text:
    DANIEL et ux. v. HAMILTON et al. DANIEL et al. v. HAMILTON et al.
    No. 7369.
    Supreme Court of North Dakota.
    Nov. 18, 1953.
    Rehearing Denied Dec. 4, 1953.

      Dean Winkjer, Williston, Everett E. Palmer, Williston, for plaintiffs and respondents.
    Strutz, Jansonius & Fleck, Bismarck, for defendants and appellants.
   SATHRE, Judge.

These cases are here on appeal by the defendants from a judgment in favor of the plaintiffs rendered by the district court of Williams County, North Dakota. Both cases grew out of the same facts and the defendants are the same in both. It was agreed therefore by the respective parties and their attorneys to consolidate the cases and try them together. For the- purpose of this opinion the case of J. H. Daniel and Rose Daniel will be referred to as case No. 1, and the case of F. B. Daniel and Mary V. Daniel will be referred to as case No. 2. The actions were brought for the purpose of cancelling certain oil, gas and mineral leases executed and delivered by the plaintiffs to the defendants upon certain lands in Williams County, North Dakota. The plaintiffs in case No. 1 were owners of the following described lands: The Southeast Quarter (SE14.) of Section Four (4) ; Southeast Quarter (SE*4) of Section Nine (9); South Half of the Southeast Quarter (SE% SE%) and Southwest Quarter (SW^,) of Section Three (3); West Half (W%) of Section Ten (10); Southwest Quarter (SW%) of Section Thirteen (.13) ; Southwest Quarter (SW%) of Section Fourteen (14); Northeast Quarter (NE-⅛) of Section Fifteen (15) all in Township One Hundred Fifty-six (156) North, Range Ninety-eight (98) West of the Fifth Principal Meridian.

The plaintiffs in case No. 2 were the owners of the following described land: The North Half of Section Nine (9); Northeast Quarter (NEJ4) of Section Sixteen (16); all in Township One Hundred Fifty-six (156) North, Range Ninety-eight (98) West, containing Four Hundred Eighty (480) acres more or less.

The amended complaints allege that the plaintiffs are the owners of the lands described, and that on the 11th day of April 1951 they executed and delivered to the defendants certain oil, gas and mineral leases upon said described land and that the leases were recorded in the office of the Register of Deeds of Williams County, North Dakota, on the 21st day of April 1951; that on the 11th day of April 1951, the date of the execution of the leases, the defendants issued drafts as follows: to the plaintiffs in case No. 1, $1,360 and to the plaintiffs in case No. 2, $400, drawn on the American State Bank of Williston, Williston, North Dakota, which drafts were payable on the approval of title to said lands within fifteen days; that said drafts were duly presented to the American State Bank of Williston and were not paid; that the leases were secured by the defendants by fraud in that they agreed that payment was to be made of said drafts in accordance with the terms thereof, but that the defendants have failed to pay the drafts and never intended that they should be paid; that the plaintiffs are entitled to the immediate possession of said described real property; that the defendants claim certain estates or interests in or liens or encumbrances upon said real property adverse to the plaintiffs, but that such claims are junior and inferior to the right, title and interest of the plaintiffs in said described real property; that the relief sought consists wholly in excluding the defendants and each of them from any interest in or lien or encumbrance upon the real property, but that no personal claim is made against any of said defendants.

At the close of the trial plaintiffs were permitted to amend their complaints by adding an allegation that:

“no consideration of any kind or character for executing said oil, gas or mineral lease was received by the plaintiffs from the said defendants.”

It was stipulated that the answers of the defendants herein should stand as a denial of the allegation in plaintiffs’ amended complaints.

Judgment is demanded that the said described oil, gas and mineral lease be can-celled and rescinded; that the title to said described lands be quieted in the plaintiffs as to any and all claims of the defendants •and that the defendants and each of them be forever debarred and enjoined from asserting same.

In their answers the defendants admit that the plaintiffs are the owners of the real property described in the complaints and that they executed and delivered the gas, oil and mineral leases to the defendants; that on the date of the leases their agent, H. F. Leverenz, issued to the plaintiffs the drafts described in the complaints; that the defendants did at all times have money in the American State Bank available for payment of said drafts upon presentation thereof and have at all times been ready, willing and able to pay the same; that if said drafts were presented and were not paid, it was due to error and mistake on the part of the bank on which they were drawn, and to no fault of the defendants; that the defendants again tender the monies so on deposit in the bank in Williston, North Dakota, and demand that the plaintiffs withdraw the same in payment of the drafts issued thereon. The defendants specifically deny that the leases described in the complaint were secured by fraud, and they allege that the same were secured through the utmost good faith on the part of the defendants; that the plaintiffs failed and neglected promptly to notify the defendants of the error and mistake on the part of the bank in refusing to honor the drafts issued by the defendants; that had such notice been given, the defendants at once would have corrected said error and mistake and the drafts would have been paid. It is further alleged that the plaintiffs have at no time tendered or returned the said drafts to the defendants, but have held and retained the same and still have them in their possession; that by reason thereof the plaintiffs have waived and lost their right of action, if any they had, other than the right of action to recover upon said drafts; that the title of the plaintiffs to the lands described in the complaints is subject to the rights of the defendants under the said leases executed by the plaintiffs. Judgment is demanded that plaintiffs’ actions be in all things dismissed; that the plaintiffs be required to accept the money tendered and heretofore deposited for the payment of the amount due on the drafts described in the complaint.

At the opening of the trial the defendants made a motion that the plaintiffs be required to elect what form of action they relied upon for the. reason that under the allegations in the complaints there was uncertainty as to whether the actions were brought to determine adverse claims, for cancellation, or for rescission of contracts on the ground of fraud. The motion was denied and the cases were tried on the merits.

The leases which it is sought to cancel in these actions are the usual oil, gas and mineral leases. They provide among other things that:

“the lessor for and in consideration of $10.00 cash in hand paid, receipt of which is hereby acknowledged and of the covenants and agreements hereinafter contained on the part of the lessee to be, kept and performed, has granted, demised, leased and let, and by these presents does grant, demise, lease and let exclusively unto said lessee with the exclusive right of mining, exploring, etc. * * * all that certain tract of land situated in the county of Williams, North Dakota. (The land described in the complaint.)
* * * * * *
“if no well be commenced on said land on or before one year from the date hereof, this lease shall terminate as to both parties, unless the lessee on or before that date shall pay or tender to the lessor .or to the lessor’s credit in the American State Bank of Williston, N. D., or its successors, which shall continue as a depository regardless of change in ownership of said, land, the sum of $680.00 which shall operate as a rental and cover the privilege of deferring of the commencement of a well for twelve months from said date. In like manner and upon like payments or tenders the commencement of a well may he further deferred for like periods of the same number of months -successively. All the payments or tenders to be made by check or draft of lessee or any assignee thereof, mailed or delivered on or before the rental paying date. * * *
“It is understood and agreed that the consideration first recited herein, the down payment, covers not only the privilege granted to the date when said first rental is payable as aforesaid but also the lessee’s options of extending that period as aforesaid and any and all other rights conferred.”

It was mutually agreed that all rental payments under these leases should be tendered to the lessors at the American State Bank of Williston.

The leases were identical except for the names of the grantors and the amount of the rentals. ’ ■

The defendants retained the original leases and copies were given to the plaintiffs to which were attached the drafts referred to in the amended complaints. The lease in case No. 1 was introduced in evidence as plaintiffs’ exhibit 1, and the lease in case No. 2 was introduced as plaintiffs’ exhibit 4. " .

