Court Opinion

ID: 6908278
Source: CourtListenerOpinion
Date Created: 2022-07-23 22:04:14.915539+00
Date Added: 2024-06-11T16:06:27.228286
License: Public Domain

BEAN, J.,
Dissenting. — This is an action for the possession of an automobile. The complaint is in the usual form. The defendant denied the allegations of the complaint and alleged that the plaintiffs sold *242the defendant the automobile in March, 1921, at an agreed price of $920, and in substance avers that the plaintiffs, as an inducement for the defendant to buy the automobile, warranted the car as a high motor Moore; that it was mechanically perfect and in first-class condition and in all respects that the power of the engine and the hill-climbing qualities were equal to the other low motor car used in the demonstration ; that the car sold to defendant would' develop from 25 to 27 miles to the gallon of gasoline; that the defendant relied upon such warranties and was induced to purchase the car and paid thereon a Ford automobile at the agreed price of $325, $100 in cash, and gave his promissory note for the balance in the sum of $495, to be paid at the rate of $30 per month and interest.
Defendant then avers that the automobile purchased was not as represented and warranted by the plaintiffs, but that the engine of the high-power Moore had little power, or hill-climbing qualities, and the same was not in first-class condition or mechanically perfect in that the clutch would not hold, “and would throw oil from a point in the shaft near the fan belt to such an extent that the hood, of the said automobile would become covered with oil and the clothes of persons riding in said automobile would become sprinkled and saturated with oil thrown from said point” and the said automobile would develop only 14 to 18 miles to a gallon of gasoline.
Defendant paid one installment of $30 and interest, secured a license, paid insurance on the car; and after he had discovered the defects, he complained to plaintiffs, who admitted that the car was not in the condition in which it was warranted to be and promised to repair and put the same in condition; that after the oar had been in the shop four times, plaintiffs *243failed and refused to remedy the defects and defendant notified plaintiffs that he would not make further payments unless the car was put in the condition it was warranted. It is further averred by defendant that about that time, in order to settle the difference between plaintiffs and defendant, plaintiffs agreed to deliver a certain Dodge automobile to defendant, in consideration of the sums paid upon the Moore automobile, and surrender his note given for the balance of the purchase price; that defendant accepted the proposition but when he offered to make the exchange the plaintiffs failed and refused to carry out the agreement.
Defendant demands $494.50 with interest and $1,000 damages. The plaintiffs moved to strike out defendant’s further and separate answer and counterclaim for the reason that plaintiffs’ action was one of replevin, not subject to counterclaim. This motion was overruled by Hon. George W. Stapleton, circuit judge, after much research and study, whereupon plaintiffs filed a reply putting in issue the new matter of the answer.
Upon a trial before a jury, verdict was rendered in favor of defendant for the sum of $295. From a judgment thereon plaintiffs appeal.
It appears that the note given or the contract of sale of the automobile provided for the retention of title in the plaintiffs ufitil the balance of the purchase price was paid. The plaintiffs contend that there was parol evidence admitted to vary the terms of the written contract. The written agreement, which is in evidence and marked Plaintiffs’ Exhibit “A,” has the following provisions:
“No representations or agreements other than as set forth herein have been made by or on behalf of the vendor as an inducement to the execution hereof *244by the vendee or otherwise; and there are no other understandings or agreements between the vendor and vendee in reference to the above property, or this note or contract.”
Plaintiffs also contend that the replevin action determines the right of possession of the car and nothing more; that damages as a counterclaim cannot be pleaded or awarded to the defendant.
