Action by R. Thomas Carter and wife and another against LaDee Logging Company. Judgment for defendant, and plaintiffs appeal.
REVERSED AND REMANDED. REHEARING DENIED. Action by plaintiffs for damages caused by forest fires. On the plea of defendant that the judgment in the federal court case, hereinafter referred to, was in effect an adjudication of the issues herein involved, a trial was had on that question alone, in advance of the trial on the merits of the case, and upon the preliminary trial a judgment was entered in favor of the defendant.
In 1926 the Union Lumber Company, Ltd., a corporation of the state of Louisiana and owner of certain timber lands in Clackamas county, Oregon, entered into a contract with the defendant, LaDee Logging Company, an Oregon corporation, granting to the LaDee company the exclusive right and privilege to go upon and remove from its lands the timber thereon, for which privilege the LaDee company was to pay for the timber removed a stipulated price depending upon the market price of logs. The Union company was also joint owner of a certain portion of a railroad of considerable value in conducting logging operations on its lands and granted to the LaDee company the right to use the same in its logging operations.
The contract provided that the LaDee company should "not be deemed to be the agent or representative of the owner (Union Lumber Company, Ltd.) in the conduct of said operations" and that company was to indemnify and save the Union company harmless from any and all damage to the railroad and "from any claims which might be asserted by any person or corporation injured or damaged in any way by reason or in connection with the use of said railroad", and to indemnify and hold the Union company and its property "harmless and free from any and all manner of *Page 442 claims, liens or charges arising out of or in connection with" the LaDee company's operations under the contract.
The LaDee company had been in possession of and logging these timber lands for some time when in September, 1929, a fire, originating thereon, spread to and destroyed the residence and other property of the plaintiffs, Carter and wife.
In November, 1929, Carter and wife instituted this action against the LaDee company to recover the loss suffered by them by reason of the forest fire above mentioned, and contemporaneously therewith instituted a similar action in the District Court of the United States for the district of Oregon against the Union Lumber Company, Ltd. After these actions had been pending for some time the Fidelity Phenix Fire Insurance Company of New York paid the Carters the amount of the insurance policies it had issued on the damaged property, and a supplemental complaint in the state court case was filed by the Carters making the insurance company a co-plaintiff and setting forth the payment of the insurance. In the federal court case an amended complaint was filed, making the insurance company a co-plaintiff and setting forth similar facts in addition to the facts alleged in the original complaint.
After the federal court action was filed, the Union Lumber Company, Ltd., wrote to the LaDee company, calling attention to the provisions of the agreement requiring the LaDee company to indemnify the Union company, stating that the contract provided "that you shall not be deemed to be the agent or representative of Union Lumber Company, Ltd.", and requested that the LaDee company assume the defense of the action. *Page 443 In compliance with this request the LaDee company took charge of, or assisted materially in, the defense thereof, although the Union company's attorneys participated in the trial of the case.
The federal court case was tried first, before the court and a jury. Many witnesses were called, and after several weeks of trial a verdict was rendered in favor of the Union Lumber Company, Ltd. Thereafter the LaDee company filed in this case a supplemental answer setting forth the proceedings in the federal court and alleged that the judgment against the plaintiffs and in favor of the Union company in the federal court "is resadjudicata as to the causes of action herein asserted, and is a bar to further proceedings in this action". A motion to strike the supplemental answer was filed by the plaintiffs on the ground that it did not constitute a defense of former adjudication. This motion was heard by Judge Ekwall and sustained.
Thereafter a supplemental complaint was filed in the state court by the Carters in order to make the insurance company a party plaintiff, and thereupon the defendant filed an amended supplemental answer setting up substantially the same facts stated in its former supplemental answer which had been stricken by the court.
After the case was at issue and upon the stipulation of the parties, the question of whether or not the judgment in the federal court case was a bar to a recovery by the plaintiffs in this case was tried first, resulting in a judgment in favor of the defendant — the lower court holding that the judgment in the federal court in favor of the Union Lumber Company, Ltd., and against the plaintiffs herein, was a bar to the maintenance of this action by the same plaintiffs against the LaDee Logging Company. *Page 444 It is contended by the defendant that the judgment in the federal court case in favor of the Union Lumber Company, Ltd., the owner of the timber land, and against the plaintiffs in that case, is a bar, either as a former adjudication of the issues herein involved or as an estoppel, on the ground of public policy, to the maintenance of this action against the LaDee Logging Company, since the plaintiffs in both cases are the same and the issues involved in both cases substantially identical. On the other hand, the plaintiffs contend that the issues and parties in the two cases are not the same and therefore there can be no estoppel, and that the matters involved are not resjudicata.
