Corbin v. Preston
| Decision Date | 25 September 1923 |
| Parties | CORBIN v. PRESTON ET AL. [*] |
| Court | Oregon Supreme Court |
Department 2.
Appeal from Circuit Court, Multnomah County; Walter H. Evans, Judge.
Action by J. C. Corbin, doing business as the J. C. Corbin Company against B. H. Preston and others. From a judgment and decree in favor of plaintiff, defendants appeal. Modified.
See also, 212 P. 541.
J. LeRoy Smith, of Portland (L. B. Sandblast, of Portland, on the brief), for appellants.
Robert F. Maguire, of Portland (Joseph K. Carson and Winter & Maguire, all of Portland, on the brief), for respondent.
Plaintiff, as the assignee of a chattel mortgage upon the furniture and household goods in the Sheffield Apartments, Portland, Or., the condition of which mortgage had been broken by the mortgagees, commenced this action against the mortgagees, the defendants herein, to recover the possession of the mortgaged property, as authorized by section 10183, Or. L. The purpose of the action was to place plaintiff in a position to foreclose the chattel mortgage in the manner therein provided. The complaint is in the usual form of a complaint in an action of replevin.
The defendants, answering, denied the allegations of plaintiff's complaint, and pleaded affirmatively that they purchased the personal property covered by the chattel mortgage, together with the assignment of a lease on the Sheffield Apartments from Lyle Ashton, plaintiff's assignor, for the agreed consideration of $14,000, of which sum they paid $5,600 at the time the sale was made, and discharged the balance by their promissory note in the sum of $8,400, payable in monthly installments of $350 and interest, which note was secured by the chattel mortgage mentioned.
Defendants further averred in their answer that they were induced to make the aforesaid purchase by false and fraudulent representations made to them by Lyle Ashton, which they believed and relied upon, and by reason of which they were injured and damaged in the sum of $10,000; that they paid $700 upon the principal of the note and interest to October 1, 1921; that Lyle Ashton assigned the above-mentioned note and mortgage to plaintiff without consideration, and for the purpose of defeating defendants' claim for damages; and that, unless restrained, plaintiff would seize the mortgaged property to satisfy his mortgage and harass defendants and put them to great cost and expense.
Defendants prayed for a judgment for damages in the sum of $10,000, to be set off against the amount due and unpaid on the note and chattel mortgage securing the same, also for a decree directing that the note and mortgage be delivered up and canceled, and for other relief as to the court might seem equitable.
Plaintiff, by his reply, denied the affirmative matter in the answer and cross-complaint, and by direct averment pleaded the assignment of the note and mortgage to him by Lyle Ashton, but did not allege that the assignment was for value or without notice of defendants' claim of fraud. Plaintiff's reply concluded by a prayer for the appointment of a receiver pending the litigation. The cause thereafter proceeded to trial as an equity suit.
After hearing all the evidence, the circuit court determined that the defendants had failed to establish the charges of fraud and deceit, as set forth in their answer, and that their equitable defense and cross-complaint were without equity; also that the plaintiff "is the owner and entitled to the immediate possession of all of the personal property described in plaintiff's complaint." The court embodied its aforesaid determination in a judgment and decree, and further directed the sheriff of Multnomah county to deliver the personal property to the plaintiff and place him in the possession thereof forthwith. Defendants appeal from that judgment and decree.
Defendants' principal assignments of error are directed at the adverse decision of the court upon the issues of fact presented by the allegations of fraud contained in defendants' answer, and denied by plaintiff in his reply. Defendants contend that the evidence establishes that the sale of the furnishings in the Sheffield Apartments and the lease thereon to defendants was procured and induced by fraudulent representations made to defendants by Lyle Ashton, plaintiff's assignor, as charged in the answer and cross-complaint of defendants, and also establishes that defendants were damaged by reason of such fraud and deceit in the sum of $10,000, entitling them to the relief prayed for in their answer and cross-complaint.
