Court Opinion

ID: 9560305
Source: CourtListenerOpinion
Date Created: 2023-08-21 17:47:03.636058+00
Date Added: 2024-06-11T09:12:49.176280
License: Public Domain

BUTTLER, J.,
dissenting.
Although the majority has done a commendable job on the principal substantive questions presented, it detracts from that good work by undoing that of the trial judge in granting complete relief to all of the parties. As a result, further litigation between or among all of the parties will be necessary, taking more court time when the docket already is overcrowded, and will involve additional and completely unnecessary expense to the litigants and to the taxpayers.
Those unfortunate consequences flow from the majority’s misconception of the nature of this action, which the majority says is to interpret the security agreement between plaintiff and Bank. Therefore, it concludes that the action is legal in nature. I do not question that the underlying nature of the case determines whether a declaratory judgment proceeding is legal or equitable in nature. C & B Livestock v. Johns, 273 Or 6, 539 P2d 645 (1975). However, it is clear that plaintiff did not bring this action to interpret its contract with Bank.
The dispute here is whether Bank had a security interest in the proceeds of collateral superior to the rights of defendant under Article 9 of the UCC, particularly ORS 79.3060(2). Defendant claimed that its rights were prior under the UCC, notwithstanding Bank’s security interest. That is the principal question that the majority decides correctly. Plaintiff has no claim against defendant for the money; it does, however, have an obligation under the security agreement to defend the collateral against all claims and demands. It brought this action, not for a money judgment or for breach of contract or to interpret the security agreement, but for a declaration of rights to determine which of two creditors has priority in the proceeds of collateral. It could not have obtained that relief in an action at law. As the court stated in Community Bank v. Jones, supra, 278 Or at 651:
*694“We find the instant case to be a suit in equity. It is essentially a creditor’s suit brought to determine the respective rights of multiple parties, each of whom claim to have, or to have had, interests in contested collateral. * * *
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“* * * The complexity involved and procedural flexibility required to properly order priorities and property rights where multiple parties claim conflicting interests in the same collateral (or proceeds therefrom) renders a creditor’s relief at law inadequate and brings the issue within the jurisdiction of the equity court.”
Although plaintiff is the debtor, it was obligated to defend Bank’s collateral. Furthermore, the case was pleaded and tried as a proceeding in equity. Defendant so alleged, and it asserted an equitable defense and an equitable cross-claim. It also anticipated that, if the court declared that Bank was entitled to the proceeds, Bank would also be entitled to a judgment against defendant, in which case it prayed for judgment against plaintiff, as well as the right to equitable subrogation to Bank’s rights under guarantees which it held for the debt owed by plaintiff. That is the way all of the parties treated the litigation, and that is the way it was tried and decided.
Accordingly, I would treat the action as one that is equitable in nature. In such cases, trial courts historically have been empowered to grant complete relief, even if doing so affords relief beyond that prayed for, if the relief granted is within the issues framed by the pleadings. Kerschner v. Smith, 121 Or 469, 474, 236 P 272, 256 P 195 (1927). Here, plaintiff alleged that Bank had a prior right to the proceeds; defendant denied that allegation and Bank admitted it. Defendant alleged that, if it was required to pay the money to Bank, defendant was entitled to a judgment against plaintiff for the same amount.
ORCP 67C preserves that rule. It provides:
“Every judgment shall grant the relief to which the party in whose favor it is rendered is entitled, even if such relief has not been demanded in the pleadings, except:
“C(l) A judgment by default shall not be different in kind from or exceed in amount that prayed for in the demand for judgment. However, a default judgment granting equitable remedies may differ in kind from or exceed in amount that *695prayed for in the demand for judgment, provided that reasonable notice and opportunity to be heard are given to any party against whom the judgment is to be entered.
“C(2) Where a demand for judgment is for a stated amount of money as damages, any judgment for money damages shall not exceed that amount.”
Although subsection C(1) is not directly applicable, I quote it because, by authorizing judgments granting “equitable remedies” to “differ in kind from or exceed in amount that prayed for” in default judgments, it illustrates the continuing recognition of the distinction between remedies in proceedings that are equitable in nature and those in proceedings at law and of the authority of courts granting remedies in equitable proceedings to fashion such relief as will best accomplish the ends of justice. See Cameron v. Benson, 295 Or 98, 103, 664 P2d 412 (1983). Equity, it has been said, does not do justice by halves.1 It follows that subsection'C(2), which defendant contends limits the court’s authority to award a money judgment beyond that demanded in the pleadings, is inapplicable.
