Firemen's Fund Ins. Co. v. Oregon R. & Nav. Co.

• Decision Date: 13 June 1904
• Citation: 45 Or. 53,76 P. 1075
• Parties: FIREMEN'S FUND INS. CO. et al. v. OREGON R. & NAVIGATION CO.
• Court: Oregon Supreme Court

76 P. 1075

45 Or. 53

FIREMEN'S FUND INS. CO. et al. v. OREGON R. & NAVIGATION CO.

Supreme Court of Oregon

June 13, 1904

Appeal from Circuit Court, Umatilla County; W.R. Ellis, Judge.

Action by the Firemen's Fund Insurance Company and another against the Oregon Railroad & Navigation Company. From a judgment for plaintiffs, defendant appeals. Affirmed.

The plaintiff the Northwestern Warehouse Company being the owner of a quantity of wheat stored at Barnhart Station, in Umatilla county, insured it with its coplaintiff, the Firemen's Fund Insurance Company, in the sum of $1,250 which was less than its value. The wheat was destroyed by fire, which, it is alleged, originated through the negligence of the defendant company. The insurance company paid the warehouse company the amount of the insurance, and, by articles of subrogation, took an assignment of all right or claim which the latter company had by reason of the damages sustained, to the extent of the amount so paid, and both companies join in an action against the railroad company for the entire amount of damages sustained by reason of the fire. Sam Davis was the owner at the same time of a quantity of wheat which was also destroyed. Having since assigned his claim for damages against the railroad company to plaintiffs they sue upon this demand, also, as a second separate cause of action. A demurrer was interposed to each of these causes of action, but, being overruled, judgment was rendered against the defendant, from which it appeals.

W.W Cotton and H.F. Conner, for appellant.

John J. Balleray, for respondents.

WOLVERTON, J. (after stating the facts).

The questions for our consideration arise upon the demurrer. The first ground of demurrer as to each cause of action is that the complaint does not state facts; the second ground, as to the first cause, is that the plaintiffs' right of action is equitable; the third, that plaintiffs have attempted to unite an equitable cause of suit in favor of the insurance company with another equitable cause in favor of the warehouse company; and the fourth, that two causes of action--one in favor of each plaintiff--are improperly united. The second ground of demurrer to the second cause of action is that such cause has been improperly united with the causes of action contained in the first count. The demurrer also goes to the entire complaint, on two grounds: First, that several causes of action have been improperly united; and, second, that a cause of action at law has been united with two equitable causes of suit. Error is assigned in overruling the demurrer as to each of the grounds designated, but the real and crucial objections center about the first count or cause of action; the latter being unobjectionable, except that it is attempted to be combined with the first in one action.