Before proceeding to a consideration of the specific fraudulent representations which defendants allege were made by plaintiff's assignor to induce the sale and transfer in question, it may be helpful to set forth a brief explanation of the situation and relations of the parties, together with a general description of the subject-matter, as the same are disclosed by the evidence.
The Sheffield Apartments contain 24 house-keeping apartments, some having three rooms therein, and the others four rooms each. Each apartment is provided with a bathroom and kitchen, and equipped with electric lights and a telephone. More than half of them were furnished, and the remainder were unfurnished at the time of the transactions under consideration.
Mrs. Ashton owned the household furniture and furnishings and held a lease upon the building, which lease by its terms terminated on December 1, 1923. The rental provided by the lease was $650 per month. payable monthly in advance. Under the terms of the lease the tenant was required at her own expense to keep the building in repair, except repairs to the roof and to piping and plumbing within or behind the walls. Apartment designated as No. 26 therein and one room facing on Jefferson street in apartment designated No. 42 were reserved by the lessor, and it was provided in the lease that the lessee should furnish heat, telephone, water, and other general service without charge to the occupants of the apartment and room so reserved. It was also provided in the lease that the lessee should deliver up possession of the premises to the lessor at the expiration of the term of the lease, or at any earlier termination thereof. No provision was made in the lease for any extension thereof.
Lyle Ashton acquired the furniture of the Sheffield Apartments, and the leasehold interest above mentioned, on February 23, 1921, and upon that date entered upon the operation and management of the apartment house, and managed and conducted the same about five months, or until she sold her furniture, furnishings, and leasehold interest to the defendants on August 1, 1921.
The defendants are husband and wife. For about two years prior to the transaction in question, B. H. Preston, with the assistance of a janitor employed by him, had been conducting an apartment house in the city of Portland. Florence Preston is an experienced business woman. Defendants apparently entertained the expectation (since disappointed) that a World's Exposition would be held in Portland in 1925. In anticipation of that event, and calculating that space for the accommodation of visitors would then likely be at a premium, defendants conceived the purpose of securing another apartment house with the intention that defendant Florence Preston would manage and conduct the same. Accordingly, about July 22, 1921, defendants entered into negotiations with Lyle Ashton for the purchase of the furniture in, and lease upon, the Sheffield Apartments, throughout which negotiations the parties dealt at arms' length.
On the last-mentioned date, defendant Florence Preston was shown through the apartment house by Lyle Ashton, and inspected a number of the apartments and the furniture and furnishings therein. As they went about the premises, Lyle Ashton informed Mrs. Preston of the amount of rent received from each apartment when occupied; that the rent of each apartment was on the average $5 per month more in the winter months than in the summer months; and that the item of rent payable to the owner under the terms of the lease was $650 per month. Defendant at the time understood (whether from previous knowledge or from information given her by Lyle Ashton does not appear) that the cost of incidental repairs, removing garbage, janitor service, and for water, heat, light, and telephones supplied to the occupants of the apartments, constituted items of expense in the operation of the apartments, which the party conducting the same was required to pay.
On July 26, 1921, the defendants together made an examination of the apartment house, and also inspected several of the apartments therein, including some that were furnished, in which cases they also examined the furniture and furnishings. Lyle Ashton gave defendants such further information respecting the operation of the apartments as was called for by inquiries made by defendants. Following this second visit and examination of the premises, defendants agreed to purchase the interests of Mrs. Ashton, and thereafter on August 1, 1921, the transfer was consummated, and defendants took possession and entered upon the management of the apartments.
Several of the representations which the defendants allege that Lyle Ashton made to induce them to purchase the furniture owned by them, and situate and located in the Sheffield Apartments together with their leasehold interest, and which defendants claim were fraudulent, consist of predictions as to the future conduct of the owner of the Sheffield Apartments. Defendants alleged in their answer, in substance, that Lyle Ashton, for the purpose of inducing them to purchase the property and execute a note and chattel mortgage in part payment...
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