Davis v. Hofer

63 P. 56 | Or. | 1900

Mr. Justice Moore,

after stating the facts, delivered the opinion of the court.

1. If the overruling of the motion to require the defendants to render an account be regarded as a denial of equitable jurisdiction of the subject-matter, the court necessarily erred; for, while an action of account was originally cognizable at law, it was soon ascertained that only a court of equity, by reason of its power to compel a discovery, was competent, in many cases, to afford adequate relief; and out of this discovery has been evolved the principle of concurrent jurisdiction of courts of equity in such cases: 3 Blackstone, Comm *437; 1 Story, Eq. Jur. (13 ed.), § 452. The inadequacy of a legal remedy which gives rise to equitable jurisdiction to settle an account is apparent in the following instances : (3 ) Where the accounts are mutual; (2) when they are all on one side, but intricate; (3) where a fiduciary relation exists between the parties, thereby imposing upon the defendant the duty to render an account: 3 Pomeroy, Eq. Jur. (2 ed), § 1421. The rule is of universal application that a court of equity has jurisdiction to settle an account wherever a fiduciary relation exists between the parties upon whom the duty of keeping accounts rests: 1 Enc. PI. & Prac. 96; Warren v. Holbrook, 95 Mich. 185 (54 N. W. 712, 35 Am. St. Rep. 554) ; Nashua & L. R. R. Corp. v. Boston & L. R. R. Corp., 19 Fed. 804; Pacific R. R. Co. v. Atlantic & P. R. R. Co., 20 Fed. 277; Bischoffsheim v. Baltzer, 20 Fed. 890; Thornton v. Thornton, 31 Grat. 212; Clarke v. Pierce, 52 Mich. 157 (17 N. W. 780); Marvin v. Brooks, 94 N. Y. 71; Fowle v. Lawrason, 30 U. S. (5 Pet.), *495; Halsted v. Rabb, 8 Port. 63; Vilwig v. Baltimore & Ohio R. R. Co., 79 Va. 449. To cite authorities illustrative of the principle that the directors of a corporation are the agents of and trustees for the stockholders, who have a quasi reversionary interest in the corporate property after the payment of the corporate debts, seems unnecessary, and, the fiduciary relation existing between the parties having been clearly stated in the complaint, ■jurisdiction of the subject-matter attached in equity.

2. A suit in equity is maintainable only where there is not a plain, adequate, and complete remedy at law: Hill’s Ann. Laws, § 380. “A plea of stated account,” says Mr. Pomeroy in his work on Equitable Jurisprudence (volume 3 [2 ed.], § 1421), “obviously constitutes a bar to a suit in equity for an accounting, since in that case the remedy at law is entirely adequate.” Thus in Wann v. Coe, 31 Fed. 369, which was a suit to redeem certain property that had been conveyed and transferred as security for a loan of money, and for an accounting, the defendants contended that all the matters in controversy existing between the parties had been settled by an agreement, in pursuance of which the plaintiff promised to pay them the sum of $26,500 as the amount due, and to accept a reconveyance and transfer of all property received by them, and not sold or disposed of. But'it was held that, inasmuch as the account rendered by the defendants was not itemized, and many of the charges contained therein were evidently excessive, it did not constitute a plea in bar, so as to defeat the interposition of a court of equity, and thereupon decreed an accounting. So, too, in Morton v. Lea, 73 N. C. 21, it is held in a suit for an accounting that an answer alleging a former account and settlement did not constitute a plea in bar unless it alleged that an account had been stated between the parties, and, as settled, was just and true. In Lee v. Abrams, 12 Ill. 111, Mr. Justice Trumbull, in speaking of the distinction between a plea in bar and a denial of any indebtedness, and the evidence necessary tO‘ establish each, says : “By filing the plea of plene computavit before the court, the defendant would, if the issue was found in his favor, be entitled to' a judgment against the plaintiff for costs, and the plaintiff would be driven to seek redress in another form of action, although the proof should show that a large sum had been admitted to be due him upon such accounting. The difference between the proof necessary to sustain the plea of plene computavit on the part of the defendant and that which is requisite to sustain the issue of nothing in arrear is this: In the former case the defendant must show an actual settlement or accounting between the parties, and a balance struck, it matters not in favor of which party; while in the latter case he must show by an exhibition of the accounts that nothing is due the plaintiff.” In the case at bar the defendants admit in their answer that they secured all moneys collected on account of the corporation, and do not deny that they received the sum of $30,000; but they do not plead a stated account in bar, or tender the issue of nothing in arrear; thereby conclusively establishing the existence of conditions giving the court equitable jurisdiction of the subject-matter. Under the rules of former practice it was customary in a suit for an accounting to render an interlocutory decree known as “quod computet” (Morton v. Lea 73 N. C. 21; Closson v. Means, 40 Me. 337); but such decree was not necessarily a condition precedent to referring the cause to a master, auditor, or referee to take and state the account (Spalding v. Day, 37 Conn. 427). The decree in such cases, “that the defendant do account,” was equivalent to an adjudication upon the pleadings that a court of equity had jurisdiction of the subject-matter (McPherson v. McPherson, 11 Iredell’s Law, 391, 53 Am. Dec. 416); and the fact that defendants herein introduced testimony after the motion was overruled tends to show that the court did not hold that it was without jurisdiction.

