Sturtevant v. Dowson

219 P. 802 | Or. | 1923

Lead Opinion

McBRIDE, C. J.

It will be observed that the action upon the note was begun June 1, 1921, and the alleged breach of the agreement mentioned did not occur until October 13, 1921. We are clear that these counterclaims for alleged breach of the contract not to engage in business were not proper and have no place in this case. We do not find any precedent for allowing a counterclaim upon a cause of action which had not matured at the time of the commencement of plaintiff’s action, and such seems to be the condition of the authorities: 1 Sutherland’s Pleading, Practice and Forms, § 628, p. 374; Gannon v. Dougherty, 41 Cal. 661; McGuire v. Lamb, 2 Idaho, 378 (17 Pac. 749); McGuire v. Edsall, 14 Mont. 359 (36 Pac. 453), and the many cases there cited.

We have not cited the New York cases because the statute there expressly excludes counterclaiming of unmatured causes of action, but the statutes of California, Idaho and Montana are similar to ours in this respect. An apparent exception to the rule, but which exception is only apparent when the reason of it is understood, arose where a wrongful attachment was sued out at the commencement of the action. Such cases are Reed v. Chubb Brothers, Barrows & Co., 9 Iowa, 178; Rumsey & Co. v. Robinson & Atherton, 58 Iowa, 225 (12 N. W. 243), and Waugenheim v. Graham, 39 Cal. 169. All these cases arose under statutes permitting cross-complaints similar to our counterclaim, sometimes more liberal and, in other instances, sometimes more narrow; but the underlying principle in all these cases is that the wrongful attachment was instituted coincidentally with the commencement of the action and so, by reason of such wrongful attachment, a cause of action accrued to the defendant at the time of the commencement of plaintiff’s action. We find no other cases sustaining defendants’ theory than these and, as is shown, they are distinguished from this case.

While “counterclaim” includes both setoff and recoupment, it is a more comprehensive term than either in that it permits the defendant to recover against the plaintiff any balance which may have existed in his favor at the time of the commencement of plaintiff’s action, which was not the case with a defense pleaded by way of setoff or recoupment before the statute of counterclaim in equity. Other than the difference above mentioned there seems to be no logical distinction, and the defendant was never permitted to set off or recoup for a cause of action which had not accrued in his favor when the plaintiff’s action was commenced. The only defense which the defendants had when plaintiff began this action was that of fraudulent misrepresentation as to the value of the stock and goodwill and as to the amount of the daily sales made as to each of which the jury found in favor of the plaintiff under unquestionably proper instructions by the court upon that subject. In other words, the jury found that there was no legitimate defense to this action when it was begun.

It was never the policy or intent of the law to permit a defendant, who at the time suit was brought actually owed the debt, to prolong litigation for several months and then lug in alleged defenses which had not accrued when the action was commenced against him. This being true, it was not error for the court to exclude the testimony of a supposed expert as to the value of the goodwill and the stock of goods affected by an alleged breach of contract occurring several months after plaintiff’s action was commenced. The only error that was committed was in submitting that question to the jury at all. All evidence on that subject should have been excluded and had there been an appeal by the plaintiff on account of the court submitting this quéstion to the jury we should have been compelled to reverse the case in his favor. As it is, he has not appealed and the abatement sought by the defendants must be allowed to stand, but, instead of being injured in the premises, defendants have received an undue credit of $300.

Mr. H. E. Slattery for the petition. Mr. F. E. Smith, contra.

This view of the case renders it unnecessary to con-, sider the other questions arising on the rejection of evidence on the other causes of action and the judgment will be affirmed. Aeeirmed.

Harris and Mo Court, JJ., concur. Burnett, J., took no part in the decision of this case.

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Rehearing

Reversed and remanded on petition for rehearing January 22, 1924.

On Petition for Rehearing.

(222 Pac. 294.)

McBRIDE, C. J.

This is a petition for rehearing, in which the correctness of the opinion published in 219 Pac. 802, is challenged.

We there held that in cases of this character, in order that a counterclaim could be pleaded under Section 74, Or. L., it should be one existing at the time of the commencement of the action. The opinion was rendered by the writer of this opinion and, the case not being thoroughly briefed, it was there held that, in order to constitute a valid counterclaim, the cause of action arising under the counterclaim should have existed at the time of the commencement of the action. Upon a petition for a rehearing the case has been thoroughly briefed and carefully examined, and the writer now finds that the cases there cited by him in support of his opinion were cases arising under subdivision 2 of Section 74, and were not applicable to cases arising under subdivision 1, and that he was wrong.

The great weight of authority under statutes similar to ours is to the contrary: 23 Standard Ency. Procedure, 707; Slaughter v. Machine Co., 148 N. C. 471 (62 S. E. 599); Caspary v. Hatch, 157 App. Div. 679 (142 N. Y. Supp. 785); Howard v. Johnson, 82 N. Y. 271; Californicm Canneries Co. v. Pacific S. Metal Works, 164 Fed. 978 (91 C. C. A. 106); Smith & Bro. v. French, 141 N. C. 1 (53 S. E. 435). Therefore we are constrained to hold that the alleged counterclaim was properly pleaded and should have been considered by the court, as, in fact, it was.

The only error that we find was the refusal of the court to allow the testimony of the defendant Moyer to the effect that he knew the value of the goodwill of the business, and to testify to such value. It is very difficult to approximate the value of goodwill, and while we are still of the opinion that the conditions being shown, — the situation of the premises, the amount of patronage, and the general conditions existing at the time, — are stronger evidence than the opinion of a so-called interested expert, yet the authorities seem to be generally to the effect that such testimony is admissible for what it is worth: White v. Jones, 79 App. Div. 373 (79 N. Y. Supp. 583, 587); In re Randell’s Estate, 8 N. Y. Supp. 652, 657; Mueller’s Estate, 190 Pa. St. 601, 602 (42 Atl. 1021).

While the refusal of such testimony in the particular case, and especially from a person who did not seem to have been able to so conduct the business, even while he had all the benefits of the goodwill transferred to him by his grantors, as to be able to do anything toward the payment of the property he had purchased, yet it was technically admissible and might have had some effect upon the jury in increasing to some extent the deductions which the jury allowed the defendants. But that was a question for the jury, and not for the Circuit Court or this court.

It may be added that the data for estimating the value of the goodwill of a business are always more or less uncertain. It depends very much upon the personality of the parties engaged in the business. One man by his personality, his adroitness in conducting his business, his geniality in attracting customers, and his wide acquaintance with his customers, may be capable of doing a profitable business where another, lacking some or all of these qualities, may fail, or at least not succeed to the extent his predecessor had attained. Of course, the fact that the business had been long established, and the habit of customers who have been used to dealing at a particular place to continue to go there, and the fact that there may be some other attraction, such as the location of the postoffice in the same building, were elements not to be overlooked; but, after all, it is a question for the jury, taking all the circumstances, including tbe testimony of persons familiar therewith, into consideration. But we are not justified in saying that the testimony of the defendant Moyer, who had been connected with the business some time, was not of some value, even if small, and for these reasons our former opinion in this case is set aside and the case remanded to the Circuit Court for a new trial.

Reversed and Remanded. Rehearing Denied.

Mr. Justice Harris having resigned and Mr. Justice Coshow having been appointed since this case was submitted, neither took part in this decision.