Agri-Link Corp. v. Schmitz

• Decision Date: 07 August 1975
• Docket Number: AGRI-LINK
• Citation: 538 P.2d 924,272 Or. 654
• Parties: CORP., a Delaware Corporation, Appellant, v. Gayle SCHMITZ et al., Respondents.
• Court: Oregon Supreme Court

Page 924

538 P.2d 924

272 Or. 654

AGRI-LINK CORP., a Delaware Corporation, Appellant, v. Gayle SCHMITZ et al., Respondents.

Supreme Court of Oregon, In Banc.

Argued and Submitted July 7, 1975.

Decided Aug. 7, 1975.

Robert M. Johnstone, McMinnville, argued the cause for appellant. With him on the briefs were Francis E. Marsh and Marsh, Marsh, Dashney & Cushing, McMinnville.

William D. Rutherford, of Rutherford & Drabkin, McMinnville, argued the cause and filed the brief for respondents.

TONGUE, Justice.

This is a suit to enjoin arbitration proceedings under ORS 607.304 to determine the amount of 'costs' payable to defendants for the 'taking up' and 'keeping' of plaintiff's cattle, which had strayed upon defendants' land, and for damages allegedly caused by such cattle. Plaintiff appeals from an order dismissing its second amended complaint after the court had sustained a demurrer and plaintiff had declined to file a further amended complaint.

An examination of the record in this case reveals almost incredible confusion, for which the trial court and counsel must both share responsibility. As a result, it is difficult for this court to resolve this controversy on this appeal in any clear-cut manner and to do more than decide the procedural questions necessary to put this case 'back on the track' for an orderly and proper decision of the substantive questions involved.

The facts are not entirely clear. However, from the various complaints, notices, affidavits, stipulations and correspondence between court and counsel it appears that the facts are substantially as follows.

The facts.

In November or December 1973, cattle belonging to plaintiff strayed upon defendants' lands. Defendants rounded up the cattle and fed them, at some considerable expense. Defendants also claim that the cattle damaged their property.

At some time between November 24 and December 12, 1973, defendants gave notices to plaintiff of the 'taking up' of the cattle. Those notices were apparently intended to satisfy the requirements of ORS 607.303. ¹ The parties were then unable to agree upon the 'costs' payable to defendants under ORS 607.304(2) as a condition for redelivery of the cattle to plaintiff. ²

Plaintiff then wrote a letter to defendants 'requesting that this matter be resolved by arbitration.' Both parties appointed arbitrators for the purpose of determining the amount of 'costs' payable to defendants, in apparent accordance with the procedure for arbitration of such disputes as provided by ORS 607.304(3), (4) and (5), under which each party is to appoint an arbitrator and these two arbitrators are to 'jointly appoint a third arbitrator.' ³ Plaintiff appointed Roger Dumdi as an arbitrator. Defendants appointed Dale Schmitz, brother of defendant Gayle Schmitz, as an arbitrator. A third arbitrator, Ivan Dent, was then named under circumstances that are not clear. Plaintiff contends that he was 'selected' by Dale Schmitz.

At about the same time, plaintiff deposited with the Oregon State Department of Agriculture the sum of $15,000 in cash, representing the amount of the 'costs' claimed by defendants, as provided by ORS 607.304(7), and the cattle were then returned to plaintiff. ⁴

Plaintiff objected to the appointment by defendants of Dale Schmitz as an arbitrator on the ground that as a brother of one of the defendants he could not qualify as an impartial arbitrator. Apparently defendants were not willing at that time to name another arbitrator to replace Dale Schmitz.

On January 24, 1974, plaintiff filed its original complaint in this suit, asking for an order declaring Dale Schmitz ineligible as an arbitrator and that all acts performed by him as an arbitrator be declared void, including the appointment of Ivan Dent as the third arbitrator, and for an injunction to 'stay' the arbitration proceedings. At the same time plaintiff filed an application for a temporary restraining order and an order to show cause, supported by affidavit and a bond for $1,000. That order was then entered, setting February 8, 1974, as the date for the hearing.

On February 5, 1974, plaintiff filed an amended complaint adding, as a separate cause of suit, allegations to the effect that ORS 607.304 is unconstitutional in that its provisions for compulsory arbitration would deprive plaintiff of its right to trial by jury and of its property without due process of law and is an unlawful 'delegation' of judicial power. Plaintiff also apparently submitted at that time a memorandum in support of that contention. At some undisclosed time, defendants submitted an answering memorandum upon the constitutional question.

