Abbott v. Bobs U Drive

352 P.2d 598 (1960)

Facts

In April 1952, plaintiff Abbott leased premises to Robert E. Thompson for operating an automobile 'U-Drive' business and automobile leasing business, with the lease including a provision requiring arbitration of any controversies arising from it.

Thompson incorporated defendant Bob's U-Drive in February 1953 and defendant Continental Leasing Company in October 1953, with Thompson as president and manager of both, owning fifty percent of each corporation's stock. Bob's U-Drive handled short-term automobile rentals, while Continental managed long-term leases, but both operated from the leased premises without strict segregation, sharing an office and sometimes blurring records.

In August 1954, Thompson assigned his entire interest in the lease to Bob's U-Drive in writing, but no assignment was made to Continental, though it continued occupying and using the premises.

A controversy arose regarding the defendants' performance under the lease terms, including rental payments based on the number of cars owned. On April 22, 1957, plaintiff filed a petition under ORS 33.210 et seq. to compel arbitration, with an amended petition filed in July 1957.

At the circuit court hearing, Bob's U-Drive indicated willingness to arbitrate, leading to a focus on Continental, which contested the petition for lack of a written arbitration agreement. The court ordered Continental to arbitrate but entered no such order for Bob's U-Drive. An arbitration board awarded plaintiff $2,938.88. Both defendants objected to the judgment on various grounds, but the court overruled them and entered a joint and several judgment against defendants on July 8, 1958.

Defendants appealed the judgment, challenging jurisdiction over Bob's U-Drive due to alleged dismissal, procedural compliance, Continental's obligation to arbitrate without a written assignment, and the joint and several nature of the judgment.

Analysis

Issue #1

Issue

Did the circuit court lose jurisdiction over Bob's U-Drive due to the alleged dismissal of the petition as to it?

Legal Rule

An order directing arbitration is not essential if a party willingly submits to arbitration pursuant to a written agreement. A party that participates in arbitration and subsequent proceedings submits to the jurisdiction of the arbitrators and the court.

Rule Analysis

The record showed that Bob's U-Drive expressed willingness to arbitrate and participated in the arbitration proceedings, making a general appearance before the board and the circuit court by filing objections to the judgment.

Even if interpreted as a dismissal, this participation constituted submission to jurisdiction, as the so-called dismissal was merely a discontinuance of coercive proceedings given Bob's U-Drive's agreement to arbitrate voluntarily.

Conclusion

No, the circuit court did not lose jurisdiction over Bob's U-Drive. Bob's U-Drive submitted to the jurisdiction by participating in the arbitration and court proceedings.

Issue #2

Issue

Was jurisdiction lacking due to failure to follow statutory procedures, such as delivering the arbitration agreement to the county clerk, proving service of the award, and disclosing the arbitrators' oath?

Legal Rule

Under ORS 33.310, the written arbitration agreement must be delivered to the county clerk, but substantial compliance suffices if the agreement is part of the court record. Service of the award on counsel is sufficient. A recital in the award that the oath was taken under ORS 33.260 is presumed true absent contrary evidence.

Rule Analysis

The lease containing the arbitration agreement was part of the petition before the court, satisfying the requirement despite no separate delivery to the clerk.

Proof of service on defendants' counsel met the requirement for service of the award.

The award recited that the arbitrators took the required oath, and with no evidence to the contrary, this recital was presumed true.

Conclusion

No, jurisdiction was not lacking due to procedural failures. The statutory requirements were sufficiently met or presumed satisfied.

Issue #3

Issue

Could Continental Leasing Company be compelled to arbitrate without a written assignment of the lease containing the arbitration clause?

Legal Rule

Possession of leased premises and payment of rent by a non-lessee creates a presumption of an implied assignment of the lease. Covenants that 'touch and concern' the land, such as arbitration of lease disputes, run with an implied assignment. The 'touch and concern' test examines if the covenant affects the parties' legal relations as landowners.

Rule Analysis

Continental's possession of the premises and payment of rent, alongside Bob's U-Drive, created a presumption of co-assignment of the lease, even without a written assignment.

The arbitration covenant touched and concerned the land as it related to rental payments under the lease, binding assignees similarly to express assignments.

Additionally, the confused operations of the corporations justified treating them as one entity, with the assignment to Bob's U-Drive inuring to Continental.

Conclusion

Yes, Continental could be compelled to arbitrate. Continental was bound as a co-assignee under an implied assignment, and the arbitration covenant ran with the lease.

Issue #4

Issue

Did the trial court err in entering a joint and several judgment against the defendants?

Legal Rule

Objections to the form of a judgment, such as whether it should be joint, several, or joint and several, must be raised in the trial court or are waived on appeal.

Rule Analysis

The record on appeal lacked the arbitration transcript, but defendants failed to object to the form of the judgment in the trial court.

This failure waived the objection, preventing challenge on appeal even if the form was incorrect.

Conclusion

No, the trial court did not err in entering a joint and several judgment. Defendants waived any objection to the judgment's form by not raising it below.

Additional Opinions

Duncan, J. (pro Tempore): Dissent

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