Court Opinion

ID: 6907832
Source: CourtListenerOpinion
Date Created: 2022-07-23 22:03:30.533241+00
Date Added: 2024-06-11T09:04:54.784794
License: Public Domain

BURNETT, J.,
Dissenting. — In this case the defendant Weller, a dealer in automobiles, sold a car to one Miller, taking from him a conditional sales contract, which Weller signed as party of the first part and Miller as party of the second part. One of the conditions was that “the rights and obligations of the parties hereto shall be the same as though this contract was a negotiable instrument.” By the contract Miller took possession of the property and agreed to, and did, pay $150 in cash, and further stipulated to pay the balance of the amount owing in monthly installments. The contract price was $502.40, made up, as the testimony shows, of the actual purchase price of the car, $19.50 as premium on a policy of insurance on the automobile, the state fee for license, and brokerage fees on the subsequent negotiation of the contract to the banking firm of Ashley & Rumelin by Weller. The agreement contained another provision requiring Miller to keep the property insured against loss by fire, theft, wrongful conversion and embezzlement; loss, if any, payable to the vendor as his interest might appear; and in case of failure of the vendee to comply with this clause, the vendor might obtain the insurance, in which case the premium should become immediately due and payable by the vendee to the vendor and would be added to the amount due under the agreement. The testimony is *510■undisputed that all of this was accomplished in advance by including the amount of the premium in the total contract price, the payment of $150, and the delivery of the machine into the possession of Miller. Within four days after the execution of the contract Weller sold the same to the banking firm and caused a policy in the plaintiff company to be issued in favor of Miller, loss, if any, payable to the bank, which was named in the policy as the vendor of the car. Of the premium, $2 was ápplied to the insurance of the bank ag-ainst damage caused by the wrongful conversion of the automobile by Miller. There was no provision in the policy in favor of Weller; neither was he mentioned therein. In other words, the policy was conditioned as if the bank and not Weller had sold the car to Miller.
When Weller sold the contract to the bank he executed and delivered to it as part of the transaction the following assignment:
“For value received, the receipt of which is hereby acknowledged, I hereby assign all my right, title and interest in and to the within contract and to the property therein described and all of the moneys payable thereunder to Ashley & Eumelin, Bankers, and hereby guarantee the payment of all moneys due or to become due under the said contract, and also the full performance by the second party therein named of all the second party’s promises and covenants; and I hereby consent that the time of payment of any or all of the said installments therein provided may be extended by Ashley & Eumelin, Bankers, and I further guarantee the payment of all sums of money due or to become due by reason of such extensions, and in the event that there shall be a breach of any of the terms of said contract or default in the payment of any sums provided therein, I agree to perform said contract or make such payments, as the case may *511be, as though I were liable thereon, and therefore hereby waiving all notice and demands.
“Dated the 27th day of May, 1918.
“(Signed) E. R. Weller.”
Miller took the car and absconded from the state with it to parts unknown, without having paid the balance due on the contract. Under these circumstances the bank called upon the plaintiff to pay the insurance, which it did to the extent of $300. Thereupon the bank executed and delivered to the plaintiff the following subrogation receipt:
“Received of the American Central Insurance Co., of St. Louis, Mo., the sum of three hundred dollars, being in full settlement of all claims and demands for loss and damage on the 5th day of August, 1918, to the property insured under policy No. 35717, issued at the Portland, Ore., agency of said company, and in consideration of such payment the undersigned hereby assigns and transfers to said company each and all claims and demands against E. R. Weller on his assignment and guaranty as set forth in the attached contract, and against any other party, person, persons, property or corporation, arising from or in any manner connected with such loss and damage, and the undersigned hereby assigns and transfers to said company the attached contract and all of the interest of the undersigned therein (and said company is hereby subrogated in the place of and to the claims and demands of the undersigned against said party, person, persons, property or corporation, in the premises), to the extent of the amount above named, and the said company is hereby authorized and empowered to sue, compromise or settle in its name or otherwise to the extent of the money paid as aforesaid.
“The undersigned covenant that they have not released or discharged any such claim or demand against such other party or parties, and that they will furnish to said company any and all papers and *512information in their possession, necessary for the proper prosecution of such claim.