The drafts were signed “Hamilton and Leverenz, by H. F. Leverenz,” and were introduced in evidence as plaintiffs’ exhibits 2 and S, respectively and are as follows:

“$1360.00 April 11, 1951

On approval of title within 15 days, pay. to the order of J. H. Daniel, One thousand three hundred sixty and no/100 dollars. Value, received and charge the same to account of .

Hamilton & Leverenz,

■ By H. F. Leverenz,

To American State Bank

No.'Williston, North Dakota.”

“$400.00 April 11, 1951

On approval of Title within 15 days, pay to the order of F. B. Daniel, Four hundred and no/100 dollars.

Value received and charge the same to account of

Hamilton & Leverenz

By H. F. Leverenz

To American State Bank, Williston, North Dakota.”

F. B. Daniel testifying for the plaintiffs stated that on the 10th day of May 1951 he wrote a-letter to the American State Bank at Williston, in which he enclosed his own draft for $400, plaintiffs’ exhibit 5, and his father’s draft in the sum of $1,360, plaintiffs’ exhibit 2. These were the drafts attached to the respective leases executed by the plaintiffs. He testified further that the drafts were not paid when presented on May 10, 1951 and were not paid on May 31, 1951. On the latter' date his father J. H. Daniel and he went to the bank at Willis-ton and consulted -with 'Davidson, Sr., president of the bank, with reference to the nonpayment of their drafts and that they withdrew them from the bank at that time and took them to the office of their attorney at Williston.

Mr. H. F. Leverenz, testifying for the defendants, stated that on April 19, 1951 he opened an account in his own name at the American State Bank at Williston and on that date deposited $1,000 for which he was given credit. On April 25, 1951 he deposited $2,250 to the same account. Fie was not sure which one of the bank personnel received the deposit but he told him that the money was there to take care of the Daniel drafts. He heard nothing more about the Daniel leases or drafts until the last week in May 1951 when he met Roman Daniel at a gas station in the city of Ray, and that Roman inquired whether he could cash his draft and Leverenz replied that the money was in the bank and had been there a long time; he was surprised that the draft had not been paid; he was in the American State Bank of Williston on May 7, 1951 and talked to one of the men in the bank who he thought was Harding. He called his attention to the Daniel drafts and told him specifically to pay them.

Mr. Owen Harding, vice president of the Williston State Bank, testifying for the plaintiffs ■ stated that he was in the bank when the letter enclosing plaintiffs’ exhibits 2 and 5 was received; that he notified Mr. Leverenz that the bank had these drafts for collection and asked him if it were O.K. to pay them and that Mr. Leverenz réplied that they were not ready to be. paid yet and that he would-let them know when they were ready for payment; that the drafts were received in the bank on the 11th day of May 1951 but he could not recall the date when he- notified Leverenz that the bank had the drafts for collection, but he was - sure that it was within or before the fifteen days were up. Harding stated further that the drafts had not been paid' because payment had not been au tho'rized by Mr. Leverenz; that the- defendants had drawn several sight drafts in favor of other sons of J. H. Daniel involving similiar lease transactions, and that two of these drafts had been charged to the deposit made by H. F. Leverenz; but that siich payment was made only after it had been authorized by Mr. Leverenz putting his initials and his “O.K.” on the drafts; that the two drafts that were paid were included in the monthly statement of cancelled checks and mailed to Mr. Leverenz. Mr. Leverenz claimed, however, that he had not initialed them nor had he received the can-celled drafts from the bank and did not know where they were. So far as the record discloses neither party pursued this matter further.

Leverenz testified, further that on or about the 10th day of June 1951 a friend of his told him that attorney Winkjer of Williston wished to see him and that sometime thereafter he called at Winkjer’s office and that he then learned that the Daniel drafts had not been paid.

We quote from the testimony: , . ■

' “Q. How had you- discovered that the Daniels had not cashed their drafts? -A. Attorney Winkjer.
“Q. Well, going-back further., How did you happen to go and see Attorney Winkjer? A; A friend of mine here in town came down to Epping there.'
“Q. You recall who that friend •was? A. Ralph Slaaten.
“Q. All right go ahead. A. And he told me that Dean had told him that if he sees me to tell me to' drop in the office.
“Q. Did Mr. Slaaten state to you what Dea'n-'wanted to see you about? A. I had no idea.
“Q. Do you recall the approximate date that Mr. Slaajen told you that Dean Winkjer wanted to see you? A. No, I-would say it was around the 10th of that month. ■
“Q-. Of what month?- A. June.
“Q. June? A. I would say-so.
“Q. And subsequently ■ when you came to Williston, did you see Mr. Winkjer? A. Not the first time that I was here.
“Q. -About when did you see him? A. L don’t' remember the date.'
“Q. Well, what occurred on this visit to Williston when you did see Mr. Winkjer? A. He told me about the deal, about the Daniels, and that—
“Q. ■ What did he say and what did you say ? . A. He told me that they were ready to start a lis pendens action or stop this lease deal. And I asked him at that time not to. I says, ‘That shouldn’t be done’. As far as I ‘was concerned I just wasn’t in a — that I hadn’t had -a chance to do anything about it before.
“Q. That was the first notice that you had that the drafts were not paid, is that correct? A. Yes.
“Q. Now give the conversation as near as you can between you and Mr. Winkjer? A. Well, he told me that Daniel’s had withdrawn their drafts or something to that effect, and that they planned on a lis pendens action.
“Q. A lis pendens action? A. Uh huh.
“Q. Did you note at that time what he meant by lis -pendens action? A. No.
“Q. What else was said then? There must have been more conversation between you and he ? A. I told him to hold it up for awhile if he could.
“Q. For what purpose? -A. I wanted to see the Daniel’s and talk it over with them. I still figured that we had a good chance to settle it, or at least wait until Mr. Hamilton got here.
“Q. Did you ask him to wait until Mr. -Hamilton arrived? A. Yes.
“Q. Now following this visit at Mr. Winkjer’s office, did you see Daniels? A. Yes. I saw Francis Daniel and Joe Daniel.”

After his meeting with attorney Winkjer Leverenz contacted the plaintiffs and a meeting was had with them at Ray on Saturday evening July 14 at which time the plaintiffs J. H. Daniel and F. B. Daniel, and Hamilton and Leverenz were present. The payment of the drafts was discussed and arrangements were made to meet at the Williston bank on Monday morning July 16th. With reference to the meeting at Ray on July 14th Leverenz testified as follows:

“Q. Now do you recall the conversation that was held at that time? A. Parts of it, yes.
“Q. Will you state what was said by the various people in the presence of each other on that particular occasion? A. Well, the Daniels claimed they hadn’t been getting their money, or hadn’t been able to get their money. Mr. Hamilton and myself told them that the money was there. It should have been paid. Mr. Hamilton promised them that we would be at the bank Monday morning to see that they did get their money.
“Q. And what did Mr. J. H. Daniel and Mr. Francis Daniel say at that time? A. As I remember they said they would be there.”

