L.B. Menefee Lumber Co. v. MacDonald

• Decision Date: 18 October 1927
• Citation: 260 P. 444,122 Or. 579
• Parties: L. B. MENEFEE LUMBER CO. v. MACDONALD ET AL.
• Court: Oregon Supreme Court

260 P. 444

122 Or. 579

L. B. MENEFEE LUMBER CO. v. MACDONALD ET AL.

Supreme Court of Oregon

October 18, 1927

Department 2.

Appeal from Circuit Court, Multnomah County; Louis P. Hewitt, Judge.

Action by the L. B. Menefee Lumber Company against L. W. MacDonald and another, copartners under the firm name of MacDonald &amp Harrington, in which defendants filed a counterclaim. Judgment for defendants on counterclaim, and plaintiff appeals. Affirmed.

The complaint sought the recovery of the value of some quantities of lumber sold by the plaintiff to the defendants. It was stipulated between the parties that the plaintiff was entitled to judgment for $10,838.03 upon these items; hence we need not concern ourselves with the complaint. It is the allegations of the counterclaim and the matters therein set forth, and denied in the reply, that are called to our attention.

Omitting the formal parts, the counterclaim sets forth:

"That on and between the 31st day of August, 1923, and the 1st day of April, 1924, the plaintiff took and received 524,899 feet of lumber, which was the property of, and belonged to the defendants; that said plaintiff sold, used appropriated, and converted said lumber, and the whole thereof, to its own use and benefit; that the defendants were the owners of said lumber, and have demanded the return of same from the plaintiff, or the value thereof but said plaintiff has refused to return said lumber to the defendants or pay for same; that the plaintiff took and received said lumber and appropriated it to its own use and benefit, thereby said plaintiff promised to pay the defendant a reasonable value for same. * * * Said defendants have elected, and hereby elect, to bring this counterclaim and action against plaintiff in assumpsit, and recover the reasonable value of said lumber, upon the implied promise of plaintiff to pay for same."

The counterclaim alleged that the value of this lumber was $14,392.75, and asked for judgment against the plaintiff in that amount. The reply denied these allegations, and alleged an estoppel, which, briefly stated, is as follows: That, if the defendants had any interest in this lumber, they permitted the lumber to remain in the possession of the Hubbard Lumber Company under such circumstances that the plaintiff was led to believe that the Hubbard Company was the owner of it; that the defendants dealt with the Hubbard Company as owner of this lumber, and paid the Hubbard Company in full for all lumber received by the plaintiff; and that the defendants, knowing that the plaintiff was dealing with the Hubbard Company as owner, failed to advise the plaintiff of their interest.

At the conclusion of the evidence, the plaintiff moved for a directed verdict upon the ground that there was no evidence that the plaintiff had converted to its use any of defendants' lumber, and that, since the parties had stipulated that $10,838.03 was due the plaintiff by reason of the transactions set forth in the complaint, the plaintiff was entitled to judgment.

The court ruled that there was no evidence of any conversion. This ruling apparently was based on its finding that the plaintiff came rightfully into possession of defendants' lumber; that defendants had made no demand on the plaintiff for a return of it; and that a demand was essential to change a rightful possession into an act of conversion. The court thereupon informed counsel that the case would not be submitted to the jury as one of conversion, but, believing that the counterclaim could be construed as one of assumpsit for merchandise sold and delivered on a quantum valebat denied the motion for a directed verdict.

In instructing the jury, the court refused to give plaintiff's requested instructions upon the subject of conversion, and instructed the jury that the facts did not warrant a finding of conversion. It submitted the case to the jury as one wherein the defendants alleged the Hubbard Lumber Company rightfully delivered to the plaintiff a quantity of defendants' lumber, which the plaintiff accepted and promised to pay for, but had failed to do so.

Following the court's ruling upon its construction of the theory of the case, both sides excepted, and the defendants asked leave to amend their pleadings. This request was denied. The jury decided the issues upon the counterclaim for the defendants. Plaintiff appealed.

W. B. Shively, of Portland, for appellant.

Nicholas Jaureguy, of Portland (J. G. Arnold and Jaureguy & Tooze, all of Portland, on the brief), for respondents.

ROSSMAN, J. (after stating the facts as above).

