Opinion
No. 28136.
November 20, 1951.
APPEAL FROM THE CIRCUIT COURT, MARION COUNTY, ROY B. MERIWETHER, J.
Charles E. Rendlen, Rendlen Rendlen, all of Hannibal, J. Andy Zenge, Jr., Canton, for appellant.
William B. Spaun, Hannibal, Hilbert Veatch, Monticello, for respondents.
This action was brought to recover from the defendants a sum of money alleged to be due the plaintiff by reason of a contract between the parties. The petition alleged that the defendants ran a garage and that the plaintiff turned over to them an automobile that he owned, with the understanding that they were to sell it and pay him from the sale price $1,000 and in addition thereto one-half of the excess over $1,000 that they received from the sale, after deducting for themselves the sum of $5 for minor adjustments. It was alleged that it was agreed that the plaintiff would purchase other cars and turn them over to the defendants for resale upon the same basis; that is to say, the defendants would sell the cars and pay the plaintiff the amount that he had paid for them and then after deducting $5 for adjustments the excess over the cost of the car to the plaintiff would be divided equally between the partnership and the plaintiff. It was further alleged that in addition to placing his own car with the defendants he bought and delivered to them six other used cars, pursuant to the agreement, and that the defendants sold all of them. The petition detailed the amount realized by the defendants on each transaction and averred that by virtue of the sales there became due to the plaintiff a total of $4820, of which amount only $2100 had been paid, and the action was brought to recover the difference of $2720.
The defendants in their answer admitted their partnership, but denied all other allegations in the petition and stated that the matters raised by the plaintiff were res adjudicata. The plea of res adjudicata was based upon the fact that a previous suit had been filed by the plaintiff against these defendants, in which the plaintiff sought an accounting from the defendants on the sale of the same cars. The same agreement was alleged in that suit, and upon a hearing to determine whether or not an accounting would lie the court found for the defendants.
The instant case was tried by the court without the aid of a jury, and after fully hearing all the evidence the cause was dismissed and a judgment entered for the defendants on their plea of res adjudicata. It is from this judgment that the plaintiff appeals.
Richter, the plaintiff, was a farmer who lived near LaGrange in Lewis County, Missouri, and defendants, Leslie Frieden and Robert Frieden, operated a garage in LaGrange where they sold used automobiles. Richter testified that Robert Frieden came to him in April, 1947, and asked him if he wanted to sell the 1942 Ford which he owned. Richter said that he offered to sell the car for a thousand dollars but Frieden told him that owing to credit restrictions placed upon him by the bank he could not mortgage the car for the purchase price and he did not have sufficient cash to make an outright purchase. Frieden made a counter offer to take Richter's Ford and sell it, stating that they, the Friedens, would then get the thousand dollars for Richter and that in addition to that they would give him half the profit made on the sale. Richter further testified that Frieden told him that if he would buy other used cars they would sell them on the same basis. According to Richter he did not want to do this at first because of the expense of putting the cars in good mechanical shape, but Frieden said that they would only charge five dollars a car for such work and that this amount would be taken out of the profits. Richter said that cars were hard to get but he knew where some were obtainable, and after turning over his own Ford for sale he agreed to the proposition.
Richter further testified that Frieden Bros. sold his car for $925 cash and took in trade for the balance of the purchase price a Ford worth $200. Richter then bought a 1934 Chevrolet coupe for $250 and delivered it to the defendants for sale. It brought $435. His next purchase was a 1936 Chevrolet which cost him $450 and it was sold by the Friedens for $650. He then bought a Ford for $900, which the defendants sold for $125 cash and a 1939 Chevrolet. The Chevrolet was sold for $925. This was followed by the purchase by the plaintiff of a 1935 Ford for $365, which upon resale brought $500. Another 1935 Ford was purchased by Richter for $240 and Frieden Bros. sold it for $335. The last transaction was the purchase by the plaintiff of a 1940 Ford for $1100, which the defendants sold for $450, plus a 1938 Ford, which, according to Richter, the defendants said they later sold for $800. Richter stated that he had paid out for the purchases mentioned a total of $4305, and that he had only received from the defendants a total of $2100.
Defendant Leslie Frieden testified that he knew very little about the transactions that took place between Robert Frieden and Richter.
Robert Frieden testified that the cars were brought to them by Richter and that he purchased the cars and paid for them. He also stated that the books of the partnership had been destroyed by fire when his home burned and that he was testifying from memory.
On June 26, 1949, plaintiff filed a suit in Lewis County against these two defendants in which he sought an accounting. He pleaded the same contract that was pleaded in this action, and prayed that the court determine the amount of the profits derived from the sales.
In the instant case the defendants put in evidence a full transcript of the first action, which shows that at the outset of the hearing the court stated: "Now, gentlemen, in order that there will be no misunderstanding like we had at one previous time here, it is understood now that this hearing is solely as to whether or not there will be an accounting?"
And after some colloquy the attorney for the defendants stated:
"* * * the Court must take evidence to find out, as I understand it, whether or not there should be an accounting, and if so, the accounting comes later.
"The Court: Very well. I wanted it so that everybody understands it."