In this case the defendant, LaDee Logging Company, is alleged to have conducted its logging operations on certain lands in Clackamas county "with camps and logging equipment comprising cables, donkey engines, locomotives, railroads and the usual appurtenances of such business * * * and had been maintaining and conducting such business there and in the vicinity adjacent for some long time prior to and during the month of September, 1929"; and it is charged with the following acts of negligence:
"The defendant in its logging operations aforesaid did not clean up the brush, slash, debris, downfall and inflammable materials arising out of and connected with its logging operations and allowed the same to accumulate, and did not keep clean and remove from its operated logging railroad right-of-way accumulations of inflammable material, and also tinder, refuse and extra dried vegetation likely to be the cause of or become set on fire, but allowed the same to accumulate on and near the ties and rails of its said railroad so that fire might be communicated thereto, all during the summer of 1929 and prior thereto without any act *Page 445 or thing being done to lessen or remove the menace and danger of fire from its said logging operations, and as the summer heat and dryness advanced into the month of September, 1929, there was caused thereby and became a period of exceptional fire emergency and extra hazardous climatic conditions for any logging operations whatever, in the whole area of townships three (3) and four (4) south of ranges five (5) and six (6) east of the Willamette Meridian; and defendant persisted without any precaution and any care to conduct and did so conduct its operations, notwithstanding it was notified September third, 1929, to cease the same on account among other things of dangerous humidity and weather conditions, and the excessively dry and highly inflammable nature of the vicinity of its operations, all of which defendant well knew and saw and was readily to be then known and seen without any notice especially in the vicinity of the southeast quarter of the southeast quarter (SE 1/4 S.E. 1/4) of section twenty-five (25), township four (4) south of range five (5) east of the Willamette Meridian, and these conditions were then known and had been known to defendant, and defendant knew all of the same, for it was as early as June, 1929, or thereabouts duly notified by the authorities both federal and state of its failure to take precautionary measures of and about its brush, slashing, debris and inflammable materials and to remove and prevent the danger and spread of fire, but defendant disregarded said conditions, notice and knowledge and wholly and wilfully failed, neglected and refused to do anything to prevent the starting of fires or the spread and continuation thereof after fire did start; and on or about the time between September first and September fifteenth, 1929, in the vicinity aforesaid and under the knowledge, notice and conditions aforesaid, and notwithstanding the increasing and continued humidity, dryness, heat and wind, all of which the officers, agents, employes and operators of defendant then knew and were informed about and wholly without any precautions to prevent spread *Page 446 of fire wilfully and without doing anything to control or extinguish the same started and set and caused to be started and set fires upon said lands that spread and escaped without controlling or without extinguishing them, and suffered and permitted such fires to increase and augment and to burn into or through forests, woods, timber, brush, slashing, cutover land and clearing and thereby defendant destroyed the aforesaid properties and belongings of these plaintiffs".
It is further alleged that the fire complained about occurred through the wilfulness and negligence of the defendant and by the defendant "deliberately augmenting and not preventing said fires and the spread thereof".