On February 7, 1974, defendants filed a demurrer on the ground 'that Plaintiff has through Laches been barred from bringing this suit,' based upon affidavits alleging facts relating to alleged delays by plaintiff. At the same time defendants served (if not filed) an 'Application for Modification of Temporary Restraining Order' asking for an order that plaintiff 'promptly arbitrate this dispute as it is required by statute' and 'restraining plaintiff from further delay.' In support of that 'Application' affidavits were filed stating that defendants had offered to replace Dale Schmitz as an arbitrator. The 'Application' contended, however, among other things, that plaintiff was 'estopped' to complain of the selection of either Dale Schmitz or of Ivan Dent, as the third arbitrator, because Roger Dumdi, the arbitrator named by plaintiff, had met with Dale Schmitz and had 'joined in the selection of Ivan Dent as arbitrator.'

The hearing on February 8, 1974, was not recorded and no order was entered by the court at that time. From correspondence between court and counsel, however, it appears that defendants, 'as an effort to compromise the matter and to gain an early determination,' agreed orally with plaintiff to at least 'temporarily abandon their statutory recourse'; to 'file separate actions on the law side of the court to recover money damages' for the trespass by the cattle and to accept payment of an agreed amount for their 'out-of-pocket losses' in 'feeding and caring for the cattle'; and that this would have the effect of staying or abating both the 'arbitration process' and the injunction suit, 'thus deferring the need for this court to resolve the constitutional issue.'

Written stipulations were then signed and filed under which $2,633.50 was paid by plaintiff to defendants for 'care and feeding' of the cattle, without prejudice to the claims of either party against the other and without admission of liability for defendants' claims for damages for trespass by the cattle. Defendants then filed separate actions at law for such damages.

Although not entirely clear, it appears that plaintiff then applied for the return of the $15,000 deposit with the state as a bond on return of the cattle and that defendants opposed the return of that deposit. In any event, on April 30, 1974, plaintiff filed a motion to set this case for trial. At about the same time, plaintiff made a written demand upon the state for return of the $15,000 deposit, which was denied.

After correspondence with counsel relating to the previous agreement between the parties and the return of the $15,000 deposit, among other things, the court, by letter dated June 24, 1974, notified the parties that:

'It is obvious from your correspondence that-- despite Mr. Rutherford's clients' (defendants) willingness to stay the arbitration process and seek a judicial resolution of their claims--the original equity suit (case No. 30169) filed by Mr. Johnstone's client (plaintiff) testing the constitutionality of the statutory scheme of arbitration remains a viable file requiring determination by this court.

'Pursuant to your stipulation that both parties stand on their written memorandums and no further argument need be heard, I am now prepared to rule that Agri-Link has failed in its burden of establishing the unconstitutionality of ORS 607.304, and, therefore, the court denies each specification of the relief sought in the amended complaint as filed February 5th. The court is adopting Mr. Rutherford's memorandum--and he may prepare the appropriate order.

'Please advise me promptly as to the manner in which you wish to be relieved of your earlier stipulations.

'Upon my signing of the above-mentioned order and the termination of existing stipulations, Mr. Rutherford's clients will be in a position to make a free election of remedies.

'If they pursue the matter in Circuit Court, I would then be prepared to sign an order releasing Agri-Link's $15,000. Since a general denial has been filed in the Schmitz case (No. 30309) (the action for damages for trespass filed in circuit court by defendant Schmitz), that case is prepared for docketing in the normal course. As soon as a responsive pleading is filed in the Dickey case (No. 30328) (the similar action filed by defendant Dickey), the court will set it also.

'If the matter is pursued through arbitration, then the two lawsuits must be dismissed. However, if Agri-Link decides to seek appellate review on the constitutional issue, a motion by Mr. Rutherford to stay those actions pending a Supreme Court outcome would be appropriate.' (Emphasis added)

There is nothing in the record to indicate any subsequent agreement between the parties to terminate or otherwise modify their 'earlier stipulation.'

As previously noted, plaintiff's amended complaint included two separate causes of suit: (1) alleging that ORS 607.304 is unconstitutional, and seeking a declaration to that effect; and (2) alleging that Dale Schmitz was ineligible to act as an arbitrator and seeking an order declaring him to be ineligible and that all acts performed by him, including appointment of Ivan Dent as third arbitrator. There is nothing in the record to indicate that the sufficiency of the facts alleged in this second cause of suit had ever been the subject of...