Johnson v. Dave's Auto Center, Inc.

• Decision Date: 05 November 1970
• Citation: 476 P.2d 190,257 Or. 34
• Parties: Mrs. F. P. JOHNSON, Guardian of the Estate of Gary W. Johnson, Appellant, v. DAVE'S AUTO CENTER, INC., an Oregon Corporation and Neil Roberts, whose true name is Arthur Neil Roberts, Respondent.
• Court: Oregon Supreme Court

Page 190

476 P.2d 190

257 Or. 34

Mrs. F. P. JOHNSON, Guardian of the Estate of Gary W Johnson, Appellant, v. DAVE'S AUTO CENTER, INC., an Oregon Corporation and Neil Roberts, whose true name is Arthur Neil Roberts, Respondent.

Supreme Court of Oregon.

Argued and Submitted Sept. 11, 1970.

Decided Nov. 5, 1970.

Thomas B. Brand, Salem, argued the cause for appellant. With him on the brief were Brand, Lee & Ferris, Salem.

George A. Rhoten, Salem, argued the cause for respondent. With him on the brief were Rhoten, Rhoten & Speerstra, Salem.

Before O'CONNELL, C.J., and McALLISTER, DENECKE, TONGUE, HOWELL, SCHWAB and MENGLER, JJ.

TONGUE, Justice.

This is an action for $7,541.55 in special damages for hospital and medical expenses and $40,000 in general damages for personal injuries resulting from an automobile accident. Plaintiff's complaint alleges that he was a paying passenger in a truck owned by defendant Dave's Auto Center, Inc. and driven by defendant Arthur Neil Roberts and that he was injured as a result of defendant's negligence in the operation of the truck.

The answers of both defendants allege, as affirmative defenses, that plaintiff asserted a claim under the Oregon Workmen's Compensation Law for compensation for injuries resulting from the same accident; that in that proceeding plaintiff asserted that he was an employee of defendant Dave's Auto Center, Inc., which was a contributing employer under that law; that this claim was compromised and settled by payment of $7,935.71; that this was plaintiff's 'sole remedy,' and that in asserting such a claim plaintiff made a 'judicial election of remedies,' barring any remedy against defendants; that, under these same facts plaintiff was estopped from asserting such a claim, and that, in any event, any damages awarded to plaintiff should be reduced by the amount received as a result of that settlement. ¹

Plaintiff filed demurrers to these answers and also replies alleging that defendants were barred and estopped from raising such defenses for the reason that defendant Dave's Auto Center, Inc. had at all times denied that plaintiff was its employee. In turn, defendants demurred to these replies.

A hearing was then held on the issues of law raised by the demurrers to the answers and the demurrers to the replies, as well as upon the limited issue of fact raised by the affirmative defenses and replies. At that time no testimony was offered, but the parties stipulated to the following facts in addition to those admitted for the purposes of the demurrers: That when plaintiff filed a claim with the Workmen's Compensation Board, a copy of that claim was sent to defendant Dave's Auto Center, Inc., which then filed with the Board a 'response' entitled 'Employer's Report of Occupational Injury,' signed by its sales manager, in which it was stated that 'This man was not employed'; that the Board then issued an order denying plaintiff's claim upon the ground that he was not an employee; that plaintiff then requested a hearing, at which testimony was taken, but which was not completed; that while plaintiff still contended that he was an employee, the State Compensation Department still denied that fact; that a settlement was then agreed upon as set forth in a stipulation reciting that the settlement was made 'on the basis of a disputed claim, and without any admission of liability by either party as to the status of employment or nonemployment'; that an 'Order Approving Disputed Claim Settlement' was then made by the Board, and that under the terms of that settlement plaintiff's doctor, hospital and medical expenses in the sum of $7,541.55 were paid, plus attorney's fees and costs, resulting in a total payment in the sum of $7,935.71. It was also stipulated that this payment 'is not being charged against Dave's Auto Center, Inc. by the State Compensation Department.'

Based upon this record the trial judge held that plaintiff 'in pursuing his remedy to an award from the Workmen's Compensation Board cannot now, as an employee, make claim against the defendant, the employer.' Plaintiff appeals from the resulting judgment for the defendants.

Plaintiff's principal contentions on this appeal are: (1) that by filing a claim with the Workmen's Compensation Board and by entering into a compromise settlement of that claim plaintiff is not barred or estopped from filing the present action against defendants, either on the ground of election of remedies or otherwise; (2) that, in any event, by denying that plaintiff was an employee upon the filing of that claim, defendants are now themselves estopped from relying upon any such defenses; and (3) that defendant also is not entitled to a reduction or offset of the amount received by plaintiff under the settlement with the Workmen's Compensation Board from the amount of any verdict which may be returned by a jury in favor of plaintiff on remand of this case for further trial. Plaintiff concedes, however, that if the jury should find, contrary to plaintiff's contention, that he was an employee he would not be entitled to any recovery in this case.

