Court Opinion

ID: 6904929
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:58:51.743728+00
Date Added: 2024-06-11T16:06:18.591535
License: Public Domain

Mr. Justice Bean
delivered the following dissenting-opinion .
I am unable to concur in the majority opinion.
This is an action upon an indemnity contract. The cause was tried by the court without the intervention of a jury. Findings of fact were made and a judgment rendered in favor of defendant C. A. Sheppard, from which plaintiff appeals. Defendant G. F. Martin made no defense.
The facts and circumstances of the case are nearly all detailed in the findings of the trial court, the substance of which is as follows: The plaintiff is a Maryland corporation authorized to do business in Oregon. On December 2, 1910, one E. M. Meach had instituted an action in the Superior Court of Clarke County, Washington, against one C. Schley, doing business as the Vancouver Bill Posting Company and the S. S. S. Realty Company, to recover $767.67, and caused a writ of attachment to be issued and levied upon his property. Schley made application to the plaintiff to execute a bond in the sum of $1,536 conditioned that Schley would pay any judgment that might be rendered against him in the action, for the purpose of having the property released from the attachment. The bond was executed and the property released by the sheriff. At the time the plaintiff company signed the bond, C. A. Sheppard and G. F. Martin executed to it an indemnity agreement indemnifying and holding it harmless from any liability upon the bond signed as surety for Schley. On January 19,1911, the defendant Schley made a full and complete settlement of the action with plaintiff E. M. Meach and by the terms thereof agreed in writing to cause it to be dismissed. The agreement is as follows:
*386“Portland, Oregon, January 19,1911.
“Received from the Northwest Bill Posting Company four hundred sixty-five and 50/100ths ($465.50) dollars in full settlement of all claims to date for which amount I agree to dismiss the suit now pending in the Superior Court of the State of Washing-ton for the county of Clarke in which I am plaintiff and C. Schley and the Northwest Bill Posting Company is defendant.
“[Signed] E. M. Meach.'”
Such writing was executed by E. M. Meach with the purpose and intention of being a full ánd complete settlement of the suit hereinbefore mentioned, and by it Meach agreed to dismiss the action. Relying upon the written agreement of Meach to dismiss the action, and believing that the same had been fully settled and satisfied, C. Schley left the State of Washington and has remained away ever since that time. Thereafter in violation of his agreement of settlement with Schley and with the purpose and intention of wronging, defrauding and cheating him and all other parties interested in such action, after ascertaining that Schley had left the State of Washington and that his whereabouts were at the time unknown, E. M. Meach refused to dismiss the action and caused the same to be set down for trial without notifying Schley, or the surety upon his bond, or any other person interested therein. Thereafter, in violation of his written agreement to dismiss the action, he wrongfully, unlawfully and by fraud practiced upon the court caused the same to be tried without the knowledge of Schley and without the latter being present in said court to protect his interest thereunder. By reason of this fraud practiced upon the court and upon Schley, Meach caused a judgment for the sum of $737.26 to be rendered in that action in his favor and against defendant Schley and the *387United States Fidelity & Guaranty Company which had signed the attachment bond. Some time after obtaining such judgment, Meach notified the plaintiff herein as surety upon the bond of Schley and demanded payment of the judgment. The plaintiff company notified this defendant C. A. Sheppard, who had signed the indemnity agreement, of the judgment rendered against Schley and demanded of him as indemnitor that he pay the judgment. Immediately upon receipt of this notice, C. A. Sheppard notified the guaranty company of the facts hereinbefore stated and of the fact that such judgment had been wrongfully and unlawfully obtained in violation of the written agreement of E. M. Meach to dismiss the action, and advised the company, that the claim of Meach in that action had been fully settled and discharged; that the pretended judgment obtained by him had been wrongfully and illegally procured and was not of any force or effect; that it was the intention and desire of the defendant Sheppard to institute a suit in said court in the name of the plaintiff, the United States Fidelity & Guaranty Company, for the purpose of having such judgment set aside upon the ground that the same had been wrongfully obtained. Defendant Sheppard also notified plaintiff that he had employed, at his own expense and without costs to the plaintiff, an attorney who was authorized to practice law in the State of Washington, and who was familiar with the practice therein, for the purpose of bringing such suit. He further notified the plaintiff that he had arranged for a bond, as required by law, that he would pay the costs and expenses of said suit, that an attorney was employed by him who was familiar with all the facts hereinbefore stated and would verify said complaint, and asked permission of *388tie plaintiff lerein to institute and carry on said suit for tie purpose of setting aside tie pretended judgment in tie name of plaintiff lerein. Tie plaintiff refused to permit sucl suit to be instituted or carried on in its name or to permit tlis defendant to take any action in tie name of tie United States Fidelity & Guaranty Company for tie purpose of laving tie judgment in question set aside and annulled. In tlis refusal tie plaintiff acted arbitrarily and in violation of tie rights of Sleppard, as indemnitor, thereby willfully and unlawfully prevented defendant Sleppard from securing any protection against sucl judgment, and thereby deprived him of a substantial right belonging to him as indemnitor. At tie time Sleppard signed tie indemnity agreement to tie plaintiff, he received no security therefor, which plaintiff well knew. In paying tie judgment tie plaintiff lerein did so against tie protest and objection of Sleppard and in violation of its duty to him as indemnitor.