The amended complaint in the federal court case alleged that the defendant Union Lumber Company, Ltd., was the owner of certain lands in Clackamas county, being the same lands described in the complaint in the state court case, and that the "LaDee Logging Company is its operating agent as loggers with camps and logging equipment comprising cables, donkey engines, locomotives, railroads and the usual appurtenances of such business as is usually conducted, to operate" in that particular district "and was so allowed and permitted to operate by Union Lumber Company, Ltd., on its lands, to fell and log its timber, and was so doing and engaged for defendant at the time of the events herein complained about, the defendant being the owner of lands on and over which the aforesaid described operations were then being conducted during the month of September, 1929". The defendant in that case was also charged with certain acts of negligence, in the following language:
"Paragraph 8. Defendant allowed, suffered and permitted on its said forest and timber lands in the *Page 447 county of Clackamas and state of Oregon, and in township four (4) south of ranges five (5) and six (6) east of Willamette Meridian, slashing, brush, debris and inflammable materials to accumulate on its said land and remain thereon a constant fire menace and danger without protection and removal in September, 1929; also, forest fires to start and to escape and did not extinguish the same, and to come together and reach its log `cold deck'; also allowed fires to escape uncontrolled and develop and increase with indescribable fury until there was enveloped several thousand acres; also fires to increase and advance on its own property without protection or prevention by it; also fires to be caused, set out and spread beyond control; also, fires to burn into or through woods, forest, timber, brush, slashing, cutover land and clearing, and into and through the same into the properties of the plaintiffs, R. Thomas Carter and Alice E. Carter, and did not furnish or provide adequate protection against the starting or spread or escape of said fires on its lands in the month of September, 1929, in Clackamas county, Oregon; and it was these acts of the defendant that caused, suffered and permitted the destruction of the property of the plaintiffs, R. Thomas Carter and Alice E. Carter, as described aforesaid.
"Paragraph 9. That there was excessive humidity, dryness and heat in the month of September, 1929, well known to everybody and especially the defendant, and all parts of the woods and forest in the vicinity described were in a highly inflammable condition that rendered conditions of operations and conduct of logging of critical emergency for fire during that month, all of which the defendant well knew and was informed about, and was notified to cease timber and logging operations because thereof, but defendant disregarded said knowledge and information and persisted in and continued its timber and logging operations in the month of September, 1929, and defendant then knew that fire started and existed on its property September eleventh, 1929, but did not prevent its escape, increase *Page 448 and spread and did not extinguish or control said fires, and caused the origin of said fires on said day on its land during its said operations and allowed them to escape and to spread, thereby destroying the property of the plaintiffs, R. Thomas Carter and Alice E. Carter.
"Paragraph 10. That defendant carelessly, wilfully and deliberately without permits set out fires and did not extinguish the same, and fires occurred and escaped by its acts hereinbefore alleged, thereby destroying plaintiff's property on the fifteenth day of the month of September, 1929, in Clackamas county, Oregon".
In its answer in the federal court case the Union Lumber Company, Ltd., admitted that it was the owner of the land described in the complaint and that the LaDee Logging Company was allowed to operate and to log timber on its lands, "but only as an independent contractor". It further alleged that immediately upon the outbreak of the fire the LaDee Logging Company promptly and efficiently proceeded to fight the fire and was making progress in its control and extinguishment and would have had the fire under control and extinguished had it not been for the acts of a certain forest officer and ranger.
At the trial in the federal court case a certified copy of the complaint filed in the state case was introduced in evidence by the defendant and in referring thereto the court charged the jury as follows:
"There has been received in evidence as defendant's exhibit `S' a certified copy of a complaint filed in the circuit court of the state of Oregon for Multnomah county. You are to consider the allegations in this complaint only in determining whether the statements contained therein are inconsistent with plaintiffs' evidence here, and as affecting the credibility of plaintiffs' evidence". *Page 449
The Union Lumber Company, Ltd., also introduced in evidence the contract between it and the LaDee Logging Company. In referring to the LaDee Logging Company the federal judge instructed the jury as follows:
"LaDee Logging Company was an independent contractor, and the defendant can not be held for its negligence, if any, in conducting its logging operations. As an example, the defendant would not be liable for the negligence of the logging company in handling its locomotives or cars while engaged in logging, or in the falling of trees, or in the hauling of logs, or in doing any other thing in connection with its logging operations. If there was an agency between the defendant and the logging company, it was a special agency, and had relation only to the fighting and prevention of fires, as I have instructed you. * * *.
"If the relation of principal and special agent existed between the Union Lumber Company and the LaDee Logging Company under the instructions I have given you, and if the defendant and its special agent jointly committed the negligent acts set forth in the amended complaint here, the plaintiffs would have a joint and several action against these companies, but they would be entitled to one recovery only".
In denying the motion for a new trial, Judge McNary stated as follows regarding the relationship existing between the Union Lumber Company, Ltd., and LaDee Logging Company:
"The LaDee Logging Company was an independent contractor, as by its agreement with the defendant it had the right to hire and discharge employes, and the privilege of determining the manner in which the work was to be done. In fact, the defendant was interested only in the final results.
