Farmers' Loan & Trust Co. v. Oregon P. R. Co.

• Decision Date: 22 July 1895
• Citation: 28 Or. 44,40 P. 1089
• Court: Oregon Supreme Court
• Parties: FARMERS' LOAN & TRUST CO. et al. v. OREGON PAC. R. CO. et al.

40 P. 1089

28 Or. 44

FARMERS' LOAN & TRUST CO. et al. v. OREGON PAC. R. CO. et al.

Supreme Court of Oregon

July 22, 1895

Appeal from circuit court, Benton county; J.C. Fullerton, Judge.

Action by the Farmers' Loan & Trust Company, trustee, and others, against the Oregon Pacific Railroad Company and others, for the foreclosure of a trust deed. From a judgment for plaintiffs, defendants appeal. Affirmed.

This is an appeal from an order confirming a sale of railway franchises and property on the foreclosure of a mortgage. The facts are that, the plaintiffs having commenced a suit against the defendants the Oregon Pacific Railroad Company and the Willamette Valley & Coast Railroad Company to foreclose a mortgage given to secure the payment of bonds amounting to $15,000,000, a receiver was appointed, and on April 27, 1891, the defendant companies having, by their answers, admitted the allegations of the complaint and supplement thereto, a decree was rendered as prayed for wherein the mortgaged property was ordered sold by the sheriff of Benton county to the highest bidder for cash without appraisement or right of redemption; and said officer was thereby directed to require of the bidder a deposit of not less than $5,000 in cash, to be applied in part payment of the purchase price if the sale should be confirmed. That on October 23, 1891, the court made an order directing an execution to be issued, and instructing the sheriff to accept no bid less than $1,000,000, of which sum $25,000 should be deposited before accepting any bid. That, an execution having been issued, the sheriff, on January 20, 1892, at a sale of the property, accepted the bid of Zephin Job, of $1,000,000 of which sum $25,000 was deposited with said officer, who reported the sale to the court, whereupon an order was made that upon the payment of $975,000 within 30 days the sale should be confirmed; but the bidder having failed to make payment of such sum, or any part thereof, the court, on November 17th of that year, ordered a resale of the property and directed the sheriff to accept no bid for a less sum than $1,250,000, of which $200,000 was required to be deposited before any bid could be accepted. That, a second execution having been issued, the sheriff was unable to sell the property under these terms, and, by order of the court, returned the writ. That on April 10, 1893, the court again ordered a resale of the property, and directed the sheriff to require a deposit of $200,000 from the bidder before any bid should be accepted, and on December 15th of that year, another writ having been issued, the sheriff accepted the bid of $200,000 from J.J. Beldon, Henry Martin, F.K. Pendleton, S.S. Hollingsworth, Joseph Wharton, and James K. Blair; but on the 26th of that month the court, upon the officer's return of the writ, refused to confirm the sale, and made an order setting it aside and directing the return of the deposit. That on March 2, 1894, the court, upon due notice to Zephin Job and the corporation to whom he had assigned his right of purchase, made an order setting aside the conditional confirmation of the sale made upon his bid, directing a resale of the property to the highest bidder for what it would bring in cash, and instructing the sheriff to accept no bid until $200,000 had been deposited with him by the bidder. That, another execution having been issued, the property was advertised to be sold on June 7, 1894, but, failing to receive any bid therefor, the officer returned the writ. That on October 20, 1894, the court made another order, directing a resale of the property on a day, to be fixed by the sheriff, between the 15th and 22d days of December of that year, and instructing him to accept no bid until $100,000 had been deposited; and, a pluries writ having been issued, the said officer, after having duly advertised the property, and received a deposit of $100,000, accepted a bid for that amount, and on the 22d day of December, 1894, sold, subject to confirmation, all the property and franchises of the defendant companies to E.L. Bonner and A.B. Hammond for said sum, and on the 26th of said month returned the writ. That on January 3, 1895, the bidders at said sale moved for an order of confirmation, while certain of the appellants, being either general creditors of the defendant corporations, or holding receiver's certificates, filed objections thereto, and on the 19th of that month other appellants filed objections to the confirmation, all of which having been overruled, the court made an order confirming said sale, from which order this appeal is taken.

