McCargar v. Wiley

• Citation: 229 P. 665,112 Or. 215
• Parties: MCCARGAR ET AL. v. WILEY.
• Decision Date: 07 October 1924
• Court: Supreme Court of Oregon

229 P. 665

112 Or. 215

MCCARGAR ET AL. v. WILEY.

Supreme Court of Oregon

October 7, 1924

In banc.

Appeal from Circuit Court, Multnomah County; Fred W. Wilson, Judge.

Action by C. A. McCargar and others, copartners doing business as McCargar, Bates and Lively, against E. Wiley. Judgment for defendant, and plaintiffs appeal. Reversed.

Bean J., and McBride, C.J., dissenting.

This is an action in replevin which was instituted to recover the possession of an automobile. The complaint is in the usual form, and contains all of the averments necessary to maintain the action. It alleges, among other things, that plaintiffs are the owners and entitled to the immediate possession of the automobile, and particularly describes it. That it is of the value of $550 and in the possession of the defendant that plaintiffs demanded possession of it; and that the defendant wrongfully and unlawfully detains the same from plaintiffs in Multnomah county, Or. The judgment demanded was for the return of the automobile or for its value in case a return thereof could not be had. There was no allegation of or demand for damages. In the preliminary proceedings the automobile was taken from defendant's possession and delivered to the plaintiffs.

The defendant filed an answer containing a general denial and also a counterclaim. In his counterclaim he alleged that he purchased the automobile from the plaintiffs for the sum of $922, and paid thereon the sum of $100 in cash, and delivered to plantiffs a Ford automobile, for which it was stipulated he was to be allowed and credited the sum of $325, and gave his promissory note for the balance of $495; that the note by its terms, was payable in monthly installments of $30 each, with interest, and that one installment only has been paid. The others are due and in default. It is alleged in the counterclaim that defendant was induced to purchase the automobile by plaintiffs' fraudulent misrepresentations upon which he relied, and by plaintiffs' warranty that the automobile was in good condition and of high power; that the automobile was not in the condition represented or warranted; and that, by reason of said false and fraudulent representations and breach of warranty defendant sustained damages in the sum of $494.50, which sum he alleged had been paid out and expended by him upon the automobile, and in the further sum of $1,000, damages alleged to have been sustained by reason of his inability to use the automobile and the trouble and annoyance he had sustained because of its defective condition, for which sums the defendant demanded judgment. The answer contained no claim or demand for the return of the automobile. The plaintiffs filed no demurrer to the counterclaim, but interposed a motion to strike, upon the ground that a counterclaim for the recovery of damages does not lie in an action in replevin brought to recover the possession of a chattel. This motion was overruled. A reply was filed denying these allegations, and upon the trial the same point was saved by a motion for a directed verdict, to the overruling of which an exception was reserved. The cause was tried to a jury, and defendant had verdict in the sum of $295.75, and judgment for said sum and for his costs and disbursements. The judgment made no mention of or reference to the automobile.

F. S Senn, of Portland (Senn, Ekwall & Recken, of Portland, on the brief), for appellants.

F. C. Howell, of Portland (Wilbur, Beckett & Howell, of Portland, on the brief), for respondent.

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

Although it was not alleged in any of the pleadings that the sale was a conditional one, it appeared from the evidence offered upon the trial by both plaintiffs and defendant, and it was admitted by both parties, that the sale of the automobile was made under a written contract, which contract was introduced as an exhibit, and provides that the title to the automobile should not pass to the defendant until the whole purchase price was paid. It also appears from the allegations of the answer that, with one exception, the stipulated payments were not made at the times specified, nor made at all, and that by reason thereof the defendant was in default at the time plaintiffs demanded from defendant the possession of the automobile.