"Under such an agreement, the contractor alone is answerable for injuries happening to third parties in the prosecution of the work". *Page 450
Both actions (state court and federal court) were based upon two theories: the violation of a statutory duty, and common-law negligence. This was recognized by the federal judge who so instructed the jury, and by the circuit judge in his written opinion.
Section 42-421, Oregon Code 1930, sets forth the statutory duty of both the Union Lumber Company, Ltd., owner of the land, defendant in the federal court case, and the LaDee Logging Company, defendant in this case, in the following language:
"Every one (by which is meant every person, firm or corporation) engaged in logging or wood cutting, or permitting logging or wood cutting upon his lands in this state, thereby creating a fire hazard, shall, unless relieved by the state forester, each year remove such hazard by burning his annual slashing, by which is meant the tops and inflammable refuse left after logging or wood cutting, that may carry fire or cause it to spread, at such time and in such manner and with such provisions of help as shall afford all necessary precaution against the spread of fire to other property. Any and all such burning during the closed season shall be done in accordance with the provisions of section 9 of this act".
In charging the jury in the federal court case relative to the statutory duties of the defendant in that case, Judge McNary said:
"The complaint charges the defendant with a violation of certain statutory duties as follows:
"`Defendant allowed, suffered and permitted on its said forest and timber lands in the county of Clackamas and state of Oregon, and in township four (4) south of ranges five (5) and six (6) east of Willamette Meridian, slashing, brush, debris and inflammable materials to accumulate on its said land and remain thereon a constant fire menace and danger without protection and removal in September, 1929'". *Page 451
All or practically all of the other allegations in that case concerning defendant's negligence, with the exception of the allegation as to setting fires, were characterized by the federal court in its instructions to the jury as relating to common-law negligence.
The duty imposed by the statute is mandatory on both the owner, the Union Lumber Company, Ltd., and the logger, the LaDee Logging Company. The Union company, having permitted the LaDee company to log its lands, could not have escaped liability for failure to obey the mandate of the statute, regardless of whether the LaDee company was its agent or an independent contractor, and regardless of whether or not the condition existing on the land, and prohibited by statute, was brought about by or resulted from the acts of the logging company.
Since the plaintiffs have litigated, or could have litigated in the federal court case against the Union Lumber Company, Ltd., all questions involving the breach of a duty imposed by statute upon both the owner of the land and the company engaged in logging it, ought they again to be permitted to litigate the same questions in this case? We think not.
According to the evidence, the LaDee company undertook, at the request of the Union company, the defense in the federal court case. It procured the witnesses, paid them their fees and paid the expenses connected with the defense of the case, with the possible exception of the fees of the attorneys representing the Union company. Had judgment been rendered against the defendant in that case based upon the breach of any duty imposed by statute upon the logging company, the latter company under its contract with the owner of the timber land would have been obligated to pay the same. *Page 452
The bar to further litigation as to this aspect of the case is based more upon the ground of estoppel because of public policy than upon the doctrine of res judicata.
In the case of McNamara v. Chapman, 81 N.H. 169 (123 A. 229, 31 A.L.R. 188), the question arose as to the right to maintain an action against an employee who had caused the accident by his negligent operation of an automobile, after a judgment had been recovered by the identical plaintiff against the employer for the same accident. At the time the question arose the judgment remained unsatisfied. In referring to the fact that the judgment against the employer was a bar to the action instituted against the employee, the court said:
"The leading case on the subject is Emery v. Fowler, 39 Me. 326, 63 Am. Dec. 627. It holds that a judgment in favor of the employer is conclusive in a subsequent suit against the servant. While it is possible to distinguish it upon the ground that it involved suits for trespass to real estate, it has generally been treated as authority in cases involving other classes of torts. Freeman, Judgm. § 179; Black, Judgm. § 579. Attempts have been made to sustain these and other decisions upon grounds of privity and estoppel, but they do not satisfy the generally accepted tests. Lamberton v. Dinsmore, 75 N.H. 574, 78 A. 620.
"The underlying reason which has moved the courts in these matters is nowhere better stated than in Atkinson v. White,60 Me. 396, 397. `That the question involved in each suit is precisely the same, and to be proved by the same testimony, is beyond a doubt. It is equally clear that the plaintiff is the same, and that he has had his day in court. He has had a full hearing upon the law and fact involved in the very question he now proposes to try again in another suit. He has had every privilege the law allows him, unless he is *Page 453 entitled to another hearing simply because he is now attempting to enforce his claim against another defendant in name, indeed, but the same in interest'".
