Opinion
Argued at Pendleton October 31, 1927
Modified November 22, 1927 Costs retaxed December 13, 1927
From Malheur: DALTON BIGGS, Judge.
For appellant there was a brief over the names of Messrs. Nichols, Hallock Donald and Messrs. Davis Lytle, with an oral argument by Mr. Blaine Hallock.
For respondent there was a brief and oral argument by Mr. Chas. H. Kahn.
In Banc.
This is a suit for contribution. The facts are that the plaintiff, the defendant and appellant, Stanfield, whom we shall refer to as the defendant, and I.N. Ingle and J.B. Adrian, defendants, together with one W.G. Jenkins, were the stockholders of the Sumpter Gold Dredging Company. This corporation had purchased a dredger upon a conditional sales contract; a payment was about to become due; but the corporation's treasury was empty. All of the directors, with the exception of Jenkins held a meeting and discussed means of relieving their company from this predicament. Their discussion resulted in the four going to Mr. William Pollman, a banker, with a request for a loan. From Mr. Pollman $3,250 was obtained; the four men gave their demand note for that amount.
According to the testimony of both Mr. Pollman and the plaintiff, the former later demanded of the latter payment of the note, with the result that the plaintiff paid Mr. Pollman $351.12 cash, being the accrued interest, and gave a new note signed by himself only for the principal; he then received back the note bearing the signatures of all four. In the original complaint neither Adrian nor Ingle were parties; Stanfield alone was a defendant; he demurred on the ground of defect of parties; this demurrer was sustained. Thereupon an amended complaint was filed, in which both Ingle and Adrian, together with Stanfield, appeared as defendants; the amended complaint alleged the original note; that upon Pollman's demand the plaintiff discharged it by paying the accumulated interest and executing another note; that both Ingle and Adrian were insolvent, but that Stanfield was able to pay. The prayer was for judgment against defendant for one half of the interest paid and one half the face of the note. With the filing of the amended complaint the court ordered that Ingle and Adrian be made parties and that they be served.
The answer of defendant admitted the execution of the original note, but denied all of the other allegations of the amended complaint; by way of affirmative defense the answer alleged that the corporation was the borrower and the four individuals were only sureties, and that they had previously agreed among themselves, each should be liable to the one or more paying only in their aliquot parts. The reply denied these allegations.
The decree recited that the default of Ingle and Adrian had been previously entered and gave plaintiff judgment as prayed for. This was followed by notice of appeal, the filing of an undertaking and the perfection of appeal in this court. After the appeal had been perfected, counsel for plaintiff discovered that the sheriff's return showing service upon Ingle and Adrian had never been filed. He thereupon moved the lower court for leave to file the sheriff's return nunc pro tunc; his motion was accompanied by an affidavit subscribed by his counsel, setting forth, that his residence was in Idaho; that he was unfamiliar with the methods of sheriffs in this state; that when the sheriff sent him the return of the summonses he assumed that they were copies sent to him through the courtesy of the sheriff for the benefit of his office files, and did not realize they were the original summonses; that therefore he did not file them. His affidavit was not controverted; the affidavit filed by the defendant set forth the perfection of the appeal and submitted that the Circuit Court was without jurisdiction to permit the filing of the returns.
After counsel for appellant had prepared their briefs and filed them in this court, counsel for plaintiff discovered another error to the effect that the lower court in preparing its nunc pro tunc order which permitted plaintiff to file the sheriff's returns as of the actual date, inserted March 25, 1923. This was manifestly erroneous, because the amended complaint was not filed until October 4, 1923. Plaintiff now moves this court for an order correcting this mistake; he accompanied his motion with an affidavit explaining how the error occurred; the affidavit is not controverted. MODIFIED.
The first problem is, did the lower court have power to permit the filing of the returns of the summonses and to make the nunc pro tunc order. The office of nunc pro tunc order is "to speak what has been done, not create." Cox v. Gress, 51 Ark. 224 ( 11 S.W. 416). Or as has been stated by another court, "to supply an omission in the record of action really had, but omitted through inadvertence or mistake, or to enter an order which should have been made as a matter of course and as a legal duty." City of Grand Rapids v. Coit, 151 Mich. 109 ( 114 N.W. 880). Since it was the duty of the lower court to file the return upon the summonses the court could properly enter the order filing them nunc pro tunc if the perfecting of the appeal to this court did not deprive the Circuit Court of its power.
