136 P. 826 | Or. | 1913
delivered the opinion of the court.
On February 18, 1909, Sam Manerud, one of the defendants, entered into' a contract with the City of Eugene, by the terms of which said Manerud agreed to construct for said city a power canal. On or about April 23, 1909, the said Sam Manerud and the defendant Edward Quinn made and entered into a contract between themselves, whereby they formed a partnership and assumed as partners the contract referred to, supra, for the construction of said power canal for said city. On the 29th day of April, 1909, the defendant Manerud and the plaintiff entered into a written contract whereby Sam Manerud sublet to the plaintiff the construction of about one and three fourths of a mile of said power'canal. This contract-was entered into about six days after Manerud and Quinn had formed said partnership. Quinn was not a party to said contract, but he signed it as an attesting witness. The plaintiff performed most of his part of said con
On motion of the plaintiff, the Circuit Court.entered an order that Manerud appear before said Circuit Court of Lane County and be examined under oath
The following is a copy of the stipulation executed on November 11, 1910, and filed in the above-named Circuit Court in the action of Carl B. Ryckman v. Sam Manerud, omitting the name of the court and the title of the cause:
“It is hereby stipulated and agreed by and between the above-named plaintiff, Carl B. Ryckman, and the above-named defendant, Sam Manerud, and Edward Quinn, that the said Sam Manerud and Edward Quinn may pay to said plaintiff, on or before the last day of the present November term of the above-entitled court, the sum of one thousand dollars ($1,000) cash and deliver to said plaintiff their promissory note for the sum of three thousand five hundred dollars due on or before six months from the daté thereof, secured to the satisfaction of plaintiff, or said plaintiff may, on the last day of said term, take judgment against said defendant in said action for the said sum of four thousand five hundred dollars ($4,500); and the court shall be authorized to enter judgment accordingly without trial. In case, said sum of one thousand dollars ($1,000) is paid and the said note and security given as above provided, said action shall be dismissed.
“Dated November 11,1910.”
Said stipulation was signed by Carl B. Ryckman, Sam Manerud, and Edward Quinn and assented to by Holmquist & Nelson, attorneys for the plaintiff, and
It will he noticed that the partnership of Manerud & Quinn is not referred to in said stipulation and that it does not bind Quinn to do anything, and it does not oblige Manerud to do anything excepting to permit judgment to be entered against him for $4,500. It makes no provision for paying the judgment, and the judgment was to be entered against Manerud only. The respondent places much stress on the foregoing stipulation and the judgment entered in accordance therewith.
On December 22,1910, the firm of Manerud & Quinn recovered a judgment against the said City of Eugene for the sum of $6,525.90 as the balance due them for the construction of said power canal, and said judgment was affirmed by this court after this suit was begun. Said judgment is the only asset of said firm of Manerud & Quinn.
The plaintiff alleges in the complaint that, when the stipulation set out, supra, was executed, it was mutually agreed, for the benefit of said partnership and of the plaintiff, and by and between Sam Manerud and Edward Quinn, that the said Manerud should have sufficient of the said partnership assets to secure him on the payment of said sum of $4,500 to the plaintiff, Ryckman, and that a portion of the assets of the firm was assigned to him for that purpose; that he should have a lien upon said assets for said sum; that said sum was set aside for that purpose; and that Manerud should be allowed for that sum on a final accounting for said firm, etc. But there was a failure to prove said allegations, and the written stipulation set out, supra, contains all that the parties agreed upon at that time.
Sam Manerud and Edward Quinn refused to pay the plaintiff anything out of said judgment against the
The complaint prays inter alia that the assets of Edward Quinn and of the firm of Manerud & Quinn be marshaled and that the other creditors be required to exhaust the individual assets of Edward Quinn; that the judgment of the plaintiff be decreed to be a first lien on the partnership assets of Manerud & Quinn; that said sum of $4,500, alleged to have been assigned to Sam Manerud for the benefit of the plaintiff, be decreed to be the property of the plaintiff; that the plaintiff be subrogated to the rights of Manerud in the partnership estate, etc.
The defendants Manerud, Quinn and Jenkins answered the complaint, denying parts thereof, and setting up new matter, and, among other things, they pleaded that the plaintiff, with full knowledge that Manerud and Quinn were partners, and of the ownership by said firm of the contract for the construction of said canal, and of the subletting by Manerud, for the benefit of said firm, of the construction of said portion of said canal to the plaintiff, and of all the facts connected with such construction, commenced the
“The general rule is, therefore, that a judgment must be obtained and certain steps taken toward enforcing or perfecting such judgment before a party is entitled to institute a suit of this character. In this there is a uniformity of opinion, but the difficulty arises in determining exactly how far a plaintiff should proceed after he has obtained his judgment. It is, of course, necessary for the creditor to allege and prove that he has taken the necessary proceedings at law before he can show a case requiring the interposition of equity. Whether an equitable suit, analogous to the creditor’s suit, will be allowed in aid of the lien created by an attachment before the recovery of judgment is a question to which American courts have given directly conflicting answers.”
