Ruckman v. Union Ry.

• Decision Date: 12 December 1904
• Citation: 45 Or. 578,78 P. 748
• Parties: RUCKMAN v. UNION RY. et al.
• Court: Oregon Supreme Court

78 P. 748

45 Or. 578

RUCKMAN v. UNION RY. et al.

Supreme Court of Oregon

December 12, 1904

Appeal from Circuit Court, Union County; Robert Eakin, Judge.

Action by George W. Ruckman against the Union Railway and another. From a judgment for defendants, plaintiff appeals. Reversed.

In January, 1893, the Union Railway Company issued and delivered to J.W. Shelton twenty bonds, of the par value of $1,000 each, secured by mortgage on its property. Shelton sold four of the bonds, and they came into the hands of F.L. Richmond and W.T. Wright. Wright and Richmond borrowed $1,500 of the First National Bank of Union on their promissory note, and deposited the four bonds as collateral security therefor under an agreement that in case the note was not paid at maturity the bank might, at its option as to time and manner and without notice to the pledgors, sell the bonds at public or private sale to pay the amount due on the note, together with accruing interest and costs. Default was made in payment of the note, and the bank elected and undertook to foreclose its lien upon the bonds in the manner provided in the agreement, whereupon the defendant the Union Street Railway Company, which had purchased the mortgaged property after the bonds had been transferred to the bank, brought a suit in equity to compel the bank to surrender up such bonds for cancellation, on the ground that they were issued in trust to Shelton, in order that he might negotiate them to intending purchasers for the use and benefit of the company, and had been delivered to the bank by Shelton for safe-keeping until so sold and disposed of; that no sale had been made, and therefore, in equity, they belonged to the plaintiff, as the purchaser of the property covered by the mortgage given to secure the payment thereof. Issue was joined, and the suit tried and determined on the merits, resulting in a decree in favor of the defendants. Union St. R. Co. v. First National Bank, 42 Or. 606, 72 P. 586, 73 P. 341. The bank thereafter foreclosed its lien upon the bonds, and sold them to the present plaintiff, who brings this suit to enforce the mortgage given by the railway company to secure the payment thereof. For a defense to the present suit, the defendants allege, in brief, (1) that the bonds were paid in full to the bank out of the money paid by the promoters of the Union Street Railway Company for the mortgaged property and (2) that W.T. Wright, the president of the bank, was present at, and participated in, the negotiations for the purchase, and knew that such promoters understood and believed at the time that such purchase would be free of all liens and incumbrances, notwithstanding which he failed and neglected to disclose to them the lien of the bank on the four bonds in suit, but permitted them to pay over the money and take a conveyance of the property in ignorance thereof and therefore the bank and its successor with knowledge should now be estopped from asserting that such bonds are a lien upon the property. The plaintiff pleaded the decree in the former suit as a bar, and averred that all the matters and things now alleged as a defense to the present suit were known to the defendants at the time the former suit was commenced, and should have been alleged therein as a ground of recovery. The court below held the former decree not a bar or estoppel, found the facts in favor of the defendants, and dismissed plaintiff's complaint.

C.E. Cochran and T.H. Crawford, for appellant.

Leroy Lomax and C.H. Finn, for respondents.

BEAN J. (after stating the facts).

Upon the record, we have substantially this state of facts: A party commenced a suit against another to compel the surrendering up for cancellation of negotiable instruments on the ground that they were never issued for value. Issue was joined, the suit tried on the merits, and a decree rendered in favor of the defendant. At the time the suit was commenced, the plaintiff therein had two other grounds upon which he might have recovered, neither of which, however, he set up or alleged in the complaint. Thereafter, when the defendant in the former suit, or the party who had succeeded to his interest with knowledge, brought an action to enforce the payment of the instruments, and to foreclose the lien given as security therefor, the defendant therein and the plaintiff in the former suit pleads as a defense the two matters which he might have relied upon for relief in his first suit. The question for decision is whether he is estopped by the former decree against him from pleading such defenses.

It is settled law in this state, as elsewhere, that a judgment or decree rendered upon the merits is a final and conclusive determination of the rights of the parties, and a bar to a subsequent proceeding between them upon the same claim or cause of suit, not only as to the matter actually determined, but as to every other matter which the parties might have litigated and had decided as incident to or essentially connected, therewith, either as a matter of claim or defense ( Neil v. Tolman, 12 Or. 289, 7 P. 103; Morrill v. Morrill & Killen, 20 Or. 96, 25 P. 362, 11 L.R.A. 155, 23 Am.St.Rep. 95; le v. Brown,

37 Or. 588, 61 P. 1024; White v. Ladd, 41 Or. 324, 68 P. 739, 93 Am.St.Rep. 732), but that when the action is upon a different claim or demand the former judgment can only operate as a bar or an estoppel as against matters actually litigated or questions directly in issue in the former action ( Barrett v. Failing, 8 Or 152; Applegate v. Dowell, 15 Or. 513, 16 P. 651; La Follett v. Mitchell, 42 Or. 465, 69 P. 916, 95 Am.St.Rep. 780; Caseday v. Lindstrom, 44 Or. 309, 75 P. 222; Gentry v. Pacific Live Stock Co. [ Or.] 77 P. 115). This distinction should always be kept in mind in considering the effect of a former judgment or decree. If the second action or defense is upon the same claim or demand, the former judgment is a bar not only as to matters actually determined, but such as could have been litigated; but, if it is upon another claim or demand, the former judgment is not a bar, except as to questions actually determined or directly in issue. This case comes within the...