The case of Brown v. Wabash Railway Company, 222 Mo. App. 518 (281 S.W. 84), was an action for damages against the initial railroad carrier. Prior to the institution of that case the same plaintiffs had prosecuted an action for the same damages against a connecting carrier, which resulted in a judgment in favor of the defendant, and this judgment was pleaded as a bar to the maintenance of the second action. The federal statute provided that either the initial or the connecting carrier might be sued. The court, holding that the judgment in favor of the connecting carrier was a bar to the maintenance of the second action, said:
"Plaintiffs elected to sue the connecting carrier for damages caused by it, which they had a perfect right to do. Plaintiffs insist that there was no privity between the two railroad companies, and therefore the former judgment is not a bar to that part of the present cause of action seeking to recover damages done by the connecting carrier, the Illinois Central Railway Company. There may not have been privity between the two carriers within the strict technical meaning of that term, and, while the general rule is that a judgment is conclusive only as between the parties to an action and their privies, there are exceptions to the rule. In Taylor v. Sartorious, 108 S.W. 1089, 1094,130 Mo. App. 23, 40, the court said:
"`The question of who is concluded by a judgment has been obscured by the use of the words "privity" and "privies," which in their precise technical meaning in law, are scarcely determinative always of who is and who is not bound by a judgment. Courts have striven sometimes to give effect to the general doctrine that a judgment is only binding between parties and privies, by extending the signification of the word *Page 454 "privies" to include relationships not originally embraced in it; whereas the true reason for holding the issue res judicata, does not necessarily depend on privity, but on the policy of law to end litigation by preventing a party who has had one fair trial of a question of fact, from again drawing it into controversy'. * * *
"The Illinois Central Railway would not be able to set up the judgment in its favor in the suit by plaintiffs as a bar to the right of the Wabash Railway to recover against it, if the Wabash Railway had no notice of the former suit, and no opportunity to defend it. It is quite apparent that, in so far as the damage done on the line of the Illinois Central Railway is concerned, the question involved in the two suits is precisely the same; the plaintiffs, of course, are the same. They have had a full hearing upon the law and facts involved and the very question that they now propose to try again in another suit, and we think they ought to be barred under the maxim of interest rei publicae ut sitfinis litium".
In the case of Bailey v. Sundberg, 49 Fed. 583, the question arose as to whether or not a dismissal on the merits of a libelin rem for a collision rendered the question res judicata as against a subsequent libel in personam against the master of the boat. In the libel in rem, the master, although not a formal party, took an active part in the defense. The court, after discussing the general rule that there can not be an estoppel which is not mutual, said:
"He was the agent of the owner of the steamship in the alleged trespass which was the cause of action asserted by the owners of the schooner; and the decree necessarily determined that he, as well as his principal, was innocent of the imputed wrong. Upon principle, all those who have litigated that question ought to be precluded, as against one another, from litigating it again. `Justice requires that every cause be once *Page 455 fairly and impartially tried; but the public tranquillity demands that, having been once so tried, all litigation of that question, between those parties, should be closed forever.' 1 Greenl. Ev. § 522. The owners of the schooner, having chosen to test their right against the principal, and having had their day in court, ought to be precluded from testing it again on the same issue against the agent. Emma Silver Mining Co. v. Emma Silver Mining Co., 7 Fed. Rep. 401. It was held in Emery v. Fowler, 39 Me. 326, in a carefully considered opinion by the supreme court, that a party is not permitted to bring an action against a principal for an alleged trespass, and, after failing upon the merits, to subsequently bring one against the servant who acted by the order of the principal, and rely upon the same acts as a trespass. The court said:
"`In such cases the technical rule that a judgment can only be admitted between the parties to the record, or to their privies, expands so as to admit it when the same question has been decided and judgment rendered between parties responsible for the acts of others'".
In 34 C.J., at page 977, is the following statement:
"One who assists in the prosecution or defense of an action in aid of some interest of his own, and who does this openly to the knowledge of the adverse party, is as fully entitled to avail himself of the judgment as an estoppel as he would be if he had been a party to the record".
