Northern Ins. Co. of New York v. Conn Organ Corp., 44588

• Decision Date: 25 June 1979
• Docket Number: No. 44588,44588
• Parties: NORTHERN INSURANCE COMPANY OF NEW YORK, Appellant, v. CONN ORGAN CORPORATION, Donald W. Rife and Clara M. Rife, d/b/a Rife Conn Organ Sales & Studios, Defendants, The Marshall Company and the Marshall Fixture Company, Respondents. The MARSHALL FIXTURE COMPANY, an Idaho Corporation, Third-Party-Plaintiff, v. E. R. CARPENTER COMPANY, INC., a corporation, Third-Party-Defendant. ; CA 11500.
• Court: Oregon Court of Appeals

Page 605

596 P.2d 605

40 Or.App. 785

NORTHERN INSURANCE COMPANY OF NEW YORK, Appellant, v. CONN ORGAN CORPORATION, Donald W. Rife and Clara M. Rife, d/b/a Rife Conn Organ Sales & Studios, Defendants, The Marshall Company and the Marshall Fixture Company, Respondents.

The MARSHALL FIXTURE COMPANY, an Idaho Corporation, Third-Party-Plaintiff, v. E. R. CARPENTER COMPANY, INC., a corporation, Third-Party-Defendant.

No. 44588; CA 11500.

Court of Appeals of Oregon.

Argued and Submitted April 17, 1979.

Decided June 25, 1979.

John C. Mercer, Portland, argued the cause for respondents. With him on the brief was Gearin, Landis & Aebi, Portland.

David P. Morrison, Portland, argued the cause for appellant. With him on the briefs was Cosgrave, Kester, Crowe, Gidley & Lagesen, Portland.

Before SCHWAB, C. J., and THORNTON and JOSEPH, JJ.

JOSEPH, Judge.

This is an action for property damage arising out of a fire in a church. Plaintiff Northern Insurance Company of New York (the insurer) appeals from judgments entered for defendants Marshall Company (Marshall) and Marshall Fixture Company (Marshall Fixture) on their demurrers.

The fire occurred on March 17, 1973. It originated in an organ and spread to pew cushions, the flammability of which allegedly contributed to causing substantial additional damage to the inside of the building. The church submitted a claim to the insurer and negotiated with the insurer's representative to determine the amount of the loss. During the negotiations, the insurer paid the church $15,000 for debris removal. After the representative and the church reached agreement on the amount of the fire loss, the church executed a proof of loss and a release. ¹ Prior to disbursement of the balance of the agreed benefits, and at the insurer's request, the church executed two loan receipts, ² one for $191,614.92 (which included the $15,000 for debris removal) and one for $1,111.52.

In October, 1973, an action was begun in the name of the church against the Conn Organ Company (which manufactured the organ), the Rifes, doing business as Conn Organ Sales and Studios (who had sold the organ to the church), and Marshall (which sold and installed the pews and cushions). The damages prayed for were equal to the total payments made to the church by the insurer. Marshall filed a plea in abatement, alleging that the insurer had paid the loss and was the real party in interest. After an evidentiary hearing, the court dismissed the plea.

On April 8, 1976, the church filed an amended complaint, adding Marshall Fixture, which designed and manufactured the pew cushions, as a defendant. Marshall Fixture filed a plea in abatement, raising the same real party in interest issue as Marshall had, and it also filed a third party complaint against Carpenter Company (Carpenter). Carpenter subsequently filed a plea in abatement, raising the same issue as Marshall Fixture's plea. An evidentiary hearing on those pleas was held before the same judge who had ruled against Marshall on the issue. He reached a different result than he had on the earlier plea. He concluded that the insurer was the real party in interest and ordered the action abated until an "amended complaint" be filed naming the insurer as a party plaintiff.

On March 15, 1977, the insurer filed a complaint (designated a "third amended complaint") naming only itself as plaintiff. It bore the same file number as the earlier complaints. All defendants (except third party defendant Carpenter) demurred to the third amended complaint on the ground that the insurer's cause of action was barred by the two-year statute of limitations of ORS 12.135(1). The Rife and Conn Organ demurrers were overruled. The demurrers of Marshall and Marshall Fixture were sustained. After permission to file a fourth amended complaint was denied, judgments were entered in favor of Marshall and Marshall Fixture and against the insurer. Subsequently, the claim against Conn Organ was compromised and dismissed. The third party complaint against Carpenter was dismissed by Marshall Fixture. The insurer appeals the judgment for Marshall and Marshall Fixture. The church is not a party to the appeal, having neither filed a notice of appeal nor having been named in the notice filed by the insurer. ³

The insurer first argues that the trial court erred in ruling that it, and not the church, was the real party in interest. ORS 13.030 requires that all actions be brought in the name of the real party in interest. In effect, the insurer's contention is that the ruling resulted directly in the filing of the third amended complaint, which named the insurer as sole plaintiff and which led to the judgments after the demurrers on statute of limitations grounds.

