The Holladay Case

• Decision Date: 14 June 1886
• Citation: 27 F. 830
• Parties: THE HOLLADAY CASE. v. ELLIOTT and others. HICKOX
• Court: U.S. District Court — District of Oregon

27 F. 830

THE HOLLADAY CASE.

HICKOX v. ELLIOTT and others.

United States Circuit Court, D. Oregon.

June 14, 1886

James K. Kelly and C. E. S. Wood, for plaintiff.

Henry Ach, for defendant Effinger.

Thomas N. Strong, for defendant Joseph Holladay.

J. K Weatherford, for defendant Elliott.

DEADY J.

This suit is brought by George C. Hickox, a citizen of California against Simon G. Elliott, Joseph Holladay, William H.

Effinger and Ben Holladay, as citizens of Oregon, to subject certain property, the legal title of which is now in Joseph Holladay, to the payment of a certain decree, heretofore given by the supreme court of Oregon, against Ben Holladay, on the ground that said property was assigned, transferred, and conveyed to the former by the latter, to hinder and delay his creditors; and that the plaintiff is the assignee of said decree, in trust for Martin White, a creditor of said Elliott. The case was before this court on November 12, 1884, on a demurrer to the bill, and the judgment of the court thereon is reported in 10 Sawy. 415, and 22 F. 13. On March 16, 1885, the suit was dismissed as to Ben Holladay on his plea in abatement, to the effect that he 'is a citizen of the city of Washington, in the District of Columbia. ' The plea was considered as the equivalent of an allegation that the defendant is not a citizen of any state in the Union, and therefore not suable here on the ground of his citizenship.

Briefly, the case stated in the bill, and admitted by the answers or made by the proof, is this:

On September 12, 1868, Elliott entered into a partnership with Ben Holladay and C. Temple Emmet, for the purpose of constructing and operating railways in Oregon, which partnership was engaged in the construction of the road of the Oregon Central Railway Company until November 5, 1869, when Holladay and Emmet commenced a suit in the circuit court for the county of Multnomah to dissolve said partnership, which suit was afterwards transferred to Marion county, where, on September 28, 1877, a decree was made dissolving said partnership and declaring Elliott indebted thereto in the sum of $470, from which decree Elliott took an appeal to the supreme court of the state, wherein, on August 15, 1879, a decree was given dissolving said partnership, and that Elliott recover from Holladay $21,919.46, and from Emmet $8,596.08, together with nine-tenths of the costs in both the appellate and lower court, amounting, as taxed, to $2,710.76; and there is now due on said decree from said Holladay, principal and costs, the sum of $24,630.22, with interest from August 15, 1879, to January 25, 1881, at the rate of 10 per centum per annum, and thereafter at the rate of 8 per centum until date; in all, the sum of $38,806.29.

On February 10, 1874, Elliott, being without means or credit, applied to Martin White, then and now a citizen of California, for a loan of $12,000, to enable him to assert and maintain his rights in said suit, and offered to secure the payment of the same by an assignment of all his right, title, and interest in the property involved therein, to the plaintiff, in trust for said White. Thereupon, a contract was duly made and signed by said Elliott and White, which in effect recites that a controversy exists between Elliott and Holladay and others, concerning Elliott's 'right' in the property, franchise, and rights of the Oregon Central Railroad Company, and that, 'for the purpose of asserting and maintaining his rights in said controversy, said Elliott has borrowed from Martin White the sum of $12,000 in gold coin of the United States, and has agreed to repay the same within one year from the date of the last installment thereof, as hereinafter provided, (and within two years from the date hereof, whether the last installment shall be demanded by said Elliott within one year from the date hereof or not,) with interest on each installment from the date of the advance thereof at the rate of 10 per centum per annum. ' The agreement continues, that, in consideration of the premises, 'Elliott has granted to White the option,' to be exercised within 60 days after Elliott shall obtain possession of said property, 'and notified White thereof,' to take in lieu of the repayment of said loan one-half of all the property recovered by said Elliott, less 1,000,000 of the bonds of the Oregon Central Company reserved for the use of the latter, and not exceeding $100,000 of the same for his attorney. 'And to secure the performance of this agreement on his part, and to secure the payment of any additional advances not exceeding $13,000 that he may obtain from said White or other parties, said Elliott has assigned and conveyed in trust to George C. Hickox all his right and title, interest and claim, in and to the property aforesaid. ' 'And in consideration of the agreement and acts of said Elliott, said White has agreed to loan to said Elliott said sum of $12,000 in gold coin of the United States, and to advance the same upon his demand in installments from time to time, as the same shall be required, upon the terms aforesaid. ' See Hickox v. Elliott, 10 Sawy. 417, S.C. 22 F. 14, 15, where this agreement is set out in full.

