State v. Superior Court for King County

• Decision Date: 15 December 1920
• Docket Number: 16000.
• Court: Washington Supreme Court
• Parties: STATE ex rel. ALASKA PACIFIC NAV. CO. v. SUPERIOR COURT FOR KING COUNTY.

194 P. 412

113 Wash. 439

STATE ex rel. ALASKA PACIFIC NAV. CO. v. SUPERIOR COURT FOR KING COUNTY.

No. 16000.

Supreme Court of Washington

December 15, 1920

Department 1.

Certiorari by the State of Washington, on the relation of the Alaska Pacific Navigation Company, against the Superior Court of the State of Washington for King County, to review an order denying stay of proceedings in an action by J. E. Peterson against relator. Writ dismissed.

C. H. Hanford, of Seattle, for plaintiff.

Chadwick McMicken, Ramsey & Rupp and John P. Garvin, all of Seattle for respondent.

MACKINTOSH J.

J. E Peterson began an action against the relator, alleging that the Standard Gas Engine Company, a California corporation entered into a contract with the relator to furnish engines and machinery, and, after performing its part of the contract, the relator failed to pay a balance due thereunder, and that the account had been assigned to Peterson for the sole purpose of collection. The relator made application to the superior court for a stay of proceedings until the Standard Gas Engine Company should enter its appearance and submit to the jurisdiction of the court in order to 'adjudicate any and all the issues involved and which may become involved in this action.' The relator asserts that it has a claim for damages against the Standard Gas Engine Company arising out of the breach of the contract referred to, and that that claim exceeds in amount the balance for which Peterson is bringing suit. The superior court refused to make the order applied for, and the relator comes here for a writ of certiorari to review the superior court's action.

Our statutes recognize the right to assign causes of action where, as here, they are merely assigned for the purpose of collection and the plaintiff has no interest in the amount which may be recovered. But the statutes further provide that, where actions are brought by an assignee for collection, the defendant may, by answer, set up such defense as may amount to a set-off of the claim sued on by the plaintiff. Sections 267, 271 1/2, and 272, Rem. Code, bear on this question and are as follows:

'If the plaintiff be a trustee to any other, or if the action be in the name of the plaintiff who has no real interest in the contract upon which the action is founded, so much of a demand existing against those whom the plaintiff represents or for whose benefit the action is brought, may be set off as will satisfy the plaintiff's debt, if the same might have been set off in an action brought by those beneficially interested.' Section 267.

'If the amount of the set-off, duly established, be equal to the plaintiff's debt or demand, judgment shall be rendered that the plaintiff take nothing by his action; if it be less than the plaintiff's debt or demand, the plaintiff shall have judgment for the residue only.' Section 271 1/2.

'If there be found a balance due from the plaintiff in the action to the defendant, judgment shall be rendered in favor of the defendant for the amount thereof, but no such judgment shall be rendered against the plaintiff when the contract, which is the subject of the action, shall have been assigned before the commencement of such action nor for any balance due from any other person than the plaintiff in the action.' Section 272.

It would seem from an examination of these sections that in an action begun by an assignee no affirmative judgment may be secured against him by the defendant, who is only allowed to plead in defense of the action an indebtedness in such amount as will equal the claim sued on. One objection raised to this conclusion is that section 273, Rem. Code, which provides:

'The defendant may set forth by answer as many fedenses and counterclaims as he may have, whether they be such as have heretofore been denominated legal or equitable, or both. They shall each be separately stated, and refer to the causes of action which they are intended to answer, in such a manner that they may be intelligibly distinguished'

--is broad enough to allow the procedure asked for by the relator, and that under section 196, which provides:

'The court may determine any controversy between parties before it when it can be done without prejudice to the rights of others, or by saving their rights; but when a complete determination of the controversy cannot be had without the presence of other parties, the court shall cause them to be brought in'

--the court should stay all proceedings until the Standard Gas Engine Company is brought into the action.

In support of this contention, the case of State ex rel. Adjustment Co. v. Superior Court, 67 Wash. 355, 121 P. 847, is cited. The fallacy in this position rests in the fact that in section 273 the Legislature was dealing with defenses and counterclaims set up in an answer in all actions, both where the real party in interest is the plaintiff and where an assignee is plaintiff, and does not refer exclusively to actions of the latter kind, which actions are specifically referred to and covered by sections 267, 271 1/2, and 272 Rem. Code, which we have set forth in full.

By virtue of section 273, reading it in conjunction with these other sections, defendant in an action begun by an assignee for collection is entitled to plead against the assignee plaintiff those legal defenses which, if sustained, would result in no affirmative judgment against the plaintiff, and is entitled to plead equitable defenses enforceable against the assignee plaintiff, even though they may result in bringing in the real plaintiff in interest in order to fully protect the defendant's equitable rights.

The case of State ex rel. Adjustment Co. v. Superior Court, supra, was a case where, as here, the plaintiff was an assignee for collection only, and in his complaint asked, as does the plaintiff here, for merely a money judgment; but in the Adjustment Co. Case the defendant interposed an equitable defense, while the defendant here is asking the court to compel the entrance of the real plaintiff in interest, for the purpose of interposing a purely legal counterclaim. In the Adjustment Co. Case this equitable defense was that the property for which the assignee plaintiff was seeking recovery consisted of patented articles, and that the defendant should not be compelled to pay for these unless plaintiff's assignor was compelled, under the terms of his contract, to deliver them, for the reason that they could not be obtained from any one but the plaintiff's assignor. It is apparent, therefore, that this equitable defense to which the defendant was entitled in the Adjustment Co. Case could not be enforced against the assignee plaintiff, for the reason that it could not thus have the specific performance by the assignor of his contract, upon which the assignee plaintiff was suing. In order to accord to the defendant in that case the right which section 273 gives him to plead against the plaintiff in the action his legal or equitable defenses, it was necessary that the real party in interest be brought in. This court, in the Adjustment Co. Case, used language considerably broader than was necessary for the decision of the case; but the essence of the decision is stated by the court as follows:

'The same authority (Rem. & Bal. Code, § 191) which sustains the right of an assignee to sue at law in his own name also gives the right to a defendant to 'set forth by answer as many defenses and counterclaims as he may have, whether they be such as may have heretofore been denominated legal, or equitable, or both.' Rem. & Bal. Code, § 273. * * * To state the rule is to suggest its reason, for if it were otherwise or as contended by relator, it would operate to cut off equitable defenses entirely.'

The Adjustment Co. Case is not authority for the view that, where the defendant has legal defenses, he may plead other legal defenses than those specified in sections 267, 271 1/2, and 272, Rem. Code. In other words, under section 273 a defendant may plead, against an assignee for collection, such legal defenses as would not call for an affirmative judgment against the assignee plaintiff, but may plead equitable defenses, though the determination of them may result in bringing in, as plaintiff, the real party in interest.

Nor does section 196 cover this class of cases, for that section refers to the bringing in of parties 'when a complete determination of the controversy cannot be had without the presence of' such parties. In other words, this section refers to the bringing in of necessary parties. The plaintiff Standard Gas Engine Company is not a...