The doctrine of election of remedies, although long the subject of criticism as a 'weed' of somewhat recent origin in the 'garden of the common law' and one resulting from the 'carelessness of judicial gardeners,' ² is nevertheless firmly rooted in the law of Oregon, as indicated by its recognition in numerous cases. ³

This court, however, in Elliott v. Mosgrove, 162 Or. 507, 553, 93 P.2d 1070 (1939), agreed with the statement by the Supreme Court of the United States in Friederichsen v. Renard, 247 U.S. 207, 38 S.Ct. 450, 62 L.Ed. 1075 (1917), that 'for obvious reasons it has never been a favorite of equity.' Indeed, in Friederichsen, the court also said (at p. 213, 38 S.Ct. at p. 452) that:

'At best this doctrine of election of remedies is a harsh, and now largely obsolete rule, the scope of which should not be extended, * * *.'

To the same effect, this court made the following observation in Sheppard v. Blitz, 177 Or. 501, at p. 511, 163 P.2d 519, at p. 523 (1945), with reference to the doctrine of election of remedies when it said that:

'We are concerned here with procedure, which is the 'means whereby the court reaches out to restore rights and remedy wrongs; it must never become more important than the purpose which it seeks to accomplish.''

It has also been recognized by this court that much of the confusion and seeming conflict in judicial opinions on this subject arises out of a failure to observe the distinctions between the doctrine of election of remedies and those of estoppel and res judicata. Oregon Mill & Grain Co. v. Hyde, 87 Or. 163, 173, 169 P. 791 (1918). Indeed, there is considerable support for the view that the doctrine of election of remedies had 'no independent viability' and that 'estoppel and res judicata can be employed without resort to the election doctrine.' ⁴

In any event, it is well established in Oregon that the 'selection of a remedy that is not available does not bar later resort to an available remedy.' Payne v. Griffin, 239 Or. 91, 95, 396 P.2d 573 (1964), and cases cited therein. ⁵ Thus, as held in Ladd v. General Insurance Co., 236 Or. 260, 265, 387 P.2d 572 (1964), quoting Mr. Justice Cardozo in Schenck v. State Line Telephone Co., 238 N.Y. 308, 311, 144 N.E. 592, 593 (1924):

'If in truth there is but one remedy, and not a choice between two, a fruitless recourse to a remedy withheld does not bar recourse thereafter to the remedy allowed. * * *.'

This rule has been applied in cases in which plaintiff, in the filing of his original action, proceeded in the mistaken belief that the facts, as well as the law, were such as to entitle him to recover. Elliott v. Mosgrove, 162 Or. 507, 553, 93 P.2d 1070 (1939). See also Cook v. Kinzua Pine Mills Co., 207 Or. 34, 52, 293 P.2d 717 (1956); Jones v. Howe-Thompson, Inc., 143 Or. 337, 343, 22 P.2d 502 (1933); and Rehfield v. Winters, 62 Or. 299, 306, 125 P. 289 (1912). ⁶ See also Brandeis, J., dissenting in United States v. Oregon Lumber Company, 260 U.S. 290, 305, 43 S.Ct. 100, 67 L.Ed. 261 (1922).

In this case, the facts relating to the question whether or not plaintiff was an employee of defendant Dave's Auto Center, Inc., are not included in the record of the hearing before the trial court. Apparently, however, plaintiff was not a regular employee of that defendant, but was riding as a passenger in defendant's truck on a trip to pick up some cattle. From all that appears from the record in this case, plaintiff may have been mistaken, in good faith, as to the ultimate question of law or fact whether or not he was an employee, based upon all of the evidentiary facts. Thus, based upon this record, we hold that the Filing by plaintiff of his claim with the Workmen's Compensation Board for compensation which would be payable only if he was an employee, did not, of itself, bar plaintiff by the doctrine of election of remedies or estoppel from later filing his complaint in this case. ⁷

Ordinarily, there is no binding election of remedies unless and until the first proceeding has proceeded to a judgment on the merits. On the contrary, it is generally held that there is no binding election of remedies when the original action resulted in a voluntary nonsuit, for the reason that such a judgment 'does not reach the merits' and thus does not establish an estoppel on any issue in the case. Fleming v. Wineberg, 253 Or. 472, 455 P.2d 600 (1969); cf. Restatement of the Law, Judgments § 53.

This is particularly true in cases involving claims under Workmen's Compensation Acts. Thus, in this case, it is clear that if plaintiff had withdrawn his claim from the Workmen's Compensation Board without any decision by it on the merits to the effect that he was or was not an employee, plaintiff would have been free to file the present action and would not have been barred from doing so under the doctrine of...