“Dated at Portland, Ore., this 7th day of February, 1919.
“Witness -
i 6_
“Ashley & Bumelin, Bankers,
“By M. A. M. Ashley,
“Cashier.”
As stated, the insurance company paid but $300 on the policy, contending that the policy did not cover the premium, the license, fee or the brokerage commission, but only the purchase price of the car. This left a balance of $52.40, which Weller paid to the bank, together with interest amounting to $10.63.
The insurance company sues Weller on his guaranty, to recover the $300 it paid to the bank. Weller denies liability and further claims repayment to him of the money he paid to the bank, on the ground that he disbursed it for and on account of the plaintiff. His claim in that respect is denied by the reply.
At the trial, before the court without a jury, at the conclusion of the plaintiff’s testimony, as disclosed by the abstract, “the defendant moved the court for a directed verdict and for a judgment against the plaintiff.” This motion was allowed and judgment was entered as follows:
“It is now hereby ordered and adjudged that the plaintiff herein recover nothing, and that the defendant have judgment of and against the plaintiff and that defendant also have judgment against the plaintiff for his costs and disbursements herein taxed at $_-.”
The trial judge did not make any findings of fact or conclusions of law. The motion, being for a directed verdict and judgment in favor of the defend*513ant, cannot be treated rightfully as a motion for a nonsuit, because in an application for a nonsuit, no verdict is ever called for. A judgment for nonsuit is rendered in cases where there is no issue in the testimony and the cause is not one sufficient to be submitted to the jury: Or. L., § 182. The effect of a judgment of nonsuit does not bar another action for the same cause: Or. L., § 184. Calling as it did, for a verdict, an element unknown in nonsuits, and for a judgment for the defendant, the motion contemplated a deliverance of the court which would bar another action for the same cause, and such was the judgment actually entered in this case. This was a trial of an issue of fact by the court without a jury, governed by Section 158, Or. L., reading thus:
“Upon the trial of an issue of fact by the court, its decision shall be given in writing, and filed with the clerk during the term or within twenty days thereafter. The decision shall state the facts found, and the conclusions of law separately, without reason therefor. Such decision shall be entered in the journal, and judgment entered thereon accordingly. The court may deliver any argument or reason in support of such decision, either orally, or in writing, separate from the decision, and file the same with the clerk”; and Section 159 as follows: “The order of proceedings on a trial by the court shall be the same as provided in trials by jury. The finding of the court upon the facts shall be deemed a verdict, and may be set aside in the same manner and for the same reasons, as far as applicable, and a new trial granted.”
Both before and since the amendment to the judiciary section of the Constitution it has been held under the statutes quoted that failure of the court to make findings of fact and conclusions of law where the case is tried before the court without a jury, renders its judgment void. The statute referred to has *514been in force since the making of the Code in 1862. That the requirement is binding as well since as it was before the amendment, is enforced by the Constitution itself in its amended form, wherein it says:
“The courts, jurisdiction, and judicial system of Oregon except so far as expressly changed by this amendment, shall remain as at present constituted, until otherwise provided by law.” Article VII, § 2-b, Constitution.
In Clackamas Southern Ry. Co. v. Vick, 72 Or. 580 (144 Pac. 84), the precedents are reviewed by Mr. Justice Moore, who also in his opinion considered the amended Article VII of the Constitution, arriving at the conclusion that a judgment rendered under the circumstances of the present case is void. The precedent is followed in School Dist. No. 30 v. Alameda Construction Co., 87 Or. 132 (169 Pac. 507, 788), and in Turner v. Cyrus, 91 Or. 462 (179 Pac. 279). In brief, the constitutional amendment requires compliance with the then existing judicial system, including the duty of the trial judge where a jury is waived to make findings of fact and conclusions of law, the absence of which will render his judgment void.