In pursuance of this agreement, Elliott, on February 13, 1874, executed and delivered to the plaintiff the following sale and assignment:

'In consideration of the sum of $12,000 in gold coin of the United States to me paid, and other valuable considerations, I, S. G. Elliott, of the commonwealth of Massachusetts, have granted, bargained, sold, and assigned, and by these presents do grant, bargain, sell, and assign, unto George C. Hickox, of the city and county of San Francisco, state of California, all my right, title, interest, and claim, both in law and equity, in and upon the stock, property, and assets of the Oregon Central Railroad Company of Salem, Or., and the Oregon & California Railroad Company, of Portland, Or., the firm of A. J. Cook & Co., and the firm of Ben Holladay & Co.'

White claims and testifies that between the date of said agreement and March 25, 1879, he advanced to Elliott thereunder, or to others for him, the sum of $22,201.15. It is not questioned but that he advanced this sum, as stated in the account thereof attached to his deposition herein. But Elliott contends that White failed to advance him money as the agreement required, whereby the arrangement fell through and the assignment became inoperative; and that all sums paid out by White, as set forth in his account, after July 24, 1874, were so paid without his authority or consent, for which he is not liable. This contention is based on the assumption that White undertook to advance Elliott not exceeding $25,000, when and as he might require or demand it. But the truth is, White never undertook anything of the kind. Taking this agreement and assignment together, and reading them by the light of the surrounding circumstances, it is evident that White did not undertake absolutely to advance Elliott more than $12,000, and only so much of that amount as might be necessary, from time to time, to enable the latter to properly carry on the controversy with his partners, which was expected to be brought to an end within the coming year, and that any additional advance that Elliott might obtain from White or other persons, not exceeding $13,000, should be equally secured by this assignment; but White did not undertake to furnish any portion of said additional advance.

Elliott admits that prior to July 2, 1874, and scarcely five months from the date of the contract, White had advanced him $8,592.50, the larger portion of which appears to have been applied to the former's private use, and not to the expense of the litigation with Holladay & Co. But the evidence shows that by July 14, 1874, there was advanced to Elliott by White $11,718.50, and that on August 18th thereafter the latter paid Domnett a note of $363, which he had accepted for the former, in the February preceding, making the sum thus advanced $12,082.25, or $82.25 in excess of the sum stipulated.

On April 29, 1874, when over $7,000 had been advanced to Elliott, he drew on White from Portland in favor of himself for $500, and the defendant Effinger, who was his attorney, for $1,500. On May 6th these drafts were protested for non-payment, and three days afterwards White wrote Elliott, rebuking him sharply for drawing on him for such sums or at all, after he had been advised not to draw on him for a dollar. The letter was put in evidence by Elliott. In the course of it White says if you need some small amounts 'for incidental uses in the suit,' write and let me know, and I will send my check therefor. 'I have already let you have enough to meet all coming (current) expenses, had it been applied to that purpose; in fact, I have advanced it twice as fast as I expected to, when I began. ' I would be glad to furnish the $1,500 for Mr. Effinger. 'I have no doubt he needs the money, but under the circumstances I cannot see any way to let him have it at present. ' With this letter White sent Elliott his check for $250 'to defray incidental expenses.'

On July 24, 1874, Elliott being in San Francisco, and in need as usual, drew on White in favor of Johnson & Co. for the sums of $325 and $1,575, and the defendant Effinger for the sum of $600, which sums White declined to pay, as he told Elliott he would before the drafts were drawn.

Thereafter, Elliott testifies that he considered the arrangement with White at an end, and the assignment inoperative.

The only item in White's account of the $12,000 advanced to Elliott now disputed by the latter, is the $2,465 paid by the former to discharge a debt of Elliott's of that amount secured by a mortgage on the property assigned to...