Williams v. Stockman's Life Ins. Co.

• Decision Date: 22 May 1968
• Citation: 441 P.2d 608,250 Or. 160
• Parties: Olaf S. WILLIAMS, Respondent, v. STOCKMAN'S LIFE INSURANCE COMPANY of America, Appellant.
• Court: Oregon Supreme Court

Page 608

441 P.2d 608

250 Or. 160

Olaf S. WILLIAMS, Respondent, v. STOCKMAN'S LIFE INSURANCE COMPANY of America, Appellant.

Supreme Court of Oregon, Department 2.

Argued and Submitted Feb. 8, 1968.

Decided May 22, 1968.

Zig I. Zakovics, Portland, argued the cause for appellant. With him on the briefs were Reiter, Day, Wall & Bricker, and Raymond J. Conboy, Portland.

Jonathan Purver, Portland, argued the cause for respondent. On the brief were Pozzi, Levin & Wilson and Dan O'Leary, Portland.

Before PERRY, C.J., and SLOAN, GOODWIN, HOLMAN and LUSK, JJ.

LUSK, Justice.

This is a proceeding, the precise nature of which is clouded with a doubt, to recover on an insurance policy.

According to the complaint the defendant issued 'a group credit life policy and health and accident insurance policy to the American Acceptance & Lease Corporation' (hereinafter 'American'), by the terms of which, including a rider thereto attached, defendant, in consideration of premiums paid by the plaintiff, agreed to pay to American in the event of the total disability of the plaintiff certain sums during such time as plaintiff remained totally disabled, such sums to be applied on an indebtedness of plaintiff in the amount of $6,346.56 to American. The complaint alleges that on October 5, 1965, plaintiff became totally and permanently disabled and that 'A controversy has arisen between plaintiff and defendant, and a question has arisen as to plaintiff's rights under the contract between American Acceptance & Lease Corporation and this defendant.' The prayer is as follows:

'WHEREFORE, plaintiff demands a judgment declaring his rights under the contract aforesaid, and requiring defendant to pay to the American Acceptance & Lease Corporation the sum of $836.00, together with such further sums as accrue and become due and payable prior to the trial of this case, and for an order requiring the defendant to continue to pay the stipulated daily indemnity throughout the period of plaintiff's permanent and total disability, and to pay to the plaintiff a reasonable attorney fee in the sum of $1250.00, and plaintiff's costs and disbursements necessarily incurred herein.'

Defendant, in its amended answer, admitted the existence of a controversy as alleged and pleaded affirmatively as follows:

'That any disability from which plaintiff may be suffering did not first manifest itself after the group policy referred to in plaintiff's complaint was in force and after the date of plaintiff's indebtedness to American Acceptance and Lease Corporation, to-wit: on or about March 29, 1965, but in fact said disability preexisted and was first manifested prior to said date.'

Defendant's prayer was for dismissal of the complaint.

A reply having been filed, the case came on to be tried before a jury. The court submitted to the jury two questions as follows:

'1. Is the plaintiff totally disabled in that he is unable to engage in any gainful occupation for which he is reasonably qualified by education, training or experience?'

'2. Was the cause of the disability of plaintiff, if any, first manifested after the group policy was in force and after the date of plaintiff's indebtedness to American Acceptance and Lease Corporation, to-wit: March 29, 1965?'

These were the only issues of fact in the case. The jury by its verdict answered each of the questions in the affirmative and the court thereafter entered a judgment order as follows:

'The above-entitled cause having come on regularly for trial by jury before the Hon. Alan F. Davis, Judge of the above-entitled Court, plaintiff appearing in person and by Dan O'Leary, of his attorneys, and the defendant appearing by and through its attorney of record, Frank Day, and the jury having been selected, empaneled and sworn, opening statements having been made by counsel, evidence having been received on behalf of the respective parties, arguments having been submitted to the jury by counsel, and the Court having instructed the jury upon the law, and the jury thereupon having retired for deliberations, and on the 2nd day of December, 1966, returned the following verdict, and answers to questions, to-wit, omitting the title of court and cause:

(Here follows a copy of the verdict.) and said verdict having been received and entered and accepted by the Court and the Court being fully advised in the premises, now, therefore, based upon said verdict, it is

'HEREBY ORDERED and ADJUDGED that plaintiff, Olaf S. Williams, have judgment against the defendant for the sum of Nine Hundred Twenty Five and 54/100ths Dollars ($925.54), and

'IT IS FURTHER ORDERED and ADJUDGED that the plaintiff have judgment against defendant for the monthly payments which have accrued since the filing of the complaint herein, hereby determined to be the sum of Nine Hundred Twenty Five and 54/100ths Dollars ($925.54), and

'IT IS FURTHER ORDERED and ADJUDGED that the defendant shall continue to pay the stipulated daily indemnity throughout the period of plaintiff's permanent and total disability, or until such time as plaintiff's indebtedness under his contract with the American Acceptance and Lease Corporation is discharged, and

(A judgment for attorneys' fee and costs omitted.)'