Another reason why the motion should not be treated as one for nonsuit may be found by a consideration of the testimony in the bill of exceptions. The contention for the defendant seems to be that he paid the premium and hence is entitled to the benefit of the insurance. The testimony shows without dispute that he charged the premium to Miller as part of the total amount covered by the contract; and that the latter not only signed the contract which by agreement of the parties was considered a negotiable instrument, but he also paid Weller $150 in cash, more than enough to cover the premium and other extra *515charges. It was held in Cranston v. West Coast Life Ins. Co., 72 Or. 116 (142 Pac. 762), that where the insured in a life insurance policy had given his note for the amount of the premium to one who was acting as soliciting agent for the insurance company, it was sufficient as evidence of payment of premium to prevent a judgment for nonsuit. In that instance the insured was a minor and had given his note for the amount of the premium to the .soliciting agent without naming him as agent or in any way referring to the company in the note. He afterwards repudiated the note and refused to pay it to the then holder. The note was discounted to a third party, but none of the proceeds ever reached the company. If in that instance the transaction was sufficient to prevent a nonsuit as to payment of the premium, so here, where Miller not only gave his note or contract for the payment of an amount including the premium, but also paid actual money, it certainly ought to be enough to prevent a nonsuit, so far as the case turns upon who paid the premium, Miller or Weller. The judgment of the Circuit Court was therefore clearly void for want of findings of fact and conclusions of law, especially where the defendant was claiming under a policy to which he was not a party and for which he had paid nothing.
As before stated, when the company paid the bant, the latter assigned to it not only the contract itself but also all claim against Weller on his guaranty of the payment by Miller of the amount due on the contract. The plaintiff is therefore claiming not necessarily by a pure subrogation, but as an assignee of Weller’s contract of guaranty agreeing to pay the amounts due on the contract, waiving all notice and .demand. It is said that the case of Milwaukee *516Mechanics’ Ins. Co. v. Ramsey, 76 Or. 570 (149 Pac. 542, Ann. Cas. 1917B, 1132, L. R. A. 1916A, 556), controls this case in favor of the defendant. The Ramsey case differs from the present one in two important particulars: first, the fire loss in that case which the company insured against was an honest loss occurring without the fault of Ramsey, the insured, while here Miller himself, the insured, caused the loss by his conversion of the car. Second, in the Ramsey case the company did not get an assignment of Ramsey’s note and mortgage and hence did not and could not sue on them, while here the company has an assignment of the Miller contract and of the Weller guaranty, and is entitled to sue on either of them. There, the insurance company had insured Ramsey’s laundry, loss, if any, payable to the Tillamook County Bank. Afterwards Ramsey violated the terms of the policy by making a change in the ownership of the property without the consent of the company, thus destroying’ his interest in the policy. The fire occurred without any fault of Ramsey. In an action on the policy by himself and the bank against the insurance company the judgment went in favor of the bank and against Ramsey, he failing to recover because of the change in the ownership. The insurance company in that action paid the judgment to the bank and demanded assignment to it of Ramsey’s note and mortgage, which was refused by the bank. The company then, claiming to be subrogated to the rights of the bank against Ramsey, sued him to recover the amount it had paid thé bank. Recovery was denied because the company had not insured the debt but had insured the building, which was lost without Ramsey’s fault.
In this case, Miller, the insured, himself has committed the act occasioning the loss under the policy. *517In other words, he has himself converted the property. The Ramsey case would be similar in that respect, if Ramsey himself had burned his laundry, but he did not. Here Miller has done the act equivalent to Ramsey’s supposed act of arson. Moreover, in the Ramsey case the insurance company failed to secure an assignment to it of Ramsey’s commercial paper. In this instance the insurance company is the assignee not only of Miller’s commercial paper but also Weller’s guaranty of the same.
The plaintiff’s rights, therefore, do not depend upon subrogation. It has the same rights that any other assignee of those papers would have. If the automobile had been stolen by some stranger to the transaction and the company had paid the insurance, then it would be subrobated to the rights of the bank against that stranger and would have a chose in Action against the stranger sounding in tort and not on a contract. But that is not this case. Miller has .never paid his debt, unless it can be said that by stealing his own automobile he has discharged that obligation. Weller’s contract was not to insure the automobile or to prevent its conversion by Miller. The plain reading of his guaranty is to pay the debt, and as long as Miller’s debt remains unliquidated, Weller’s guaranty of the same still lives. Miller has not paid what he agreed to pay. Neither has Weller paid his guaranty obligation underwriting Miller’s promise.
