Hill v. Cooper , 6 Or. 181 ( 1876 )

By the Court, Boise, J.:

The facts stated in the plaintiff’s bill show that Patton paid Stratton the full purchase price of the land and took possession under the imperfect deed; this proceeding would give Patten an equitable title to the land as against Stratton, Avhich a court of equity on a proper bill filed would enforce by declaring a specific performance of tlie contract to convey; for the imperfect deed in such a case will be construed as a contract to convey, and may be enforced. (Story’s Eq. 165.) And the same is true of all who succeed to the naked legal title which commenced in Stratton, if they took with notice; and it appears that Cooper, who succeeded to this title by said quitclaim deed knew all the facts, and had actual notice of the equity then in the appellant, and he was bound to take notice of this equity, for Hill was in actual possession of the land. (Stannis v. Nichols, 2 Or. 332.) But we understand that respondent’s counsel do not strenuously contend that Hill might not have obtained the relief he now seeks in this suit, had he interposed the same, as a defense by the way of a cross-bill in equity to the action by Cooper against him to recover the possession of this land. But counsel for respondent now insist that having a right under the statute to interpose this equity in that action, appellant having failed to avail himself of such a defense, cannot now, after having asserted in his answer in that action that he was the owner of the fee-simple title, and that having been determined against him, come and assert his equity derived through the deed from Stratton to Patton. It is insisted by the counsel for respondent that it is the duty of a party defendant who has an equitable defense to an action at law to interpose the same by way of cross-bill, as allowed by the code, and if he fails to do so, his right is lost and the determination of the action at law against him will forever bar his equity. The determination of this question depends upon the construction of our statute conferring on litigants the right to interpose equitable defenses in actions at law. The statute is as follows:

“Where the defendant is entitled to relief arising out of the facts requiring the interposition of a court of equity and material for his defense, he may, upon filing his answer therein, also as plaintiff file a complaint in equity in the nature of a cross-bill, which shall stay the proceedings at law.”

The statute says the defendant may on filing his answer also as plaintiff file a complaint in equity, which opens to ^ him the door to let in equitable defenses, without the expense and trouble of commencing an original suit in equity to enforce his claim; it may be that his equitable defense is a full defense, and in effect defeats the claim of the plaintiff, and it may be that it is only a partial defense, and, as is the case in many real actions, only offers partial relief by seeking to have a return of the purchase-money where there has been a failure' to convey the title, and the court of equity cannot decree the title to defendant as in cases of sales by executors and guardians.

In such cases it often happens that doubts arise as to whether the legal title has been conveyed, and the defendant when sued at law for the possession, may, when called on to answer, desire to try the legal title, and fully believe he has it by virtue of the sale, though doubts have been cast on it by claim of the heir. In such a ease, if he yields to the title of the heir, and files his cross-bill to recover the purchase-money, he must abandon the hope of holding the land, though bought in good faith and greatly enhanced in value by improvements made by him.

In such cases it would be vastly more conducive to justice that the law remain as it was before the enactment of the statute referred to, if the construction contended for by the respondents prevail. It has been held by this court, in the case of Dolph v. Barney, that where a defendant in an action to recover real property files an answer at law asserting title in himself or another, he cannot also file a bill in equity in the nature of a cross-bill, he must therefore abandon his right to defend his title at law before he can avail himself of any defense in equity.

We think it was not the intention of the statute to place defendants in a worse position by giving them a right to interpose equitable defenses in legal actions than they were before- It was the intention of the statute to simplify legal proceedings and save expenses to litigants, and at the same time -save to them all their former remedies if they saw fit to omit them. And such a construction has been given a similar statute in other states. (Lorraine v. Long, 6 Cal. 452; Hobbs v. Duff, 23 Cal. 596.) We think the proper construction of this statute is that it confers on a defendant in an action at law the privilege to interpose an equitable defense if he has one, but that if he fails to so interpose he may avail himself of his equity after a judgment against him in the same manner as before this statute was enacted.

There is another matter which was presented and insisted on by the respondent as conclusive in this case, that is that inasmuch as the appellant Hill in his answer in the action for possession by Cooper against him, set up title in fee-simple in himself, which was denied in the replication, and this issue being determined against him, this determination was a final adjudication of title in' the premises between him and Cooper, for the fee-simple includes and merges all other title and equities, the same being inferior to and included in the fee-simple. It is true when the appellant asserted a fee-simple title in his answer in the ejectment he claimed a title which if he possessed included all inferior titles, and he had no need to assert this equity claimed in the suit. But the determination in that action was .that he had not a fee-simple title, that such title was in respondent Cooper. This determination in that action showed that appellant was mistaken in supposing he possessed a fee-simple ' title, in that action. He could not assert his equity under the pleading on which it was tried; and consequently his equity asserted in this suit was not adj udicated in that action.

A matter cannot be said to be adjudicated- in an action which was not in issue therein. (Civil Code, p. 255, sec. 720.