In the earlier cases the set-off was not allowed in an action of replevin except where equitable relief may be demanded under exceptional circumstances. In some jurisdictions the filing of a counterclaim in a replevin suit is expressly prohibited by statute. Since the adoption of Codes, in most of the states, the doctrine of set-off and counterclaim has undergone much change. At first, counterclaims were held not to be available in any action for tort, and therefore not in replevin, which sounds in tort: 34 Cyc. 1416, subd. 4. In many of the jurisdictions- which have adopted a Code of Civil Procedure, it is provided with respect to set-off and counterclaim in general that -the answer may contain a statement of any new matter constituting a counterclaim, which is defined to be a cause of action arising out of the contract or transaction set forth in the complaint as the foundation of plaintiff’s claim, or connected with the subject of the action. This language is held sufficiently comprehensive to permit the setting up in an action of replevin, of a counterclaim coming within the terms of the definition: Note to Zimmerman v. Sunset Lbr. Co., Ann. Cas. 1913A, 107; Ames Iron Works v. Rea, 56 Ark. 450 (19 S. W. 1063); Rennebaum v. Atkinson, 103 Ky. 555 (45 S. W. 874); Dodd v. Wilson, 26 Mo. App. 462; McCormick Mach. Co. v. Hill, 104 Mo. App. 544 (79 S. W. 745); Thompson v. Kessel, 30 N. Y. 383; Adenaw v. Piffard, 137 App. Div. (N. Y.) 470 *245(121 N. Y. Supp. 825); Vallancey v. Hunt, 20 N. D. 579 (129 N. W. 455, 34 L. R. A. (N. S.) 473); Morgan v. Spangler, 20 Ohio St. 38.
The State of Oregon seems to be aligned with other Code states allowing a counterclaim to be pleaded by-defendant in an action for the possession of personal property in the nature of replevin, in cases in which the claim is a direct result of a breach of the contract by the plaintiff, is reasonably within contemplation of the parties and arises “out of the contract or transaction set forth in plaintiff’s complaint as the foundation of the plaintiff’s claim” and is sufficient to defeat the plaintiff’s right to recovery provided it equals or exceeds the amount of the plaintiff’s claim: Sec. 74, subd. (1), Or. L.; Zimmerman v. Sunset Lbr. Co., 57 Or. 309, at page 313 (111 Pac. 690, 691, Ann. Cas. 1913A, 103, 32 L. R. A. (N. S.) 123), where Mr. Justice Eakin states thus:
“But, if the action is to recover possession of property, the right to which arises upon contract, such as, upon chattel mortgage, which in terms authorizes the mortgagee to take possession upon default in payment of the debt secured, any matter tending* to defeat plaintiff’s right of possession may be pleaded as a set-off, as plaintiff’s right, in such a case, being for the purpose of foreclosure, is not based on title, but the right of possession; and if there is no debt there is no right of possession in the mortgagee. This is recognized in Nunn v. Bird, 36 Or. 515 (59 Pac. 808), and Freeman v. Trummer, 50 Or. 287 (91 Pac. 1077). But to defeat the action the set-off must equal the debt. Cobbey, Replevin, § 791; Wells, Replevin, § 581.
“Most of the cases discussing this question grow out of chattel mortgage or some other character of lien, and it seems that the same rule applies to cases in which the vendor retains the title until full payment of the purchase price, as in the case before us. In such a case, if the debt is canceled, his title is *246terminated without other act. This is recognized in Ames Iron Works v. Rea, 56 Ark. 450 (19 S. W. 1063), and Cobbey, Replevin, § 791.”
In McCormick Harv. Mach. Co. v. Hill, supra (see note, Ann. Cas. 1913A, 108), the court, after an extended review of the authorities, and in view of the liberal construction put on the state statutes in reference to set-off and counterclaim with a view to settling all controversies in one action, laid down the rule that set-off and counterclaim are available as defenses in replevin as well as in other actions, subject, of course, to such restrictions as the nature of the proceeding or the facts of the case may impose. The court said:
“Does the asserted counterclaim arise out of the contract or transaction set forth in the petition as the foundation of the plaintiff’s claim or is it connected with the subject of the action? It must fulfill one of those contingencies, as this is not a case on a contract. * * The overpayment pleaded by way of counterclaim is directly connected with the subject of the action, when thus regarded, and might perhaps be declared to arise out of the transaction on which the notes and mortgage were given. But we prefer to decide that the payments are connected with the subject of the action. The phrase ‘subject of the action’ is different from ‘cause of action,’ and signifies the ultimate or primary title, right or interest which a plaintiff seeks to enforce or protect; not merely the wrong to be redressed in the particular case. According to this view, the subject of the action in this litigation is neither the animals mentioned in the complaint, nor their unlawful detention by the defendant, but plaintiff’s claim against the defendant on the notes and chattel mortgage. Plaintiff’s right to the stock depended entirely on whether its notes had been paid and the lien of the mortgage thereby destroyed; hence the indebtedness was the subject of the action, and its existence the fact in dispute.”
