Slate Const. Co. v. Pacific General Contractors, Inc.

• Decision Date: 21 February 1961
• Citation: 359 P.2d 530,226 Or. 145
• Parties: SLATE CONSTRUCTION COMPANY, Appellant, v. PACIFIC GENERAL CONTRACTORS, INC., William Glaser, Frank T. Glaser, David E. Turnidge, and Percy L. Turnidge, Respondents.
• Court: Oregon Supreme Court

Page 530

359 P.2d 530

226 Or. 145

SLATE CONSTRUCTION COMPANY, Appellant, v. PACIFIC GENERAL CONTRACTORS, INC., William Glaser, Frank T Glaser, David E. Turnidge, and Percy L. Turnidge Respondents.

Supreme Court of Oregon, In Banc.

Argued and Submitted Dec. 6, 1960.

Decided Feb. 21, 1961.

Sam Kyle, Albany, argued the cause for appellant. With him on the briefs were Mark V. Weatherford and Marrison M. Weatherford, Albany.

W. C. Winslow and Norman K. Winslow, Salem, argued the cause and filed briefs for respondents.

Before McALLISTER, C. J., and WARNER, PERRY, SLOAN, O'CONNELL, GOODWIN and HOWELL, JJ.

HOWELL, Justice pro tem.

Plaintiff appeals from an adverse decree in a suit to set aside a former judgment and for an accounting.

The parties, including the two corporations, have been twice before this court in Pacific General Contractors v. Slate Const. Co., 196 Or. 608, 251 P.2d 454 and Glaser et al. v. Slate Const. Co., 196 Or. 625, 251 P.2d 441. The former will hereinafter be called the first case and the latter the second case. We shall refer to the defendant Pacific General Contractors as Pacific and the plaintiff, Slate Construction Company, as Slate Company to avoid confusion with M. C. Slate.

The Slate Company had been engaged in highway construction for many years. M. C. Slate was President and George Fritz and Webber Doughton were members of the Board of Directors. In May 1948, Slate, Fritz, Doughton and F. T. Glaser, William Glaser, D. E. Turnidge and P. L. Turnidge organized the Pacific General Contractors, Inc., to engage in highway construction. The men listed were elected to the Board of Directors and Slate was elected President, Fritz, Vice President and Doughton, Secretary-Treasurer. The other facts necessary to an understanding of the issues will be stated in connection with the questions discussed.

Slate Company asserts now, as before, that it was engaged in a joint adventure with Pacific. It charges that Pacific, together with the individual defendants herein, conspired to defraud Slate Company and acquire its property and asks the judgment obtained by Pacific in the first case be set aside for fraud.

The complaint alleges that a joint adventure was agreed upon at a special meeting of the two corporations held on May 25, 1948. This joint adventure, according to Slate Company, was to involve highway construction on the Roseburg, or North Umpqua, job. Apparently anticipating the defense of res judicata, the complaint declares the defense of joint adventure was pleaded and relied upon in the first case as a defense to Pacific's action for money had and received but that the trial court and this court did not pass upon the question.

The defendants' answer pleaded the judgment in the first case as an estoppel or res judicata to the allegations of joint adventure.

The trial court found that the defense of res judicata did not apply because of Slate Company's theory of fraudulent conspiracy but held that the evidence failed to establish either a joint adventure between the two corporations or a fraudulent conspiracy upon the part of all the defendants and denied Slate Company's request for an accounting.

Two questions are presented upon this appeal:

(1) Does the defense of res judicata bar Slate Company's assertion that the two corporations were acting as joint adventurers on the Roseburg job; and,

(2) Was there a fraudulent conspiracy by the defendants to ruin Slate Company and secure its assets.

