Barnes v. Eastern & Western Lumber Co.

Citation205 Or. 553,287 P.2d 929
PartiesMartha Ladd BARNES et al., Respondents, v. EASTERN AND WESTERN LUMBER COMPANY, a corporation, et al., Appellants.
Decision Date21 September 1955
CourtSupreme Court of Oregon

Wilber Henderson, Portland, argued the cause for appellants Eastern and Western Lumber Co., and others. With him on the briefs were Carl E. Davidson and Charles P. Duffy, Portland.

Robert L. Sabin, Portland, argued the cause for appellant United States National Bank of Portland, as Executor and Trustee under the Will of Frank H. Ransom, Deceased. With him on the briefs were Sabin & Malarkey and Carmie R. Dafoe, Jr., Portland.

Robert F. Maguire, Portland, argued the cause for respondents. With him on the brief were Maguire, Shields, Morrison & Bailey, Latourette & Latourette, Henry A. Buehner and Harrison E. Spangler, Portland.

ROSSMAN, Justice.

Four members of this court, prompted by a belief that a judge should not only be fair but should also be free from all relationship to the case and its parties that might afford ground for distrusting his impartiality, announced after this appeal was filed that they deemed themselves disqualified and would not participate in the disposition of the appeal. The circumstances which induced their action were well-known to all of the parties. After those four justices had made their announcement, all parties joined in a petition requesting all seven justices to hear the case. The petition evinced confidence in the impartiality of all members of this court. Thereupon the case was heard en banc. We make this explanation so that no one will infer that any member of this court, without express approval, participated in the disposition of an appeal in which any party might have cause to deem him disqualified.

This is an appeal by 18 of the 29 defendants from a decree in favor of the plaintiffs, 12 in number. The subject matter of the suit was 2,500 shares of the capital stock of Eastern and Western Lumber Company, a corporation, which was dissolved November 6, 1946, before this suit was instituted, but which, nevertheless, was named as one of the 29 defendants. The plaintiffs were the owners of the aforementioned 2,500 shares on February 8, 1944, and on that day sold them to Charles B. Duffy, K. H. Koehler, Frank H. Ransom and L. A. Morrison. Those four persons were the principal executive officers of the Eastern and Western Lumber Company. The plaintiffs were unaware of the fact that those individuals were the buyers, and allege that they would not have sold their stock had they known that the principal officers of the corporation were the buyers. Morrison died April 25, 1945, and Ransom on June 10, 1946. December 3, 1948, this suit was instituted. Its purpose, among others, was to effect a rescission of the sale of the stock. One Lee Burton Morrison, executor of the estate of L. A. Morrison, deceased and the United States National Bank of Portland, trustee under Morrison's will, were made party defendants and both are now appellants. The same banking institution, as executor and trustee under the will of Frank H. Ransom, deceased, is again a defendant-appellant in the capacities last mentioned. Charles B. Duffy and K. H. Koehler were other defendants.

We take the following from the challenged decree:

'Ordered, Adjudged and Decreed as Follows:

'1. That the sale and transfer by plaintiffs on February 8, 1944, of their 2500 shares of capital stock of Eastern and Western Lumber Company to Charles B. Duffy, K. H. Koehler, Frank H. Ransom, and L. A. Morrison, be and is rescinded, cancelled, annulled and held for naught as of February 8, 1944;

'2. That Eastern and Western Lumber Company having been dissolved and liquidated and its assets distributed to its stockholders appearing of record and it being impossible for the defendants Charles B. Duffy, K. H. Koehler, The United States National Bank as executor of the Estate of Frank H. Ransom, deceased, and Lee Burton Morrison as executor of the estate of L. A. Morrison, deceased, to return to plaintiffs their said 2,500 shares of capital stock of Eastern and Western Lumber Company the plaintiffs are entitled to and are hereby given joint and several judgment against Charles B. Duffy, K. H. Koehler, The United States National Bank of Portland as executor of the estate of Frank H. Ransom, deceased, and Lee Burton Morrison as executor of the estate of L. A. Morrison, deceased, and in the following amounts,----

'(a) $782,495.00, together with interest thereon at the rate of 6% per annum from October 23, 1946, which said interest up to the date of the entry of this decree is $263,178.95.'

At that point the decree added 14 supplementary awards. Seven of the latter were each in the amount of $3,750 and represented dividends upon the aforementioned 2,500 shares of corporate stock which were paid to the four defendants, Duffy, Ransom, Koehler and Morrison, subsequent to February 8, 1944. The remaining part of the 14 supplementary awards consisted of interest upon the seven sums of $3,750, calculated from the time payment was made to the day of the decree's entry.