Subsection C(2) refers only to demands for a stated amount of money as damages, an historically legal remedy. Here, the judgment for money simply carried out the court’s declaration that Bank was entitled to the proceeds, and was purely ancillary to the equitable relief sought, completes that relief and avoids multiple actions. If the court had not entered the money judgment, Bank could have filed a petition for supplemental relief under ORS 28.080.2 Then defendant could have gone through the same process to obtain a judgment against plaintiff. The trial court properly obviated the necessity for those additional expenditures of time and money; the majority, without any valid reason, insists that the parties and the court must do more to achieve the obvious.
*696Defendant contends, and the majority agrees, that City of Portland v. Hespe, 69 Or App 663, 687 P2d 804 (1984), nevertheless precludes a judgment on a cross-claim that was not pleaded. That case recognized that ORCP 67C empowers a court to grant relief not demanded in the pleadings under some circumstances but properly held that the relief granted by the trial court in that case was error. There, the City of Portland brought an action to declare that certain buildings were public nuisances and that the city could abate the nuisance by demolition. The defendants were Hespe, the vendor of the property, the vendee and several sub-vendees. The vendee had commenced a strict foreclosure action against her sub-vendees, and that action was consolidated with the city’s action. The trial court granted the vendee strict foreclosure and declared that the structures were a public nuisance and could be demolished unless the vendee performed certain acts, including paying off Hespe. We reversed and remanded with instructions to delete from the judgment the condition that the vendee pay off Hespe, because that remedy was not raised by any issue framed by the pleadings.
It is apparent that the vendee’s obligation to Hespe, her contract vendor, was independent of and unrelated to the city’s demand for declaratory relief. Therefore, the monetary relief awarded Hespe had no relation to the equitable relief sought by and granted to the city. Here, however, the monetary relief awarded Bank was predicated on the same rights and duties as the declaratory relief demanded and granted; it merely effectuated the rights that were established by the declaratory judgment. Accordingly, I would affirm the money judgment in favor of Bank and against defendant and the money judgment in favor of defendant against plaintiff in order to complete the relief that obviously is called for in this action.
Because I would affirm those judgments, I would decide defendant’s remaining assignments. First, it contends that the trial court erred in denying its claim for subrogation to the rights of Bank. It argues that, in satisfying the judgment against it, defendant “will be paying the debt of [plaintiff] and its guarantors” and therefore should be subrogated to Bank’s rights and priorities against plaintiff and its guarantors. However, the judgment against defendant merely requires that it *697deliver -to Bank that to which Bank is lawfully entitled, as against defendant.3
Finally, defendant contends that the trial court erred in refusing to award its costs and disbursements against plaintiff, because it obtained a judgment against plaintiff and is the prevailing party. In the ordinary case, costs and disbursements are allowed to the prevailing party. The trial court properly concluded that, because plaintiff obtained the declaration that it sought and that defendant disputed, plaintiff was the prevailing party. It is true that defendant obtained a judgment against plaintiff; however, there was no dispute but that it was entitled to that judgment if plaintiff obtained the relief that it sought and if defendant was obligated to pay the money to Bank. Although the trial court could have directed otherwise, ORCP 68B, it was not required to do so.
In summary, I would modify the judgment only to delete prejudgment interest, because that is conceded to be error. In all other respects, I would affirm.
Rossman, J., joins in this dissent.

 “Courts of equity delight to do justice, and that not by halves.” Tallman v. Varick, 5 Barb 277, 280 (NY 1848).

 ORS 28.080 provides:
“Further relief based on a declaratory judgment or decree may be granted whenever necessary or proper. The application thereof shall be by petition to a court having jurisdiction to grant the relief. If the application be deemed sufficient, the court shall, on reasonable notice, require any adverse party whose rights have been adjudicated by the declaratory judgment or decree, to show cause why further relief should not be granted forthwith.”

 In its reply brief, defendant raises, for the first time, the issue of marshalling. Because the issue was not raised below, I would not consider it.