The first case was an action for money had and received brought by Pacific against Slate Company. The latter's answer alleging an equitable defense to the law action together with the entire file in that case, was introduced in evidence in the instant case. The answer alleged a joint adventure was formed by the parties and stated:

'Plaintiff, and particularly the individuals which formed the plaintiff corporation hereinabove mentioned, have become dissatisfied with said joint venture and seek to secure for themselves individually a return to them of the money invested in the purchase of the stock of the said plaintiff company, and have instituted and prosecuted this action at law set forth in the complaint, in violation of said joint enterprise and said contract and agreement between the two said corporations and have caused writs of attachment to issue wrongfully out of the court upon the pretense that the defendant has borrowed the said sums of money mentioned in plaintiff's complaint from the plaintiff, when in truth and in fact said money was advanced by the plaintiff in the performance of said joint enterprise.' (Emphasis supplied.)

The decision of this court by Mr. Justice Lusk in the first case shows the theory of joint adventure was determined against Slate Company by the trial court. No decree was entered dismissing the equitable defense but Slate Company then filed a general denial. The trial court proceeded to hear the issues of law and entered findings of fact, conclusions of law and judgment for Pacific for $38,844.

The issue of joint adventure was urged by Slate Company, again, on the appeal and this court stated:

'The difficulty with defendants' position is, that while there is evidence to sustain a finding that the money in question--or most of it--went into a joint adventure, there is also evidence to the contrary.' Pacific General Contractors v. Slate Const. Co., supra, 196 Or. at page 620, 251 P.2d at page 459.

As there was substantial evidence to support the trial court's conclusion that the two corporations were not engaged in a joint adventure, the judgment was affirmed. Contrary to the allegations in the instant complaint, this issue was before both the trial court and this court.

In Winters v. Bisaillon, 153 Or. 509, 513, 57 P.2d 1095, 1096, 104 A.L.R. 968, the following quotation from Ruckman v. Union Railway Co., 45 Or. 578, 78 P. 748, 69 L.R.A. 480, was approved:

"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, 20 Or. 96, 25 P. 362, 11 L.R.A. 155, 2O Am.St.Rep. 95; Belle 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 Livestock Co. 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." (Emphasis supplied.)

See also Nusom et ux. v. Fromm et ux., 217 Or. 36, 340 P.2d 186; Kelley et ux. v. Mallory et ux., 202 Or. 690, 277 P.2d 767; and Wagner v. Savage, Adm'r, 195 Or. 128, 147, 244 P.2d 161.

While Slate Company's theory of a joint adventure with Pacific pervades the instant case including the charge of conspiracy to defraud and we feel that Slate Company's claims are the same in both suits, it is not important to the decision herein whether Slate Company's contentions are upon the same or a different 'claim or demand.' The former judgment is a bar at least as to the question of joint adventure and Slate Company cannot urge it again as an issue in this case.

The individual defendants herein were not parties to the first case and, therefore, the judgment in that case is not res judicata on joint adventure as to them. We do not understand, however, Slate Company to contend a joint adventure existed between it and the individual defendants in this case as the complaint, briefs and oral argument all refer to the relationship being between the two corporations. For example, Slate Company's brief states, 'This is a suit alleging that a joint venture was entered into by and between the Slate Construction Company, plaintiff, and the Pacific General Contractors,' and the prayer asks 'it be adjudged and decreed that the plaintiff and the defendant corporation entered into a joint venture for the performance of the Roseburg contract * * *.' (Emphasis supplied.)

In any event, there is no evidence that the defendant individuals engaged in a joint adventure with Slate Company.

The decree of the trial court recited that it was based upon a failure of Slate Company to prove a joint adventure and conspiracy and not upon the defense of res judicata. Slate Company now argues that we cannot consider the question of res judicata because the defendants did not appeal from that recitation in the decree. The decree had dismissed the complaint. Defendants did not have to appeal as the decree was completely in their favor. While the reasoning of the trial court in dismissing the suit may have been partly erroneous, its conclusion was correct. Walker v. Mackey et al., 197 Or. 197, 251 P.2d 118, 253 P.2d 280.

Slate Company asks to have the judgment obtained against them in the first case set aside for fraud. It charges that the allegations of money had and received were made falsely as part of the general conspiracy and claims that any money received by it was...