Opinion
No. 23717
Decided May 10, 1933.
Pleading — Omission of material allegation in petition, supplied by denial in answer — Judgment not reversed for absence of pleading or allegation, when — Judgment on agreed verdict for personal injuries vacated — Fraud and collusion between claim agent and plaintiff's attorney.
1. Where a defect in a petition, to which no motion nor demurrer has been filed, consists in the omission of a material allegation, but the defendant's answer supplies such allegation by a denial of the omitted averment, and no reply is filed, and both parties ignore the absence of a reply, and at the trial offer testimony upon the issue raised in the defendant's answer, the defendant has not been prejudiced by the absence of such allegation or by the absence of such pleading, and a judgment rendered after trial upon such issue will not be reversed by this court upon error proceedings.
2. A petition was filed against an interurban traction company, praying for the vacation of a judgment for personal injuries theretofore rendered against such traction company, upon the ground that such judgment was entered upon an agreed verdict through fraud of the attorney for the plaintiff in such personal injury suit. The record showed that the plaintiff had refused to authorize such settlement and was absent from court at the time of the rendition of such agreed verdict, and that a release which had been submitted to such plaintiff, prepared by the defendant traction company, was never signed. The record also showed that the attorney for the plaintiff had notified the claim agent of the defendant company, several weeks prior to the rendition of such verdict and judgment, that his client refused absolutely to make a settlement upon the basis of the amount of such verdict and judgment, and notified such claim agent of such attorney's contract of employment as attorney in order that his fees might be protected. At the time of the entering of such agreed verdict the attorney filed an action on behalf of the husband of such client for loss of services, without authority from such husband, and drew an answer for such defendant company in the case filed on behalf of the husband, which answer was verified at the attorney's request by the secretary of such company, and entered an agreed verdict and judgment in such case filed ostensibly on behalf of the husband. Held: That the record contains ample evidence of collusion between such claim agent and such attorney, and that in such case, when the petition does not contain any allegation as to knowledge or collusion on the part of the defendant, but the answer asserts lack of knowledge that such attorney for such plaintiff was not authorized to negotiate such settlement, and asserts good faith, and where both parties ignore the lack of a reply, and upon trial introduce testimony upon such issue of knowledge, good faith and collusion, and the trial court finds that such judgment theretofore entered in such personal injury action was entered by fraud and irregularity and vacates such judgment, the defendant company has not been prejudiced by the lack of such allegations nor by the lack of such pleading, and such judgment of vacation of judgment will not be reversed by this court on error proceedings.
ERROR to the Court of Appeals of Summit county.
In this case an action was filed in the court of common pleas of Summit county, in which the petition was as follows:
"Now comes the plaintiff in the above entitled action and moves the court to vacate, set aside, and hold for naught a judgment heretofore entered in favor of this plaintiff on December 15th, 1927, against the defendant in case No. 57313, in the Court of Common Pleas, Summit County, Ohio.
"Plaintiff states to the court that said judgment was obtained by fraud in that one, Charles I. Parlett, who appeared as attorney for this plaintiff, represented to the court and jury that he was attorney at law for the plaintiff in said action, and duly authorized to represent her in making a settlement, and represented also to the, court that he had conferred with the client, plaintiff herein, and that she had consented to an agreed verdict of Twenty Seven Hundred Fifty Dollars ($2750.00) in full settlement of her claim against the defendant, The Northern Ohio Power Light Company, whereas in truth and in fact the said Charles I. Parlett had been hired by this plaintiff for the purpose of prosecuting her claim against the defendant herein, which was one for injury to her person and had been advised and directed by this plaintiff that her case should be tried and presented to a jury.
"That on December 12th, 1927, said cause was, during her absence and without her knowledge or sanction, presented to a jury, which by direction of court returned a verdict of Twenty Seven Hundred Fifty Dollars ($2750.00) without any evidence being adduced. That at the time, said cause was presented to jury this plaintiff was ill and unable to attend court and did not know that same would be presented to a jury for disposition and that her attorney, Charles I. Parlett, had been directed by this plaintiff that he should not go into court and take an agreed verdict.