Where goods or chattels are sold on condition that the title thereto shall not vest in the vendee until payment of the purchase price, the legal title to the property remains in the vendor until the payment is made, and if the vendee fails to make the payment at the specified time the vendor is entitled to the possession of the property. As said by this court in Maxson v. Ashland Iron Works, 85 Or. 345, 355, 166 P. 37, 40, upon the default of the vendee in the payment of the purchase price under a contract of this character, the vendor "may upon a breach of the conditions treat the sale either as absolute and sue for the consideration agreed to be paid or he may regard the sale as canceled, and recover the property." Where the vendors, as in this case, elected to recover the possession of the property, it was the duty of the vendee, upon demand, after default, to surrender the possession of the property to the vendors, and upon his refusal the plaintiffs, as vendors, were entitled to maintain an action to recover the possession of the property from the defendant vendee.

The issue to be litigated in an action in replevin is the present right to the possession of the property in controversy. Under this contract no title whatever to the automobile had vested in the defendant at the time when sued for the recovery thereof, and hence the defendant had no defense to this action. Roach v. Curtis, 191 N.Y. 387, 84 N.E. 283.

The defendant contends that the facts stated in the answer constitute a counterclaim, within the meaning of the Code. These facts are that the defendant sustained damages by reason of false representations which induced him to purchase the automobile and the breach of a warranty as to the condition and quality of the automobile. So far as applicable to the question of whether these facts constitute a counterclaim within the meaning of the Code, section 74, Or. L., provides as follows:

"The counterclaim * * * must be one existing in favor of a defendant, and against a plaintiff, between whom a several judgment might be had in the action," and "arising out of the contract or transaction set forth in the complaint, as the foundation of the plaintiff's claim," and "in an action arising on contract, any other cause of action arising also on contract, and existing at the commencement of the action."

In addition to these provisions the statutes of most states, defining what constitutes a counterclaim, include the provision "or connected with the subject of the action." These words, however, are omitted from our statute, and hence in this state a counterclaim, which is merely "connected with the subject of the action," and which might be permissible under other statutes, cannot be interposed as a counterclaim. Under our statute a counterclaim is not sufficient if it be only connected with the subject of the action. Krausse v. Greenfield, 61 Or. 502, 506, 123 P. 392, Ann. Cas. 1914B, 115; Wait v. Wheeler & Wilson Co., 23 Or. 297, 301, 31 P. 661, Loewenberg v. Rosenthal, 18 Or. 178, 184, 22 P. 601; Chance v. Carter, 81 Or. 229, 234, 158 P. 947.

To constitute a valid counterclaim under our statute the facts stated in the counterclaim must be sufficient to constitute a cause of action in favor of the defendant and against the plaintiff, between whom a several judgment might be had in the action, and the cause of action set forth in the counterclaim must be one of the following: (1) A cause of action arising out of the contract set forth in the complaint as the foundation of the plaintiff's claim; (2) a cause of action arising out of the transaction set forth in the complaint as the foundation of the plaintiff's claim; or (3) if plaintiff's action is one arising on contract, then any other cause of action arising also on contract and existing at the commencement of the action.

While the proper mode of raising and presenting the question of whether the facts stated are sufficient to constitute a counterclaim under the statute is by demurrer (Pomeroy's Code Remedies [4th Ed.] § 487), and while in the instant case the objection to the sufficiency of the counterclaim was not raised by demurrer, that is not the only manner in which the question can be presented to the court for decision. If the facts alleged do not constitute a counterclaim within the meaning of the statute, and the matters alleged constitute no defense, the question of the sufficiency of the counterclaim may be raised by an objection to the introduction of any testimony offered to sustain it, as in Chamberlain v. Townsend, 72 Or 207, 213, 142 P. 782, 143 P. 924, or by a motion for a directed verdict, and, if the matters alleged in the counterclaim are sham, frivolous and irrelevant, the objection may be raised by a motion to strike. The objection was raised here by a motion to strike and also by a motion for a directed verdict. The objection, therefore, if the matter alleged did not constitute a counterclaim or defense to the cause of action set forth in the complaint, was sufficiently raised and was not waived by failure to demur (see Kondo v. Aylsworth, 81 Or. 225, 158 P. 946), nor was it waived or cured by the reply. Smith v Hall, 67 N.Y. 48.

As the defendant, until his default in payment, was rightfully in possession of the automobile, it was necessary for the plaintiffs to demand possession of it in order to render his subsequent possession unlawful. After demand and refusal by the defendant to surrender...