*247In the case of Minneapolis Thresh. Mach. Co. v. Darnell, 13 S. D. 279 (83 N. W. 266), an action of replevin, to enforce a chattel mortgage, the defense was that at the time of the execution of the mortgage the plaintiff stipulated that the defendant should insure the mortgaged property against loss by fire, and that the plaintiff undertook, on the delivery by the defendant to him of a promissory note for the premium, to secure the insurance or to carry the risk itself; that the plaintiff failed to procure insurance; and that the property had been damaged by fire to an extent which the defendant sought to be set off against the plaintiff’s claim. It was held that the counterclaim of the defendant arose directly out of the transaction, and was connected with the subject of the plaintiff’s action, and that the plaintiff could not object that the counterclaim was in the nature of a tort and therefore could not be pleaded as against a claim on a contract, since under the terms of the contract alleged by the defendant the plaintiff itself was liable for the loss: See, also, Deford v. Hutchinson, 45 Kan. 318 (25 Pac. 641, 11 L. R. A. 257). To much the same effect see Johnson v. St. Louis Butcher Supply Co., 60 Ark. 387 (30 S. W. 429); Lapham v. Osborne, 20 Nev. 168 (18 Pac. 881); Thompson v. Kessel, 30 N. Y. 383; Cooper v. Kipp, 52 App. Div. 250 (65 N. Y. Supp. 379); Ramsey v. Capshaw, 71 Ark. 408 (75 S. W. 479); Brown v. Buckingham, 11 Abb. Pr. 387, 21 How. Pr. 190; Wilson v. Hughes, 94 N. C. 182.
The instant case depends upon the force and effect of subdivision (1) of Section 74, Or. L. It should be remembered that all forms of action are abolished. The main question is, did the cause of action set forth in defendant’s answer as a counterclaim arise out of the transaction set forth in the com*248plaint as the foundation of plaintiffs’ claim? If so, it may he pleaded as a counterclaim. If not, the contrary should he held.
Section 73, Or. L., permits an answer to contain a statement of any new matter constituting a defense or counterclaim. Section 74, Or. L., provides that the counterclaim must be one existing’ in favor of the defendant, and against the plaintiff, between whom a several judgment might be had in the action, and arising out of one of the following causes of action:
“(1) A cause of action arising out of the contract or transaction set forth in the complaint, as the foundation of the plaintiff’s claim.
“(2) In an action arising on contract, any other cause of action arising alsoi on contract, and existing at the commencement of the action.
“The defendant may set forth by answer as many counterclaims as he may have, including pleas in abatement. Such defenses shall each be separately stated and shall refer to the causes of action which they are intended to answer, in such manner that they may be intelligently distinguished; provided, that the defendant shall not be required to admit in his answer any liability or indebtedness to the plaintiff in order to be permitted to plead a counterclaim. ’ ’
Subdivision (1) above quoted provides for two classes of counterclaims; first, a demand existing in favor of the defendant and against the plaintiffs, which arises out of the contract upon which the plaintiffs base their action; second, a cause of action arising out of the transaction set forth in the complaint as the foundation of plaintiffs ’ claim.
The word “transaction” has a broader significance than the word “contract,” as the words are used in our Code. Every contract may be said to be a transaction, but every transaction is not necessarily a contract. The term “transaction” as dis*249tinguished from the contract is intended to extend to other matters than a contract upon which an action may be based. In actions in which some transaction, although iiot necessarily a contract, is set forth as the foundation of the plaintiffs’ claim, counterclaims which arise out of the same transaction, may be pleaded^ “The term ‘transaction’ is all-embracing.” Bliss on Code Pleading, § 372, and note to § 371.
To that section of the work on Code Pleading which discusses the second class of counterclaims, the following note is appended:
“I can imagine cases where one neglects a common-law duty, as that of a carrier, where the parties have been brought into obligatory relations by means of a contract, in which the mutual liabilities would be enforced, whether the original action were founded upon the contract and its breach, or upon the common-law duty and its tortious disregard. The transaction would be the same.”
In Bitting v. Thaxton, 72 N. C. 541 (see note to § 374, Bliss on Code Pleading), objection had been made because the action was one of tort.
