Gwynn v. Wilhelm

• Citation: 360 P.2d 312,226 Or. 606
• Parties: Hazel GWYNN, Appellant, v. Virginia WILHELM, Respondent.
• Decision Date: 08 March 1961
• Court: Oregon Supreme Court

Page 312

360 P.2d 312

226 Or. 606

Hazel GWYNN, Appellant, v. Virginia WILHELM, Respondent.

Supreme Court of Oregon, Department 1.

Argued and Submitted Dec. 8, 1960.

Decided March 8, 1961.

Otto R. Skopil, Jr., Salem, argued the cause for appellant. On the brief were Williams & Skopil, Salem.

Arthur C. Johnson, Eugene, argued the cause for respondent. On the brief were Johnson, Johnson & Harrang, Eugene, and Harry G. Hoy, Oceanlake.

Before McALLISTER, C. J., and ROSSMAN, PERRY, SLOAN and KING, JJ.

McALLISTER, Chief Justice.

This is an action against a physician to recover damages for malpractice in treating a fractured arm and other injuries sustained by plaintiff in a fall. The trial court held that this action was barred by the default judgment of a justice's court in an action by the physician to recover the value of her professional services. Plaintiff appeals.

The sole question presented is whether a judgment by default in an action in a justice's court by a physician against his patient to recover for his professional services is a bar to an action by the patient to recover damages resulting from malpractice in the performance of such services.

Plaintiff filed this action on April 17, 1957 in the circuit court for Lincoln county to recover damages for the alleged malpractice of the defendant in treating plaintiff for injuries sustained in a fall at her home on December 18, 1955. Defendant answered with a general denial.

On August 7, 1958, the Lincoln Adjustment Service, Inc., a collection agency, filed an action in the justice's court for Lincoln county against the plaintiff and her husband to recover the sum of $204.50 for Dr. Wilhelm's professional services in caring for plaintiff, which cause of action the doctor had assigned for collection to the collection agency. Neither plaintiff nor her husband appeared in said action and on August 26, 1958, a default judgment was entered against them for the amount demanded.

On September 14, 1959, defendant filed in the case at bar a supplemental answer pleading the justice's court judgment as a bar to this action. Plaintiff demurred to the supplemental answer on the ground that it did not state facts sufficient to constitute a defense. The trial court overruled the demurrer, found that the judgment of the justice's court was a bar to further proceedings and dismissed plaintiff's complaint.

In applying the doctrine of res judicata it is necessary first to determine whether the second action is upon the same cause of action as the first or whether the two actions are upon different causes of action. If the second action is upon the same cause of action the judgment in the first action is conclusive as to all matters which were litigated or which might have been litigated in the first action. If the second action is upon a different cause of action, the judgment in the first action is conclusive only as to the matters essential to the judgment which were actually litigated and determined therein. If the two actions are upon different causes of action, the applicable rule, now generally called 'collateral estoppel', is stated in Restatement, Judgments § 68, p. 293, as follows:

'(1) Where a question of fact essential to the judgment is actually litigated and determined by a valid and final judgment, the determination is conclusive between the parties in a subsequent action on a different cause of action, except as stated in §§ 69, 71 and 72.

'(2) A judgment on one cause of action is not conclusive in a subsequent action on a different cause of action as to questions of fact not actually litigated and determined in the first action.'

The rule as stated above has been the law in Oregon since an early day. See Applegate v. Dowell, 15 Or. 513, 524, 16 P. 651; White v. Ladd, 41 Or. 324, 332, 68 P. 739; Ruckman v. Union Railway Co., 45 Or. 578, 581, 78 P. 748, 69 L.R.A. 480; Farmers' & Fruit-Growers' Bank v. Davis, 93 Or. 655, 665, 184 P. 275; Beezley et al. v. City of Astoria, 126 Or. 177, 187, 269 P. 216, 60 A.L.R. 504; Winters v. Bisaillon, 153 Or. 509, 513, 57 P.2d 1095, 104 A.L.R. 968; Wagner v. Savage, 195 Or. 128, 147, 244 P.2d 161; and State of Oregon v. Dewey, 206 Or. 496, 504, 292 P.2d 799.

The doctrine of res judicata, including collateral estoppel, as to matters essential to the judgment, applies to judgments by default. See White v. Ladd, supra; J. W. Copeland Yards v. Sheridan et al., 136 Or. 37, 296 P. 838, 297 P. 837; Butler v. Maas, 163 Or. 201, 94 P.2d 1116; State ex rel. Nilsen v. Bean, 218 Or. 506, 346 P.2d 652; and Buck v. Mueller, Or., 351 P.2d 61.