"Plaintiff further says that the agreed verdict, as aforesaid, was insufficient and without authority, and rendered as aforesaid without being regularly assigned for hearing, and that the judgment on same should be vacated and said case assigned for hearing.
"Plaintiff further says that she has been advised that the said, The Northern Ohio Power Light Company, successors to the Northern Ohio Traction Light Company, has paid some money to the said Charles I. Parlett upon said pretended judgment, but this plaintiff says that she has not accepted any part of same and has advised the defendant that she would not accept it, and has signed no release and made no settlement.
"Wherefore, plaintiff prays that said judgment aforesaid may be set aside and held for naught and that the said case be placed on the active list for trial, and that she be restored to all things which she has lost by reason of said pretended judgment, and that she may be given such other and further relief as she may be entitled to in the premises."
The answer admitted the recovery of a judgment by the plaintiff against the defendant in the sum of $2750, in connection with a claim of the plaintiff against the defendant growing out of personal injuries received by the plaintiff, admitted the employment of one Charles I. Parlett, an attorney at law, by the plaintiff to represent her in connection with the handling of her claim, and admitted the payment to Charles 1. Parlett, as attorney for the plaintiff, of the sum of $2750 in full settlement and discharge of such claim and judgment, and the payment of costs. The answer further constituted a general denial of every other allegation, averment and statement contained in the petition, and contained the following additional allegations:
"By way of further defendant [defense] herein this defendant says that said claim of the plaintiff referred to in her petition was brought to the attention of this defendant by one Charles I. Parlett, an attorney at law and a member of this bar, who represented to the defendant that he was attorney for said plaintiff, duly authorized to represent her in connection with said claim, with full power and authority from said plaintiff to negotiate a settlement thereof.
"This answering defendant relying upon the representation of the said Charles I. Parlett, as aforesaid, and having no knowledge to the contrary and believing said representation to be true, negotiated a settlement with said Charles I. Parlett of plaintiff's claim and agreed to pay in full settlement thereof the sum of $2,750.00 which the said Charles I. Parlett agreed to receive and which he did receive."
No reply was filed to the answer.
A hearing was actually held in the case in March, 1930, before the court of common pleas of Summit county, but the case was continued from time to time until June 19, 1931, at which time an amended answer was filed, which in substance reiterated the statements made in the original answer, including the statement that the defendant in agreeing to pay the sum of $2,750 in controversy relied upon the representation of Charles I. Parlett that he as attorney for the plaintiff had full power and authority from the plaintiff to negotiate a settlement of the case, and that the defendant, "having no knowledge to the contrary and believing said representations to be true," thereafter paid to the clerk of the court of common pleas of Summit county such sum, together with costs of the action. The amended answer further asked that Charles I. Parlett and James A. Dillian, clerk of the court of common pleas of Summit county, be made parties defendant in the case. A motion was also filed asking that Charles I. Parlett and James A. Dillian be made parties defendant. This motion was denied. No reply was filed to the amended answer.
The court heard the case upon "the petition, the answer and the evidence," found that the judgment theretofore entered on December 15, 1927, in such personal injury action, was entered and obtained by fraud and irregularity, set aside the judgment, and ordered the case regularly assigned for trial. The Court of Appeals of Summit county affirmed this judgment.
The case comes into this court upon allowance of motion to certify the record.
Mr. R.H. Nesbitt, for plaintiff in error.
Mr. Carl M. Myers, for defendant in error.
It is not necessary to discuss the personal injury action filed by Texanna C. Smith out of which the judgment arose which was set aside upon the ground of fraud by the trial court in the instant case, except to state that in that action it was alleged in substance that Texanna C. Smith had suffered a serious and permanent injury while riding on one of the street cars of the Northern Ohio Power Light Company.
