McDonald v. American Mortgage Co.

Thaver, C. J. The main issue in this case in the' circuit court was whether the performance of the services and expenditure of the money by the law firm of McDougall & Bower, as alleged in the complaint, were done aud made in pursuance of a direct employment of said firm by the respondent, or were done and made under an arrangement entered into between said firm and the corporation known as the Oregon and Washington Mortgage Savings Bank of Oregon as a part compliance with a contract between the latter and the respondent. If the respondent contracted with the Mortgage Savings Bank, as alleged in its answer, and the bank, in order to [631] carry out that contract, employed said law firm, and the services were rendered and money expended by the firm in pursuance of such employment, with an understanding of the relations existing between the bank and the respondent, then the firm had no recourse upon the respondent, but was necessarily obliged to rely upon the bank for compensation and remuneration. That issue Was tried by the referee, who appears to have found that said law firm performed the services and expended the money at the instance and request of the bank, pursuant to a contract entered into between the bank and the respondent, as alleged in the answer; that said firm had knowledge of the terins of said contract when the services were rendered and money expended, and the Same were not done at the instance or request of thé respondent. Said finding stands as the verdict of a jury, and is conclusive against any right of recovei'y upon the part of the appellant. Unless; therefore, some error were committed at the trial, Or in the proceedings had in the action, prejudicial to the rights of the appellant, this court has no alternative but to affirm the judgment appealed from. The appellant in his notice of appeal assigned several grounds of error on which he intended to rely upon the appeal, and which his counsel insists are tenable. The first ground of error assigned is the denial of the appellant’s motion to strike out parts of the respondent’s answer, and his further answers to the complaint. The parts of the answer sought to be striken out relate to the allegations that the services rendered and money expended by the said law firm were not rendered and expended for the Respondent, but for and bn behalf of and at the instance and request of the said bank under find by virtue of the contract between the bank and the repondent before referred to; also to divers other parts of [632] the answer, including the respondent’s claim to damages on account of the alleged careless and negligent manner, in which said law firm conducted the business of loaning respondent’s money; and substantially all that part of the answer not included in the denial, that the services were rendered and money expended for the respondent.. The appellant’s counsel contend that it was incumbent upon the appellant to show that the respondent employed the said law firm before he could claim a recovery in the action, whether said matters were pleaded or not, and that therefore it was unnecessary to allege them. If that were so, I do not think it follows that , the facts set up in the further answers were sham, frivolous, or irrelevant, within the meaning of the provisions of the code which permit such answers and defenses to be.striken out on, motion. It may be true that said facts would not have; been admissible in proof upon a mere traverse, but that should not deprive the respondent of the right to make its answer specific. The services rendered and money expended were ostensibly for the benefit of the respondent, and it was clearly proper, it seems- to me, for it to allege all the facts under which they were done, in order to, rebut any presumption that might arise from that circumstance. The pleading was in the nature of a confession and avoidance. The respondent admitted, in effect, that the law firm did perform services and expend money in and about its business; and to avoid the presumption of a claim that, might arise from that circumstance, alleged that it had contracted with the bank to do the business at a fixed compensation, the latter to employ the necessary attorneys therefor, and that said firm was employed by the bank to assist in carrying out such contract. Nor was the defense that the law firm was guilty of negligence in the management of the said business irrele [633] vant. It was unnecessary, if the other defense proved good; but the respondent’s counsel could not be certain of that, and hence they prudently interposed the further defense to fall back upon, in the event of the failure of the former. A party has the right to set forth by answer as many defenses and counterclaims as he may have, and it does not follow, because he has set up one defense which is good upon its face, that, therefore, he shall not be permitted to set up another. If a party were sued upon a promissory note which he had never made, but notwithstanding had paid, he certainly would not be precluded from denying the making of the note, and, at the same time, pleading its payment. The rule, as I understand it, in regard to inconsistent defenses is, that defenses are not inconsistent when they may all be true; that they are only inconsistent when some of them must necessarily be false, if others of them are true; in such case they cannot be united. The two defenses set up in the answer, that the respondent never employed the law firm of McDougall & Bower, and that they were guilty of gross negligence in the management of the business, were not necessarily inconsistent, as they both may have been true. If the respondent had denied the rendition of the services, and then alleged that they were negligently and unskiilfully performed, the case would have been different. In the latter case, the two defenses, unless the denials were with an absque hoc, as it was termed, would be inconsistent, as both could not be true. I think the motion to strike out was properly overruled. If, however, the ruling had been erroneous in that particular, it would have been no ground for reversing the judgment, and it could not possibly have prejudiced the appellant. • Another of the grounds of error assigned is, that the court erred in referring the action. The record discloses [634] that the respondent’s counsel filed’ a motion to refer the case to a referee; that the motion was made mainly upon the pleadings in the cause; that it was argued by counsel pro and con; that the court found that the trial of the issués in the case would require the examination of a long account; that it was a case proper to be referred; and thereupon the order of reference was made. An examination of the proceedings in the action shows that the appellant, in compliance with a demand in writing made by the attorneys for the respondent, furnished a bill of the items of account of the labor and services and of the money paid out and expended by the said law firm, which are alleged in the complaint, and that said items consisted of about 180 in number, which varied in amount from fifty cents to $550. From this fact, the circuit court seems to have made the holding referred to, of which the appellant’s counsel complains. The code, section 222, provides that the court may direct a reference when the trial of an issue of fact shall require the examination of a long account on either side, without the consent of the parties, or of its own motiori. It has been claimed, however, that said provision of the code was unconstitutional; but this court, in Tribou v. Strowbridge, 7 Or. 156, held otherwise, and I think we are bound by that holding. According to the decision in that case, the order of reference herein was properly made, and should be sustained. I have examined the other grounds of error assigned, and do not think they are well taken. There were some* irregularities in returning certain commissions issued to' take the depositions of witnesses on the part of the respondent, but they were not of a character which would, justify the court in suppressing the depositions taken-, under the commissions. The judgment appealed from will therefore be affirmed.