The mere fact that the appeal had been perfected did not deprive the lower court of all jurisdiction over its record. Thus it is stated in 2 R.C.L., Appeal and Error, Section 95:
"When an appeal with a supersedeas or stay has been taken the jurisdiction of the trial court is suspended as to all matters necessarily involved in the appeal. Accordingly, pending an appeal, the lower court, as a general rule, has no power to allow amendments of the proceedings. For example, pending an appeal from an order denying a motion to quash an execution, the court has no power to allow an amendment of the execution. * * An appeal or writ of error does not, however, deprive the trial court of all power to act pending the appeal. Thus, though there are cases to the contrary, it is generally held that the pendency of an appeal or writ of error does not deprive the trial court of the power to correct its record so that it will speak the truth and truly set forth the proceedings as they actually occurred. Nor does the pendency of an appeal deprive the lower court of power to correct a mere clerical error in the entry of the judgment, though the correction of the error deprives the appellant of his ground of appeal."
This court has followed the liberal rule announced above, thus in Helms, Groover Dubber v. Copenhagen, 93 Or. 410 ( 177 P. 935):
"An appeal does not deprive the trial court of all power to act pending the appeal. As a general rule, the pendency of an appeal does not divest the trial court of the power to correct its record so it will conform to the truth, and truly set forth the proceedings as they actually occurred."
In State v. Estes, 34 Or. 196 ( 51 P. 77, 52 P. 571, 55 P. 25), the problem presented was the following:
"The judgment having been entered in the circuit court in the above cause on March 6, 1897, the bill of exceptions was settled, allowed, and signed on April 3, and the appeal perfected April 29. At a subsequent term, to wit, on December 24, 1897, upon motion of the defendant, the bill of exceptions was amended over the objection of the appellant. The amended bill of exceptions has been certified up, and it is this additional record that appellant seeks to have stricken out. The question presented is whether a bill of exceptions which has been settled, allowed and signed by the trial judge can be amended at a subsequent term, and after an appeal has been taken and perfected. * * The apparent object of the amendment was to make the record conform to the truth. The matters certified in the amended bill are in one or two particulars inconsistent with those contained in the original, and are of such a nature as that they might become of vital importance at the hearing. * *"
The court thereupon reviewed many authorities, but selected the more liberal rule and held that the lower court acted within its authority in allowing the amendment. In St. Helens Lumber Co. v. Evans, 90 Or. 71 ( 175 P. 612), it is said:
"It is well settled that it is within the discretion of the trial court after an appeal has once been taken, to cause papers omitted from the record to be attached thereto, and in the absence of any affirmative showing to the contrary it will be presumed that the court acted regularly and within the powers granted him."
And in Brewster v. Springer, 79 Or. 88 ( 154 P. 418) we find:
"Notwithstanding an appeal from a judgment may have been taken and perfected, jurisdiction of the cause is retained by the trial court sufficient to empower it, at any time before the appeal is heard and determined, to amend the bill of exceptions so as to make it conform to the facts."
In Oregon-Washington Co. v. School Dist., 89 Or. 7 ( 173 P. 261), an appeal was taken from the decree of the Circuit Court; after the appeal had been perfected the lower court vacated its decree; it was held that the court has power to do so. Our procedure makes ample provision for the correction of errors so that the record before us will portray the truth of what occurred in the court below; it is deemed wiser to correct a record than to reverse the case and thus cause the parties to set in motion from the beginning the ponderous machinery of a new trial.
A few illustrations of the various methods that have been resorted to to correct a mistake in the record are illustrated by the following cases: West Coast Lumber Co. v. Brady, 69 Or. 39 ( 137 P. 764); Bloch v. Sammons, 37 Or. 600 ( 55 P. 438, 62 P. 290); Fisher v. Portland Ry. L. P. Co., 74 Or. 229 ( 137 P. 763, 143 P. 992, 145 P. 277); Overton v. Stocker, 117 Or. 122 ( 239 P. 816, 246 P. 209). See, also, Constitution of Oregon, Art. VII, § 3c. The lower court was within its authority in permitting the filing of the return nunc pro tunc. We are likewise of the opinion that the motion filed with us to correct the lower court's nunc pro tunc order so that it will show the date correctly should be allowed.
