Lewis v. Merrill

• Citation: 228 Or. 541,365 P.2d 1052
• Parties: William D. LEWIS, Appellant, v. Parley MERRILL, III, Respondent.
• Decision Date: 25 October 1961
• Court: Supreme Court of Oregon

Page 1052

365 P.2d 1052

228 Or. 541

William D. LEWIS, Appellant, v. Parley MERRILL, III, Respondent.

Supreme Court of Oregon, Department 1.

Argued and Submitted Sept. 7, 1961.

Decided Oct. 25, 1961.

Gerald H. Robinson, Portland, argued the cause for appellant. With him on the brief was Stephen King, Portland.

Ben T. Gray, Portland, argued the cause and filed a brief for respondent.

Before McALLISTER, C. J., and ROSSMAN, WARNER, PERRY and LUSK, JJ.

LUSK, Justice.

The plaintiff brought an action against the defendant to recover damages for assault and battery. The defendant filed a counterclaim based on the same incident as that alleged in the complaint charging that the tort was committed against him and seeking damages for his injuries. The plaintiff in his reply alleged that the counterclaim was barred by the statute of limitations. To this reply the defendant filed a demurrer which was sustained by the court. The jury returned a verdict in favor of the defendant on his counterclaim for $250 compensatory damages and $1,500 punitive damages. From the ensuing judgment plaintiff has appealed.

The alleged assault and battery occurred on the twenty-seventh of March, 1958. The complaint was filed on March 16, 1960, and the defendant was served on March 18, 1960. The answer containing the counterclaim was filed on March 29, 1960. Both the complaint and counterclaim alleged that the incident occurred 'on or about March 27, 1958.'

The action is governed by the two-year statute of limitations, ORS 12.110(1), and would have been barred after March 27, 1960. Defendant's answer, therefore, was filed two days after the expiration of the statutory period, but the cause of action stated in the counterclaim was not barred at the time the complaint was filed. We are, therefore, called upon to determine whether, in these circumstances, the statute of limitations should be held to have run against the counterclaim. This is a new question in this state.

Preliminarily, we notice the contention of the defendant that the plaintiff waived the defense of limitations by setting it up in the reply instead of demurring to the counterclaim. The argument assumes that the fact that the action was barred appears on the face of the pleading and the decisions of this court which hold that when this is so the objection may be taken only by demurrer are relied on. Dixon v. Schoonover, Or., 359 P.2d 115, 117, and cases there cited. This, however, is an erroneous assumption because, as Judge Deady said in Conroy v. Oregon Construction Co., C.C.D.Or.1885, 23 F. 71, 73, an allegation that something occurred "on or about' a certain day, is not an averment that it occurred on any distinct day or time. The actual day or time may be either before or after the one stated with an 'on or about." It was therefore held in a personal injury action in which the complaint alleged that the injury was sustained "on or about" a certain day that a demurrer to the complaint based on the statute of limitations would not lie because it did not appear on the face of the complaint when the right of action accrued.

We recognize, of course, that there are limits beyond which the courts will not go in the application of this rule of construction to particular cases. Thus, as the court said in Newcomer v. Ament, 214 Iowa 307, 242 N.W. 82, 83: 'No date in July is 'on or about' the last days of October.' See, also, Crawford v. Arends, 351 Mo. 1100, 176 S.W.2d 1; Render v. Commonwealth, 206 Ky. 1, 266 S.W. 914. Without attempting to determine the allowable latitude that may be given the phrase, it is certain that 'on or about March twenty-seventh' includes at least until the end of March; hence, the fact that the statutory period for bringing the action had run did not appear on the face of the counterclaim and the question was properly raised in the reply.

This court has held in a number of cases, of which Dixon v. Schoonover, supra, is the most recent, that, notwithstanding the running of the statute of limitations, a counterclaim may be employed defensively, that is by way of setoff or recoupment, either to defeat altogether the plaintiff's action, or diminish the amount of his recovery. These cases, however, are not controlling because they do not involve the right of the defendant to recover an affirmative judgment and were decided without regard to the question whether the cause of action stated in the counterclaim was barred at the time that the plaintiff filed his action.

The Oregon statute provides that the answer of the defendant shall contain 'a statement of any new matter constituting a defense or counterclaim.' ORS 16.290(2)(b). ORS 16.300 provides in subsection (1):

'The counterclaim mentioned in subsection (2)(b) of ORS 16.290 must be one existing in favor of the defendant, and against a plaintiff, between whom a several judgment might be had in the action, and arising out of one of the following causes of action:

'(a) A cause of action arising out of the contract or transaction set forth in the complaint, as the foundation of the plaintiff's claim. * * *'

In Sturtevant v. Dowson et al., 110 Or. 155, 163, 219 P. 802, 222 P. 294, we held that the language of the section last quoted was broad enough to cover causes of action arising after as well as those existing at the time of the commencement of the action. We are concerned in this case, however, only with a cause of action which was in existence at the time the complaint was filed and our decision is limited to such a case.