The plaintiff's evidence presented then was about the same as that presented at the trial under consideration, except that it was considerably abbreviated.
The defendants' testimony was the same with the exception that Robert Frieden said that he had the books and records of the partnership transactions with Richter, which could be produced within an hour, although the fire that was later said to have destroyed the books took place before both trials.
The final judgment in the suit for an accounting recites: "This cause having been heard by the Court on the issues of whether or not plaintiff was entitled to maintain an action for an accounting, and the Court having taken the matter under advisement and being fully advised in the premises does find that plaintiff is not entitled to maintain an action for an accounting."
In the case under consideration the court, after having heard all the evidence, found that the previous trial had been "* * * a full and complete adjudication of the alleged cause of action * * *". The case was dismissed and a judgment entered for the defendants. The appellant asserts that the court erred in holding that his right of recovery was barred by the previous suit.
In the first case tried the court clearly stated and remarks of counsel indicate that it was clearly understood that the trial being conducted was to determine whether or not an accounting would lie. An accounting is an action in equity. It rests primarily upon three grounds: the need of discovery, the complicated character of the accounts, and the existence of a trust or fiduciary relationship. Strong v. Crancer, 335 Mo. 1209, 76 S.W.2d 383; Wilson v. Hoover, 342 Mo. 1182, 119 S.W.2d 768; Edwards v. Sittner, Mo.App., 213 S.W.2d 652. In such an action the court first determines whether or not plaintiff is entitled to an accounting (Ewalt v. Hudson, Mo.App., 223 S.W.2d 132), unless, of course, such a preliminary step is expressly waived or removed from the case by acts of the parties. Larson v. Crescent Planing Mill Co., Mo.App., 218 S.W.2d 814.
In the first suit brought by the plaintiff the court confined its hearing to the question of whether or not the defendants should be ordered to account to plaintiff, and after hearing the evidence it was decided that there was no basis for the action. The judge in that suit did not attempt to determine whether or not any debt was owing by the defendants to the plaintiff, but confined himself to the preliminary question before him. This left plaintiff with the issue of the defendants' debt to him undetermined and he brought the action at law now under consideration.
It is urged by the respondents that since the subject matter of the first suit was the same as this one, and since the parties are the same, the plaintiff's rights were fully adjudicated and the court did not err in so holding. This contention would bar a plaintiff from any recovery after having lost an action because he brought it upon a mistaken theory of his legal rights. Such is not the doctrine of res adjudicata. We stated in Motley v. Dugan, Mo.App., 191 S.W.2d 979, loc. cit. 983: "A judgment rendered on any grounds which do not involve the merits of the action may not be used as a basis for the operation of the doctrine of res adjudicata. Lilly v. Tobbein, 103 Mo. 477, 15 S.W. 618, 23 Am.St.Rep. 887. Nor is the doctrine available as a bar to a subsequent action if the judgment in the former action was rendered because of a misconception of the remedy available."
This was restated by the Supreme Court in Pemberton v. Ladue Realty Construction Co., 359 Mo. 907, 224 S.W.2d 383.
The plaintiff mistakenly sought in the first case a remedy that was not available to him and he has never had any trial on the merits of his alleged claim, and therefore the court erred in holding that the present action was barred, by the first trial, under the doctrine of res adjudicata.
The appellant states that the trial court also erred in permitting defendant Robert Frieden to testify that he had paid Richter because payment had not been pleaded. It is true that where nonpayment is an essential element of the plaintiff's action, payment is an affirmative defense and should be pleaded. Duffy v. Barnhart Store Co., Mo.App., 202 S.W.2d 520. Here, however, the plaintiff sued on an alleged contract whereby he was to share the profits and recover his costs on the sale of used cars, and the defendants denied existence of such a contract. The payments to which Frieden testified were in support of his contention that the defendants bought the cars from the plaintiff and did not take them under any profit-sharing agreement. The issues would have been better clarified by the defendants pleading the purchase of and payment for the cars, but, under the circumstances presented, we cannot say that the court erred in admitting the testimony since it was in effect a denial of the claim asserted by the plaintiff.
The plaintiff states that we should consider this case "de novo" and enter an appropriate judgment because of the provision of Section 510.310, Mo.R.S. 1949, which deals with cases tried without a jury and states in part of subsection 4: "The appellate court shall review the case upon both the law and the evidence as in suits of an equitable nature." This section does not mean that we shall for the first time try a case here upon the record where the evidence is in great conflict, for the same section continues with the statement that "due regard shall be given to the opportunity of the trial court to judge of the credibility of the witnesses." De novo means anew or again, and in this case there has never been a trial on the merits; so we do not have the benefit of the opinion of the trial judge upon the credibility of the witnesses that appeared before him. For this reason we cannot enter a judgment on the merits of the case but must remand it to the trial court.
For the error noted, it is the recommendation of the Commissioner that the judgment be reversed and the cause remanded.
The foregoing opinion of WOLFE, C., is adopted as the opinion of the court.
The judgment of the circuit court is accordingly reversed and the cause remanded.
BENNICK, P. J., and ANDERSON, J., concur.
RUDDY, J., not sitting because not a member of the court at the time of argument and submission.