Erickson v. Grande Ronde Lbr. Co.

• Decision Date: 03 May 1939
• Citation: 92 P.2d 170,162 Or. 556
• Parties: ERICKSON <I>v.</I> GRANDE RONDE LUMBER CO. ET AL.
• Court: Oregon Supreme Court

162 Or. 556

92 P.2d 170

ERICKSONv.

GRANDE RONDE LUMBER CO. ET AL.

Supreme Court of Oregon.

Argued at Pendleton May 3, 1939.

Modified June 6, 1939.

Rehearing denied September 26, 1939.

Contracts — Value of services rendered

1. In action by tax counselor and accountant against corporations for value of services rendered in income tax contests, evidence held to authorize conclusion that plaintiff's services were valuable, satisfactory and productive of desired results.

Appeal and error — Value of services

2. In action for value of services rendered, where one defendant's motion for nonsuit was allowed at conclusion of plaintiff's testimony and no appeal was taken from judgment against other defendant, reviewing court must assume that plaintiff's services were worth at least the amounts awarded in the judgment.

Corporations — Services of tax counselor

3. Services rendered by accountant and tax counselor in income tax contests were not within provision, in contract for transfer of corporation's assets, excepting from liabilities assumed by transferee "the liability for income tax incurred prior to [specified date]".

Corporations — Transfer of assets

4. Generally, corporation to whom all of another corporation's assets are transferred is not liable for transferor's liabilities, except where there is express or implied agreement, the transaction amounts to consolidation or merger, purchaser is merely a continuation of selling corporation, or the transaction is fraudulent.

Contracts — Definitions

5. The words "liabilities" and "indebtedness" may be deemed "accordion words", capable of expanding and contracting in their connotations; they may mean present, current, future, fixed or contingent debts, and their meaning should be determined not by looking in dictionaries, but by reading the context, reviewing the transaction, and taking note of the parties' subsequent conduct.

Corporations — Services of tax counselor

6. As used in contract for transfer of lumber company's assets to related company, which was to assume transferor's "liabilities" and "indebtedness", the quoted words included transferor's liability

to accountant and tax counselor for services rendered in tax contests, in view of knowledge of transferee's directors that services were being performed, coupled with other facts.

Contracts — Promise to pay

7. Where one agrees to pay another person's creditors, out of a fund or property received from the other person or in satisfaction of debt to the other person, creditor can maintain action on the promise.

Contracts — Transfer of assets

8. Where agreement for transfer of corporation's assets provided that transferee would pay transferor's indebtedness, and funds were transferred to transferee out of which to make such payment, and were held by transferee in a special fund, transferor's creditor could maintain action against transferee on his debt.

Contracts — Beneficiaries

9. Where debtor-creditor relationship exists between promisee and third-party beneficiaries of contract, description of the beneficiaries by class is sufficient, and beneficiary need not be identified when the contract is made.

Corporations — Transfer of assets

10. Under agreement for transfer of all of corporation's assets, whereby transferee assumed transferor's liabilities, transferor's creditor was not required to make formal acceptance of the agreement within a reasonable time in order to maintain action against transferee on the debt.

Contracts — Value of services rendered

11. In action for value of services rendered under contract, evidence held sufficiently contradictory of plaintiff's opinion evidence concerning value of services, to authorize findings allowing plaintiff less than amount sought.

Appeal and error — Evidence

12. Where trial court held a particular item of evidence inadmissible, but evidence was in fact admissible and the fact was subsequently placed in the record by an offer of proof, reviewing court could employ such item of evidence in making statement of facts.

Appeal and error — Disposition on appeal

13. Where judgment against corporation for value of services rendered was affirmed, but erroneous judgment for other corporation which assumed first corporation's indebtedness was based upon order of nonsuit, reviewing court would remand rather than render judgment against both defendants.

ON PETITION FOR REHEARING

Contracts — Construction

14. In construing a contract, testimony concerning the circumstances which surrounded the parties to the contract at time it was written was admissible.

Judgment — Contracts

15. A creditor beneficiary who has an enforceable claim against the promisee can get judgment against either the promisee or promisor or against each of them on their respective duties to him, and satisfaction in whole or in part of either of these duties, or of judgments satisfies to that extent the other duty or judgment.