Defendants do not challenge the right of the insurer to contest the validity of the order abating the church's action, but we believe it would create misunderstanding if the point went unnoticed. When the order was made, the insurer was not a party; therefore, in legal contemplation, no interest of the insurer was affected or, in the terms of ORS 19.010(2)(a), it was not "an order affecting a substantial right, and which in effect determines the action * * * " as to the insurer. The church has not appealed, ⁴ and the insurer is now engaged in what might seem to amount to a collateral attack on an order the parties to which have not challenged.

A procedural oddity was introduced into this case when the insurer filed the "third amended complaint" in its own name without a formal order substituting it as the sole party plaintiff. Except for a recital of the insurer's capacity and the issuance of the policy to the church, that complaint was substantially identical to the second amended complaint filed by the church. None of the defendants raised an objection to the insurer's capacity or standing; they demurred on the statute of limitations. As noted above, the Conn Organ and the Rife demurrers were overruled, and they eventually settled with the insurer. It is clear that Marshall and Marshall Fixture would have been hard put to challenge the substitution of the insurer as a party plaintiff In the same action ; similarly they could not now be heard to object to the insurer's being treated as having been properly substituted for the church as a party plaintiff. ORS 16.330.

Even so, the insurer was not a party to, or at the time of, the abatement order, and ORS 19.010(2)(a) standing by itself might well be read to prevent the validity of the order being challenged in the absence of the church as a party to the appeal. Moreover, there is a question whether this court has jurisdiction over the appeal at all. We are required to examine our own jurisdiction even if the parties do not challenge it. City of Hermiston v. ERB, 280 Or. 291, 570 P.2d 663 (1977).

ORS 19.023 provides:

"(1) An appeal * * * to the Court of Appeals shall be taken in the manner prescribed in ORS 19.023 to 19.065 and 19.074 to 19.190.

"(2) A party to a judgment desiring to appeal therefrom, * * * shall cause a notice, signed by himself or his attorney, to be Served on all parties as have appeared in the action, * * * and file the original, with proof of service endorsed thereon or affixed thereto, * * *.

"(3) The notice shall be in the form prescribed in ORS 19.029, * * *." (Emphasis supplied.)

ORS 19.033 provides:

"(1) When the notice of appeal has been Served and filed as provided in ORS 19.023 to 19.209, * * * the Court of Appeals shall have jurisdiction of the cause, * * *.

"(2) The Serving and filing of the notice of appeal as provided in ORS 19.023 to 19.029 is jurisdictional And may not be waived or extended." (Emphasis supplied.)

ORS 19.029(1) provides:

"(1) The notice of appeal shall contain the following:

" * * *

"(c) A notice to All parties or their attorneys as have appeared in the action, * * * that an appeal is taken from the judgment * * *. (Emphasis supplied.)

" * * *."

The taking of this appeal was defective in at least three respects ⁵ that relate to our jurisdiction, the church having been a party and having appeared. The church was not named in the notice of appeal; the notice was not directed to the church; and the church was not served with the notice. Although the Supreme Court has been divided over questions about which of the required contents of a notice of appeal set forth in ORS 19.029 are jurisdictional (See Gordon Creek Tree Farms v. Layne, 230 Or. 204, 358 P.2d 1062, 368 P.2d 737 (1962); Millard v. Mitchell Bros., 261 Or. 165, 492 P.2d 783 (1972); Pohrman v. Klamath Co. Comm., 272 Or. 390, 538 P.2d 70 (1975); Stahl v. Krasowski, 281 Or. 33, 573 P.2d 309 (1978)), there has been no recent indication whether a failure to serve a notice of appeal "on all parties that have appeared in the action" (ORS 19.023) could be regarded as other than a jurisdictional defect and fatal to the appeal, given the language of ORS 19.033(2) quoted above.

Nonetheless, we are not required to dismiss this appeal for want of jurisdiction because of the singular procedural circumstances. After the filing of the third amended complaint, all of the defendants ⁶ conducted themselves as if the church had never been a party at all. Furthermore, the attorneys for the insurer were the same ones who had represented the church. A perfect compliance with the statutes would have involved naming their former clients in the notice and serving that notice on themselves, who by the terms of the loan receipt had full control over the litigation. None of the defendants have perceived it to be in their interest to raise a jurisdictional issue, and we do not believe any public policy or juridical policy would be served by a dismissal. The situation is within the sense of the pronouncement in Banfield v. Schulderman, 137 Or. 256, 260, 299 P. 323, 324, 3 P.2d 116 (1931):

"As to the second ground (for dismissal of the appeal), that no notice was served upon the executor, we hold that...