If Miller could show that his own conversion of the car renders the plaintiff liable to pay him on the policy, he might plead it as a counterclaim in plaintiff’s action against him on the contract of which the plaintiff is the assignee, and so work out a discharge of his debt. This, of course, would discharge Weller’s guaranty. But under the admissions of the plead*518ings there is no defense for Miller against his liability on the contract. He is liable to the assignee thereon.
It is no concern of "Weller’s what induced the bank to assign the contract and his guaranty of it to the plaintiff. So far as that is concerned, “the assignee of a chose in action in Oregon may maintain an action thereon in his own name although he paid no consideration therefor”: Dawson v. Pogue, 18 Or. 94 (22 Pac. 637, 6 L. R. A. 176); Gregoire v. Rourke, 28 Or. 275 (42 Pac. 996); First Nat. Bank v. Miller, 48 Or. 587, 592 (87 Pac. 892); King v. Miller, 53 Or. 53, 62 (97 Pac. 542).
Weller is not a party to the policy and cannot claim under it. Whatever he paid was derived from Miller’s cash and promise to pay. At the most Weller acted only as the agent of Miller in procuring the policy, for it was obtained in Miller’s name and with his money or his promise to pay. While Miller’s liability on the contract remains, Weller’s guaranty of its payment is still in force and he is liable on it to its holder. Miller’s contract, not having been discharged by any payment on his part, was a living chose in action and the plaintiff had the right to buy it and the guaranty and to recover on either of them.
Having taken an assignment of Miller-’s contract, suppose the insurance company sues him for the money due upon it (not for the tort of stealing the car). Will it be a defense for him to say: “I insured your assignor against my theft of the car, which insurance you yourself have paid and so extinguished my liability on the contract which you bought from the bank”? Manifestly this would be no answer for Miller. How then can it be a defense for *519his guarantor who has agreed to pay this very debt which has not been paid?
The insurance as such is fimctus oficio, having been paid by the insurer to the insured, and is no longer a factor to be regarded in litigation on the contract. There has never been a time when the company owed Miller anything that could be applied on his debt, for it did not insure him against his own theft of his own car. Neither has the company ever owed any debt or duty to Weller, for it made no contract with him and he has never done anything which would subrogate him to any chose in action against the company or anyone else. Weller accredited Miller by putting the car in the latter’s possession and guaranteeing his debt, thus placing him in position to defraud others. To allow Weller to escape from his guaranty under such circumstances would not only permit him to reap where he has not sown, but also would deprive the company of a valuable chose in action on the guaranty and substitute for it a probably worthless claim against Miller on his tort. Weller should make good the loss he enabled Miller to inflict.
Subrogation is granted to one who has paid some debt or obligation for which he is not primarily liable, and remits him to the enforcement in his own right of some unliquidated obligation of another from the collection of which he may reimburse himself. Until Weller has paid the debt he guaranteed, he has no defense against enforcement of his obligation. Neither has he a right to subrogation in any form. Even if he pays the debt in full, he will not be subrogated to any chose in action against the company, for it has paid its liability once. He would be subrogated only to his remedy against Miller either for his tort of stealing the car or on the original contract.
*520Every precedent cited which gives to an indorsing mortgagee the benefit of insurance effected by the mortgagor upon the mortgaged property is an instance of an honest loss resulting in a situation where the debtor has legitimately created a fund for the payment of his debt. In such circumstances the mortgagor or those standing in his shoes would have a right of action against the insurer and of course it would inure to the benefit of the mortgagee who indorsed the paper of the mortgagor. Here the company has never been under any obligation to the principal debtor. As to Weller, Miller has not created any fund for the payment of his debt and there is nothing inuring to Weller’s benefit. The fallacy of the opposing argument lies in the failure to distinguish between an honest loss and one that is dishonest and in extending the company’s liability to those with whom it did not contract and to whom it owed no duty here involved.
The judgment of the Circuit Court ought to be reversed on the merits as well as for want of findings.