Mr. Justice Read, after showing that there was but one form of action, says:
“When the plaintiff files his complaint, setting forth the transaction, whether it be a tort or a contract, the defendant may set up any claim — which he has against the plaintiff, connected with the transaction set up in the complaint, and this is called ‘a counterclaim.’ And where the plaintiff states the transaction, he' cannot, by calling it one name or another — as, tort, or contract — cut off the defendant’s counterclaim growing out of the same transaction. It is the ‘transaction’ that is to be investigated, without regard to its form or name.”
*250See Judah v. Trustees of Vincennes University, 16 Ind. 56; Cow Run Tank Co. v. Lehmer, 41 Ohio St. 384; Cornelius v. Kessel, 58 Wis. 237 (16 N. W. 550); Revere Fire Ins. Co. v. Chamberlin, 56 Iowa, 508 (8 N. W. 338, and 9 N. W. 386); Mulberger v. Koenig, 62 Wis. 558 (22 N. W. 745).
A statement particularly applicable to this case is found in Cobbey on Replevin, Second Edition, Section 793; the only difference being between chattel mortgage and a conditional sale contract. We there read as follows:
“In replevin by a mortgagee, the mortgagor may prove a purchase of the goods by the mortgagee subsequent to the making of the mortgage and his refusal to take the goods and pay for them as agreed; and if plaintiff, mortgagee, is allowed to keep the goods, may have judgment for a return or the value of her interest therein.”
Xenia Branch Bank v. Lee, 7 Abb. Pr. (N. Y.) 372, was an action brought to recover damages for an alleged conversion of certain bills of exchange. The answer first denied the allegations of the complaint and averred that several bills were indorsed to defendant and received by him in good faith; second, the answer set up, by way of counterclaim, the making of several drafts with plaintiff as drawee, which were duly indorsed, and finally in due course came to the proper possession of defendant, and alleged that there was due upon said bills a certain sum. The plaintiff moved to strike from the answer this counterclaim, on the ground that it was not one which the Code authorized to be set up in such an action. After an extended discussion it was held that the counterclaim was permissible, for the reason that it arose out of the transaction set forth in the complaint as the *251foundation of the plaintiffs’ claim. See note to § 371, Bliss on Code Pleading.
In the note referred to in Ann. Cas 1913A, at page 108, the author states:
“The rule permitting the assertion of a counterclaim ‘arising out of the contract or transaction set forth in the complaint’ or ‘connected with the subject of the action’ finds frequent application in cases where chattels have been the subject of a conditional sale or installment lease, and the vendor seeks the recovery of the possession of the goods sold on the failure of the vendee to make the payments agreed on. In such a case it is well settled that the vendee may counterclaim for damages arising from the vendor’s failure completely to perform the contract of sale or from his breach of warranties or conditions annexed thereto.” (Citing several authorities.)
In note to Dearing Water Tube Boiler Co. v. Thompson, 24 L. R. A. (N. S.) 748, it is stated:
“Where a statute in general terms and without limitation as to the nature of the action, authorizes a defendant to counterclaim for damages arising out of the transaction set forth in the complaint as the foundation of plaintiff’s claim or connected with the subject of the action, defendant in replevin may counterclaim for damages which, at common law, would have been a proper item for recoupment.”
The transaction involved in the case at bar includes the sale and warranty of the automobile the representations made to defendant by plaintiffs to induce him to make the purchase. The transaction set forth in the complaint as the foundation of plaintiffs’ claim may fairly be said to embrace all the dealings between plaintiffs and defendant relating to the conditional sale and transfer of the machine. In a just sense the counterclaim of defendant arose out of such transaction or dealings. Plaintiffs, in order to support their alleged title *252to the motor-car, offered in evidence the note or conditional sale contract. The defendant then was entitled, as a defense to plaintiffs’ demand, to allege and prove that there was nothing due on the contract, either that the debt had been paid or extinguished. If there was no debt due from defendant to plaintiffs on the sale of the automobile, then there was no title to, or right of possession, of the car in plaintiffs, and their action should fail.
Whether the cause of action set forth in defendant’s answer as a counterclaim arises out of the contract set forth in the complaint, it is unnecessary to stop to consider, as the term “transaction” being a broader term, and the greater includes the less.