Hamilton and Leverenz and J. H. Daniel and F. B. Daniel appeared at the bank Monday morning in accordance with the arrangements made the previous Saturday evening at Ray. They waited a few minutes for the bank to open and then they all went into the bank together. Leverenz stated that he talked to one of the personnel in the bank -who he thought was Mr. Harding, vice president of the bank, and that he told him to pay the Daniel drafts. To this statement he said that Mr. Harding replied “O.K.” Leverenz then left the bank. The plaintiffs, J. H. Daniel and F. B. Daniel, admitted that they heard Leverenz say to Mr. Harding, vice president of the bank, “Pay those drafts,” and that Harding said “O.K.” With reference to the meeting at Williston bank the plaintiff F. B. Daniel on cross-examination testified as follows:

“Q. You didn’t talk about this deal with Mr. Leverenz and to Davidson, Jr., while you were there? A. Well, we did say briefly—
“Q. What did you say? A. Well, I asked him if he thought they were liable for not making our payments.
“Q. I see. And what did he say? A. He said ‘No,’ he didn’t see where they were, because he said, ‘We didn’t have any authorization to pay, to malee those payments.’
“Q. Well, you just heard at that time, two or three minutes before, Harry tell the vice-president, Mr. Harding, that those drafts were to be paid ? A. That’s true.
* * * * ⅜ *
“Q. You thought if the bank was liable to be stuck, you would go through with the deal rather than have that happen, I suppose. A. .No,' not stuck, if they were going to put the bank in trouble.”

Upon the record thus made the trial court held that there was no evidence of fraud on the part of the defendants;’ but that there was a failure of consideration for the reason that the drafts issued in payment of the rentals were not paid within the time specified therein. Judgment was accordingly rendered quieting title in the plaintiffs in arid to the premises described in the complaints, free and clear of any right, title or interest on the part of the defendants under the leases involved herein, and declaring said leases to be in all things cancelled, void and of no effect. The defendants appealed from the judgment and the whole thereof and demanded a trial de novo in this court.

The defendants assigned numerous errors, all of which may be considered under two propositions:

1. That the court erred in refusing to require plaintiffs to elect the form of action upon which they intended to rely, under the allegations in the complaints.

2. That the trial court erred in finding that the plaintiffs received no consideration for executing the oil, gas and mineral leases.

We will consider them in the order stated.

The substance of the amended complaints has been set out in this opinion. While these complaints are not in the best form, we nevertheless think that liberally construed they state a cause of action for determination of adverse claims. Actions to determine adverse claims may be employed for the purpose of cancelling oil, gas and mineral leases. In 24 Am.Jur. page 648, Gas and Oil, Sec. 163, we find the following :

“Actions to determine adverse claims are frequently resorted to in controversies concerning oil and gas leases. A duly recorded lease constitutes a cloud on the lessor’s title, and where the lessee, under a lease that has expired by its own terms or has been validly forfeited, persists in his claim of right and refuses to execute or deliver a proper release for purposes of record, the lessor may appeal to a court of equity to quiet his title. But of course he must make a meritorious showing in order to obtain relief.”

And in the case of Udgaard v. Schindler, 75 N.D. 625, 630, 31 N.W.2d 776, 779, it is held: .

“We think it clear therefore that an action to determine adverse claims will lie to recover possession of real property from a lessee who holds over after the termination, or forfeiture of his lease.”

We hold that under the authorities cited, the trial court correctly denied the motion of the defendants made at the opening of the trial.

The second point for consideration is whether the court erred in holding that there was a failure of consideration.

It is conceded that the $10 payment specified as consideration for granting of the leases was not paid and may therefore be disregarded. The plaintiffs contend that the consideration for the execution and delivery of the leases was the payment of the rentals provided for therein and that the consideration failed for the reason that the drafts issued in payment thereof were not paid within fifteen days as provided for therein. The printed stipulation in 'the leases with reference to the time for rentals is as follows:

“If no well be commenced on said land on or before one year from the date hereof, this lease shall terminate as to both parties, unless the lessee on or before that date shall pay or tender to the lessor or to the lessor’s credit in the American State Bank at Williston, N.D., or its successors, * * * Six Hundred eighty and no/100 * * * Dollars.”

However, the defendants issued drafts in payment of rentals. They were of the same date as the leases; they fixed the time of payment of the rentals. Under the stipulation contained in the drafts they were payable within fifteen days upon approval by the defendants of plaintiffs’ title to the land. The drafts were not paid when presented to the bank for payment .on May 11, 1951. They were not paid bn May 31j 1951. Plaintiffs’ cause of action accrued on. May 11th when payment of their drafts was refused; but they did not notify the defendants and took no action. Thereafter and on Saturday July 14th, plaintiffs met with the defendants Hamilton and Leverenz at Ray, North Dakota, and negotiated with them with reference to payment of the drafts. Defendants advised them that sufficient funds to pay the drafts were then and at all times had been on deposit in the Williston bank, and that if they would meet the defendants at the bank on Monday morning July 16th payment would be made. Plaintiffs accordingly met with the defendants at the bank on Monday morning looking to the payment of the drafts and the undisputed testimony shows. that defendants had funds on deposit in the drawee bank to pay 'plaintiffs’ drafts'; the bank' was then and there directed by defendant Leverenz to pay the drafts in the presence of the plaintiffs who' still had possession and control of the drafts, and had they been presented they would have been paid in full.

The rule governing rescission is prescribed by section 9-0904, NDRC 1943, and, is as follows :

“Rules Governing Rescission. Rescission, when not effected by consent or pursuant to sections 9-0808 and 9-0809, can be .accomplished only by the use, on the part of the party rescinding, of reasonable diligence to comply with the following rules:
“1. 'He must rescind promptly upon discovering the facts which entitle him to rescind, if he is free, from duress, menace, undue influence,. or disability and is aware of his right to rescind; and
“2. He must restore to the other party everything of value which he has received from him under the contract or must offer to restore the same upon . condition that such party shall do like- ■ wise, unless the latter is unable or positively refuses to do so.”

Upon the state of the record before us the question presented is whether plaintiffs waived their right to rescind the leases by not' acting promptly as required by subsection 1 of Section 9-0904, supra, after payment’of their drafts was refused, and by their subsequent negotiations with the defendants relative to payment thereof.

“Where a party, with knowledge of facts entitled him to rescission of a contract or conveyance, afterward, without fraud or duress, ratified the same, he has no claim to the relief of cancellation. An express ratification is not required in order thus to defeat his remedy; any acts of recognition of •.the contract as subsisting or any coni duct inconsistent with an intention of avoiding it, have the effect of an election to affirm. Indeed, it has been declared that since the remedy of rescis- ' 'sión of cancellation is not held in high esteem by the courts even slight cir- ' ' cumstances showing a purpose or intent to waive it will preclude the allowance. of such relief. * * *
“Particular acts or attitudes on the part of plaintiff which, under the prin- ■ ciples just outlined, would constitute ■''an affirmance or ratification of a contract otherwise subject to judicial rescission are infinite in their variety; generally speaking, any transactions with defendant relating to the subject matter of the contract and inconsistent with an intention to rescind will preclude a rescission.” 12 C.J.S. Cancellation: of Tnstrumentsj § 38, pages' 996 and 997.

And- in 12 Am.Jur. page 865, Contracts, Sec. 310,: it states:

“Even though there is no stipulation in the contract that time shall be essential nor anything in the nature or circumstances of the agreement to make it so, it can nevertheless be made so áfter the time -for performance has arrived by a performance or tender of performance by one party and a demand of the other or by a demand by a party" not in default who is ready to perform. Time may also be made of the essence by the act of one of the parties in fixing a reasonable time for the completion of the contract and giving notice to the other party of an intention to abandon it unless it is completed within the time fixed. This rule is especially applicable where there has been a waiver of the time stipulation in a contract. Time cannot again be made of the essence without notice to the party in "default requiring performance within a reasonable time to be specified in the notice and stating that if there is not performance within this time the contract will be abrogated, or without conduct equivalent to such notice. This rule applies regardless of whether the time stipulation in the original contract was of the essence of that -contract.”