The LaDee company in the federal court case not only undertook the defense but did so openly and to the knowledge of the plaintiffs.
Freeman on Judgments (5th Ed.), § 432, says:
"Persons though not nominal parties may, by active and open participation therein, so connect themselves with litigation in which they are interested that the result is res judicata for or against them. Thus *Page 456 whenever one has an interest in the prosecution or defense of an action, and he, in the advancement or protection of such interest, openly takes substantial control of such prosecution or defense, the judgment, when recovered therein, is conclusive for and against him to the same extent as if he were the nominal as well as the real party to the action".
The same principle is also recognized in the case of Souffrontv. La Compagnie des Sucreries, 217 U.S. 475, 487 (30 S. Ct. 608,54 L. Ed. 846), where it is thus stated:
"The case is within the principle that one who prosecutes or defends a suit in the name of another to establish and protect his own right, or who assists in the prosecution or defense of an action in aid of some interest of his own, and who does this openly to the knowledge of the opposing party, is as much bound by the judgment and as fully entitled to avail himself of it as an estoppel against an adverse party, as he would be if he had been a party to the record. Lovejoy v. Murray, 3 Wall. 1".
Courts, in considering the right of a defendant not a party to an action to urge the judgment therein as a bar to a similar action brought against him by the same plaintiff, seem to place particular stress on whether or not the person sued could, as a matter of right, have appeared and made a defense in the former action. This matter is referred to in the case of Bigelow v. OldDominion Copper Co., 225 U.S. 111 (32 S. Ct. 641, 56 L. Ed. 1009, Ann. Cas. 1913E, 875), involving the right of a defendant to plead as a bar a judgment rendered in another court in favor of a joint tort-feasor, in the following language:
"Bigelow could not have appeared as of right and made a defense to that suit. No judgment can be regarded as res judicata as to any matter where the *Page 457 rights in the subject matter arise out of mutuality, and not by succession, unless the party could, as a matter of right, appear and defend, even though he may have had knowledge of the suit. Otherwise, he might be bound by a judgment as to which he had never had the opportunity to be heard, which is opposed to the first principles of justice".
In referring to the justice of the doctrine of res judicata, the Supreme Court of the United States in the case of Hart SteelCompany v. Railroad Supply Company, 244 U.S. 294 (37 S. Ct. 506,61 L. Ed. 1148), made the following observation:
"This doctrine of res judicata is not a mere matter of practice or procedure inherited from a more technical time than ours. It is a rule of fundamental and substantial justice, `of public policy and of private peace,' which should be cordially regarded and enforced by the courts to the end that rights once established by the final judgment of a court of competent jurisdiction shall be recognized by those who are bound by it in every way, wherever the judgment is entitled to respect. Kessler v. Eldred, 206 U.S. 285".
Since the plaintiffs herein have had their day in court so far as the issues involved herein pertaining to the statutory duty of both the defendant in the federal court case, the Union Lumber Company, Ltd., and the defendant herein are concerned, public policy demands that they be not permitted to litigate these issues a second time, and so far as these issues are concerned the plaintiffs are estopped from again litigating them. The plaintiffs have once had a full and fair trial as to these matters, unaffected by the relationship existing between the owner of the land and the logging company.
In so far as the complaint may contain charges of violation of a common-law duty imposed upon the *Page 458 owner of the land, regardless of who is occupying or using the same, to exercise reasonable care and diligence to prevent the spread and escape of fires which break out thereon, the same rule of law applies as in the case of the violation of a statutory duty.
Another question, however, is involved. The complaint charges common-law negligence on the part of the defendant, which could not be the basis of an action against the Union Lumber Company, Ltd., except on the theory that the logging company was its agent or representative. Had the defendant in the federal court case admitted that the LaDee Logging Company in its logging operations and occupancy of the land was the agent of the Union company, and that the Union company was chargeable with the negligent acts of the logging company, our decision relating to these charges of common-law negligence would not differ from our conclusions already announced with reference to the violation of the duty imposed on both the owner and the logging company by statute.