Corporations — Value of services

16. Where agreement for transfer of corporation's assets provided that transferee would pay transferor's indebtedness and funds were transferred to transferee out of which to make such payment, an accountant and tax counselor who rendered services to transferor was not required to elect as to whether he should take judgment against transferee or transferor, for value of his services, but could secure a judgment against both the transferee and transferor.

Principal and surety — Corporations — Transfer of assets

17. Under an agreement for transfer of corporation's assets which provided that transferee would pay transferor's indebtedness, the relation between transferor and transferee was not that of "principal and surety", and a creditor of transferor suing transferee was not bound by the suretyship rule that principal and surety may not be sued in same action and, where they are, a plaintiff must make an election before case is submitted to jury.

Principal and surety — Corporations — Transfer of assets

18. An agreement for transfer of assets, with transferee agreeing to pay transferor's indebtedness, is not a contract of "suretyship" but an original undertaking between transferor and transferee based upon a sufficient consideration, which operates for benefit of creditor of transferor.

                  Liability of reorganized corporation for debts of predecessor
                note, 39 A.L.R. 143. See, also, 13 Am. Jur. 1124
                  See 12 Am. Jur. 784; 20 Am. Jur. 1011
                  14a C.J. Corporations, §§ 3659, 3669
                

Department 1.

Appeal from Circuit Court, Baker County.

C.H. McCOLLOCH, Judge.

Action by R. Erickson against the Grande Ronde Lumber Company and another, for value of services rendered. From an insufficient judgment, plaintiff appeals.

MODIFIED. REHEARING DENIED.

Sidney Teiser, of Portland (Teiser & Keller, of Portland, and Hallock, Donald & Banta, of Baker, on the brief), for appellant.

A.A. Smith, of Baker (Heilner, Smith, Grant & Fuchs, of Baker, on the brief), for respondents.

ROSSMAN, J.

This is an appeal by the plaintiff from a judgment in favor of the defendant, Stoddard Lumber Company, entered after a motion for a nonsuit made by that defendant had been sustained, and against the other defendant, Grande Ronde Lumber Company, a dissolved corporation, in an amount less than that sought by the plaintiff. The part of the judgment which is against the Grande Ronde Lumber Company is based upon findings of fact and conclusions of law. The appeal is predicated upon contentions that the nonsuit should not have been allowed, and that the plaintiff was entitled to recover the entire sum he sought.

The plaintiff is an accountant and tax counselor. His complaint avers that he performed services in his professional capacity at the request of the Grande Ronde Lumber Company, and that subsequently the Stoddard Lumber Company entered into a contract with the Grande Ronde Lumber Company whereby it agreed to discharge all of the liabilities of the latter, with the exception of whatever income taxes the Grande Ronde Lumber Company may have incurred prior to January 1, 1929, and permitted to remain unpaid. The plaintiff claims that the assumption of liabilities included the amount owing to him.

There are three corporations which we shall be required to mention so frequently that we deem it well to identify them at the outset. Two of them are the defendants Stoddard Lumber Company and Grande Ronde Lumber Company. The third is the Nibley-Mimnaugh Lumber Company. From here on we shall omit the word "Lumber" as we employ the names of these companies. The Nibley-Mimnaugh Company was dissolved March 7, 1924, and the Grande Ronde Company on December 30, 1933. The Stoddard Company is a going concern. At the times with which we are concerned these three corporations were closely related through the fact that their stock was largely owned by the same individuals. Elmer I. Stoddard, in 1923, was the president of the Nibley-Mimnaugh Company; in 1928 he was president of the Grande Ronde Company and a director in the Stoddard Company. He stated that he and other members of the Stoddard family owned the majority of the stock of both the Nibley-Mimnaugh Company and the Grande Ronde Company. Later the Stoddard Company, by transferring to the stockholders of the Grande Ronde Company 3600 shares of its capital stock, acquired all of the property of the Grande Ronde Company. Concerning the times with which we are concerned, Elmer Stoddard further testified: "At that time most of the stockholders of the Stoddard Lumber Company were directors of the Grande Ronde and also the Nibley-Mimnaugh Lumber Company, and in one meeting — whatever they did, it would naturally tie up the other." The close relationship between the companies was indicated by Charles H. Mimnaugh, a director in the Nibley-Mimnaugh Company during its existence, when he said, referring to that corporation and the Grande Ronde Company: "You might say there that Elmer Stoddard was president of both...