. The appeal is solely from a determination of the equitable issues presented.” A part of the so-called decree entered by the Circuit Court reads: “That the plaintiff recover from the defendants, H. H. Williams and Edith Williams, the possession of the said lands and premises last above described, and that a writ of restitution issue therefor.” This is the form of judgment prescribed by the code in an action of forcible entry and detainer. OES 105.145. The court proceeded to order that neither party should have costs or disbursements which would indicate that the court thought that the judgment was given in a proceeding in equity. But that was merely the mistake of the court. Insofar as the court also adjudged that the plaintiff was the owner of the land involved, free and clear of any right, interest, claim or estate of the defendants, it would appear that the court intended to enter a decree upon the issues made by the equitable answer. But that does not decide the question before us the way the court here decides it for the reason that, once a decree has been entered disposing of the equitable issues unfavorably to the defendant, the only order to be entered is a judgment at law. This is true even though, as in the Pacific General Contractors case, no decree formally dismissing the equitable defense has ever been entered, and neither the form which the judgment takes nor the name it is given can change its essential character.
As did the Circuit Court, we have held that the equitable defense failed. We have affirmed the portion of the so-called decree granting restitution of the real property to the plaintiff. What the court now does is to hold that in an action of forcible entry and detainer, where an equitable answer is interposed and fails, a counterclaim for money had and received may be al*689lowed, not because tbe equitable defense succeeded, but because it failed. This the court holds in a case in which the pleadings cannot possibly be stretched to include such an issue. That issue is the right of the defendants to recover $6,000, the initial payment under a contract for the purchase of land which the defendants alleged in their answer was still in full force and effect and constituted the foundation of their right to remain in possession of the land. It must be plain that under such a pleading the defendants did not raise the question of their right to recover the down payment, for that right could not arise unless the contract had been cancelled and the whole theory of the defense is that it was still in effect.
On the other hand, the reply was directed solely to the claim in the defendants’ answer that the contract was still in effect, thereby presenting as the ultimate question: Must plaintiff’s action at law be perpetually enjoined because of the facts alleged in the answer? When we decide, as we do, that it should not be enjoined because the equitable defense has not been sustained, nothing is left except an ordinary forcible entry and detainer action. I still adhere to the statement in our former opinion that an action for money had and received cannot be set up as a defense (or, I would add, as a counterclaim) to the possessory action of forcible entry and detainer. And such a cause of action certainly cannot be adjudicated when it is not even in issue. The court now holds, and properly so, that the stipulation transferring the cause from the justice’s court to the Circuit Court did not authorize the latter to determine all the equities between the parties. I can find no other stipulation to that effect, either express or implied.
I know of no statute, nor of any precedent construing our statutes, which is authority for the procedure *690which the court now inaugurates. Certainly, the court has cited no case which supports this novel decision. It may be laudable to attempt to avoid a multiplicity of suits, but it is not permissible to do so at the expense of settled principles of procedure. I would modify our former opinion by affirming that portion of the decree of the Circuit Court which grants to the plaintiff judgment of restitution, without prejudice to the right of the defendants to bring an action for the recovery of the sum of $6,000 paid to the plaintiff at the time of the execution of the contract of sale.
Warner, C. J., joins in the foregoing dissent.