In this court (though not below) the defendant contends that this is a suit in equity, that the jury was only advisory, and that we should review the evidence de novo, find it preponderates in favor of the defendant and enter a decree accordingly. We are of the opinion that the defendant is in no position to raise this question and that the proceeding can and should be treated as an action at law.

The complaint on its face does, indeed, appear to state a cause of a suit in equity brought by the promisee in a third party creditor-beneficiary contract against the promisor to compel specific performance of the promise. But there is not the faintest suggestion in the record that the trial was treated by the parties or the judge as other than the trial of an action at law. At no stage of the proceedings was there any suggestion to the contrary, or even, for that matter, any discussion of the nature of the case. As in any other action at law a jury was called and sworn, testimony taken and rulings on evidence made by the court. At the conclusion of the testimony counsel for defendant moved for a directed verdict, a motion unknown to equity procedure. The court instructed the jury as in a law action, exceptions were taken to the instructions as in a law action, the verdict of the jury was not 'read as evidence,' as is authorized by ORS 17.040, the statute providing for use of an advisory jury in equity trials, but was received by the court and made the basis of the judgment. The form of the judgment--'The above-entitled cause having come on regularly for Trial by jury before the Hon. Alan F. Davis,' etc. (italics added)--is wholly inconsistent with the idea of an advisory jury.

All was done without any objection by the defendant, indeed with its full participation, and not until the case reached this court did defendant make the objection that this is a suit in equity.

So far, the case falls squarely within our decision on rehearing in Oregon Farm Bureau v. Thompson, 235 Or. 162, 176, 378 P.2d 563, 384 P.2d 182. The situation there was the converse of that presented here: the case was tried without objection as a suit in equity and the prevailing party in the circuit court contended on appeal that it was an action at law and the findings of the court, therefore, if supported by substantial evidence were binding on this court. We held that, as the issues were not wholly outside the cognizance of equity, and the case was tried without objection of any kind as a suit in equity, failure to raise the question in the circuit court precluded the right to raise it in the Supreme Court. Hence, the evidence was reviewed de novo.

As will presently be shown, there were legal issues to be tried in the case at bar and the only apparent difficulty in applying the rule of the Oregon Farm Bureau case arises from the prayer of the complaint which does not ask for a money judgment for the plaintiff, but for specific performance of the contract of the defendant to make payments to American. The difficulty is not, however, real or substantial. The prayer is no part of the cause of suit or action and ordinarily a party is entitled against answering defendants to any relief warranted by the facts set up in his complaint and the proof, Elliott v. Mosgrove, 162 Or. 507, 543, 91 P.2d 852, 93 P.2d 1070. This is the general rule in code pleading states, 41 Am.Jur. 367, Pleading § 112.

This case, tried as it was, could not eventuate in a decree of specific performance. Counsel for defendant must have been aware of this fact, yet no objection was made to the form of the judgment.

As promisee in the third party beneficiary contract plaintiff could maintain an action at law for damages for its breach, the measure of damages being the full amount of the debt: McDaniel v. Ins. Co. of Oregon, 243 Or. 1, 410 P.2d 814; Johnson v. Risk, 137 U.S. 300, 308, 11 S.Ct. 111, 34 L.Ed. 683; Green Properties, Inc. v. Livingston, 230 Md. 193, 197, 186 A.2d 475; Restatement, Contracts § 136; 4 Corbin on Contracts 241--242, § 812. Disregarding the prayer, the complaint states a cause of action for such a breach and the proof, as will be hereinafter shown, warrants the judgment for the sums found to be due.

Defendant urges that if the judgment should be affirmed and plaintiff should not pay his debt to American, American would have the option of suing either plaintiff or defendant (citing Erickson v. Grande Ronde Lbr. Co., 162 Or. 556, 586, 92 P.2d 170, 94 P.2d 139), thus subjecting the defendant to the risk of a double liability. To...