Ketcham v. Selles

772 P.2d 419, 96 Or. App. 121
CourtCourt of Appeals of Oregon
DecidedApril 12, 1989
Docket81-653-CV, 86-679-CV CA A42920 (Control), CA A43495
StatusPublished
Cited by9 cases

This text of 772 P.2d 419 (Ketcham v. Selles) is published on Counsel Stack Legal Research, covering Court of Appeals of Oregon primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ketcham v. Selles, 772 P.2d 419, 96 Or. App. 121 (Or. Ct. App. 1989).

Opinions

[123]*123DEITS, J.

Plaintiff Ketcham and intervenor appeal the trial court’s allowance of defendant Selles’ motion to offset judgments and motion to dismiss, its denial of intervenor’s motion to intervene and its denial of plaintiffs and intervenor’s motion to dismiss and requests for trial. We affirm.

In April, 1981, defendant obtained a money judgment against plaintiff in an unrelated case (the 1981 judgment). That judgment remained unsatisfied. In September, 1985, plaintiff obtained a money judgment against defendant in the present case (the 1985 judgment). Before the 1985 judgment was rendered, plaintiff assigned to his attorneys (intervenor in this case), all proceeds collected on any future judgments in a number of specified cases, including the present case. The assignment was consideration for intervenor’s legal services. Intervenor took the assignment with knowledge of the unsatisfied 1981 judgment that defendant held against plaintiff. In October, 1985, intervenor filed a notice of assignment and a notice of attorney’s lien on the proceeds from the 1985 judgment.

Defendant appealed the 1985 judgment. After this court issued a decision affirming the 1985 judgment, 81 Or App 445, 725 P2d 950 (1986), but before that decision became a final judgment under ORS 19.190, defendant filed a post-judgment motion to compel satisfaction of judgment through setoff of the 1981 and 1985 judgments. After defendant filed the motion, plaintiff and intervenor filed a declaratory judgment action to determine defendant’s right to setoff. After the 1985 judgment became final, plaintiff moved the trial court to dismiss defendant’s motion to compel setoff or, in the alternative, a request for trial. After the first day of the hearing on the motion to compel setoff had been held, intervenor filed its motion to intervene. The trial court denied the motion to intervene, the motion to dismiss and the request for trial and allowed defendant’s motion to compel satisfaction through setoff. The court in the declaratory judgment case subsequently allowed defendant’s motion to dismiss. Plaintiff and intervenor appeal those actions.

Plaintiff and intervenor first assign as error the trial court’s allowance of defendant’s motion to compel satisfaction through setoff. They argue that Oregon does not recognize a [124]*124post-judgment right to offset judgments when the party asserting the right fails to plead setoff as an affirmative defense. We disagree. Although offsetting one judgment against another is not a matter of right, the court, in the exercise of equitable power, may do so. Hartford Accident v. Pyle, 271 Or 97, 530 P2d 843 (1975). The statutes do not require, nor have we held, that setoff must be pled as an affirmative defense.

Plaintiff and intervenor argue that Parker v. Reid, 127 Or 578, 582, 273 P 334 (1928), requires that setoff be pled as an affirmative defense. However, in Parker, the judgment debtor was seeking to offset mere claims that he held against the judgment creditor. Here, the judgment debtor, defendant, has an existing, unsatisfied judgment against his creditor, plaintiff. This is a significant distinction because, when the judgment debtor holds only a claim against the judgment creditor, post-judgment setoff is inappropriate because the judgment creditor has not been given an opportunity to assert any defenses he may have to the judgment debtor’s claims. However, when the judgment debtor holds an unsatisfied judgment against the judgment creditor, the judgment creditor presumably has had an opportunity to be heard.1 Accordingly, the fact that defendant in this case did not assert the right to setoff as an affirmative defense to plaintiffs action does not bar him from obtaining a post-judgment order to compel satisfaction by setoff.

Plaintiff and intervenor next argue that setoff in this case is inappropriate because there is no “direct nexus” between the 1981 judgment and the 1985 judgment. They argue, relying on Delaney v. Georgia-Pacific, 42 Or App 439, 601 P2d 475 (1979), rev den 288 Or 519 (1980), that a court’s ability to declare a setoff of judgments is limited to situations where both judgments arise out of the same case as a result of a partial remand. We disagree. Our holding in Delaney was dependent on the unique circumstances of that case. In Delaney, the trial court dismissed the plaintiffs claims against [125]*125the defendant and awarded him a money judgment on his counterclaim. On appeal, the Supreme Court affirmed the judgment on the counterclaim, but reversed and remanded the dismissal of the plaintiffs claims. On remand, the trial court awarded the plaintiff a money judgment. The defendant then sought to collect the judgment that he had obtained on his counterclaim and the interest that had accrued from the date that the original judgment was entered. In an effort to eliminate disparities in both the rate and time of accrual of interest on the two judgments, the plaintiff argued that the judgment obtained on remand should be automatically offset against the defendant’s judgment as of the date the judgment was entered in the first trial. The plaintiff was essentially arguing that the actions were so interrelated that the judgments should share a single date of entry. Under the circumstances of that case, we held that there had to be a “direct nexus” between the two judgments in order to allow a setoff. Delaney v. Georgia-Pacific, supra, 42 Or App at 457.

Here, defendant does not seek a retroactive setoff of judgments. Rather, he asks only that the present balances of both judgments be offset. In such a case, the lack of a direct nexus between judgments should not preclude the court from exercising its equitable power to allow a setoff.

Plaintiff and intervenor next argue that setoff should have been denied in this case because intervenor’s interest obtained through the assignment of judgment by plaintiff must be given priority over defendant’s right of setoff. They also argue that Hartford Accident v. Pyle, supra, governs this case, and that applying the factors identified as pertinent in Hartford Accident dictates that setoff should not be allowed.2 [126]*126We do not agree.

As recognized in Hartford Accident, whether the assignment of a judgment precludes a setoff of that judgment depends upon “principles of equity and justice under the circumstances then attendant.” 271 Or at 100. The factors identified by the court in Hartford Accident were identified as issues which “have been considered important by courts in disposing of like problems.” These factors were not presented as absolute standards that are subject to a mechanical application in each case. Rather, the significance of each depends upon the particular circumstances of each case. For example, the first factor identified by the court in Hartford Accident is whether both judgments were in existence when the assignment was made. In most circumstances, that would be an important consideration because, generally, an assignee of a judgment takes subject to all defenses, legal or equitable, that were available to the judgment debtor as against the assignor. Parker v. Reid, supra, 127 Or at 582. Consequently, when both judgments exist at the time of assignment, the assignee takes subject to the right of setoff assertable against the assignor.

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Ketcham v. Selles
772 P.2d 419 (Court of Appeals of Oregon, 1989)

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Bluebook (online)
772 P.2d 419, 96 Or. App. 121, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ketcham-v-selles-orctapp-1989.