Jerstad v. Warren

• Decision Date: 01 May 1985
• Citation: 698 P.2d 1033,73 Or.App. 387
• Parties: , 41 UCC Rep.Serv. 149 Luther G. JERSTAD, and LJA, Inc., an Oregon corporation, Respondents, v. Kenneth Edgar WARREN and Maxine Marie Warren, husband and wife, Appellants. 79-7-124; CA A31867.
• Court: Oregon Court of Appeals

Page 1033

698 P.2d 1033

73 Or.App. 387, 41 UCC Rep.Serv. 149

Luther G. JERSTAD, and LJA, Inc., an Oregon corporation, Respondents, v. Kenneth Edgar WARREN and Maxine Marie Warren, husband and wife, Appellants.

79-7-124; CA A31867.

Court of Appeals of Oregon.

Argued and Submitted Jan. 7, 1985.

Decided May 1, 1985.

Dennis H. Elliott, Portland, argued the cause for appellants. With him on the briefs was Elliott & Freedman, Portland.

Frank Porcelli, Jr., Beaverton, argued the cause for respondents. On the brief were Bradley C. Blyth and Blyth, Solomon & Porcelli, Beaverton.

Before BUTTLER, P.J., and WARREN and ROSSMAN, JJ.

BUTTLER, Presiding Judge.

This is an action to recover payment made by plaintiff LJA, Inc., on a promissory note which defendants signed as makers, payable to the Oregon Bank. Plaintiff Jerstad, who is president of LJA, Inc., ¹ signed the note as an accommodation party. ORS 73.4150. When defendants defaulted on the note, the bank demanded payment from Jerstad. The bank's demand was satisfied by payment from LJA.

Jerstad then filed this action to recover the payment from defendants, who counterclaimed for an accounting of wages and for stock options in LJA, allegedly due under an employment contract with Jerstad. Jerstad's demurrer to the counterclaim on the ground that LJA was a necessary party to the litigation was overruled. In his answer to the counterclaims, Jerstad again asserted that LJA was a necessary party under ORCP 29 for the adjudication of those claims. Defendants moved for summary judgment on Jerstad's claim on the ground that LJA, not Jerstad, paid the note; therefore, any right to recover belonged to LJA, rather than to Jerstad. That motion was denied; however, during the trial, a motion was allowed substituting LJA for Jerstad as plaintiff on the claim and adding LJA as a defendant on the counterclaim along with Jerstad. When we refer to plaintiff, we refer to LJA.

Trial was to the court, which found in favor of LJA on the claim and for defendants on their counterclaims against Jerstad personally. Separate judgments were entered July 29, 1982, disposing of the claim and the counterclaims. We dismissed the appeal and cross-appeal from those judgments, because there was no final disposition of the counterclaim against LJA and because neither of the judgments complied with ORCP 67 B. Jerstad v. Warren, 66 Or.App. 299, 673 P.2d 565 (1983). On remand, the trial court entered another separate judgment in favor of LJA on the counterclaim on May 2, 1984. This appeal by defendants is taken from the May 2 judgment, and there is no cross-appeal.

LJA contends that this appeal must also be dismissed, because the errors assigned are not related to the May 2, 1984, judgment, but only to the July 29, 1982, judgments, and because the notice of appeal fails to designate accurately what action of the trial court is being appealed. The notice of appeal reads, in part, as follows:

"Defendants hereby give notice of appeal from the judgment entered in this case on May 2, 1984 by Judge Howard Blanding in the Circuit Court for Clackamas County."

Attached to the notice of appeal are copies of the July 29, 1982, judgments ² and the May 2, 1984, judgment.

In Jones v. Tri-State Realty, 46 Or.App. 159, 611 P.2d 312 (1980), we held that the predecessor to ORCP 67, ORS 18.125, did not require

" * * * that the several judgments respecting the various parties be summarized in a single judgment order. What is required is that the cause be determined as to all parties or that the requirements of ORS 18.125 be met as to a judgment for fewer than all parties. * * * " 46 Or.App. at 161, 611 P.2d 312.

Defendants have appealed from the judgment that, considered with the two earlier judgments, finally disposed of all claims against all of the parties. It is an appealable judgment. The notice correctly advises the adverse parties that the appeal is taken from that judgment, gives the correct date of the judgment and has a copy of the judgment attached. Defendants met the requirements of ORS 19.029. See generally Werline v. Webber, 54 Or.App. 415, 419, 635 P.2d 15 (1981), rev. den. 292 Or. 450, 644 P.2d 1128 (1982).