Apart from Duffy, Koehler, and the representatives of the estates of Ransom and Morrison, all of the other defendants are beneficiaries under the wills of the two decedents last mentioned or under the will of one W. B. Ayer, whom we will later identify. Since Duffy, Ransom, Koehler and Morrison were, according to the decree, the purchasers of the aforementioned block of stock and are the individuals whom the plaintiffs allege employed deceit, we will hereafter, for purposes of convenience, refer to them as the defendants and appellants, even though Ransom and Morrison died before this suit was instituted. After this appeal was argued, the plaintiffs-respondents, in consideration of $280,000 paid to them, stipulated 'not to further prosecute said suit or press their said claim against' the defendant-appellant United States National Bank, as executor and trustee of Ransom's estate, nor against any of the other 'Ransom defendants' (beneficiaries of Ransom's estate). The motion of the plaintiffs-respondents which presented the stipulation to this court reserved to the plaintiffs the right to continue the suit against all of the other defendants-appellants, subject to a credit of $280,000. Based upon the motion and stipulation, this court entered an order which gave effect to the stipulation. Hence, we are not called upon to adjudicate the liability or nonliability of Ransom's estate or of any of the 'Ransom defendants.' We will, however, be required frequently to mention Ransom, and when we use the word 'defendants' we will include him in the term.

The challenged decree was entered after a trial, in the course of which evidence was received which, as transcribed, covers approximately 4,000 pages. The testimony is supplemented by exhibits, more than 300 in number, which consist in large part of correspondence, bank records, bookkeeping entries and corporate minutes. The entire record has been examined with care. Our review of it will be lengthy, but the facts in this case are of primary importance.

The trial judge made no findings of fact. His decree, however, contains this recital:

'The court having heretofore found for the plaintiffs and against the defendants that the allegations of plaintiffs' second amended complaint as amended, and the allegations of their reply to the answers and the further and separate answers and defenses of the defendants * * * are true * * * and that the allegations set forth in the answers and further and separate answers and defenses of defendants last above named are not sustained by the evidence and are not true * * *.'

It will be observed that the decree states that the allegations of the second amended complaint and those of the reply 'are true' and that those of the answer were not sustained by the evidence. The four defendants, according to charges made by the plaintiffs' pleadings, deceived the plaintiffs and in that manner induced them to sell their stock. The complaint gives the following specifications of the general charge of fraud: the defendants (1) concealed from the plaintiffs some of the lumber company's assets; (2) misstated and depreciated to the plaintiffs the value of a parcel of land in Portland upon which the lumber company's plant stood; (3) misrepresented and belittled to the plaintiffs the value of a large tract of pine timberland in Klickitat county, Washington, which the company purchased in 1920 as an investment; (4) falsified to the plaintiffs the probable value, upon liquidation, of the corporation's assets; (5) for the wrongful purpose of inducing them to anticipate corporate losses, told the plaintiffs that they, as the managing officers of the company, intended to cut the Klickitat county timber, bring the logs to Portland and mill them in the corporation's Portland plant; and (6) wrongfully concealed from the plaintiffs the fact that the defendants were the purchasers and induced them to infer that the purchaser was an individual who lived in St. Paul, Minnesota.

The answer of the defendants traversed all of the charges of fraud. It denied that the defendants purchased the 2,500 shares from the plaintiffs and averred that the latter, with full knowledge of the facts, sold their stock to an investment firm entitled Hess and Butchart. It alleged that the defendants later purchased the stock from that firm. The answer tendered defenses of estoppel, laches and the bar of the statute of limitations.

The lumber company, which was incorporated in August, 1902, constructed a sawmill in Portland upon a site, about 22 acres in extent, which lay on the west bank of the Willamette river. Prior to 1930 the company earned large dividends for its stockholders. In the years 1930 to 1936, both inclusive, and in 1938 it operated at a loss. The year 1937 was profitable; so, also, was 1939 and...

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    • United States
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    ...trust, the doctrine of unjust enrichment generally governs the substantive rights of the parties. See Barnes v. Eastern & Western Lbr. Co., 205 Or. 553, 287 P.2d 929 (1955). Unjust enrichment requires restitution, see Ahrens v. Dye, 208 Neb. 129, 302 N.W.2d 682 (1981), which measures the re......
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