In the case of Crocker Chair Co. v. Edward Hines Hardwood & Hemlock Co., 201 Wis. 415, 230 N.W. 61, 64, 75 A.L.R. 603, the court had under consideration the question whether the defendant in that case had waived strict performance of a sixty-day net payment provided in the contract between the parties. There had been some discussion between the parties with reference to the sixty-day payment feature involved and with reference thereto the court said: . . ;

“Whether the result of that discus-' sion amounted to an express agreement" to waive compliance in this respect, the , " plaintiff had a right to believe that indulgences would be granted. At least, the plaintiff had a right to believe that it would be warned if the defendant intended to enforce the strict terms of the contract with respect to payment.”

Upon the récord and the evidence before us we conclude that the plaintiffs by their conduct as hereinbefore set forth waived their right to rescind and that they are only entitled to payment in full of their drafts.

The judgment, of the district court is reversed and the defendants are entitled to a dismissal of the.actions upon payment in full of the drafts in question.

. It-is so ordered..

MORRIS-, G. J.,' and CHRISTIANSON, GRIMSON, and BURKE, JJ., concur.' - '


source: Caselaw Access Project

author: BURKE, Judge.

license: Public Domain

text:
    SCHATZ et al. v. CITY COUNCIL OF CITY OF NEW ENGLAND et al.
    No. 7350.
    Supreme Court of North Dakota.
    Dec. 4, 1953.

      Strutz, Jansonius & Fleck, Bismarck, for appellants. '
    Cox, Cox, Pearce & Engebretson and Johnson & Rausch, Bismarck, for respondent Montana-Dakota Utilities.
    No appearance for City of New England et al.
   BURKE, Judge.

This is a taxpayers’ suit in which the plaintiffs sought to enjoin the City of New England from selling its electric utility property to the Montana-Dakota ■ Utilities Company. The proposal to purchase the property was filed by the Montana-Dakota Utilities Company with the city on June 4, .1951. On August 6, 1951 the city council, by its Resolution No. 108, resolved to submit the proposal to the qualified electors of the city at a special election to be held on September 18, 1951. The question submitted was:

“Shall the City of New England, Hettinger County, North Dakota, sell to Montana-Dakota Utilities Co., a Delaware Corporation, its successors and assigns, the electric public utility property now owned by said City of New England, pursuant to the written offer or proposition to purchase which offer or proposition is on file in the office of the City Auditor of the said City of New England?”

A -copy of the proposal to ptirchase was published with the notice of election as required by Section 40-3303, NDRC 1943. The essentials of the proposal of purchase were that the Montana-Dakota Utilities Company would pay the city $105,000, extend its natural gas mains to the city and construct a natural gas distribution system within the city, if the city would convey to it the electric utility property owned by the city and grant it a twenty year ele'ctric utility franchise and a twenty year natural gas utility franchise.

The election was held according to notice. The vote was 274.in favor of the acceptance of the proposal and 223 against. Pursuant to the mandate of this election the city council adopted Ordinances No. 89 and No. 90 granting 20 year gas and electric franchises' to the Montana-Dakota Utilities Company. Both ordinances were vetoed by the mayor and both were passed over his veto. The council also adopted Resolution No. 110 by which it accepted the offer-to purchase. This resolution was also vetoed by the mayor. It was then reconsidered and adopted over the veto. Thereafter the city council again accepted the proposal to purchase by Ordinance No. 91. This ordinance was not vetoed.

These proceedings are challenged by plaintiffs upon four grounds: 1, That the election was invalid because the question, voted on, contained at least two separate and distinct propositions; 2, That the proposed sale is illegal because it is unreasonable; 3, That the proposed sale is illegal because there was no appraisal made of the property to be sold; and 4, The proposed sale is illegal because the mayor vetoed the resolution accepting the proposal.

Concerning their first contention plaintiffs say that the question submitted at the election contained two separate and .distinct propositions: 1, Shall the city sell its electric plant? and 2, Shall the city have natural gas? In support of this contention they introduced in evidence advertisements published in the' New England ' papers, in Which the proponents of the proposal laid great stress upon the benefits the city would receive from the installation of natural gas. They offered the testimony of several individuals who, they said, would have testified that the only reason they voted for the proposal was because its adoption would bring natural gas to the city. They cite decisions of this court in which we have held elections, upon the approval of bond issues, to be invalid because several separable and distinct propositions were presented by a single question on the ballot. Stern v. City of Fargo, 18 N.D. 289, 122 N.W. 403, 26 L.R.A.,N.S., 665; Logan v. City of Bismarck, 49 N.D. 1178, 194 N.W. 908. The statute concerning the sale of a municipal utility is Section 40-3303, NDRC 1943. It provides:

“No municipality shall sell any municipal plant, system, or line, nor lease the same, or any substantial part thereof, or interest therein, to any person, firm, or corporation unless the person, firm, or corporation shall have filed in the office of the clerk or auditor of the municipality a complete written offer or proposition, nor unless a majority of the qualified electors of the municipality shall have voted in favor of accepting the offer or proposition at an election called, held, and conducted as specified in section 40-3302. A copy of the offer or proposition shall be published with the notice of the election. * * *«

The language of this statute is clear. It requires the filing of a complete written offer and the approval of the complete offer by the electorate.

Here the prospective purchaser offered to pay $105,000 and extend its gas distribution lines to the city as consideration for the purchase of the city’s electric utility and the granting of electric and gas franchises. In the sense that the purchaser offered to perform several separate acts in exchange for the performance of several separate acts on t)he part of the city, the offer is multiple in nature, but as limited by the terms of the offer it is a single proposal. The complete offer must be accepted or rejected in its entirety. The number and diversity of the commitments to be performed by the respective parties in order to execute the contract do not have the effect of converting such a proposal into a double or multiple proposition as long as the commitments are interdependent and the complete offer must be accepted or rejected in toto. An attempt to submit such a proposition by separate questions on the ballot would be futile. Only one question can be submitted and that is whether the complete proposition shall be accepted or rej ected.

Plaintiffs’ second contention, that the ordinance accepting the proposal to purchase is so unreasonable that in enacting it the city council exceeded the powers delegated to it by the legislature, is predicated, 1, On the fact that the proposed conveyance includes real property upon which a public rest room, the city jail and part of the city’s water storage facilities are located; 2, That the proposal is uncertain as to whether a truck owned jointly by the city electric utility and the city waterworks was to be included in the sale and 3, That there is no mutuality in the contract.

We see no need to discuss these contentions at length. The proposed deed reserves to the city an “easement over and upon lands it now occupies to maintain the water tank, water mains, and buildings used in connection with the municipal waterworks so long as the land is used for such purpose.” It appears that both the jail and the public rest room are located in buildings used by the waterworks and are covered by the easement. The purchaser states in its brief that such is its interpretation of the easement. It appears therefore that the city is adequately protected in the use of its waterworks, jail and rest room for as long as it wishes to use them.

Any uncertainty that may have existed as to whether the truck was included in the sale or not has been removed by the purchaser’s concession that the uncertainty may be resolved in favor of the city.

Plaintiffs’ claim of lack of mutuality rests on the fact that the contract does not provide a time limit within which performance must be completed by the purchaser but only a limit within which performance must be commenced; that there is no provision for termination of the contract by the city if the company does not perform, and that the city “will be required to pay approximately one third of the sales price immediately when certain items are deposited in the Bank of New England, regardless of whether the other portions of the contract are thereafter carried out or not.”