The Circuit Court acquired jurisdiction over Ingle and Adrian when they were served with process. The entry of the return of service merely placed upon the records evidence of the fact of service. "It is the service and not the proof thereof, that gives the court jurisdiction." Blandy v. Modern Box Mfg. Co., 40 Idaho 356 ( 232 P. 1095); Wade v. Wade, 92 Or. 642 ( 176 P. 192, 178 P. 799, 182 P. 136, 7 A.L.R. 1143). The Circuit Court therefore had jurisdiction over all of the parties, and was in a position to write the proper decree; we are in a similar position, because the trial before us is de novo.
It is contended by the defendant that the evidence submitted by the plaintiff in proof of the insolvency of Ingle and Adrian was insufficient to establish his contentions. For us to set forth our consideration and comparison of the evidence upon this subject, and have it become a part of our permanent reports, would needlessly consume space which should be devoted to some better purpose. We shall, therefore, content ourselves with the observation that the evidence showed the plaintiff had made a thorough investigation concerning Ingle, and had arrived, as he testified, at the conclusion that Ingle was "broke" and that a judgment against him would not be collectible; he likewise testified that he had done much business with Adrian and had made a thorough investigation as to his financial responsibility; that Adrian's condition was the same as Ingle's; he testified that there were outstanding, unsatisfied judgments against Adrian, one of which he held; he produced the judgment records showing this unsatisfied judgment and two more against the Adrian Investment Company, the stock of which Adrian owned; the plaintiff stated that this stock was worthless. He also testified that Ingle admitted to him his insolvency, and that Adrian owed plaintiff several thousand dollars, the result of other transactions; further that Adrian was indebted to various other persons, and that he had many times declared himself "fire proof." Mr. Pollman, a banker, who would be likely to know the financial condition of men like Adrian and Ingle, and who had had business dealings with both, testified that Ingle was insolvent and had no property out of which the plaintiff's claim could be satisfied; he added that Adrian was in the same condition. Both Adrian and Ingle attended the trial as witnesses for the defendant. Neither they nor anyone else controverted the above testimony. We believe that this evidence was admissible and sufficient to prove the insolvency of these two men. When the plaintiff was permitted to testify to the result of his inquiries the hearsay evidence rule was not violated; he did not pretend to testify what the persons of whom he made the inquiries said to him, but stated merely the fact of his inquiries; this was admissible: State v. Wentworth, 37 N.H. 196; Wigmore on Evidence (2 ed.), § 1789. Both the plaintiff and Pollman testified sufficiently to the materials upon which their opinions were based to make the latter admissible.
We have carefully read the evidence and believe that the loan was made by Pollman to the four men as borrowers, and not to the corporation. It is true that the corporation received the money; but it is also conceivable that the four men due to their interest in the corporation, and the corporation's inability to obtain money on its own credit, may have been willing to become the borrowers. The fact that the note does not bear the signature of the corporation is very persuasive that the men and not the corporation were the borrowers.
Likewise we do not believe that the evidence warrants the finding that before the four individuals attached their signatures to the note they agreed that the limit of their liability in contribution should be one fourth.
The complaint alleges that the plaintiff satisfied the note executed by all four, by paying Mr. Pollman the accumulated interest and executing a new note; we understand from the evidence that later the plaintiff discharged this new note with cash. To secure contribution it is not necessary that the obligation should be discharged with money: Davis v. First Nat. Bank, 86 Or. 474 ( 161 P. 931, 168 P. 929); Pom. Eq. Juris. (2 ed.), § 2340; 13 C.J. 823. We believe that the complaint stated a cause of suit.
The situation thus disclosed by the record is one where all four signers were bound in the same degree to the discharge of a common burden. One of the four, the plaintiff, is now bearing the entire burden; two who should help in bearing the burden are insolvent; this defendant, however, is able to bear his just portion. The doctrine of equitable contribution enables the plaintiff to shift one half of the burden which he is carrying on to this defendant. The decree of the lower court enforcing contribution is therefore adopted by us as our own with this modification, however, that the two insolvent debtors should not escape contribution entirely; they may eventually come into such financial condition that they can bear their portion of the burden which their present financial condition renders it impossible for them to discharge; judgment should be entered against them so that in event it ever becomes collectible, execution may be had without resorting to another action or suit. The Circuit Court will so modify its decree. Costs to neither party. MODIFIED.
BELT, J., did not participate in this decision.