Barde v. Portland News Pub. Co.

• Court: Oregon Supreme Court
• Writing for the Court: KELLY, Justice.
• Citation: Barde v. Portland News Pub. Co., 26 P.2d 787, 145 Or. 376 (Or. 1933)
• Decision Date: 09 November 1933
• Parties: BARDE et al. v. PORTLAND NEWS PUB. CO. [*]

26 P.2d 787

145 Or. 376

BARDE et al. v. PORTLAND NEWS PUB. CO. ^[*]

Supreme Court of Oregon

November 9, 1933

In Banc.

Appeal from Circuit Court, Multnomah County; Robert Tucker, Judge.

Action by Rose Barde and others against the Portland News Publishing Company. Judgment for plaintiffs, and defendant appeals.

Affirmed.

Dan E. Powers and Guy C. H. Corliss, both of Portland (John C. Veatch, of Portland, on the brief), for appellant.

Herbert Swett, of Portland (Dey, Hampson & Nelson, of Portland, on the brief), for respondents.

KELLY Justice.

On December 3, 1921, plaintiffs and the Telegram Publishing Company, a corporation, executed a written lease, wherein plaintiffs were designated as the lessors and the Telegram Publishing Company the lessee. By its terms, said lessors leased and demised unto said lessee lots 3 and 4 in block numbered 255 in Portland, Multnomah county, Or., the same being located at the northwest cornor of Eleventh and Washington streets in said city of Portland. The term of said lease was 25 years. The lessors agreed to construct a building under certain plans and specifications upon said premises, and the rental was to be based upon certain stipulated valuations of the real estate and the costs of the construction of the building. This building was constructed and the lessee took possession under the lease the rental then being fixed at $24,000 per annum payable monthly.

Thereafter the Telegram Publishing Company went into bankruptcy.

On June 17, 1928, based upon the report of the trustee in the matter of the bankruptcy of said publishing company, an order was duly given and made by the referee in bankruptcy which, by its express terms, authorized and empowered said trustee in bankruptcy, on payment of $226,000 in cash, to sell and convey to one David S. Lofgren, trustee, all of the properties, good will, and business of said bankrupt including choses in action, book accounts, but excluding money on hand and in transit; said sale to be consummated as of the close of business on June 18, 1927, said sale to include an assignment and transfer of the lease covering the property occupied by said bankrupt under a lease.

On June 20, 1927, pursuant to said order, said trustee executed a written instrument selling, assigning, transferring, and delivering to said David E. Lofgren, trustee, said property assets, and good will of said bankrupt, and at said time said trustee also executed an instrument in writing selling assigning, and transferring to said Lofgren, trustee, all the rights, properties, and interests of said lessee in and under said lease.

On the 21st day of June, 1927, said Lofgren, James Crossley, and Pauline Stockton, as incorporators, organized the Portland Telegram, as a corporation under and pursuant to the laws of the state of Oregon, with its principal office in Portland, Multnomah county, Ore., and said last-named corporation succeeded to the interests of the said Lofgren, trustee, in the assets of said bankrupt, the Telegram Publishing Company.

On the 31st day of August, 1927, the plaintiffs herein, said corporation, the Portland Telegram, and J. E. Wheeler and L. R. Wheeler executed a written agreement, reciting that said lease first herein mentioned had been executed; that said corporation, the Portland Telegram, had succeeded to the right, title, and interest of the lessee therein named, and that, as an incident to said succession, and in part consideration thereof, plaintiffs had consented to a modification of said lease as thereinafter set forth. Said modification reduced the rental reserved in the said premises for the first ten-year period remaining unexpired on September 1, 1927, in the annual sum of $4,200, by changing the base valuation of $200,000 for the land, whereon the Telegram building is erected, to $147,500, and in granting to the Telegram Company the right to make any desired physical changes which it might desire in the leased building, provided said changes should not impair the value of the building, conflict with any law or ordinance, or render the premises liable to any claim of lien therefor. Said instrument also provided that, with reference to the succession of the Portland Telegram, the reduction of rental, and the right to make alterations, said agreement should not become operative unless and until executed by said J. E. Wheeler and L. R. Wheeler, and that the obligations of the said J. E. Wheeler and L. R. Wheeler, as originally expressed, should continue with the substitution of the Portland Telegram as lessee.