There is no merit in these contentions. The contract provides that the purchaser shall deposit its certified check for $105,000 with the Bank of New England; that the city shall deposit a deed and bill of sale of the real and personal property to be transferred with the same bank, that the purchaser will extend its gas pipe system to the city as expeditiously as possible; and that within ten days after gas is delivered, the bank is to deliver the bill of sale and deed to the purchaser and deliver the certified check to the city. Certainly there is no lack of mutuality in this contract as there are mutual obligations to be performed by both parties. The claim of unreasonableness seems to be based upon the speculation that there may be a long delay between the time the purchaser completes the extension of its gas line to the city and the time when it completes its distribution system within the city. Self-interest, however will be a sufficient incentive to the completion of the distribution system either contemporaneously with or as soon as possible after the delivery of gas to the city. We think the contract gives reasonable assurance to the city of performance by the purchaser.

The city will suffer no detriment if it pays out a part of the purchase price before the distribution system is completed. This payment will be the payment of its outstanding indebtedness upon the utility sold and such payment is required by statute. Certainly the city can suffer no injury by the payment of its debts. Upon .a consideration of the whole record we are satisfied that plaintiffs have failed to establish unreasonableness, particularly in that degree which would place the act of accepting the contract beyond the powers delegated to the city by the legislature.

Plaintiffs’ third proposition, that the proposed sale is void because no appraisal of the property was made is founded upon the contention that the consideration agreed to be paid is so inadequate that it is both unreasonable and in violation of Section 185 of the Constitution of the State of North Dakota which provides:

“ * * * neither the state nor any political subdivision thereof shall otherwise loan or give its credit or make donations to or in aid of any individual, association or corporation except for reasonable support of the poor, *

We see no defect in the proceedings arising from the bare fact that no appraisal was made. The procedure for such a sale is prescribed by statute and that statute does not require an appraisal. This holding however does not dispose of the challenge to the sufficiency or reasonableness of the consideration. In opposition to the contention of the plaintiffs in this regard, the purchaser urges both, that the question is not one which is before the court, and also that the consideration is reasonable.

The consideration was passed upon and found reasonable by the city council when it voted to present the purchaser’s, offer to the electorate. It was again passed upon and approved when the electorate voted to accept the proposal. There is no claim of any fraud or bad faith nor, any contention that the acceptance of the proposal did not result from the exercise of the honest judgment of both a majority of the councilmen and the electorate. May a court in such circumstances review that judgment?

Chapter 40-33, NDR'C 1943, vests in municipalities the power to sell municipal utilities. The power to sell implies the power to bargain. This power to bargain must in the very nature of things rest in the governing body of the municipality even though the bargain made is not effective until approved by the electorate. The making of the bargain and the obtaining of an offer which it approves and which it could reasonably and justifiably submit to the electorate involves the exercise of discretion and judgment upon the part of the governing board of municipality.

It is well settled that “The discretionary powers of municipál authorities will not be interfered with in a suit by a taxpayer for an injunction in the absence of fraud or palpable abuse”. 64 C.J.S., Municipal Corporations, §' 2142, page 958. This rule has been applied in many cases where the discretionary power of municipal authorities was exercised in the determination of-the price to be obtained from leasing or selling property owned by a municipality. In White v. City of Grand Rapids, 260 Mich. 267, 244 N.W. 469, it was held:

“Whether city commission made good or bad bargain in leasing city’s electric lighting plant held not reviewable by court.”

In Colwell v. City of Great Falls, 117 Mont. 126, 157 P.2d 1013, 1022, it was said:

“The question of the amount and nature of the consideration received * * * is a matter which only concerned ■ and only concerns the Mayor and Council of the defendant city and a court of equity will not interfere at the suit of a taxpayer to restrain the officers of .a municipal, corporation in the exercise of their discretionary - powers, which exist herein, with regard to the control or disposition of the property of the municipality, in the absence of illegality, fraud, or clear abuse of their authority, * .* *.”■

In Smart v. Graham, 179 Md. 476, 20 A.2d 574, 580, the court said:

“However, it is the settled principle upon which courts act in dealing with a sale like the present one that it will not be set aside because of difference of opinion among witnesses as to the value of the property, or unless the price received be so grossly inadequate as to indicate a want of reasonable judgment and discretion, or misconduct . or fraud, or some mistake or unfairness for which the purchaser is responsible.”

See, also, Mathews v. Darby, 165 Ga. 509, 141 S.E. 304; Green v. City of Rock Hill, 149 S.C. 234, 147 S.E. 346; Truesdale v. City of Columbia, 203 S.C. 333, 27 S.E.2d 455; Quackenbush v. City of Cheyenne, 52 Wyo. 146, 70 P.2d 577.

The instant case differs from, the cases cited above, in . that here, the applicable statute required that the discretion exercised by the municipal authorities be approved and ratified by the electorate. In our opinion, howfever, such fact is an additional reason why the courts should not interfere with the discretion exercised. We -therefore adopt the view that the municipal authorities’ judgment with respect to adequate consideration for the sale of municipal property may not be reviewed in a taxpayer’s suit for an injunction in the absence of fraud, unless the price received be so grossly inadequate as to indicate a want of reasonable judgment and discretion.

There is no proof of such gross inadequacy in this case. Plere the. city was to receive $105,000 and the extension of gas service to the city as consideration for the sale of its electric utility. The plaintiffs offered the testimony of witnesses who, according to the terms of the offer, would have testified that in their opinion the value of the utility was $150,000. This offer was rejected by the trial court. But if we consider the record to include this excluded testimony, it still would not show gross inadequacy of consideration. The audit- of the affairs of the City of New England as of June 30, 1951 shows the book value of the utility to be $80,284.63. The cash part of the consideration was therefore approximately $25,000 more than the book value of the utility and the question of the valúe to the city of the extension of gas service thereto is one which was peculiarly within the knowledge of the municipal authorities and the electorate.

Plaintiffs’ last contention is that proceedings for 'the transfer of this property are invalid because the resolution proposing to carry into effect the proposal of sale was vetoed by the mayor.

The resolution referred to is Resolution' No. 110 which was adopted by the city council, after the proposal to purchase had been legally submitted to the electorate by proper resolution and after the electorate had approved the proposal. This resolution was mere surplusage. After proper submission to the electorate and approval thereby, nothing remained for the. city authorities to do except to carry the proposal into ef-. feet. There was no need for the council to resolve to do what the electorate had directed it to do.

The judgment of the district court is affirmed.

MORRIS, C. J., and SATHRE, CHRIS-TIANSON, and GRIMSON, JJ., concur.


author: GRIMSON, Judge.

text:
    FARMERS INS. EXCHANGE v. ARLT et al.
    No. 7390.
    Supreme Court of North Dakota.
    Nov. 12, 1953.

      J. K. Murray, Bismarck, for appellant.
    John A. Zuger, Bismarck, for respondents.
   GRIMSON, Judge.

Plaintiff brings this action for damages alleged to have been caused in a motor vehicle collision between one John A. Logan and defendant, Jacob P. Arlt.

The evidence shows that John A. Logan was the owner and operator of a 1948 Buiclc automobile and carried collision insurance thereon with this plaintiff; that Jacob P. Arlt was an employee of the State Highway Department; that the State Highway Department carried liability insurance for its employees with the defendant, United States Fidelity & Guaranty Company; that on May 20, 1949, a collision occurred on U. S. Highway No. 10 about four miles east of Glen Ullin between the automobile driven by Logan and the highway truck driven by Arlt as Logan was attempting to pass the said truck. The automobile was damaged and Logan injured. Plaintiff paid Logan $694.85 on his property damage under the provisions of the insurance policy. Thereupon John A. Logan assigned his claim for property damage against the defendant, Arlt, to the plaintiff authorizing it to bring suit if necessary.