In Davidson v. Parlin, 141 Fed. 37 (72 C. C. A. 525), the United States Court of Appeals says:
“Counsel calls his bill a creditor’s bill, but it is settled since the beginning that a simple contract creditor has no standing in a court of equity to enforce payment or subject equities until after he has reduced his demand to judgment and has exhausted his remedy at law.”
In Cates v. Allen, 149 U. S. 451 (37 L. Ed. 804, 13 Sup. Ct. Rep. 883), the Supreme Court of the United States says:
*359 “The principle that a general creditor cannot assail as fraudulent against creditors an assignment or transfer of property made by his debtor, until the creditor has established his debt by judgment of a court of competent jurisdiction, and has either acquired a lien upon the property or is in a situation to perfect a lien thereon and subject it to the payment of his judgment, upon the removal of the obstacle presented by the fraudulent assignments or transfer, is elementary. * * The existence of judgment, or of judgment and execution,' is necessary: First, as adjudicating and definitely establishing the legal demand; and, second, as exhausting the legal remedy. ’ ’
In Leavengood v. McGee, 50 Or. 233 (91 Pac. 453), the rule in this state is stated thus:
‘ ‘ This rule that a creditor must reduce his claim to a judgment before he will be allowed to attack in a court of equity a conveyance of his debtor for fraud is based upon two reasons: (1) That the claim must be a liquidated claim, so that an equity court will not be required to stop and inquire into the validity of the claim. The object of a creditor’s bill is to ascertain or determine the amount and validity of the claim or debt, but that is the province of the law. (2) A judgment and the issuance of an execution and its return nulla bona is required as an evidence that the remedies at law have been exhausted before resort is made to equity. This is the reason of the law, but there are exceptions to the general rule.”
In Dawson v. Coffey, 12 Or. 513 (8 Pac. 838), Mr. Chief Justice Waldo says:
“It is exclusively the province of a court of law to say that there is a legal debt and that it cannot be made at law. Therefore a creditor’s bill ‘must be preceded by a judgment at law, establishing the measure ancl validity of the demand of the complainant for which he seeks satisfaction in chancery.’ ”
“On the question whether a creditor must reduce his claim to judgment before he can maintain a creditor’s bill to reach assets of his debtor which have been transferred for the purpose of defrauding creditors, the authorities are not harmonious, but in this state it may be regarded as settled that a lien by attachment is sufficient for that purpose.”
In Dawson v. Sims, 14 Or. 561 (13 Pac. 506), the syllabus is:
“The lien created by an attachment duly levied upon the property of the debtor is a sufficient foundation for the jurisdiction of a court of equity to aid, by means of a creditor’s suit, in removing fraudulent impediments or conveyances which prevent the creditor from laying hold of the property and applying it to the payment of his debt.”
The citations from the authorities made, show that in most jurisdictions it has been held that, before a creditor can maintain a suit in the nature of a creditor’s bill to reach assets of his debtor, he must reduce his claim to a judgment and exhaust his remedy at law, but in this and some other states it appears to be settled that the commencement of an action at law, and the attaching of the debtor’s property, constitute a sufficient foundation for the commencement of a creditor’s suit in aid of the attachment and to reach the assets of the debtor. In this cause it appears that the plaintiff has obtained a judgment against Sam Manerud individually, but that he has not obtained any judgment against said firm or against Quinn, and that he has not sued at law either said firm or said Quinn, and that he has not attached the property of said firm or the property of said Quinn. It is clear, therefore, that the plaintiff cannot maintain, this suit against either said firm or said Edward Quinn.
In Coles v. McKenna, 80 N. J. Law, 48 (76 Atl. 344), the facts were that the action was against the West End Company, Meyer, McKenna, and the Cottentine Hotel Company to recover a laundress’ bill. Judgment by default was entered against the West End
In Mason v. Eldred, 6 Wall. 238 (18 L. Ed. 783), Mr. Justice Field, after reviewing the cases on this subject, says: “The general doctrine maintained in England and in the United States may be briefly stated. A judgment against one upon a joint contract of several'persons bars an action against the others, though the latter were dormant partners of the defendant in the original
In Davidson v. Harmon, 65 Minn. 402 (67 N. W. 1015), the facts were that the plaintiff brought an action against Harmon and Sherburne upon a joint partnership note. Both defendants were served with process. Judgment was entered against Harmon by default. The defendant Sherburne answered, and, after the judgment was entered against Harmon by default, he filed a supplemental answer, setting up the entry of said judgment as a bar to any further proceedings against him. On motion of the defendant Sherburne, judgment was entered in his favor on the pleadings. On appeal to the Supreme Court of Minnesota, that court said: “That the obligation sued upon was a joint one must be conceded. When an action was brought at common law upon a joint contract, the general rule was that there could be no judgment except in favor of or against all defendants, * * consequently where several persons were summoned as defendants, and one of them pleads, and the others suffer a default, final judgment cannot properly be entered upon the default until the issue as to the other defendants is disposed of, unless the rule has been changed by statute. The plaintiff in this case elected to enter a separate judgment against one of two defendants upon a joint obligation; and this cause being
In the case of Lauer v. Bandow, 48 Wis. 638 (4 N. W. 774), the court says:
“It is perfectly well settled that if the holder of a joint debt or obligation sues one of the joint debtors and obtains a judgment thereon against him, and then sues another of the joint debtors for the same debt or obligation, the latter may plead such judgment against his codebtor and bar the action. This is so because the joint debt is merged in the judgment against the debtor first sued, and, being indivisible, it cannot be merged or canceled as to one and existing and operative as to another joint debtor.”
