Olsen v. Crow

In Banc. This is a suit brought by Oscar Olsen as administrator of the estate of Leonard Olsen, deceased, and Myrtle Crosland, against S.P. Crow, S.M. Crow and M. Crow, to annul a judgment recovered in an action at law.

Oscar Olsen, Leonard Olsen now deceased, and Myrtle Crosland were brothers and sister, and Hannah Olsen hereinafter referred to is the wife of Oscar Olsen. The defendants were partners engaged in the general mercantile business in the town of Lostine, Wallowa county, Oregon, under the firm name of M. Crow Company.

On January 1, 1922, Oscar Olsen was indebted to these defendants in the sum of $1,924.46, for merchandise theretofore sold and delivered to him by them. On that date a settlement of the existing indebtedness was had whereby it was agreed between said Oscar Olsen and defendants that, as evidence of such indebtedness, he would execute and deliver to them his promissory note for $1,924.46, with sureties thereon. Pursuant to this agreement, he executed and delivered to M. Crow Company his promissory note in that amount, Leonard Olsen and Myrtle Olsen signing the note as accommodation makers. By the terms thereof, they promised and agreed to pay, one year after date, to the order of M. Crow Company, the sum of $1,924.46, with interest thereon at the rate of 10 per cent per annum. The note became due and remained unpaid for nearly a year, whereupon the company demanded payment, or, in lieu thereof, additional security. In compliance with this demand, on December 1, 1923, Oscar Olsen and Hannah Olsen, his wife, made and delivered to M. Crow Company their certain promissory note for $2,193.30, constituting the entire amount of principal and interest due on the promissory note hereinbefore referred to. The latter note reads:

"Collateral Note

"$2,193.30 Lostine, Oregon, December 1, 1923.

"On demand after date, without grace, I promise to pay to the order of M. Crow Co., at Lostine, Oregon, Two Thousand One Hundred Ninety-three and 30-100 Dollars in Gold Coin of the United States of America, of the present standard value, with interest thereon in like Gold Coin, at the rate of 10 per cent per annum from date until paid, for value received, interest to be paid annually, and if not so paid the whole sum of both principal and interest to become immediately due and collectible at the option of the holder of this note. And in case suit or action is instituted to collect this note, or any portion thereof, I promise and agree to pay, in addition to the costs and disbursements provided by statute, such additional sum in like Gold Coin as the court may adjudge reasonable as attorney's fees to be allowed in said suit or action.

"No. _____ "Due _____ "I.R. Stamps $ .12 canceled.

"Oscar T. Olsen. "Hannah Olsen."

On the same date, the makers of this note executed and delivered to M. Crow Company, as security for the payment thereof, a real estate mortgage upon a certain homestead to which Oscar Olsen, one of the makers, had secured title. The plaintiffs alleged:

"That the said note of the said Oscar T. Olsen and Hannah Olsen did represent and evidence the same identical indebtedness as the open account of the said Oscar Olsen to the said M. Crow Company, and the said identical indebtedness as was represented by the promissory note of Oscar Olsen, Leonard Olsen, and Myrtle Olsen to the said M. Crow Company; and the said promissory note was given to and accepted by said M. Crow Company as a renewal promissory note of said indebtedness."

On the other hand, the defendants averred and contended that the note and mortgage made, executed and delivered to them by Oscar Olsen and Hannah Olsen, his wife, was not a renewal of the original note, but that it was given and accepted only as collateral, or as additional security for the payment of the note signed by Oscar, Leonard and Myrtle Olsen on January 1, 1922.

Although payment was duly demanded, the new note, as well as the old, remained unpaid, both principal and interest. Thereafter, M. Crow Company, the defendants in the instant suit, commenced suit to foreclose the mortgage which they claimed had been given to them to secure the "collateral note." Judgment was entered upon the "collateral note," the land sold at sheriff's sale, and, after deducting the costs, disbursements and all expenses of foreclosure, the balance remaining, i.e., $1,100, was credited upon the original note. The company then commenced an action at law to recover the balance remaining unpaid upon the "principal note." Due service of process was had upon each of the makers thereof, and each made default in the action and allowed judgment to be taken for the amount due upon that note, together with accrued interest, costs and attorney's fees. To satisfy that judgment, real property belonging to Leonard and Myrtle Olsen was attached and ordered sold. Nearly three years later, they made their first objection to the judgment, and, on January 2, 1929, began this suit in equity to annul the judgment thus rendered against them, on the ground of fraud in the procurement thereof. As a result of the trial of the cause, the court denied the relief prayed for by the plaintiffs and dismissed the suit. From the earliest times in the jurisprudence of Oregon (SeeWells, Fargo Co. v. Wall, 1 Or. 295) to the decision of the recent case of Dixon v. Simpson, 130 Or. 211 (279 P. 939), the public policy of this jurisdiction has demanded that there should be an end of litigation, "and the courts look with a jealous eye upon suits which have for their object the setting aside of a judgment at law."