While there is a difference of opinion on the question, the majority of the courts hold that a counterclaim based on a cause of action which is not barred at the time of the commencement of plaintiff's action is not thereafter barred because not pleaded before the expiration of the full statutory time. 34 Am.Jur. 205, Limitation of Actions, § 249; 54 C.J.S. Limitations of Actions § 285, p. 342; Annotation, 127 A.L.R. 909. The following cases support this view: Perkins v. West Coast Lumber Co., 120 Cal. 27, 52 P. 118; McDougald v. Hulet, 132 Cal. 154, 64 P. 278; Whittier v. Visscher, 189 Cal. 450, 209 P. 23; Union Sugar Company v. Hollister Estate Co., 3 Cal.2d 740, 47 P.2d 273; Stillwell v. Bertrand, 1860, 22 Ark. 375; Tom Reed Gold Mines Co. v. Brady, 55 Ariz. 133, 99 P.2d 97, 127 A.L.R. 905; Denton v. Detweiler, 48 Idaho 369, 282 P. 82; Eve v. Louis, 1883, 91 Ind. 457; Zink v. Zink, 56 Ind.App. 677, 106 N.E. 381; Grevenstuk v. Hubeny, 216 Ind. 379, 24 N.E.2d 924; Turnbull v. Watkins, 1876, 2 Mo.App. 235; Concrete Steel Co. v. Reinforced Concrete Co., Mo.App. 1934, 72 S.W.2d 118; Rollins v. Horn, 1863, 44 N.H. 591; Brumble v. Brown, 1874, 71 N.C. 513; Parsell v. Essex, 15 Misc.2d 617, 181 N.Y.S.2d 1019; Herbert v. Day, 33 Hun, N.Y., 461; National Retailers Mut. Ins. Co. v. Gross, 142 Ohio St. 132, 50 N.E.2d 258; Eagle Sav. & Loan Ass'n v. West, 71 Ohio App. 485, 496, 50 N.E.2d 352; Bryant v. Sweetland et al., 48 Ohio St. 194, 210, 27 N.E. 100. In Wisconsin the majority rule has been incorporated into a statute. See Preston v. Thayer, 127 Wis. 123, 128, 106 N.W. 672.

We have not cited cases involving setoffs or recoupments though the reasoning in some of these would seem to be fully applicable to counterclaims. See McEwing v. James, 1880, 36 Ohio St. 152; Markley v. Michael, 1881, 8 Ohio Dec.Reprint 269; Williams v. Lenoir, 1875, 67 Tenn. 395 (mutual accounts, affirmative judgment in favor of defendant for excess sustained); Paducah & M. Railroad Co. v. Parks, 86 Tenn. 554, 8 S.W. 842.

In Perkins v. West Coast Lumber Co., supra, an attorney brought an action to recover upon a special contract for professional services rendered to the defendant. Over four years after the commencement of the action the defendant pleaded a counterclaim for damages based on bad advice given him by the plaintiff. The defendant's claim was not barred at the time the action was commenced, but if he had brought an independent action it would have been barred at the time the answer was filed. The California court held that the counterclaim was not barred, saying:

'The claim was not barred when the complaint was filed, and that fact allows it to be set up as a counterclaim, though, if standing alone, the statute would run against it before the answer was filed. As to a counterclaim, the filing of the complaint suspends the running of the statute of limitations. By section 438 of the Code of Civil Procedure, it is held that the answer of a defendant may set up a counterclaim 'existing at the commencement of the action.' Lyon v. Petty, 65 Cal. 322, 4 P. 103, fully supports this view. In answer to this position, respondent claims that it is only in actions arising upon contract set up as counterclaims that the statute of limitations is held in abeyance by the filing of the complaint. We are satisfied that the principle applies also to counterclaims of the character here relied upon.' 120 Cal. at page 28, 52 P. at page 118.

The provision of our counterclaim statute relating to a cause of action arising out of the transaction set forth in the complaint is similar to that of California, although at the time of the decision in Perkins v. West Coast Lumber Company, supra, it was provided that the counterclaim must have been in existence at the time of the commencement of the action. This provision was eliminated by amendment in 1927, 44 Cal.Jur.2d 614, Setoff and Counterclaim, § 4; Western Pipe and Steel Co. of California v. Tuolumne Gold Dredging Corp., 63 Cal.App.2d 21, 146 P.2d 61, thus bringing the California statute into harmony with ours, as construed in Sturtevant v. Dowson et al., supra. In Union Sugar Company v. Hollister Estate Co., supra, 1935, 3 Cal.2d at page 746, 47 P.2d at page 276, the court held that the amendment did not 'affect or destroy' the rule of the Perkins case.

The Arizona case of Tom Reed Gold Mines Co. v. Brady, supra, and the Missouri case of Concrete Steel Co....