Farris v. U.S. Fidelity and Guaranty Co.

• Decision Date: 28 November 1975
• Citation: 542 P.2d 1031,273 Or. 628
• Parties: Richard FARRIS and Palmer Kellum, Jr., Appellants, v. UNITED STATES FIDELITY AND GUARANTY COMPANY, a Foreign Insurance Company, Respondent.
• Court: Oregon Supreme Court

Page 1031

542 P.2d 1031

273 Or. 628

Richard FARRIS and Palmer Kellum, Jr., Appellants, v. UNITED STATES FIDELITY AND GUARANTY COMPANY, a Foreign Insurance Company, Respondent.

Supreme Court of Oregon, In Banc.

Argued and Submitted Sept. 8, 1975.

Decided Nov. 28, 1975.

Peter L. Barnhisel, Corvallis, argued the cause for appellants. With him on the briefs were Fenner & Barnhisel, Corvallis.

Edward V. O'Reilly, Eugene, argued the cause and filed a brief for respondent.

DENECKE, Justice.

The plaintiffs brought this action in their capacity as insureds in a liability policy issued by defendant (USF & G). The action is in part to recover plaintiffs' expenses incurred in defending an action brought against them and which USF & G refused to defend. The trial court sustained the demurrer of USF & G and plaintiffs appeal.

The defendant filed a motion to dismiss the appeal contending plaintiffs are attempting to appeal from a nonappealable order. We denied the motion; however, we granted the defendant leave to renew.

The trial court sustained the demurrer upon the ground that the complaint failed to state a cause of action. The trial court granted plaintiffs time to further plead. However, plaintiffs filed a motion for a voluntary nonsuit pursuant to ORS 18.230(1). That statute provides:

'A judgment of nonsuit may be given against the plaintiff:

'(1) As a matter of right, on motion of the plaintiff:

'(a) Filed with the court and served on the defendant not less than five days prior to the day of trial * * *.'

A judgment of nonsuit was entered.

ORS 19.010(2)(a) provides that a judgment may be reviewed on appeal if it is, 'An order affecting a substantial right, and which in effect determines the action or suit so as to prevent judgment or decree therein.' The question was raised whether the judgment of voluntary nonsuit is such an order because it does not determine the action as the plaintiff may refile another complaint upon the same cause of action. That the plaintiff may refile does not mean the order does not determine the action. The plaintiff may refile another lawsuit on the same cause of action when the court has ordered an involuntary nonsuit. ORS 18.250. Oregon practice has been that an appeal lies from an order of involuntary nonsuit. For example, see Steenson v. Robinson, 236 Or. 414, 416, 385 P.2d 738, 389 P.2d 27 (1964).

Defendant contends that in order for the plaintiffs to appeal after the demurrer to their complaint was sustained, the plaintiffs must secure a judgment of dismissal rather than a judgment of nonsuit. Ter Har v. Backus, 256 Or. 288, 290, 473 P.2d 143, 145 (1970), states:

'* * * If the plaintiff cannot by any means proceed any further, or prefers not to do so, he must secure a judgment of dismissal in order to obtain review. * * *.'

In Ter Har we were considering whether an order quashing service was an appealable order. We held it was not; that an order had to be made terminating the lawsuit. We did not consider whether the order should be in the language of nonsuit or dismissal.

Except in instances of dismissal for lack of prosecution, there is no statutory authorization for judgments or orders of dismissal in law actions. The statutory scheme in Deady's Code and at present indicates that in equity the correct terminology is 'dismissal' and in law the correct terminology is 'nonsuit,' voluntary and involuntary. ORS 18.210 applies to equity and provides:

'A decree dismissing a suit may be given against the plaintiff in any of the cases specified in subsections (1), (2) and (3) of ORS 18.230 (the nonsuit section), except the last clause of such subsection (3). Such decree is a determination of the suit, but shall not have the effect to bar another suit for the same cause, or any part thereof.'

ORS 18.250 provides:

'When a judgment of nonsuit is given, the action is dismissed; but such judgment shall not have the effect to bar another action for the same cause.'