Based on the findings of fact, tie court made the following conclusions of law:
“That tie said plaintiff, by reason of its refusal to permit tie said defendant, Sleppard to institute and carry on a suit in its name for tie purpose of laving said judgment set aside, deprived tie indemnitor Sleppard of a substantial right, and thereby released him upon lis indemnity agreement. That in paying said judgment against tie objection and protest of tie defendant Sleppard lerein,” and in said refusal, Sleppard is released from all liability to tie plaintiff.”
A decree was entered in favor of defendant and for costs. Plaintiff objected to tie findings of fact made by tie trial court for tie reason that tie same were not supported by tie evidence and requested findings in favor of tie plaintiff.
*389It appears that in June, 1911, a few days before the case of Meach v. Schley was set for trial, J. P. Staple-ton, attorney for Schley, informed Sheppard in regard thereto, and the latter told Stapleton and George B. Simpson, attorney for Meach, that the latter’s claim against Schley had been settled, and Simpson intimated that if that were true he would dismiss that action. Sheppard forwarded the receipt to Stapleton for Simpson’s inspection. Defendant C. A. Sheppard, an attorney of Portland, testified in substance upon the trial that on January 19,1911, Meach, who had been a former business partner of Schley, came to his office; that he figured with him and reduced his claim to $465; that he asked him if he would take the note of the Northwest Bill Posting Company, and Meach said he would provided Sheppard would sign it personally; that he told him he would not do anything of the kind; that Meach finally accepted the note of the Northwest Bill Posting Company and agreed to look to that company and to it alone for payment. This witness further stated that Meach executed the receipt and agreement, and he (Sheppard) notified Schley and the guaranty company; that Meach said he would dismiss the suit; that he heard nothing more about the matter until June 24,1911, when he sent the receipt to Schley’s attorney at Vancouver, "Washington, and went to South Bend in that state to try a lawsuit, where he was for about 14 days; that the case was tried in violation of that agreement; that the surety company would not sign the complaint or institute a suit to set the judgment aside unless Sheppard put up cash to cover the judgment and costs; that the company demanded $1,550 in cash and sufficient to cover costs; and that if the company paid the judgment it was without his con*390sent. He further stated that they offered a letter to save the company harmless on account of costs in the suit; that Mr. Hamaker offered to look to him for attorney’s fees and to save it harmless on account of attorney’s fees; that at first he (Sheppard) asked the company to put up an injunction bond which it refused, and then he told it he would get the bond.
It appears that the amount of cash demanded by the company to be deposited was afterward reduced to $800. The record disclosed that there was a lengthy correspondence between one G. E. Hamaker, the attorney whom Sheppard employed to institute a suit to set aside the judgment, and the representatives of the guaranty company at Portland, and at Tacoma, Washington, which was finally submitted to the home office of the company at Baltimore, Maryland. The correspondence culminated in the refusal of the company to assist the indemnitor, as shown by the following letter:
“United States Fidelity & Guaranty Company, Baltimore, Md.
“November 18th, 1911.
“Claim #32769.
“Messrs. Hubbert & Stanton, Tacoma, Washington—
‘ ‘ Gentlemen: Be Schley for the Northwest Bill Posting Company. We have your communication of November 10th with inclosures and have considered this proposition with a great deal of interest. In the first place, it is clear to us that we should not sign the complaint or affidavit submitted. The allegations of fraudulent practice on the part of the defendants’ attorney are matters entirely without our knowledge and, moreover, it is contrary to our policy to ever make allegation of this sort in any suit if it can be avoided, especially when we have no direct interest as in this case. * * If as Mr. Hamaker states there is no other manner of securing justice to his clients, we regret the situation but do not see that the company is under any *391obligation to take care of bis clients; on the other hand, they obligated themselves to hold this company harmless and we must insist upon their complying with this obligation. * * ”
The conclusion reached by the home office of the company was communicated to Sheppard as shown by the following letter:
“United States Fidelity & Guaranty Company, Balti- - more, Md.