On January 20, 1951, said John A. Logan brought suit in the district court of Bur-leigh County, North Dakota, against Jacob P. Arlt, and the State Highway Department of North Dakota, for the recovery of $1,368.56 for property damages and $1,050 for personal injuries resulting from this collision. That case was tried in June 1951 and the jury returned a verdict of dismissal for the defendants. Judgment was entered thereon and no appeal was taken.

On October 15, 1951, the present action was commenced. It is brought on the same collision but only for the property damage in the same amount of $1,368.56. Plaintiff alleges that it is the owner of such claim to the extent of $694.85 and as to the balance of such claim that plaintiff holds same in trust for the said John A. Logan.

The defendant, Arlt, answers denying liability and alleging that the suit theretofore brought by John A. Logan for the same property damage was a complete bar to this action.

The defendant, United States Fidelity & Guaranty Company denied liability under its insurance contract and pleads the suit of Logan against the defendant, Arlt, as a bar to this action.

At the close of the testimony the defendant, United States Fidelity & Guaranty Company moved for the dismissal of the action'as against it on the grounds there was no liability shown. This motion was denied. Then both defendants moved for a dismissal upon the same grounds and upon the further' grounds that the prior action between John A. Logan and the defendant, Jacob P. Arlt, was for the same damages here' claimed resulting from the same colli-' sion; that judgment of dismissal thereon was a complete bár to the - present action, and on the further ground of contributory negligence by Logan. This motion was denied. Thereupon both defendants moved for a directed verdict upon all the grounds stated in the defendants’’ motions for dismissal. These motions were resisted and denied.

On December 9, 1952, a motion for judgment notwithstanding the verdict on behalf of each defendant, separately, was presented' to the court and set by the court for hearing on December' 23,' 1952, at 2 o’clock P.M. Service of said motion and a notice of hearing was admitted by the attorney for the plaintiff on December 9, 1952. On December 23, 1952, plaintiff’s attorney appeared specially objecting to the jurisdiction of the court on the ground said motion was not made within ten days subsequent to the rendition and filing of the judgment. On the 16th day of February, 1953, the court set aside the judgment and granted the motions of both defendants for judgment in their favor notwithstanding the verdict. The plaintiff appeals from said orders and the judgments entered thereon.

The first contention of plaintiff is that the motion for judgment notwithstanding the verdict was not made within the ten days as required by Chapter 204 SLND 1951 because it had not been filed in the clerk’s office within that time. Said section reads in part:

“ * * * Within ten days after the reception of a.verdict, a party who has moved for a directed verdict may move to the have the verdict and the judgment entered thereon Set aside and 'to have judgment notwithstanding the verdict entered in accordance with his motion for a directed verdict * *. ”

The statute does not say that the motion must be filed with the clerk within ten days. It is admitted that the motions were presented in open court within five days after the return of the verdict and served upon the plaintiff’s attorney. The motions definitely state that the defendant “moves that judgment, be entered in its favor notwithstanding the verdict.” The court and plaintiff’s attorney were engaged in another jury trial at the time so that the motions could not be heard then but the court set December 23rd as the date for the hearing. The trial court overruled the plaintiff’s objection to the jurisdiction and held “that the notice of motion and the motions were served on plaintiff’s attorney and presented to the court on Dec. 9th. 1952 * * .* and that the court had jurisdiction to rule on the motions.” Failure to.file the written motion for judgment notwithstanding the verdict with the clerk of the district court within ten days after the rendition of the verdict was not a jurisdictional prerequisite to its. consideration by the trial court or by this court on appeal. Nicholson v. Roop, N.D., 62 N.W.2d 473.

The motions for judgment notwithstanding the verdict are based on the motions for a directed verdict made by the defendant at the close of the case. Plaintiff raises two objections to those motions. First he says that no particulars are set forth as to the grounds upon which the motions are made in that the motions merely stated that they are made “upon all of the grounds and for all the reasons stated in both motions for dismissal.” When the attorney for the defendants had made that statement the following record was made:

“Mr. Zuger: Can I have the understanding that I do not need to repeat all of the grounds in this motion that I stated in the other motions?
“Mr. Murray: I am not running the court.
“The Court: Yes, you may have the grounds, for a directed verdict the same as those that you mentioned in your two motions for dismissal.”

No objection to that ruling was made by the attorney for the plaintiff. Under those circumstances the objection now made to that proceeding is without merit.

Plaintiff next contends that the motions for dismissal did not themselves specify the particulars in which the evidence was insufficient to establish a cause of action against the' defendants.

It is true that this court has repeatedly laid down the salutary rule that motions for directed verdicts upon ground of insufficiency of the evidence need not be considered by the trial court nor will they be considered on appeal unless the particulars are specifically pointed out. Jacobs v. Bever, N.D., 55 N.W.2d 512; Westerso v. City of Williston, 77 N.D. 251, 42 N.W.2d 429, and cases cited on pages 259 and 260 of 77 N.D., and on pages 433 and 434 of 42 N.W.2d.

The purpose of, this rule is to apprise the opposing counsel and the court of the failure of the evidence to sustain the law question involved. This must bé done with sufficient particularity so that the court and counsel can see forthwith what, if any, merit there is to the motion. This rule has generally been applied to cases where the motion for a directed verdict and for judgment notwithstanding the verdict have been denied. See cases cited in Westerso v. City of Williston, supra.

The motions in the case at bar do point out that there was evidence of a pri- or lawsuit involving the same issues between the plaintiff’s insured, Logan, and the defendant, Arlt, wherein a jury found in favor of defendant, Arlt; that prior thereto plaintiff had not given Arlt any notice of having received an assignment óf a partial interest in Logan’s claim for damages. They point out evidence of other defenses of the United States Fidelity & Guaranty Company. They further point out particulars of claimed contributory negligence on the part of Logan.

In the case at bar' the motions for judgment non obstante were granted. This indicates that the court concluded the motions- pointed out sufficient particulars' to warrant a' further study of the evidence and, on so doing; decided that the motions should be granted. In such cases this court also will consider the evidence to determine whether the grounds raised are sufficient. Nicholson v. Roop, supra; Clausen v. Miller, 63 N.D. 778, 249 N.W. 791; Olson v. Great Northern Ry. Co., 56 N.D. 690, 697, 219 N.W. 209; Smalley v. Rio Grande Western Railway Co., 34 Utah 423, 98 P. 311.

The evidence shows that Logan suffered personal injuries and was taken to a. hospital. His automobile was taken to the repair shop. The total repair bill amounted to $821.72. An additional $500 was claimed as the depreciation in the value of the car after repairs. Of that amount the plaintiff, Farmers Insurance Exchange, .paid, $694.-85. Logan then signed and delivered to the plaintiff an instrument entitled, “Acceptance of Repairs, Release and Subrogation Assignment.” That instrument, after releasing the Exchange from all claims for damages on account of the accident, in consideration of the payment of $694.85, provides:

“In further consideration of the above sum, I/we hereby sell, assign, transfer and set over unto the Exchange all of my/our right,' title and interest in and to the or any Property Damage, claim I/we may have against any person, firm or corporation arising out of said loss and damage to the vehicle (s) described above. If it shall become necessary that suit be filed to effect collection of this claim, I/we hereby authorize the Exchange to, at its election, file and prosecute the said suit in my/our name.”