The fact that the action in the justice's court was brought by an assignee is not material since the rule is well settled that a judgment is binding on both parties and their privies. It seems equally well settled that where the assignment is for collection only, the assignor and assignee are in privity. Clark v. Andrews, 109 Cal.App.2d 193, 240 P.2d 330; Rauer's Law & Collection Co. v. Higgins, 76 Cal.App.2d 854, 174 P.2d 450; Doxen v. Wagner, 142 Md. 441, 121 A. 254; Titus v. Miller, 132 N.J. Eq. 541, 29 A.2d 550; 1 Freeman on Judgments (5th ed.) 971, § 443 and 6 C.J.S. Assignments § 94, p. 1151.

In the case at bar it is obvious that the two actions were upon two different causes of action, plaintiff's cause of action for malpractice and defendant's cause of action for the value of her services. Under this circumstance the judgment entered in the justice's court is conclusive only as to matters essential to the judgment which were actually litigated and determined therein.

Plaintiff relies on Buck v. Mueller, supra, but we think that case is not conclusive here. It is true, as held in Buck, that in the absence of a compulsory counterclaim statute, the defendant is not required to set up a counterclaim and his failure to do so does not preclude him from bringing a separate action against the plaintiff on the separate cause of action which was available to him as a counterclaim. This rule, however, is subject to the qualification that a party can not recover in a separate action on a cause of action which he failed to plead in a prior action by way of setoff or counterclaim but which was necessarily adjudicated by the former judgment. See A. B. C. Truck Lines, Inc. v. Kenemer, 247 Ala. 543, 25 So.2d 511; Paccalona v. Peninsula Bank & Lumber Co., 171 Mich. 605, 137 N.W. 518; Warshor v. Warshor, 139 Misc. 262, 223 N.Y.S. 705; Moore v. Harjo, 10 Cir., 1944, 144 F.2d 318; Henley v. Panhandle Eastern Pipeline Co., D.C.W.D.Mo.1956, 138 F.Supp. 768; Wright v. Walling, D.C.W.D.Ark.1958, 159 F.Supp. 190; 30 Am.Jur. 434, Judgments § 386; 50 C.J.S. Judgments § 684, p. 136; and Annotation, 8 A.L.R. 694, 727. If the exercise of due care and skill by defendant in caring for plaintiff was essential to the judgment and was actually litigated and determined in the justice's court, plaintiff would be estopped by the judgment.

This case turns then on whether the exercise of due care and skill by defendant in caring for plaintiff was actually litigated and determined in the justice's court. With the exception of New York, all of the states passing on the question have held that a default judgment in an action by a physician to recover the value of his services does not estop the patient from maintaining an action for malpractice in the performance of such services. These include cases in which the judgment against the patient was taken by default, Sykes v. Bonner, 1 Cin.Super. Ct.Rep'r, Ohio, 464; Goble v. Dillon et al., 86 Ind. 327; Lawson v. Conaway, 37 W.Va. 159, 16 S.E. 564, 18 L.R.A. 627; Jordahl v. Berry, 72 Minn. 119, 75 N.W. 10, 45 L.R.A. 541; Fall v. Bennett, 8 Cir., 1918, 248 F. 491 and cases in which the patient appeared but did not allege malpractice either as a defense, a counterclaim or by way of recoupment, Ressequie v. Byers, 52 Wis. 650, 9 N.W. 779; Barton v. Southwick, 258 Ill. 515, 101 N.E. 928, 46 L.R.A.,N.S., 219; Sale v. Eichberg, 105 Tenn. 333, 59 S.W. 1020, 52 L.R.A. 894. Other cases disapprove the New York rule but nevertheless hold that the patient's action for malpractice was barred because he had appeared in the physician's action for services and alleged the malpractice as a defense. Leslie v. Mollica, 236 Mich. 610, 211 N.W. 267, 49 A.L.R. 546, as to one of two defendants, Goble v. Dillon et al., supra.

The New York rule was first stated in Bellinger v. Craigue, 31 Barb. 534 and was followed in Gates v. Preston, 41 N.Y. 113 and Blair v. Bartlett, 75 N.Y. 150, 31 Am.Rep. 455. For other later New York cases see Annotations, 49 A.L.R. 551, 128 A.L.R. 473, 502. The rationale of the New York rule was concisely summarized in the Minnesota case of Jordahl v. Berry, supra, as follows:

'After starting out with the conceded proposition that a judgment is conclusive of every fact necessary to uphold it, whether the final determination is the result of litigation, or a default of one of the parties, the reasoning of those who advocate the New York doctrine may be all summed up as follows: If the services were of value, they could not have been useless; and, if not harmful, there could not have been malpractice in the performance of them; therefore a judgment that the services were of value necessarily involved a determination that they were properly performed; and that such an adjudication is...