Mrs. Smith signed a written contract of employment with Charles I. Parlett to represent her as attorney in pressing this claim, and it was he who filed the suit against the company for damages. After Parlett's employment one Giltner, claim agent for the Northern Ohio Power Light Company, offered Mrs. Smith $2,500 in settlement, and subsequently raised his offer to $3,500, $2,750 of which Parlett stated was supposed to be for Mrs. Smith and $750 for Joseph E. Smith, her husband, for his claim for loss of services of his wife.
Mrs. Smith's action was filed December 15, 1925. The verdict actually rendered upon December 12, 1927, in her case, was for $2,750, exactly the same amount as the last sum offered through Parlett by Giltner. The record tends to show that Mrs. Smith at no time authorized a settlement at that figure, and always stated that she would not settle at anything like that figure. The record contains considerable testimony on the part of Mrs. Smith, her husband, her mother and a certain John Halderman, a disinterested witness, tending to show that on December 9, 1927, when the case was on the active list, of which fact she had actual notice, owing to physical disability Mrs. Smith was unable to be present in court. Halderman testified that he presented Parlett with a doctor's statement relative to her illness. While Mrs. Smith had been notified by Parlett that the case was on the active list, the record shows that she did not have actual notice of the day when the case was finally called for hearing, which was December 12, 1927. However, an agreed verdict was entered in her absence, and because of the judgment rendered on this verdict, paid to Parlett and never accepted nor received by Mrs. Smith, the instant action was filed, praying to set aside this judgment on the ground of fraud.
Two questions of moment are raised in this error proceeding.
1. It is maintained by counsel for plaintiff in error that there is no evidence of knowledge or collusion on the part of the Northern Ohio Power Light Company in the entering of the agreed verdict in the personal injury action, nor of knowledge that it was unauthorized by Texanna C. Smith. The record does not show knowledge on the part of the attorneys for the company, but it does show knowledge upon the part of the claim agent, and hence knowledge upon the part of the company, and in fact it warrants a finding of collusion.
The petition charges the absence of the client from court at the time that the agreed verdict was returned and the record shows that the defendant was represented in court by counsel at that specific time. No written authority from Mrs. Smith to enter the verdict is claimed to have been offered in evidence. Hence the absence of Mrs. Smith and the absence of any written sanction from her with reference to this agreed verdict were within the knowledge of the defendant company.
The record shows that upon November 1, 1927, Parlett wrote the chief claim agent of the company as follows:
"With reference to the case of Texanna C. Smith against The N. O. P. L. Company, I have had the parties in this morning and they refuse absolutely to make a settlement of their case in the sum of $3,500 and have ignored my recommendations in the matter.
"At this time I wish to advise you that I have a contract with Mrs. Texanna C. Smith, covering her case, in writing, which provides that I shall receive for my fee, one-third of the amount recovered, this contract being on a contingent fee basis. In addition to that there is some expense which has been contracted by me in the cost of the preparation of the case of approximately $200.00.
"I am notifying you of this contract in order that my fees be protected in case a settlement is made. The probabilities are that she will employ some attorney in an effort to get a larger sum of money and my position is that inasmuch as I have secured what, in my judgment, was a favorable offer of settlement for her and her husband that my fee is earned."
An italicized notation appears in the record at the end of this letter, which is as follows:
"Parlett explained further over the phone that he did not feel kindly toward Mrs. Smith. He did not discuss a division with her and her husband. He says case is worth no more because he cannot prove unconsciousness at time of accident. He feels mastoid condition is chronic and not due to accident — at least entirely. JWG."
This letter was in the possession of the claim agent at the time of the appearance of the company in court for the purpose of entering the agreed verdict.