In Mulkey v. Day, 49 Or. 312, 314, 89 P. 957 (1907), we examined the statutory scheme in Bellinger & Cotton's Code and stated:

'What was technically known at common law as a judgment of 'non prosequitur' (a judgment for defendant on the grounds that the plaintiff did not prove a cause of action; an involuntary nonsuit) and 'nolle prosequi' (an acknowledgment that he is not going to continue; a voluntary nonsuit) and 'technical nonsuits,' are now covered and included by the term 'nonsuits,' as defined by our Code: Buena Vista Freestone Co. v. Parrish, 34 W.Va. 652, 12 S.E. 817. Mr. Justice Bean, in Hoover v. King, 43 Or. 281, 286, 72 P. 880, 882; 65 L.R.A. 790, 99 Am.St.Rep. 754, says: 'A judgment dismissing a complaint in an action at law is a proceeding unknown to the statute, and does not necessarily determine any of the issues involved. Costs are but an incident to the judgment, and do not add to its force or effect. A bill or suit in equity may be 'dismissed,' and such dismissal is an effectual bar to a subsequent suit for the same cause, unless given without prejudice: B. & C. Comp., § 412. An action at law, however, is disposed of either by a judgment in favor of the plaintiff or defendant, or one of nonsuit.' Defendants' motion (for an order of dismissal) will be considered and treated as a motion for nonsuit, as authorized by Section 182, B. & C. Comp. * * *.'

We followed Mulkey in Quick v. Andresen, 238 Or. 433, 435, 395 P.2d 154, 155 (1964):

'* * * A judgment of nonsuit is the only method of 'dismissing' an action at law, as distinguished from a suit in equity. Mulkey v. Day, 49 Or. 312, 314, 89 P. 957 (1907).'

More important than whether the judgment is labeled one of 'dismissal' or 'nonsuit' is the question of whether 'the nonsuit was not voluntarily requested but was, in effect, forced upon him by the trial court's ruling on plaintiff's demurrer to Prindel's affirmative defenses.' Steenson v. Robinson, supra, 236 Or. at 417, 385 P.2d at 740.

The rationale for the distinction is that if the plaintiff were permitted to appeal from any voluntary nonsuit, plaintiff could harass the defendant by nonsuits and appeals. Plaintiff can only appeal from a judgment of voluntary nonsuit if the trial court has found plaintiff's complaint does not state a cause of action and plaintiff is of the opinion he cannot plead the facts any more favorably.

Steenson v. Robinson, supra, 236 Or. 414, 385 P.2d 738, and the present case illustrate the distinction. In Steenson the plaintiff brought a personal injury action against his driver and the driver of the other car, Prindel. At the close of plaintiff's case the court granted the host driver's motion for an involuntary nonsuit. The plaintiff did not want to proceed against Prindel alone, perhaps for supposed tactical reasons, so he secured a judgment of voluntary nonsuit and then appealed both the voluntary and involuntary nonsuits. We held:

'* * * If the plaintiff takes a nonsuit because of a ruling which precludes recovery, it has been held that the judgment is not in fact voluntarily requested and, therefore, does not bar an appeal. This is not the situation in the case before us. The trial court's action in overruling the demurrer to Prindel's (the third party) defenses did not preclude recovery (against Prindel). Therefore, the general rule is applicable and the appeal as to defendant Prindel must be dismissed.' 236 Or. at 417--418, 385 P.2d at 740.

In the present case the plaintiffs had no other alternative but to have the court enter some kind of order ending the lawsuit and appealing from that order. This case presents an obvious illustration of a plaintiff having no other choice. Plaintiffs attached to their complaint against USF & G the complaint filed against them. The trial court found that complaint charged plaintiffs with intentional torts which it held were not covered by USF & G's policy. Plaintiffs could not replead anymore favorable facts than those alleged in the complaint against them.

We hold the judgment of voluntary nonsuit was an appealable order.

Turning to the question of whether USF & G's demurrer was correctly sustained, we will consider the facts as they are alleged in the complaint. Attached to the complaint as exhibits are the insurance policy and the complaint in the damage action against plaintiffs (Farris and Kellum).

The damage action complaint alleged: Plaintiffs (Moe) operate a restaurant in Albany known as 'Captain Moe's Submarine Sandwiches.' Defendants (Farris and Kellum) operate a restaurant in Corvallis known as 'Togo's Submarine Sandwiches.' Farris and Kellum, knowing of Moe's trade name, nevertheless, filed a claim of trade name, 'Captain Moe's Submarine Sandwiches.' Farris and Kellum did this for the sole purpose of destroying Moe's business. Farris and Kellum interfered with Moe's relationship with their customers by inducing them not to do business with Moe's and made fraudulent misrepresentations to Moe's customers about Moe's business.

USF & G contends the damage complaint 'did not allege that the alleged wrongful conduct of Farris and Kellum was in connection with partnership activities,' and the policy only insured their partnership liability. The trial court held whether Farris and Kellum were sued for partnership conduct was a question of fact and was not a proper basis for sustaining a demurrer.

The insured named in the policy was 'Togo's Submarines.' The damage complaint alleged Farris and Kellum did business as 'Togo's Submarine Sandwiches,' and did acts intended to harm Moe's business. This can reasonably...