Upon paying the insured, Logan, the plaintiff Exchange was subrogated to an interest in Logan’s claim against defendant, Arlt, to the extent of such payment. The plaintiff Exchange was entitled to that subrogation irrespective of the assignment above set forth. The Exchange, however, does not obtain any more rights by the sub-rogation or assignment against the wrongdoer, Arlt, than Logan, the insured, had. Hayward v. State Farm Mut. Ins. Co., 212 Minn. 500, 4 N.W.2d 316, 140 A.L.R. 1236; Weber v. United Hardware & Implement Mutuals Co., 75 N.D. 581, 31 N.W.2d 456.

In Globe & Rutgers Fire Ins. Co. v. Cleveland, 162 Tenn. 83, 34 S.W.2d 1059, 1060, the court said:

“When a loss thereunder (the insurance policy) is occasioned by the fault or wrong of a third person, the wrongdoer is primarily, and the insurer is secondarily, liable to the owner of the property injured. * * * Upon payment of the loss, the insurer was entitled to the assignment specified in the policy, and by the assignment it acquired the equitable right to share in any recovery Hunter (the insured) might obtain against the defendant for the property damage, and to use Hunter’s name in a suit at law to recover such damages. But it is elementary that the assignment could not confer upon the insurer any greater right or interest against the defendant than the assignor then possessed, no question of fraud or estoppel being involved. And this is true whether the insurer’s rights be treated as arising only from the assignment, or by application of the doctrine of subrogation to the contract of indemnity insurance.”

This assignment was dated August 30, 1949. The plaintiff Exchange took no action under it and did not give any notice of the assignment to either of the defendants herein until this present action was begun on the 15th day of October, 1951 more than two years later.

In the meantime, on January 20, 1951, almost two years after the collision, John A. Logan commenced an action against Jacob P. Arlt for the recovery of all the damages resulting from the collision.

Thus it appears that two actions were brought for the recovery of damages resulting from the same collision.

In Brevick v. Cunard S. S. Co., 63 N.D. 210, 213, 247 N.W. 373, 375, this court held that it is the act done “which gives the plaintiff his cause of action”. In Durham v. Spence, L.R.Exch. 46, cited in Brevick v. Cunard S. S. Co., supra, the court says: “I understand by ‘cause of action’ that which creates the necessity for bringing the action.” In Harvey v. Parkersburg Insurance Co., 37 W.Va. 272, 16 S.E. 580, it is held: “ ‘Cause of action’ generally means the breach of duty”,

“A right of action at law arises from the existence of a primary right in the plaintiff and an invasion of that right by some act or omission on the part of the defendant. The facts which establish the existence of that right and its violation constitute the cause of action.” 2 Freeman on Judgment, 5th. Ed., Sec. 678, p. 1433. See also 1 C.J. S., Actions, § 8, page 981.

This court has repeatedly held that a cause of action cannot be divided; that when there is a single cause of action, although there may be different kinds of damages, only one suit can be brought.

In Jacobson v. Mutual Ben. Health & Accident Ass’n, 73 N.D. 108, 11 N.W.2d 442, 446, this court said:

“It is a familiar doctrine ‘that causes of action may not be divided, and that one who has availed himself of a part of a single claim or obligation in an action or defense is estopped thereafter from enforcing the remainder of it.’ John Miller Co. v. Harvey Mercantile Co., 45 N.D. 503, 513, 178 N.W. 802, 806, See also Klinkert v. Streissguth, 155 Minn. 388, 193 N.W. 687; Peper Automobile Co. v. St. Louis Union Trust Co., Mo.App., 187 S.W. 109; Fields v. Philadelphia Rapid Transit Co., 273 Pa. 282, 117 A. 59; Kinsey et ux. v. Duteau et ux., 126 Wash. 330, 218 P. 230. In the latter case it is said: ‘A party cannot in one action sue for a part of that to which he is entitled, and in a subsequent action sue for the remainder, when the right of recovery rests on the same state of facts.’ See also Kline et al. v. Stein et al., 46 Wash. 546, 90 P. 1041, 123 Am.St.Rep. 940.”

The principle that causes of action cannot ordinarily be divided is also upheld in Albaugh v. Osborne-McMillan Elevator Co., 53 N.D. 113, 205 N.W. 5; Reineke v. Commonwealth Ins. Co., 52 N.D. 324, 202 N.W. 657; Hyyti v. Smith, 67 N.D. 425, 272 N.W. 747.

In Boos v. Claude, 69 S.D. 254, 9 N.W.2d 262, 264, the South Dakota Court held:

“As disclosed by the Annotation 64 A.L.R. 663, it is the majority rule that a single wrongful or negligent act causing an injury to both the person and the property of the same individual constitutes but one cause of action with separate items of damages and that a recovery of a judgment for either item of damage may be pleaded in bar of an action to recover for the other item of damage.”

In Globe & Rutgers Fire Insurance Co. v. Cleveland, 162 Tenn. 83, 34 S.W.2d 1059, 1060, it is said:

“A single tort can be the foundation for but one claim for damages. * * * All damages which can by any possibility result from a single tort form an indivisable cause of action. Every cause of action in tort consists of two parts, to wit, the unlawful act, and all damages that can arise from it. For damages alone no action can he permitted.” (Citing cases.)

In Carr v. Preslar, S.D., 47 N.W.2d 497, 500, the South Dakota court held:

“A single or entire cause of action cannot he split so as to constitute the basis of more than one suit, and that recovery on any part of such an entire claim merges the whole and bars another action to recover the residue.” See also Hayward v. State Farm Mut. Automobile Ins. Co., 212 Minn. 500, 4 N.W.2d 316, 140 A.L.R. 1236; Kidd v. Hillman, 14 Cal.App.2d 507, 58 P.2d 662; Vane v. C. Hoffberger Co., 196 Md. 450, 77 A.2d 152, 22 A.L.R.2d 1450. Annotation 64 A.L.R. 663.

Under the facts in this case it is clear that only one cause of action is involved. Such cause of action cannot be divided. It follows that only one suit can be brought against the tort-feasor and only the damages asked for in that suit can be recovered.

Since the injured party, Logan, and insurer, the Farmers Insurance Exchange, plaintiff herein, were both interested in the damages resulting from a single cause of action, which cannot be divided, the question arises which one of them is the proper party to bring action for the damages caused by the collision.

The assignment by Logan of a part of the property damaged to his insurer the plaintiff Exchange, gave it also the right to bring action either in its own name or or in Logan’s. That, however, did not bar Logan from bringing suit. He still retained a larger portion of the claim for damages. Neither one had a right to split the cause of action and thereby shut the other one out from recovery for his portion of the claim for damages. Whichever one brought the suit was in good faith bound to bring it for the whole claim and on recovery to hold the share of the other one in trust whether so stated in the complaint or not. Moultroup v. Gorham, 113 Vt. 317, 34 A.2d 96; Dearden v. Hey, 304 Mass. 659, 24 N.E.2d 644, 127 A.L.R. 1077.

Hayward v. State Farm Mut. Automobile Ins. Co., 212 Minn. 500, 4 N.W.2d 316, 318, lays down this rule:

“The only means which the Home company (the insurer) had of recovery on its subrogated right was to have its claim included in plaintiff’s (the insured) cause of action against the wrongdoer. As against the wrongdoer, it could not he in any better position than the insured. By ho act of either the insurer or the insured could the wrongdoer be subjected to two actions on one cause. The cause of action could not be split by the insurer anymore than it could by the insured. If recovery had been had on either element of the cause, the other element would have been barred by the judgment.” (Citing cases.)