23 Cyc., on page 1028, says:
“Where a contract or obligation which is the subject of an action is a joint contract or obligation, a recovery against one of the joint contractors merges the entire cause of action and bars any subsequent suit on the same obligation against any of the other debtors, oi against all jointly; and conversely a judgment against all the joint contractors bars a subsequent suit against any one of them separately. The effect of this principle cannot be.avoided by consent of the parties.” On page 1212 of this volume the rule is stated thus as to partners: “The liability of the partners for the firm debts is generally held to be joint, so that a judgment against one of the partners for such a debt will bar a*365 subsequent action against another, even where defendant in the second action was a dormant or secret partner, whose connection with the firm was unknown to plaintiff when the action was brought.! ’
The twenty-fourth volume of Am. & Eng. Ency. of Law (2 ed.), 761, says:
‘ ‘ In consonance with the doctrine that has been stated, it has been held that a judgment recovered against one of two or more partners on a partnership obligation is a bar to a subsequent suit against the other partner or partners or against all of them jointly, and this is so though the new defendant was a dormant partner at the time of the contract, and this fact was unknown to the plaintiff at the time the judgment was rendered.”
Black, Judgments (2 ed.), Section 776, says:
“On the principle that a judgment against one or two obligors or contractors bars an action against the other, a former recovery against one partner for a firm debt is a bar to a recovery against the other members of the firm in another suit for the same debt. And this is so even when the plaintiff was at first ignorant that the persons whom he afterward pursues were members of the firm.”
It is clear from the authorities that where an obligation is joint and not several, and the creditor sues one of the joint debtors and obtains against him alone a judgment, the obligation sued on is merged in the judgment, and such judgment is a bar to a subsequent action or suit against any of the other joint debtors or to a subsequent action or suit against all of the joint debtors.
In this case the plaintiff obtained a judgment against Sam Manerud individually for the sum of $4,500, which the firm owed. The joint obligation of the firm to him merged in this judgment, and by such merger said debt became the individual debt of Sam Manerud, and neither the firm of Manerud & Quinn nor Edward Quinn individually can now be held for such debt.
A creditor holding a joint obligation against several persons cannot sue one of them at a time and obtain as many judgments as there are joint debtors. He has the right to obtain but one judgment or decree, and, when he has obtained one judgment or decree on a joint obligation, such judgment or decree is a bar to any subsequent action or suit on such obligation.
The plaintiff should have brought his original action against Manerud & Quinn and have obtained a judgment against them jointly for the $4,500. By suing Manerud alone, he elected to look to him for the payment of his debt, and he cannot now recover from Quinn or the firm.
The plaintiff failed to prove that there was any agreement that any part of said $4,500 judgment was to be paid by said firm or by said Quinn or out of the assets of said firm. The plaintiff obtained a judgment against the defendant Sam Manerud, as stated, supra, and had issued a writ of attachment against his property, and attempted to attach, in the hands of the City of Eugene, what said city owed Manerud on said judgment.
According to a settlement made between said Sam Manerud and Edward Quinn as to their partnership liabilities, after they had ceased to do any business, and after this suit was brought, they owed the following sums: “John C. Jenkins, $3,084.38; Jas. B. Kerr, $512.83; S. M. Calkins, $211.40;' First National Bank of
The judgment of Manerud & Quinn v. City of Eugene was rendered on December 22, 1910, and it amounted at that time to only $6,525.90. It bears interest at 6 per cent per annum, unless something has transpired to stop the interest; but when the firm had their accounting and allowed the accounts referred to, they became accounts stated and bore interest from the date of said accounting. The claim due the First National Bank of Eugene, and possibly others, bore interest prior to said accounting. If the interest is computed on said judgment from the date of its rendition to the present time and on the partnership debts from the date that they were allowed at said accounting, and such interest is added to the principal of said debts, it will appear that the debts of said firm exceed, in the aggregate, the amount of said judgment. Said judgment is the sole asset of said firm. Hence there is nothing going to Manerud from said firm, and there is nothing that we can decree to the plaintiff, as his right to recover is confined to the part of said judgment going to Manerud on the final settlement of the business of said firm. As the partnership is insolvent, there is nothing left for either partner or for the plaintiff.
The decree of the court below is reversed and this suit dismissed. Neither party will recover costs and disbursements in this court or in the court below.
Reversed : Suit Dismissed.