“Portland, Oregon, Nov. 28th, 1911.
“Messrs. Hubbert & Stanton, Tacoma, Washington—
“Gentlemen :• — Re T#32769, C. Schley for the Northwest Bill Posting Company. Tours of the 24th instant in the above connection was duly received, together with copy of letter addressed to you by the home office of the company. We are, accordingly, advising the attorney for our indemnitors that the company has refused to assist them in this matter. The complaint and affidavit submitted to you were not returned as they should have been, with your letter. Kindly see that they are sent to us at the earliest moment.
‘ ‘ Tours very truly,
“Hartman & Thompson, “General Agents,
“By Douglas R. Tate/’’
It appears that after the judgment was rendered in the Washington court a motion for a new trial was filed which was denied. It also appears that a judgment was rendered against the surety company under the statute of the State of Washington at the same time as that against Schley. This was when the company was first made a party to the record. Defendants Sheppard and Martin, who were not parties to the record in the action of Meach v. Schley, failing to obtain the assistance of the surety company to bring a suit to set aside the judgment, filed a complaint to restrain *392the levy of execution on the judgment, alleging the settlement with Meach. To this Meach interposed a demurrer, which was sustained by the court, and the suit was dismissed.
It is the position of counsel for plaintiff that as to his liability on the indemnity agreement defendant Sheppard had an adequate remedy at law by a motion for a new trial, and that a suit in equity to set aside the judgment as desired by him could not be maintained. The record shows that the defendant Sheppard exhausted all the means at his command to obtain a trial of the issues involved and did not secure such until the trial of the present case. From the manner of the presentation of this case upon appeal, it might be inferred that it was the impression of counsel that the cause would be tried de novo. Under Section 159, L. O. L., in an action at law the findings of the trial court on the facts are deemed a verdict. This court has uniformly held that such findings cannot be set aside on appeal if there is any competent evidence to support them: Astoria R. R. Co. v. Kern, 44 Or. 538 (76 Pac. 14); Flegel v. Koss, 47 Or. 366 (83 Pac. 847); Courtney v. Bridal Veil Box Factory, 55 Or. 210 (105 Pac. 896); Sun Dial Ranch v. May Land Co., 61 Or. 205 (119 Pac. 758). The appellate court will examine the evidence in an action tried by the court without a jury only to the extent of determining if there is any competent evidence to support the findings. We cannot review the weight or sufficiency of the evidence: Seffert v. Northern Pac. Ry. Co., 49 Or. 95 (88 Pac. 962, 13 Ann. Cas. 883). In such a case the trial judge acts as a jury. The findings in this cause may be referred to as a verdict.
Robb v. Security Trust Co., 121 Fed. 460 (57 C. C. A. 576), was originally an action by the latter *393against the former as an indemnitor for the company-having signed a replevin bond in the sum of $15,000 upon which a verdict and judgment had been rendered against it for the sum of $14,621.88. Robb, the indemnitor of the surety company on the replevin bond, was notified to defend the action thereon which he did. After an adverse judgment, a writ of error was sued out. The security company refused to execute a supersedeas bond or continue the litigation. The indemnitor sued out the writ of error in the name of the Security Trust Company without a supersedeas to which the company subsequently objected. After paying the judgment appealed from, the Security Trust Company notified the indemnitor that unless other security was given it would move to dismiss the appeal. Thereupon the writ of error was discontinued by the indemnitor. The United States District Court held that the request of the Security Trust Company for indemnity of the amount of the judgment was not unreasonable and instructed a verdict for plaintiff, Security Trust Company. Upon appeal to the United States Circuit Court of Appeals for the Third Circuit, after a full statement of the case, at page 464 of 121 Fed., 57 C. C. A. 576, that court observes:
“We only differ from the learned judge of the court below, in that we think there was testimony in this case tending to show that the security company did do something to impair the right of Mr. Robb to have the judgment against the said security company reviewed in the appellate court by a writ of error, and we think that it should therefore have been submitted to the jury to say whether the testimony so tending was sufficient to establish the fact of an improper and unjustifiable interference by the security company with that right of the plaintiff in error. * * The well-settled interpretation of such undertaking is that the liability *394of the indemnitor is not fixed, except by definitive judgment against him on the replevin bond referred to. In any such suit, the indemnitee must, under the contract of indemnity, either in good faith defend himself, or vouch the indemnitor to defend the suit at his (the indemnitor’s) own costs and charges, rendering such assistance as he may be called upon by the indemnitor to render in facilitating and furthering such defense. * * That is, the indemnitor is entitled, under such circumstances, to all the rights of defense to such a suit, including the right of review, which belonged to the indemnitee as the real party thereto. ’ ’