In the case at bar, the story told by the record tends to show that, for nearly three years after the rendition of the judgment against them, Leonard Olsen and Myrtle Crosland neglected to avail themselves of the remedy at law for obtaining relief therefrom. The rule governing in any given situation similar to the present one is indicated by Corpus Juris in the following language:

"Relief will in no case be granted where the loss of the remedy at law was due to the party's own negligence or fault or that of his counsel": 34 C.J., 438.

This principle of law is well established.

The same authority, in dealing with the subject of equitable relief against judgments, says, at page 439:

"A person having a direct pecuniary interest in a suit, who has an adequate remedy at law, or who had full knowledge of the pendency of the suit, and neither sought to become a party thereto nor made any effort to intervene therein so as to protect his rights, cannot, after rendition of judgment, sue to set such judgment aside or to restrain its enforcement."

And at page 442, the author, treating of equitable relief against judgments by default, says:

"A court of equity will not grant relief against a judgment taken by default where the applicant, shown to have been duly served with summons, failed to avail himself of an opportunity to defend, such failure not being the result of fraud, accident or mistake, unmixed with laches on his part. Where a judgment by default is obtained against a party by his own neglect, it constitutes no ground for equitable intervention that his adversary obtained more relief than he was entitled to."

Another interesting and helpful discourse concerning the question at issue appears in 3 Freeman on Judgments (5th Ed.), § 1213, where it is written:

"These principles (respecting grounds for obtaining relief from judgments or decrees) can be best illustrated and supported by reference to some of the opinions expressed by the highest authorities both in England and in the United States. ``I do agree the court ought to be very tender how they help any defendant after a trial at law in a matter where such defendant had an opportunity to defend himself.' * * * ``A court of equity, therefore, will not lend its aid unless the party claiming its assistance can impeach the judgment by facts or on grounds of which he could not have availed himself at law, or was prevented from doing it by fraud or accident or the act of the opposite party, unmixed with negligence or fault on hisown part.' ``When a party has once an opportunity of being heard, and neglects to do so, he must abide the consequences of his neglect. A court of equity can not relieve him though the judgment is manifestly wrong.' * * * A court of equity does not interfere on the ground that injustice has been done, or that a judgment is wrong in law or in fact, or that its enforcement will work a great hardship, unless the party complaining was, without his fault, deprived of his opportunity to present his defense in the original action on the merits."

At no time during the statutory period of one year after notice of judgment did the plaintiffs in the instant case make any effort to bring their cause within the provisions of Or. L., § 103, under which the court may, "in its discretion, and upon such terms as may be just, * * * relieve a party from a judgment, order, or other proceeding taken against him through his mistake, inadvertence, surprise or excusable neglect."

In the recent case of Dixon v. Simpson, supra, the court quoted the following excerpt from Wells Fargo Co. v. Wall, supra:

"It may be premised that courts of equity never did interfere with legal proceedings, while there was a full and adequate remedy at law. Nor will this court interfere with judgments at law, and take jurisdiction, unless it shall appear that the party has used due diligence, exhausted every means, and failed through ignorance of some fact, or was prevented from availing himself of his defense by fraud, accident, or by the act of the opposite party, unmixed with negligence or fault on his part."

See, also, Friese v. Hummel, 26 Or. 145 (37 P. 458, 45 Am. St. Rep. 610).

In the case at bar, each note gives rise to a separate cause of action, "although there can be but one satisfaction of the amount of the debt. This rule applies in the case of a principal debt with a collateral note or bond, and also in the case of a note or bond with a mortgage given as security therefor." 1 C.J., 1115. The plaintiffs knew, or at all times should have known, of the relevant facts in relation to the matter of the execution and delivery of the second note and the mortgage securing payment of the same. They have called no witness outside of their own family, and the different members thereof reside in the same community and are intimately associated. Leonard Olsen, now deceased, knew all of the facts, and he urged his brother Oscar to execute and deliver to these defendants the additional security. Upon the original note plaintiffs received credit for about $1,100 that arose out of the judgment rendered in the suit to foreclose the mortgage securing the note pledged as collateral. Both Leonard Olsen and his sister Myrtle were duly served with summons and complaint, and though they had an opportunity to make whatever defense they had they wilfully refrained from exercising that right. In the light of the authorities noted, they are not entitled to relief in equity.

The plaintiffs assert that defendants have failed to plead laches upon the part of plaintiffs. This contention is erroneous. The defendants pleaded fully the facts constituting plaintiffs' negligence, and, under the decisions of this court, their pleading is sufficient: Carlyle v. Sloan, 44 Or. 357 (75 P. 217).

This cause is affirmed, without costs in this court.

McBRIDE, J., absent.