Said instrument also contained the following provision: "The said reduction of rental and the right of alteration shall not affect the validity or operation of any clause of said lease save with respect to rental, and each and every provision of said lease is hereby ratified and confirmed, and The Portland Telegram, by its signature to one of the duplicate originals hereof, specifically assumes each and every obligation of the original lessee under said lease, save that the rental for the first ten year period is modified as above set forth, and the right of alteration is granted."

By an instrument bearing date, May 4, 1931, executed by Herbert Fleishhacker and C. H. Brockhagen, who then owned and controlled all of the capital stock of the Portland Telegram, and bearing the O. K. of Harry W. Ely, president of defendant, defendant agreed to purchase all of said capital stock for the sum of $750,000. It was therein agreed that the defendant would immediately form, or cause to be formed, a corporation under the laws of the state of Oregon, to be known as the News-Telegram Publishing Company, or some similar name, which corporation should take over all of the physical properties and other assets of defendant and the Portland Telegram, Inc., and cause to be issued first mortgage bonds in the sum of $500,000, secured by all of the assets of every nature and description of defendant and the Portland Telegram and said new corporation, said bonds to be delivered to said Fleishhacker and Brockhagen at par to apply upon the purchase price of said capital stock, the balance of said purchase price to be paid as follows: The sum of $50,000 in cash, and the purchaser to assume the difference between current assets and current liabilities of said the Portland Telegram, Inc., which in no event shall exceed the sum of $200,000 in favor of current liabilities. In the event said difference exceed the sum of $200,000, such excess shall be paid by Herbert Fleishhacker and C. H. Brockhagen, and, in the event said difference shall be less than the sum of $200,000, such deficit shall be paid by the purchasers to said Herbert Fleishhacker and C. H. Brockhagen, but in no event shall the total purchase price exceed the sum of $750,000, provided, however, that in estimating said indebtedness and/or liabilities of said the Portland Telegram, Inc., all paid-up subscriptions shall not be considered in said estimation, but shall be assumed by the purchaser. The receipt of $50,000 was acknowledged therein as the first payment of the purchase price.

On the 25th day of May, 1931, Herbert Fleishhacker and C. H. Brockhagen, as parties of the first part, the defendant as party of the second part, and the Portland Telegram, as party of the third part, executed an agreement supplementing and modifying said agreement last hereinabove mentioned, wherein, among other things, it was agreed that said Fleishhacker and Brockhagen would reimburse defendant on account of the payment of interest to the holders of the first mortgage 6 per cent. gold bonds amounting to $485,000, to be issued, by defendant for the period of May 1, 1931, to and including May 1, 1932, in an amount representing the difference between 5 per cent. and 6 per cent. interest on said $485,000; and would reimburse defendant for interest paid on said bonds for a period of four days from May 1, 1931, to and including May 4, 1931, being the period elapsed between the date of said bonds and the date the second party actually took over the assets of the third party. It was further agreed therein that Fleishhacker and Brockhagen would hold defendant harmless from liabilities arising out of certain litigation, and would also hold defendant "harmless from any and all claims whatsoever kind or nature arising out of any lawful contract, debt or other liability which may in the future be presented against The Portland Telegram and not shown on the books of said corporation at the close of business on the 4th day of May, 1931."

In said supplemental agreement of May 25, 1931, the following express agreement on defendant's part is set forth:

"The second party (defendant herein) agrees:

"(1) To assume any and all liabilities of The Portland Telegram shown on its books as of the close of business on May 4, 1931, including any and all liabilities which the third party may be subject to under certain indenture of lease by and between Rose Barde et al. and The Telegram Publishing Company, a corporation, dated the 3rd day of December, 1921, and all assignments and supplementary agreements attached thereto, which said lease covers the building hereto used and occupied by The Portland Telegram and described as 421 Washington Street, Portland, Oregon."

On the said 25th day of May, 1931, a bill of sale was executed by said corporation, the Portland Telegram, as party of the first part, wherein defendant herein is named as the party of the second part, and wherein and whereby said party of the first part sold, assigned, and delivered unto said defendant herein as the party of the second part certain specified personal property consisting of newspaper presses, composing machines, furniture fixtures and equipment,...