3. The question, then, presented by this appeal, as we view it, is whether the court, after considering that' it had jurisdiction, was obliged to refer the cause to a master to take and state the account, or wheher it could do so' itself. In Taylor v. Girard Trust Co., 1 App. D. C. 209, which was a suit to foreclose a deed of trust, it was held that it was the duty of the court to ascertain the amount due, and that in discharging such duty it might call to its assistance the services of an auditor, but that this was a matter entirely within its discretion. In Bryan v. Morgan, 35 Ark. 113, which was a suit by one partner against another for an accounting-, the court, upon motion therefor, refused to refer the cause to a master, and it was held that no error was thereby committed, the court saying-: “The chancellor may himself take an account, announce the result, and decree accordingly.” In Hidden v. Jordan, 28 Cal. 301, it is held that it is in the discretion of the court to take the account or to refer the cause to a commissioner or referee for that purpose. In Emery v. Mason, 75 Cal. 222 (16 Pac. 894), it was held that in a suit for an accounting the court may itself take 01-state, the account, and, when it does so, a refusal to order a reference for such purpose is not erroneous. In Montanye v. Hatch, 31 Ill. 394, it is held that a court of equity has power to discharge the duties ordinarily performed by its master in stating an account between parties, and that no injustice was done in refusing to refer the matter to a master, because either party had the same rights before the court in regard to the production of books and examination upon interrogatories that he would have enjoyed before a master. In Jewett v. Cunard, 13 Fed. Cas. 594 (No. 7310), it is held that, where the court has the means to take an account satisfactorily, and is disposed to do so, the cause will not be referred to a master unless both sides desire it and acquiesce in the further 'delay and expense incident thereto. To the same effect, see Wheeler v. Billings, 18 C. C. A. 573 (72 Fed. 301); Martin v. Foley, 82 Ga. 552 (9 S. E. 532); Carter v. Lewis, 29 Ill. 500; City of Belleville v. Citizens’ Horse Ry. Co., 152 Ill. 171 (38 N. E. 584, 26 L. R. A. 681); Shipp v. Jameson, 1 Litt. Sel. Cas. 190; Goodrich v. Parker; 1 Minn. 195; Pierce v. Thompson, 6 Pick. *193; Bailey v. Westcott, 6 Phila. 525.

4. The motion to. require the defendants, to render an account was evidently treated by the court and parties as a request to refer the cause to a master to take and state the account, and, when this motion was overruled, the plaintiffs had every opportunity to ascertain the condition of the account before the court that they could have enjoyed before a master: Montanye v. Hatch, 34 Ill. 394. The transcript, relating to the filing of the motion, is as follows: “Mr. Carson, attorney for the plaintiffs, asked permission of the court to file a motion asking that an interlocutory decree be issued compelling the defendants to render an accounting. The Court: ‘You can file a motion, and I will pass upon it.’ ” In pursuance of this permission the following motion (omitting the title and subscription) was filed: “Now, on this eleventh day of November, 1898, at the close of the evidence offered by plaintiffs at the trial of this cause, the plaintiffs move the court for an order or decree directing the defendants Hofer to render an account. This motion is based upon the pleadings and evidence offered by plaintiffs and received upon the trial of this suit.” If this motion be regarded as an application to the court for an order requiring the defendants to prepare and file a bill of particulars containing an itemized account of moneys collected and paid out on behalf of the corporation, and it be admitted that it is within the power of the court to grant the motion, it is at most discretionary (Hill’s Ann. Laws, § 521), and no error can be predicated upon a refusal to comply with the request, unless it is manifest that such discretion has been abused, which, in our judgment, is not apparent. If a party allege an account, and do not set forth in his pleading the items, nor file therewith a copy thereof, he must, within five days after a demand therefor in writing, deliver to the adverse party a copy of the account; and, if the one filed or delivered be defective, the court may order a further account, and, if the party refuse to comply therewith, he shall be preeluded from giving evidence thereof: Hill’s Ann. Laws. § 83. It will be remembered that the defendants do not allege an accounting with the corporation, nor does it appear that any demand was made upon them for a copy of their account; and hence plaintiffs could not insist, as a matter of right, upon the filing of a bill of particulars.

At the argument our attention was called by plaintiffs’ counsel to the case of Miller v. Kent, 60 How. Pr. 388, where it was held that a broker, who is the agent of his client, ought to be required to show fully and specifically each item of the account which he charges against his client, and the defendants were thereupon ordered to serve a bill of particulars; but tins was done, however, in pursuance of a statute of New York which provided that “the court may in any case direct a bill of particulars of the claim of either party to be delivered to the adverse party,” thus making the order evident! v a matter of discretion. To- the same effect is Morgan v. Morgan, 48 N. J. Eq. 399 (22 Atl. 545), in which it was held that when a party claims by his bill that he has been acting as trustee onagent, and as such is entitled to an account with his cestui que trust or principal, it is his duty to present his account with his bill, and, if he fails to do so, it is proper for the court, when a reference to a master is asked for, after taking the testimony, to suspend the hearing, and require the plaintiff to make and present such account. The latter decision would seem to have been made under a statute like ours. In Campbell v. Knowles, 13 Phila. 163, it is held that an order for the production of books and papers will not be made unless the bill prays for a discovery of facts material to the issue. See, also, 6 Enc. PI. & Prac. 781. In the case at bar no discovery is prayed for in the complaint, and, this being so, the plaintiffs cannot insist upon the production of a bill of particulars as a matter of strict legal right, thus exceeding the court’s discretion. Besides, the defendants were evidently ready to submit their books to the inspection of the court and parties in order that the account might be determined therefrom; for A. F. Hofer, Jr., in answer to an interrogatory propounded tO' him on cross-examination, read from his ledger the credits respecting his salary, though the books were not offered in evidence. Whether the judgment rendered against the corporation is vulnerable to a collateral attack because the claims upon which it was predicated were audited by the defendants, who constitute a majority of the board of directors making the allowance, becomes important only in case of an accounting between the parties; but the failure of the plaintiffs to avail themselves of the opportunity afforded them to try the cause before the court on the merits precludes the necessity of considering the question. The errors insisted upon not appearing to have been prejudicial, the decree is affirmed. Affirmed.