The record contains a letter written by Mrs. Smith to Charles I. Parlett, dated December 3, 1927, which reads as follows:
"Please be advised I am confined to my home indefinitely on account of my head condition and under orders that I must not risk going out until same has entirely healed. Everytime I go out have an attack, so you will have to postpone the case until I can get out without detriment.
"Sorry this happens but since Sept. 1st have been out mighty little. Sure would like to get this over with. But when I was going and ready to try they postponed on account of a convention, so surely one's life is more than a convention and the Doctor says I am flirting with Eternity and have been every time I went with an attack.
"Have never had any consideration since I have been injured but am at the place I am forced to demand it.
"If you doubt my word shall be pleased to furnish the necessary papers to sustain me in my statements.
"Have lost 3 yrs. salary................... $3,000
"On account of not being able to shop myself have spent.................. $1,500 extra
"Help ....................................... $1,500 paid
"Doctor's Bill so far ....................... $1,500
"Permanent injury to eye and ear
"4 operations
"2 more I fear to come
"You can see why this proposition is very unjust."
It is conceded by Parlett that no different instruction was ever given him by Mrs. Smith.
It is significant that while releases were supplied by Giltner and presented to Parlett to be executed by his client and by her husband, these releases never were executed. Parlett states that he notified Giltner that he probably could get no release. The company did not demand these releases at the time the verdict was taken, although two of counsel for the Northern Ohio Power Light Company were in the room at the time. This is of peculiar significance in view of the fact that it was the claim agent who was handling the case, a claim agent necessarily familiar with the fact that when a client has notified an attorney not to settle a case for a certain amount, she must have changed her mind in order for the attorney to be authorized to make a settlement for that precise amount.
It is also significant that while Joseph E. Smith, husband of Texanna C. Smith, had filed no suit for services prior to this time and denied in court that he had ever authorized Parlett to act for him, Parlett himself drew a petition in the case of Joseph E. Smith against the Northern Ohio Power Light Company at about the same time that the agreed verdict was taken. This petition was filed on December 12, 1927, on the same day that the agreed verdict was entered in the wife's case. The petition in the wife's case was filed in 1925. The petition in the husband's case was verified by Parlett as attorney, with the statement that he had personal knowledge of the facts, whereas he admitted on the witness stand that he had no such personal knowledge; that he relied merely on "investigation and interviews." Parlett himself drew the answer for the Northern Ohio Power Light Company in the husband's case, submitted it to Giltner, the claim agent for the company, and asked in effect that it be verified by the secretary of the company, who, as Parlett said in his letter, "generally executes your pleadings." Giltner testified that "supposedly" he did have the secretary of the company execute this answer. The petition, answer and reply in the husband's case were filed on the same day, December 12, 1927. Upon this same day an agreed verdict was entered against the Northern Ohio Power Light Company for $750 in favor of Joseph E. Smith, the exact sum which Parlett had stated was offered by Giltner to the husband and refused for that particular claim. Both judgments were paid to the clerk of the court upon December 15, 1927, three days after the agreed verdicts were rendered.
Parlett receipted for the payment of these judgments. The records of this court show that Parlett has since tendered his resignation to this court, and that his certificate entitling him to practice law was cancelled and annulled by this court June 1, 1932.
We think that the peculiar facts attending the taking of these two agreed verdicts, the absence of both Joseph E. Smith and Texanna C. Smith from court at the time, the drawing of an answer by Parlett for the Northern Ohio Power Light Company when he represented the husband as plaintiff, ostensibly, in that action, the absence of releases which had been submitted by the company for signature by the Smiths, together with the fact that Parlett had notified the company in November that the parties refused absolutely to make such a settlement, and that he notified the company of the contract in order that his "fees be protected," plus the fact that the agreed verdicts were rendered for the exact sum which Giltner had been notified would not be accepted, make out a distinct case of collusion between the claim agent and the attorney. The Northern Ohio Power Light Company allowed the court to believe that the amount of the verdict was satisfactory, having in its possession a letter notifying it that the amount was anything but satisfactory. This constituted a fraud upon the court, practiced, not only by Parlett, but colluded in by the company through its claim agent. Therefore the court did not err in holding that fraud was established under the record and in vacating the judgment.