In regard to the demand for further indemnity, the case at bar is similar to that from which we have quoted. The latter case shows that where the question of the good faith of the indemnitor in making a further defense, and the fairness of the indemnitee in permitting and assisting in making such defense, are involved, whether the right of the indemnitor to make a full defense has been impaired by the act of the indemnitee is a proper question for the jury. In the case under consideration, Sheppard, the indemnitor, insisted upon and earnestly endeavored to obtain a full trial in the original case of Meach v. Schley. Eelying upon the settlement which he had made for Schley, Sheppard was not present at the trial. A motion for a new trial, as its name indicates, is an application for, and not, as a rule, a full trial of a cause. It is not enough to say that Sheppard if he was not satisfied with the decision in that case should have appealed therefrom. What he asked was to have an original trial in the name of the United States Fidelity & Guaranty Company in order to produce evidence and complete the record so that an appeal would properly present the issues. If upon such trial he did not then win, an appeal would be a matter for consideration. Schley, *395the other defendant in- the case, conld not be found. No one questions the conclusion of the Washington court as the record stood in that case. In the present litigation the trial judge acting as a jury found a verdict to the effect that Sheppard’s request as an indemnitor to make such defense was reasonable; that the claim in the Meach v. Schley Case had been fully settled, and that the judgment rendered therein was fraudulent and not binding upon Sheppard as an indemnitor; that the United States Fidelity & Guaranty Company, the indemnitee, had not afforded Sheppard, its indemnitor, ample opportunity to fully defend in the litigation. There was without question competent evidence tending to support such findings or verdict, and this is as far as we are permitted to inquire. Sheppard contends that as an indemnitor he is not bound by the judgment of the Washington court. It is stated in 1 Freeman on Judgments (4 ed.), Section 181, as follows:
“In order to become thus bound, the covenantor must be tendered ‘a full, fair and previous opportunity to meet the controversy,’ ” and that he should be allowed all the means of defense open to him had he been made a party.
In Oceanic Steam Nav. Co. v. Campania Transatlantica Espanola, 144 N. Y. 663 (39 N. E. 360), the rule is stated as follows:
“It is sufficient that the party against whom ultimate liability is claimed is fully and fairly informed of the claim and that the action is pending with full opportunity to defend or to participate in the defense.”
In Eaton v. Lyman, 26 Wis. 61, the court in considering a case where the defendant was sued to contest his title to land, and where he brought in his grantor to bind him by the judgment, says:
*396“It should appear, not only that the grantor was notified of the suit and requested to defend it, but that he was allowed to do so to the utmost extent of the law, if he desired to. Otherwise a defendant in ejectment might acquiesce in an erroneous result of a trial, and refuse his grantor an opportunity to correct it by appeal, and still conclude him by the judgment in an action on his covenants. This would be clearly unjust.”
See, also, City of New York v. Baird, 176 N. Y. 269 (68 N. E. 364); Garrison v. Transportation Co., 94 Mo. 130 (6 S. W. 701); City of St. Joseph v. Union Ry. Co., 116 Mo. 636 (22 S. W. 794, 38 Am. St. Rep. 626); Ladd v. Kuhn, 154 Ind. 313 (56 N. E. 671). We know of no hard-and-fast rule that would prevent a court of equity from entertaining a suit by one against whom a fraudulent judgment had been entered to set aside such judgment. Marsh v. Perrin, 10 Or. 364, is authority for such a suit. See, also, Dist. etc. v. White, 42 Iowa, 608. Mr. Pomeroy, in 4 Pom. Eq. Juris. (13 ed.), Section 1357, states in effect that, while the inadequacy of legal remedies is professed to be the test and limit of equitable jurisdiction in applying this criterion the modern decisions with some exceptions have certainly held “the legal remedy inadequate in many instances and under many circumstances where Chancellor Kent would probably have refused to interfere.” Under the facts found by the trial court, the judgment in the action of Meach v. Schley was prima facie evidence only of the liability of Sheppard as indemnitor, and the latter had the right to interpose a defense in the present case: 22 Cyc. 93. The document signed by Meach is more than a receipt. It contains a contractual stipulation to dismiss the Washington case. Under Section 761, L. O. L., as well as under the federal *397Constitution, the effect of a judicial record of a sister state is the same here as in the state where it was made. In the absence of any showing to the contrary, the court will assume that the common-law rules in force in this state are in force in a sister state: De Vall v. De Vall, 57 Or. 128 (109 Pac. 755, 110 Pac. 705). Therefore the Washington judgment should be given the same force and effect as though it had been rendered in Oregon; no more and no less.
It follows that the judgment of the lower court should be affirmed.