The fact that defendants failed to designate in the notice of appeal the nonappealable judgments entered in 1982 was not a failure to provide notice that "an appeal is taken from the judgment or some specified part thereof * * *." ORS 19.029(1)(c). Stahl v. Krasowski, 281 Or. 33, 573 P.2d 309 (1978), relied on by plaintiff, is not in point. In that case the notice of appeal designated a nonappealable order rather than a judgment as the basis for appeal, and the court held that a designation of the judgment appealed from was a jurisdictional requirement. 281 Or. at 39, 573 P.2d 309; see also Ensley v. Fitzwater, 293 Or. 158, 695 P.2d 1062 (1982). The notice of appeal in this case does not suffer from that defect, and there is no requirement that an appellant specify in the notice of appeal those parts of a judgment on which assignments of error will be based. Errors may be assigned to "any intermediate order involving the merits or necessarily affecting the judgment * * * appealed from * * *." ORS 19.140. Accordingly, plaintiff's motion to dismiss the appeal is denied.

The trial court's findings supporting judgment for LJA on the note are brief:

"I. Defendants, for value, executed a note, a copy of which is evidenced by Exhibit No. 2, payable to Oregon Bank. Plaintiff Luther G. Jerstad signed the note as accommodation at the bank's request.

"II. The bank made demand upon Jerstad for payment of the note. LJA, Inc., of which Jerstad was principal owner, paid to the bank the balance due on the note of principal and interest in the amount of $3,256.11 on June 26, 1979. LJA, Inc. has carried this amount as due and owing on its books and has classified the amount as a bad debt.

"III. The note has been lost. It was not delivered or formally assigned to LJA, Inc. The bank has no record of delivery of the note to the defendants or LJA, Inc."

From those findings, the court concluded that:

"I. LJA, Inc. shall have judgment against defendant Kenneth Edgar Warren and Maxine Marie Warren in the amount of $3,256.11 plus interest thereon from June 26, 1979, together with costs and reasonable attorney fees to be set by the Court upon submission of proper claim."

Defendants' first two assignments of error involve the single question of whether LJA was entitled to recover on the note. The argument is aptly summarized by defendants:

"A stranger who pays a promissory note acquires rights to it only upon surrender of the note by [the] holder to the stranger-payor. Proper surrender requires a negotiation (indorsement) and delivery to make [the] transferee a holder. Only a holder can enforce the terms of a promissory note. The only exception to this is where the note is lost. Then the owner of the note may sue to enforce it. Ownership need be proved and is established by evidence of indorsement to the purported owner. LJA, Inc. was neither holder nor owner of the note and therefore cannot enforce its terms. The corporation was not an assignee of the note, which would allow for recovery even if it had not been delivered to it."

Plaintiff contends that it was an accommodation party and therefore has a right of recourse on the instrument under ORS 73.4150(5) ³ and, in the alternative, argues that it is entitled to recover under ORS 73.8040 as the owner of a lost instrument. Although we agree with defendants that LJA was not an accommodation party or a holder in the strict sense, we conclude that it is entitled to recover on the note under ORS 73.8040.

The note bears the signature of "Luther G. Jerstad." There is nothing on its face to indicate that Jerstad is the president of LJA or that he signed in a representative capacity on behalf of LJA. The only evidence to the contrary is Jerstad's testimony that it was his intention to bind LJA on the note by his signature. That evidence is insufficient to show that LJA is a party to the instrument. ORS 73.4010; ORS 73.4030; see also Dalton v. George B. Hatley Co., Inc., 634 S.W.2d 374 (Tex.Civ.App.1982).

The principal problem with defendants' argument, quoted above, is that neither "transfer" under ORS 73.2010 nor "surrender" under ORS 73.6030(2) requires that an instrument be negotiated; therefore, LJA's failure to prove that the note was endorsed by the bank is not fatal to its claim. Although negotiation is one form of transfer, it is not the only one. See generally Perry & Greer, Inc. v. Manning, 282 Or. 25, 31-32, 576 P.2d 791 (1978); Scheid v. Sheilds, 269 Or. 236, 240, 524 P.2d 1209 (1974).

ORS 73.6030(2) provides:

"Payment or satisfaction may be made with the consent of the holder by any person including a stranger to the instrument. Surrender of the instrument to such a person gives him the rights of a transferee as provided in ORS 73.2010."

The evidence here shows that payment was made at the request of the bank by LJA, a stranger to the instrument, and that the note was "surrendered" to LJA by the bank. At trial, the bank's loan officer involved with the note testified that the bank no longer had the note and that, although he did not know what had happened to it, in the normal course of the bank's business it would have been sent to LJA, which made payment. Under OEC 311(1)(m), the trial court was entitled to presume that "the ordinary course of business has been followed." That presumption imposed on defendants the burden of proving that the note was not sent to LJA. OEC 308. No such evidence was presented. Thus LJA acquired "the rights of a transferee" under ORS 73.6030(2).

ORS 73.2010 ⁴ spells out the rights of a transferee. It provides that the transfer of a negotiable instrument vests in the transferee the same rights that the transferor had in the instrument. Furthermore, when the transfer is for value, the transferee is given the...