We deem it unnecessary to consider the various technical questions raised with reference to Section 11631, General Code, for under the general equity power of the court, the statutory remedy in this state is not exclusive, but cumulative. The court had power under its general equity jurisdiction to set aside this judgment entered through fraud, irrespective of and unlimited by the provisions of Section 11631, General Code. Coates v. Chillicothe Branch of State Bank of Ohio, 23 Ohio St. 415; Darst v. Phillips, 41 Ohio St. 514; Michael v. American National Bank, 84 Ohio St. 370, at 380, 95 N.E. 905, 38 L.R.A., (N.S.), 220; Citizens Savings Bank Trust Co. v. Robison, Admx., 91 Ohio St. 421, 110 N.E. 1057, in which the judgment was affirmed on the authority of Darst v. Phillips, supra. These cases are cited with approval as recently as in the case of Christmann v. Coleman, 117 Ohio St. 1, 157 N.E. 482.
It is also stoutly maintained that the petition does not set forth a cause of action against this defendant. The petition does allege that the judgment was obtained by fraud practiced upon the court by one Charles I. Parlett, and that the case was during the absence of the plaintiff and without her knowledge or sanction presented to a jury. The petition makes no allegation of collusion, conspiracy or knowledge upon the part of the Northern Ohio Power Light Company. No demurrer was filed, and no motion to make more definite and certain.
Both in its answer and in the amended answer the defendant sets up that it relied upon Parlett's representation that he was duly authorized to represent the plaintiff in connection with such claim, and was fully empowered by her to settle such claim, that it had no knowledge to the contrary and believed such representation to be true. No reply was filed. Both parties ignored the absence of a reply, and tried the case upon the allegation of good faith, contained in the answer of the defendant, that it had no knowledge that the representation of Charles I. Parlett was false.
An objection was made at the outset of the trial to the introduction of any evidence, upon the ground that the petition did not state a cause of action, but counsel pointed out no specific ground of objection, and said he did not care to be heard on it.
The court stated: "Frankly, I have not read the petition. If that motion is made in seriousness, I must read the petition in order to intelligently pass upon it."
Counsel for the company then said: "I say to the court frankly that I have not had an opportunity to go into this matter very carefully myself. I am making the motion very largely as a matter of precaution."
We therefore have a situation in which while, technically speaking, the absence of a reply constituted the admission of the new matter alleged in the answer (Section 11329, General Code), the defendant did not treat this new matter as admitted, but treated it as controverted. Therefore it waived any objection arising out of the absence of a reply. Furthermore, by including the allegation of good faith and of want of knowledge in its answer, it supplied the material allegation of knowledge and collusion lacking in the petition, and cannot now, after the rendering of judgment, claim that the petition was defective. This is the long-established rule in the state of Ohio.
In the case of Dayton Ins. Co. v. Kelly, 24 Ohio St. 345, 15 Am. Rep., 612, it was held in the syllabus: "1. Where the defect in a petition to which a demurrer has been overruled consists in the omission to aver the performance of a condition precedent in the contract sued on, and it appears from the subsequent pleadings and record, that the defendant was not prejudiced thereby, the judgment will not be reversed."
The court, speaking of the pleadings, said at page 357: "If it were necessary to determine whether the facts stated in the petition are sufficient to constitute a cause of action, we would probably resolve the question in the negative. * * * Now, we are all agreed that the defects in the petition, whatever they be, were supplied by averments in the answer and reply: so that, upon the whole record, we find that the defects in the petition did not affect any substantial right of the defendant below."