It is insisted that plaintiffs have mistaken the forum, and that they should have proceeded upon the equitable side of the court, and not at law. This is the sum and substance of the whole controversy, and we will discuss it singly, without confusing it, if possible, with the other seemingly inconsistent grounds assigned by the demurrer. The contention is that the claim or demand arising from the destruction of the wheat through the negligence of the defendant was one wholly in favor of the warehouse company and against defendant, purely legal in character single and indivisible, and was insusceptible of assignment at law, except in its entirety; that it was assignable in part or by piecemeal alone in equity; that the alleged assignment was not of a joint or undivided interest, but of a separable or distinct part or portion of the claim or demand and that its legal effect was so to split up the cause of action that neither company could enforce its right acquired or remaining, either singly or collectively, in a court of law, but could only have redress in a court of equity. It may be premised that it is the distinction between forms of action at law that is abolished by our Code, not that which formerly existed between actions of law and suits in equity. Although administered by the same court or tribunal, the latter distinction still remains, and the cause is only cognizable in law or in equity as the especial facts will warrant. Beacannon v. Liebe et al., 11 Or. 443, 5 P. 273; Burrage v. B., G. & Q.M. Co., 12 Or. 169, 6 P. 766. But, whether the cause be an action or suit, the rule is the same; requiring it to be prosecuted in the name of the real party in interest. B. & C. Comp. §§ 27, 393. It is settled law that a party having an entire demand against another cannot split it up so as to subject the debtor to several actions, and, if he sue for a part only of such demand, the judgment obtained will operate to bar any further recovery. Nor can he assign a part only, so as to confer a right of action upon the purchaser, unless the debtor assents to it, in which event there arises a new and distinct contract or assignment; being sustained by the debtor's promise to the assignee, which operates to discharge the debtor of the original debt pro tanto. The reason assigned for the principle is that the debtor's undertaking is to pay an integral sum to his creditor, it being no part of his contract that he shall pay in fractions or by piecemeal, either to the creditor or his assignees; hence he has the right to stand upon the singleness of his original obligation, and cannot be subjected, without his consent, to divers actions or embarrassments not contemplated thereby, as would otherwise be the case. Mandeville v. Welch, 5 Wheat. 277, 5 L.Ed. 87; Grain v. Aldrich, 38 Cal. 514, 99 Am.Dec. 423; James v. Newton, 142 Mass. 366, 8 N.E. 122, 56 Am.Rep. 692. Assignments of choses in action or legal demands were anciently unknown to the common law. Latterly, however, they have been treated as merely equitable, but as conferring the right to use the name of the assignor, and thereby to authorize a recovery by an action at law. This relates to the entire demand. But our Code has changed the rule, and the procedure is more direct, requiring all actions to be prosecuted in the name of the real party in interest; thus treating the assignment as legal, and as conferring a legal right upon the assignee, not only as it respects the title to the demand, but in regard to the manner of its enforcement, also. A partial assignment may be said to be good at law between the parties, for, if the assignor should collect the funds, he would be regarded as holding it in trust for the assignee. It is such a demand, however, as is cognizable in equity as between all the parties--the debtor as well as the creditor and the assignee. It confers not a legal, but an equitable, right in the demand, enforceable alone in equity; the legal title remaining in the assignor, so that logically the assignee must go into a court of equity to enforce his claim, and, under the code practice, must prosecute the suit in his own name, he being the real party in interest. It is said that in a court of equity "the objections to a partial assignment of a demand, which are formidable in a court of law, disappear. In equity the interests of all parties can be determined in a single suit. The debtor can bring the entire fund into court, and run no risks as to its proper distribution. If he be in no fault, no costs need be imposed upon him, or they may be awarded in his favor. If he be put to extra trouble in keeping separate accounts, he can, if it is reasonable, be compensated for it. In many ways a court of equity can, while a court of law, with its present modes, cannot, protect the rights and interests of all parties concerned." Exchange Bank v. McLoon, 73 Me. 498, 505. The subject is exhaustively treated in this case, and also in a masterly opinion by Judge Morrow in the case of The Elmbank (D.C.) 72 F. 610. See, also, Railway v. Gentry, 69 Tex. 625, 8 S.W. 98; Cook v. Genesee Mutual Insurance Co., 8 How.Prac. 514; Superintendent and Trustees of Public Schools in Trenton v. Heath, 15 N.J.Eq. 22. So that the rule against the splitting up of a demand, and denying the assignee a right of action for a part only of the claim, does not deny the right to sell and transfer an undivided part thereof, or militate against or inhibit the enforcement of

the right of such an assignee in a court of equity; and, if all the owners unite in one suit upon it, the fact of the assignment of a part constitutes no defense. Whittemore v. J.L. & S.O. Co. et al., 124 N.Y. 565, 27 N.E. 244, 21 Am.St.Rep. 708.

Now arguing from these principles and premises, defendant contends that the insurance company, by its subrogation assignment, has but an equitable interest in the demand of the warehouse company against the defendant for the damages, enforceable alone in equity, and that there remains but an equitable interest in the warehouse company, enforceable alike only in equity, and that, though the insurance company and the warehouse company have joined as plaintiffs, the proceeding is still equitable, and not one cognizable in a court of law. It should be remarked in this connection that the alleged assignment confers no greater right than was conferred by operation of the subrogation to which the insurance company was entitled after having paid the amount of its insurance. Plaintiffs' counsel, upon the other hand, contend that, having united their interest by joining as plaintiffs in a common cause, the proceeding is at law, and not in equity, and was rightfully maintained. This points the exact difference between the...