Reference has already been made to the fact that the contract between the owner of the land and the logging company provided that the logging company should not "be deemed to be the agent or representative of the owner in the conduct" of operations under the contract, and that when the LaDee Logging Company was notified in writing by the Union company to take charge of the defense in the federal court case the attention of the LaDee company was directed to the provision of the contract that it should "not be deemed to be the agent or representative of Union Lumber Company, Ltd." Consideration has also been given to the fact that the complaint in the state court case was introduced by the defense in the federal court case. *Page 459
In its answer to the complaint filed against it in the federal court the Union Lumber Company, Ltd., denied that the LaDee Logging Company was its agent and alleged that the logging company was an independent contractor. It also alleged "that no agent or representative of this defendant was present upon the property described in the complaint or upon any of the property of the defendant in township 4 south of range 5 east of the Willamette Meridian at the time when the said fire started", although it freely admitted during the trial that the LaDee company was present on the property at the time the fire started.
This defendant's alleged negligent acts as an independent contractor, based on common-law negligence, in so far as they consist of acts for which the Union company could not have been liable, were not an issue in the federal court case, and plaintiffs are entitled to a fair and full hearing on the merits as to these allegations. To deny them this right would be to deprive them of the constitutional guaranty that "every man shall have remedy by due course of law for injury done him in his person, property or reputation".
The insistence of counsel in charge of the defense in the federal court during the entire trial of that case that the LaDee Logging Company was an independent contractor and that the Union Lumber Company, Ltd., was not responsible for its negligent acts was for a definite purpose: i.e., to relieve the Union Lumber Company, Ltd., of responsibility for the damage, if any, caused solely by the logging company. The introduction in evidence, in the federal court case, of the complaint in this case was without question for the purpose of showing that the plaintiffs in the federal *Page 460 court case had also brought an action against the LaDee company, claiming that the negligence of the logging company had caused the damage for which they were then suing the Union company in the federal court. If counsel for the defendant in this action had charge of the defense in the federal court case, as they now contend, it must have been at their suggestion or at least with their knowledge and acquiescence that these contentions were made, and they should not at this time be heard to say that they were not successful in creating the impression which they sought to convey, or that their contention that the LaDee Logging Company was an independent contractor was ineffective.
The judgment in the federal court case is not res judicata as to the issues relating to the common-law negligence of this defendant, for which the Union Lumber Company, Ltd., was not answerable, nor is there any valid reason for holding that that judgment is a bar, on grounds of public policy, so far as this feature of the case is concerned. Therefore, the lower court erred in holding that the judgment in the federal court case was a bar to the maintenance of this action as to this feature of the case.
One other question is raised on this appeal by the appellants, to wit: that after Judge Ekwall had sustained the motion to strike defendant's supplemental answer setting forth the judgment in the federal court as a bar to the maintenance of this action, the same question could not again be raised by the defendant in the lower court by filing an amended supplemental answer. But the only objection which seems to have been made to the filing of this pleading was contained in a document filed by the plaintiffs and designated, "Objections and Reply to Amended Supplemental *Page 461 Answer", wherein it was alleged that this amended pleading was "contrary to and against the permission" given by the judge in chambers. No ruling of the lower court relative to the filing of this amended supplemental answer is assigned as error. Moreover, a stipulation was entered into between the parties, reading as follows:
"It is hereby stipulated, by and between the parties hereto, that in view of the fact that there is tendered an issue of fact and law raised by the affirmative defense of former adjudication in the federal court and it is the desire of all parties to submit this question of fact and law to the court in the first instance and have that issue submitted and terminated by findings of fact by the court preliminary to the submission of other questions of fact to the jury, and it appearing that by so doing much record may be eliminated and in case a review is had less printing will be found necessary, the court is to hear such evidence as the defendant may produce upon the question of former adjudication and in that respect the record of the federal court may be used and such evidence, oral or written, as may be necessary to establish the relation of the defendant LaDee Logging Company to the action in the federal court and the record upon which reliance is had for a former adjudication, and such findings of the court shall be considered and be given the same effect as if the questions were heard and the court's order made upon the trial of the cause.
"And it is further stipulated and agreed that the record so made at this preliminary hearing upon the one issue of former adjudication may be utilized in a court of review without the necessity of printing".
This assignment of error is therefore without merit.
For the reasons stated, the judgment of the circuit court is reversed and the cause is remanded for further proceedings not inconsistent with this opinion.
RAND, C.J., BEAN and CAMPBELL, JJ., concur. *Page 462