In the case of Union Ins. Co. v. McGookey Moore, 33 Ohio St. 555, at page 561, the court questions the sufficiency of the petition, and goes on to say:
"In view of the state of the case, it is quite immaterial whether the petition, in this respect, be regarded as sufficient or not; for, if it be insufficient, the defect was cured by the subsequent pleadings and proceedings in the case.
"After the demurrer was overruled, the company answered the petition as if the ownership of the property by the insured was stated with sufficient clearness therein, and specifically denied that the defendants in error owned the lost property when the policy was issued, or at the time of its loss, and denied that they had lost anything by the fire; and the issues thus made were tried upon the evidence."
The fourth paragraph of the syllabus of the case holds: "Although a demurrer to a petition for want of a material fact is erroneously overruled, if the fact is properly put in issue by the subsequent pleadings and the case is tried thereon, the judgment can not be reversed for error in overruling the demurrer."
In the case of Yocum, Admr., v. Allen, 58 Ohio St. 280, 50 N.E. 909, Spear, C.J., speaking of the petition, at page 288, says: "If we were passing upon the question in a court of first instance, there would seem to be evident propriety in holding the pleading insufficient. But the question before this court is not whether this petition, tested by technical rules, states a case, but whether the error in overruling the demurrer has worked prejudice to the adverse party which requires a reversal of the judgment."
The court goes on to say: "It appears clear to us that the defects of the petition * * * were supplied, or at least rendered innocuous, by the answer and reply; so that, upon the whole record, these defects did not affect any substantial right of the defendant."
The first paragraph of the syllabus in that case reads as follows: "Where, in a cause pending in the court of common pleas a demurrer to a petition has been overruled, and upon issues made by answer and reply, the case has been tried to a jury and a verdict and judgment for plaintiff rendered, this court will not reverse the judgment, even though satisfied that the demurrer ought to have been sustained, provided it also appears, upon a consideration of the whole record, that the overruling of the demurrer was an error which was not prejudicial to the adverse party."
The same doctrine was reaffirmed in Putnam v. Board of Commissioners of Paulding County, 102 Ohio St. 45, 130 N.E. 165, in which the court in a unanimous judgment held that a defect in a petition which had been supplied by averments in the answer and reply was not prejudicial to the adverse party, and that the judgment rendered on the pleadings and evidence would not be reversed on error. The first paragraph of the syllabus in that case holds: "Where a defect in a petition, to which a motion or a demurrer has been erroneously overruled, consists in the omission to plead the performance of a condition precedent in a contract sued on, or that such performance was prevented by the defendant, and it appears from the record that the omitted facts were properly put in issue by the answer and reply, and that the defendant has not been prejudiced, the judgment will not be reversed on error."
Applying this doctrine to the instant case, in view of the fact that no demurrer was filed, that no motion to make more definite and certain was filed, that the defendant company did not seriously press its objection to the petition nor point out any material allegation lacking therein, that it ignored the lack of a reply and went to trial fully entering into the issue of knowledge and good faith raised in its own answer and amended answer, we hold that the defendant was not prejudiced at the trial by the absence of the allegation of knowledge or collusion in the petition, nor by the absence of a reply, and overrule the objection in this court based upon the insufficiency of the petition.
The court did not err in denying the defendant's motion made June 19, 1931, asking that Charles I. Parlett and James A. Dillian, clerk of the court of common pleas, be made parties defendant. This motion was made some fifteen months after the actual hearing of the case, and in the hearing itself, so far from asking that new parties be made, when counsel for Mrs. Smith asked, "Do you want Mr. Parlett made a party?" the attorney for the company said, "I will leave that to Mr. Parlett's judgment." Mr. Parlett later said, "If your Honor please, I prefer to act only as a witness," and no objection was made on the part of the company.
Hence so far as Parlett was concerned the company acquiesced in his not being a party to the case.
The judgment of the Court of Appeals will be affirmed.
Judgment affirmed.
WEYGANDT, C.J., STEPHENSON, JONES and MATTHIAS, JJ., concur.
KINKADE, J., not participating.