The question arises whether the allegations of the counterclaim are sufficient to state the cause of action which the court submitted to the jury. Defendants suggest that we omit all portions of the counterclaim referring to conversion as surplusage, and that enough will remain to state a cause of action in assumpsit based upon a sale of merchandise. As suggested in defendants' brief, the counterclaim will read as follows:

"That on or between the 31st day of August, 1923, and the 1st day of April, 1924, the plaintiff took and received 524,899 feet of lumber, the property of, and belonging to, the defendants; that said plaintiff sold, used * * * lumber, and the whole thereof, to its own use and benefit; * * * that the plaintiff took and received said lumber, and appropriated it to its own use and benefit, thereby said plaintiff promised to pay the said defendants a reasonable value for same. * * *

"Said defendants have elected, and hereby elect, to bring this counterclaim and action against plaintiff in assumpsit to recover the reasonable value of said lumber, upon the implied promise of the plaintiff to pay for same."

No motion or demurrer was filed against the answer; no motion to elect was made during the course of the trial. As to the pleadings in their shrunken form, counsel for plaintiff, in his reply brief, states:

"* * * We do here and now demur to respondents' counterclaim on the ground, and for the reason, that it, as expurgated, does not state facts sufficient to constitute a cause of action, defense, or counterclaim."

It was unnecessary to allege the agency of the Hubbard Lumber Company. The act of the agent can be charged as the act of the principal. 2 C.J. 904; Kitchen v. Holmes, 42 Or. 252, 70 P. 830; Interior Warehouse Co. v. Dunn, 80 Or. 528, 157 P. 806.

The counterclaim sets forth all of the elements suggested in Reichle v. Willamette Tribe No. 6, 118 Or. 357, 246 P. 214. But it will be noticed that it fails to aver a breach of plaintiff's duty to pay for the lumber; that is, nonpayment of the contractual obligation is not alleged. Ordinarily, in order to state a cause of action, it is necessary to allege a duty owed by the defendants to the plaintiff, a breach of that duty, and an injury to the plaintiff as a result thereof. The first and the third of these elements are set forth in the complaint in its expurgated form, but the second, a breach, is missing. A counterclaim must, of course, contain all of the elements of a cause of action. Chance v. Carter, 81 Or. 229, 158 P. 947; Bancroft's Code Pleading, § 386.

Generally, where the breach consists of the failure to pay money, the complaint should allege nonpayment. Lent v. N.Y. & Mass. R. Co., 130 N.Y. 504, 29 N.E. 988; Hudelson v. First National Bank, 51 Neb. 557, 71 N.W. 304; 4 Ency. Pl. & Pr. 942; 13 C.J. 734; Pomeroy's Code Remedies, p. 683, note. But, while the plaintiff must allege nonpayment in order to aver the breach, payment by a peculiar anomaly of law is an affirmative defense, so that generally evidence of payment is not admissible under a general denial. The authorities are collected and analyzed in 10 Cornell Law Quarterly, 269. In this case, however, the reply alleged payment to the Hubbard Lumber Company for all lumber received by the plaintiff. The issue of payment and of nonpayment was gone into fully in the evidence without objection. A technical oversight of this character remaining undiscovered until after the verdict and appeal should not be fatal, in view of the provisions of article 7, § 3c, of our Constitution (page 131, Or. L.). We shall, therefore, regard it no further.

But counsel for the plaintiff contends that, even if it were possible to place upon the complaint the construction adopted by the court below, the defendants should not be permitted to shift from tort into contract as the foundation of their case. The counterclaim itself notifies the plaintiff that the defendants expected to rely upon assumpsit. It avers that the defendants waived the tort and rely upon the implied promise of the plaintiff to pay for the property wrongfully taken and kept. The rule is well established that, where the tort-feasor has derived a benefit from the conversion, the owner of the property may sue the wrongdoer in assumpsit for the value of the benefit he received. Crown Cycle Co. v. Brown, 39 Or. 285, 64 P. 451; Hornefius v. Wilkinson, 51 Or. 45, 93 P. 474; 2 R. C. L. 755. The principle of law which underlies this theory of recovery is well stated by Professor Woodward in the Law of Quasi Contracts, § 270.

"Upon the commission of a tort an obligation always rests upon the tort-feasor to compensate the person injured for the damage suffered by him. The commission of a tort, however, frequently results, not only in damage to the person injured, but in a benefit to the tort-feasor. In the case of conversion by the wrongful sale of another's goods, for example, the owner suffers damage to the extent of the value of the goods and the converter is benefited to the extent of the sum realized by the sale. Wherever there is such an enrichment of the wrongdoer he is clearly under a moral obligation (aside from the

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