The foundation or basis of plaintiffs’ claim at first blush might seem to be the right to the possession of the car; but the real foundation of plaintiff’s claim is the debt alleged to be due from defendant, and the title to the motor-car which the plaintiffs retain as security for the payment of the debt. This is asserted by the plaintiffs as the foundation of their interest and right to recover the property in suit. The answer and reply develop all the main facts of the dealings between the parties, and together with the complaint raise the issues which may properly be tried in one case, and thereby carry out the letter and spirit of the Code: See note to Zimmerman etc. Cot. v. Sunset Lbr. Co., Ann. Cas. 1913A, 107, 108, and note to Vallancey v. Hunt, 34 L. R. A. (N. S.) 473. As noticed above, many of the Codes contain the words “or connected with the subject of the action” in addition to subdivision (1) of Section 74, Or. L., making’ three classes embraced in subdivision (1). This does not lessen or narrow the meaning of the provision *253providing for the two classes of counterclaim found in subdivision (1), Section 74 of our Code.
In the present action the right to recover possession of the automobile arises out of the contract by which the plaintiffs, the vendors, retained the title until full payment of the purchase price. Any matter tending to defeat plaintiffs’ right of possession may be pleaded as a counterclaim. Plaintiffs’ right is asserted for the purpose of enforcing payment of the note given by defendant and is in the nature of a foreclosure. As stated, if there is no debt against the defendant, there is no right of possession in the plaintiff. The case comes squarely within the rule stated in the Zimmerman case. The counterclaim pleaded by defendant is. one arising out of the contract, or transaction, set forth in the complaint. The surplus, claimed by the defendant in his answer, arose out of the transaction in which the note or contract was given as a part of the same transaction.
The fact that the defendant, in effect, claims that the machine is worthless, at least to him, and does not ask for a return of possession of the chattel, does not change the matter. The damages claimed by defendant exceeded the total claim of plaintiffs, or the value of the automobile or the amount claimed on the note and the matter could very conveniently all be adjusted in one action. The defendant should not be relegated to another action at law to recover any amount to which he might be entitled by virtue of the transaction, and thereby split his cause of action. According to the letter and spirit of the Code the whole matter should be determined in this action. This is not an action where the cause alleged in the complaint had its origin in and is based upon an alleged tortious act of the defendant.
*254It is contended by defendant that the testimony as to the failure of the car to fulfill the warranty is in violation of the rule that parol evidence is not competent to vary the terms of a written instrument. It may be stated at the outset that the testimony objected to does not contradict the terms of the written instrument in evidence in the case. That document consists of a promissory note, and states that the note is given for the purchase price of a Moore automobile of a certain factory number, type touring, four cylinder, motor 1920. There is no description of the kind of car, or any warranty contained in the instrument. It further provides that the plaintiffs should retain title to the automobile until the purchase price is paid, and contains the usual stipulations in regard to insurance and the care of the property.
Evidence of a collateral oral agreement supplementing a written agreement on the same subject and not varying or contradicting its terms is admissible: Note, Ann. Cas. 1914A, 454; Barnes-Smith Merc. Co. v. Tate, 156 Mo. App. 236 (137 S. W. 619).
In so far as the written contract of sale fully expresses the terms of the agreement, a parol agreement is excluded thereby. A number of recent cases apply the rule permitting a writing to be supplemented by proof of a collateral parol agreement to a written agreement for the sale of chattels: Note, Ann. Cas. 1914A, 456; In re Clairfield Lbr. Co., 194 Fed. 181; Jones on Construction of Contracts, §§ 139, 140.
The defendant stresses his objection to the oral evidence upon the clause contained in the note, or the contract, above quoted in regard to there being no other representations or agreements other than are set forth therein. Practically this precise question *255was passed upon in the case of Little v. Van Syckle, 115 Mich. 480 (73 N. W. 554). That case was in regard to a sale of a piano under a conditional sales contract. The title remained in the seller. The contract concluded much like the one in question “that there is no agreement or understanding between the salesman and myself otherwise than herein mentioned.” The court said, on page 483 of the report:
“If a vendor in such cases desires to avoid that warranty which the law implies, he must incorporate it in his contract, or insert therein a warranty which will exclude all others. Where a parol express warranty has been agreed upon outside the written contract, and that warranty is such as the law implies without-any agreement, the vendee cannot be deprived of the benefit of this warranty by a provision in the contract that ‘there is no agreement or understanding between the salesman and myself otherwise than herein mentioned.’ Such a clause is not in conflict with the implied warranty which the law attaches to all such contracts.”
