Adams v. Bear

• Decision Date: 30 March 1960
• Docket Number: No. 6605,6605
• Citation: 350 P.2d 751,87 Ariz. 288
• Parties: Joe ADAMS and Belle J. Adams, husband and wife, Appellants, v. M. A. BEAR, Appellee.
• Court: Arizona Supreme Court

Page 751

350 P.2d 751

87 Ariz. 288

Joe ADAMS and Belle J. Adams, husband and wife, Appellants, v. M. A. BEAR, Appellee.

No. 6605.

Supreme Court of Arizona.

March 30, 1960.

Moore & Moore, Phoenix, for appellants.

Cunningham, Carson & Messinger and Keith W. Ragan, Phoenix, for appellee.

JOHNSON, Justice.

This is an appeal by Joe Adams and Belle J. Adams, his wife, hereinafter referred to as Adams, from an order made after judgment, under the provisions of A.R.S. § 12-1838, entitled Amended Order for Further Relief based on Declaratory Judgment.

It appears from the record that Adams owned a note for $20,500 and mortgage securing it which had been executed by J. Hal Adams and Louise R. Adams. That Adams was a partner in the Goodman Construction Company, and on June 19, 1954, personally signed a note for such company for $12,000 payable to M. A. Bear, appellee, referred to herein as Bear; and to secure payment of such note Adams assigned the $20,500 note and mortgage to Bear as security for the debt. That at the same time Bear was given an option to become a partner in the Goodman Construction Company, composed of Joe Adams and Floyd Goodman. Thereafter he did exercise his option, however the company did not fare well and Bear was released from his partnership interest and insisted on payment of the note for $12,000. In February, 1955, the note not having been paid, Bear without any consideration secured from Adams, what purported to be an absolute assignment of the $20,500 mortgage, apparently with the understanding that Bear could borrow money on the absolute assignment, but would return the $20,500 mortgage to Adams on being paid. Thereafter Adams tried to pay Bear the balance due on the $12,000 note, but Bear refused, claiming absolute ownership of the $20,500 note and mortgage.

The Adams thereupon on December 6, 1955, filed a verified complaint against Bear, being cause No. 7751 in Navajo County, alleging in substance the facts above outlined, and in addition, that they were indebted to Bear on the $12,000 note, and were willing and offered to pay the amount of $12,000 into Court for the benefit of Bear. In the verified complaint the Adams requested the following relief: (1) that the assignment of the $20,500 mortgage to Bear be concelled and annulled; (2) that Bear be ordered to reconvey to Adams the $20,500 note, upon the condition that Adams pay to the Clerk of the Court for the benefit of Bear the sum of $12,000, or such sum as the Court should order.

Appellee Bear filed an answer to the complaint admitting that Adams owed him the sum of $12,000 and same was due and unpaid and requested the Court to order Adams to pay such sum into Court to satisfy their debt to him as alleged in the verified complaint. Bear also pleaded in the alternative, a counterclaim and cross-claim seeking judgment on the $20,500 note and mortgage.

After a pretrial hearing and an extended trial the lower court entered a declaratory judgment on October 5th, 1956, determining that the Adams were the owners of the promissory note executed by J. Hal Adams and Louise R. Adams, on January 9, 1954, for $20,500 and the mortgage securing such note; and that Bear was the owner of the promissory note executed by Adams on June 19, 1954 in the sum of $12,000; that Bear holds the $20,500 mortgage as security for the payment of the $12,000 note dated June 19, 1954; and that upon payment by Adams to Bear of the balance on the $12,000 note, the assignment of mortgage in the sum of $20,500 would be cancelled and annulled.

Thereafter Adams having failed to pay Bear the balance due on the $12,000 note or pay the same into court, in accordance with their offer to do so in their verified complaint, Bear instituted a new action in Navajo County being No. 8060 against Adams. The new action was filed on the theory that A.R.S. § 12-1838 permitted further relief based upon the declaratory judgment. The relief requested in this action was for a money judgment of the balance due on the $12,000 note and for foreclosure of the security interest in the $20,500 note and mortgage.

Adams answered the complaint without denying a single allegation, but setting forth three affirmative defenses. (1) that no cause of action was stated; (2) that the claim was barred under Rule 13(a), Rules of Civil Procedure, 16 A.R.S.; and (3) a defense on the merits.

Thereafter both parties moved for summary judgment. The court rendered judgment that Bear recover nothing on his complaint, and that the same be dismissed without prejudice. Adams appealed from such judgment, contending the trial court erred in dismissing the complaint 'without prejudice.'

We affirmed the trial court on appeal holding: (Adams v. Bear, Ariz., 349 P.2d 184) inter alia, that the summary judgment rendered in favor of Adams dismissing the complaint filed by Bear, did not settle or adjudicate any of the subject matter in controversy and was not a bar to any subsequent action by Bear in the instant action.

After the trial court rendered summary judgment in favor of Adams in cause No. 8060 referred to above, Bear then filed in the original action, cause No. 7751, an application for further relief based on the declaratory judgment. Adams responded to such application with certain affirmative defenses (1) that cause No. 7751 was not a pending cause and the court had no jurisdiction to proceed in it; (2) that no cause of action was stated; (3) that Rule 13(a) Rules of Civil Procedure barred the action; (4) that the claim asserted was res judicata in cause No. 8060 and that cause No. 8060 was still a pending matter; and (5) a defense on the merits.

The trial court then entered the order appealed from in the instant case and on September 25, 1957, after stating the facts found in the declaratory judgment, entered a money judgment in favor of Bear and against Adams for the sum of $11,778.24, together with interest and attorney fees; and further ordered that the lien of Bear's pledge on the $20,500 note and mortgage be foreclosed and issued a special execution directing the sale of the $20,500 note and mortgage and that the proceeds of the sale be applied in payment of the amount due Bear and the remainder of any sums to be paid into court.

Adams first assigns as error and contends that because a counterclaim for judgment on the $12,000 note was not filed by Bear before entry of the declaratory judgment, Rule 13(a) Rules of Civil Procedure, entitled Compulsory Counterclaims, bars his right to such judgment as further relief based on the declaratory judgment.

We would be inclined to agree with the contention of Adams were it not for the fact that in the verified complaint filed by Adams he alleged and admitted that he was indebted to Bear on the $12,000 note and at the trial testified under oath of the same effect, and offered to pay that amount into court for the benefit of Bear and that in response to the complaint Bear acknowledged that such obligation was due and unpaid to him and requested that Adams be required to pay such sum into court. While it is the settled law in this jurisdiction as pronounced in Biaett v. Phoenix Title & Trust Co., 70 Ariz. 164, 217 P.2d 923, 22 A.L.R.2d 615, that a claim which is a compulsory...