At common law the rule was that a suit to enforce the insurer’s rights must be brought in the name of the insured and not in the name of the insurer. Verdier v. Marshallville Equity Co., 70 Ohio App. 434, 46 N.E.2d-636; Johanson v. Cudahy Packing Co., 107 Utah 114, 152 P.2d 98; Ayres v. Wyatt, La.App., 185 So. 84. Under the statutes which require the real party in interest to bring a suit there has been some change in that rule depending upon the wording of the statute and the circumstances of each case. Where the insurer has paid the loss of the insured in full and received an assignment of the full claim of the insured for damages, it is generally held that the insurer is the real party in interest and must bring the action. Hermes v. Markham, 78 N.D. 268, 277, 49 N.W.2d 238. By the weight of authority, however, it is held that, if the insurance paid by the insurer covers only a portion of loss, as in the case at bar, the right of’ action against the wrongdoer, who caused the loss, remains in the insured for the entire loss and the action should be brought in the name of the insured. 29 Am.Jur., Insurance, Secs. 1355 and 1357, pp. 1013, 1015; Annotation 96 A.L.R. pp. 865, 879-881; Annotation 157 A.L.R. pp. 1243, 1251, 1252.

In the case of Parker v. Hardy, S.D., 41 N.W.2d 555, 556, the court said:

“When the indemnity paid by the insurer covers only part of the loss, as in this case, leaving a residue to be made good to the insured by the wrongdoer, the right of action remains in the insured for the entire loss. (Citing cases.) In these cases the insured becomes a trustee arid holds the amount of recovery, equal to the indemnity for the use and benefit of the insurer. . The rule is founded "on the principle that the wrongful act was single and indivisable, and gives .rise to but one liability. Upon this theory the splitting of causes of action is avoided and the wrongdoer is not subjected to a multiplicity of suits.”

In Flor v. Buck, 189 Minn. 131, 248 N.W. 743, 744, the Minnesota Court puts it this way:

“We are of the opinion that when the insured in a case of this character has not been paid in full by an insurance company, but has been partially repaid his loss by such company, leaving a residue to be made good by the wrongdoer, the action should be brought in the name of the insured to recover the full loss. (Citing cases.)”

In Moultroup v. Gorham, 113 Vt. 317, 34 A.2d 96, 98, the Vermont court says:

“The right of the insurer against the defendant (the wrongdoer) does not rest upon any relation of contract or. privity between them. It arises out of the nature of the contract of in- ■ surance as a contract of indemnity, and is derived from the insured alone, and can be enforced only in his right and must be worked out through the cause of action which the insured had. (Citing cases.)”

In Motors Ins. Corp. v. Coker, 218 Ark. 653, 238 S.W.2d 491, 493, the insurer was suing the wrongdoer after the insured had settled with him, the Arkansas Court says:

“We -think the best rule is to the-effect that a defendant (the wrongdoer) should have to stand but one lawsuit growing out of one tort when the cause, of a-ction is in one person or those holding through such person. If it were otherwise, ?. ^-h-.ndant would not dare settle a case for fear that, at a later date, someone would make another claim against him by reason of being subrogated to some right of the injured party, either through having paid a property damage claim,' or loss of time claim, or accidental injury' claim, or some other claim. In fact, even though the defendant may have paid a judgment in favor of 'the injured party, he would never know where he stood’ until the alleged tort was barred by the Statute, of Limitations.”

In Shiman Bros. & Co. Inc. v. Nebraska Nat. Hotel Co., 143 Neb. 404, 9 N.W.2d 807, the court held:

“Generally, under statute providing-that every action must be prosecuted in the name of the ‘real party in interest’ if the insurance paid- by' an insurer covers only a part of the loss, the right of action against the wrongdoer who caused the loss remains in the insured for the entire loss.”

Almost two years after Logan’s collision with Arlt and before the Exchange brought any suit an action was brought by Logan against Arlt. That action alleged that the collision was caused by the negligence of Arlt and prayed for all the personal and property damages. That suit was tried on its merits and all the issues raised in the instant case were passed upon by the jury. In fact, in the trial of the instant case the only evidence submitted was the reading of the testimony in the Logan case submitted by stipulation as depositions. No objection is raised that the issues were not fully submitted to the jury. The jury decided all those issues in favor of the defendant, Arlt, dismissing Logan’s cause of action.

Contrary to the contention of plaintiff’s counsel the bringing of the Logan suit and its result was available to the defendants as a defense in the instant case. It constituted a fact that arose after the assignment but prior to any notice to Logan thereof. Section 28-0203 NDRC 1943 provides, as far as applicable, to the instant case:

“In the case of an assignment of a thing in action, the action by the as-signee shall be without prejudice to any set-off or other defense existing at' the time or before notice of the assign-' ment. * * *”

In American Law Institute, Restatement of the Law on.Contracts, Sec. 167, the rule on the defenses available against an as-signee of a nonnegotiable cause of action is stated ás follows:

“An assignee’s right against, the obligor is, subject to -all limitations' of. the obligee’s- right, to all absolute and temporary defenses thereto,, and to all set-offs 'and counterclaims of . the obligor which would have been available against the obligee had there been no assignment, provided that such defenses and set-offs are based on facts existing at the time of the assignment, or are based on facts arising thereafter prior to knowledge of the assignment by the obligor.”

Logan’s suit exhausted the cause of action including the right of recovery for the property damages which plaintiff is now trying to recover. The basis of the-rights of the plaintiff under its right of subrogation and assignment were covered and litigated in the Logan action. It was the duty of the plaintiff to protect its right of subrogation but if it failed to do so it cannot now complain. Even though Logan had no recovery the final judgment is conclusive against the insured, Logan, and his insurer, the plaintiff in this action. In Sec. 52, p. 202, Am.Law Institute, Restatement of the Law on Judgments, the rule is laid down that:

“Where a valid and final personal judgment in favor of the defendant, is rendered after a trial on an issue of fact the plaintiff cannot maintain an action on the original cause of action if the issue was on the merits.”

In Freeman on Judgments, Vol. 2, Sec. 562, p. 1193, 5th Ed. it is said:

“But where an action may he prosecuted by anyone of several persons to ■be benefitted thereby, and the statute contemplates but a single action' for the benefit of all, the judgment in an action by one of such persons bars an action by the others.”

In Carr v. Preslar, S.D., 47 N.W.2d 497, 500, the court says:

“Another universally accepted principle of the doctrine of res judicata is that a single or entire cause of action cannot be split so as to constitute the basis of more than one suit, and that recovery on any part of such an entire claim merges the whole and bars another action to recover the residue.” See also Home Ins. Co. of N. Y. v. Smith, 235 Mo.App. 552, 140 S.W.2d 64; Jersey Ins. Co. of N. Y. v. Parrish, Co. Ct., 33 N.Y.S.2d 440; Patitucci v. Gerhardt, 206 Wis. 358, 240 N.W. 385; Motors Insurance Corp. v. Coker, 218 Ark. 653, 238 S.W.2d 491; Inter Insurance Exchange of Chicago Motor Club v. Andersen, 331 Ill.App. 250, 73 N.E.2d 12; Potomac Ins. Co. v. MacNaughton, 191 Misc. 362, 77 N.Y.S.2d 110; Parker v. Hardy, S.D., 41 N.W.2d 555.

The Logan judgment is a complete bar to the cause of action on which the present action is brought. The motions for judgment notwithstanding the verdict were properly granted.

The judgment of the District Court is. affirmed.

MORRIS, C. J., and CHRISTIANSON, SATHRE and THOMAS J. BURKE, JJ., concur.