In an action of claim and delivery like the present case, under our statute the defendant may set off any demand he has against the plaintiff that grows out of the same subject as plaintiff’s claim: Freeman v. Trummer, 50 Or. 287 (91 Pac. 1077); Reardon v. Higgins, 39 Ind. App. 363 (79 N. E. 208); Brown v. Buckingham, 11 Abb. Pr. (N. Y.) 387; Smith v. French, 141 N. C. 1 (53 S. E. 435); Aultman v. McDonough, 110 Wis. 263 (85 N. W. 980, 24 L. R. A. (N. S.) 748, note).
In the present case, the defendant alleged, in effect, that the plaintiffs warranted the Moore car to be as good as the car used in the demonstration; was mechanically perfect and in first-class condition and serviceable. The testimony, on the part of defendant, tended to show that the car was not in good mechanical condition; that the clutch slipped and the car vomited *256oil “way back on the back fender”; that the engine was weak; that the plaintiff promised to remedy the defects and the defendant applied to them several times to do so, but.they tried and failed to comply with their agreement in that respect and after a time refused. The testimony on the part of plaintiffs conflicts somewhat with the defendant’s testimony, but with this we have nothing to do.
Plaintiffs were dealers in automobiles and sold the car to defendant under the usual conditions. Section 8178, subdivision 1, Or. L., commonly known as the Uniform Sales Act, states:
“Where the buyer, expressly or by implication, make’s known to the seller the particular purpose for which the goods are required, and it appears that the buyer relies on the seller’s skill or judgment (whether he be the grower or manufacturer or not), there is an implied warranty that the goods shall be reasonably fit for such purpose.
“(6) An express warranty or condition does not negative a warranty or condition implied under this act unless inconsistent therewith.”
A material change has been made by the provision of Section 8178, Or. L., which puts the seller, who is not the manufacturer or grower, in the same position which was formerly held by the grower or manufacturer with reference to an implied warranty.
There can be no question that the car involved was sold to the defendant for the usual purpose of driving and riding in it, which the plaintiffs well knew. The plaintiffs and defendant, when making the deal, were not upon an equal footing. The plaintiffs were experienced dealers and understood, or are presumed to have understood, the mechanism of a motor better than defendant. Evidently the defendant relied upon their judgment and skill. The express oral warranty pleaded in this action was practically the same as a *257warranty implied by law, that it would be reasonably serviceable for defendant’s use: See Pendergrass v. Fairchild, 106 Or. 537, 546 (212 Pac. 963); Durbin v. Denham, 106 Or. 34, 38 (210 Pac. 165, 29 A. L. R. 1227); Bouchet v. Or. Motor Car Co., 78 Or. 230 (152 Pac. 888); Luria Bros. Co. v. Klaff, 139 Md. 586, 593 (115 Atl. 849); 1 Uniform Laws, Ann., 68 and 73; Gold Ridge Min. Co. v. Tallmadge, 44 Or. 34 (74 Pac. 325, 102 Am. St. Rep. 602); Puritan Mfg. Co. v. Westermire, 47 Or. 557 (84 Pac. 797).
It is tbe general rule that, in order for a writing to be protected by tbe parol evidence rule, it must be tbe final repository of tbe agreement. There must be an integration of tbe entire agreement into tbe writing; a writing drawn up for some other purpose than a final and complete repository of tbe agreement is not tbe subject of tbe parol evidence rule: Wigmore on Ev., §§ 2429, 2430; Cook v. Darling, 160 Mich. 475 (125 N. W. 411); Jones on tbe Construction of Contracts, § 134.
The ruling of the court restricted tbe oral evidence in relation to the deal between plaintiffs and defendant to tbe agreement and statements made after the execution of tbe written contract. Tbe ruling was favorable to tbe plaintiffs.
There is no reversible error in tbe record. Tbe judgment of tbe trial court should be affirmed.
McBride, C. J., concurs in this opinion.