Wallis Nash, H.C. Watson, E.C. Bronaugh, and W.D. Fenton, for appellants.

J.R. Bryson, W.S. McFadden, and G.G. Bingham, for respondents.

MOORE, J. (after stating the facts).

The respondents contend that the defendant companies having admitted in their answers that they were insolvent, and that the value of their property and franchises was insufficient to meet the payment of the bonds and overdue interest coupons secured by the mortgage, and no decree having been rendered against them for any deficiency after the sale of their property, and not having made any objections to the confirmation of the sale, they have no appealable interest and are estopped by the order of confirmation; that none of the other appellants ever intervened in the court below, or became parties to the record; that Sanford Bennett, E.C. McShane, and Bronaugh, McArthur, Fenton & Bronaugh are the only persons or firms who filed any objections to the confirmation of sale within the time prescribed by law; that the appellants have no unity of interests; and that Bronaugh, McArthur, Fenton & Bronaugh have not taken a cross appeal. Without considering the respondents' objections, but assuming that the appellants are parties to the record, and properly before the court, we will examine the case upon the merits, as presented by the record.

The appellants contend that the amount bid for the property and franchises was so grossly disproportionate to its value as to render the order of confirmation an abuse of discretion, and, while not expecting the court to set the sale aside on account of inadequacy of the price alone, yet they insist that some excuse should be found for avoiding the effect of the bid in such cases, and suggest as an additional reason therefor that the court had no jurisdiction or authority at a subsequent term to modify or vary the provisions of the original decree; while the respondents, admitting the legal proposition contended for, insist that the subsequent orders of the court did not modify or vary the original decree, but only prescribed the terms of its enforcement, and that the right to do so is inherent in the court, and was specially reserved in the decree. Assuming, for the sake of the argument, that the amount bid was inadequate, we will examine the original decree, and the order of the court of October 20, 1894, with reference to the right of a purchaser to tender, in part payment of the purchase price, receiver's certificates, as cash,--this being the particular modification of which the appellants complain. The original decree, after providing that the mortgaged property should be sold as an entirety, for cash, and without appraisement or right of redemption, further directs that: "So much of the purchase price as is not required to be paid in cash may be paid in receiver's certificates, and in bonds, overdue interest coupon bonds, at such rate and percentage as the holder would be entitled to receive, in respect of such bonds and coupons, out of the purchase money and proceeds of sale, as the same may be ascertained. If any question should arise as to the sale and amount of such dividend and percentage, or as to the proportion to be paid in cash and the proportion that may be paid in such bonds and coupons, application [for that purpose] may be made to the court from time to time." The sentence last quoted makes no provision for ascertaining what proportion of the purchase price may be paid in receiver's certificates, but the preceding sentence, having provided that so much of it as is not required to be paid in cash may be paid in certificates, bonds, and coupons, places the certificates in the same class with the other evidence of indebtedness, and limits the right of a bidder to tender them in payment of that part of the purchase price not required by the court to be paid in cash. It also required a bidder to deposit the sum of $5,000 as an earnest of his good faith, and ability to comply with the terms of his offer to purchase, but it did not prescribe what sum should be paid in cash; and hence, in the absence of such a provision, the whole purchase price could be paid only in that manner. If the sale had been made under the original decree, without any application to the court to prescribe what amount of the purchase price should be paid in cash, can it be successfully contended that the purchaser could have tendered either receiver's certificates, bonds, or interest coupons in payment of any part of it? Had the court, on the application of the parties, fixed the amount of the purchase price, less than the whole, which was to have been paid in cash, then the certificates would have been receivable at their face value in liquidation of that part of it not so payable, for the decree made provision for receiving the bonds and coupons only at such rate and percentage as the holders thereof might be entitled to out of the purchase price, and made no reference to the certificates.

The order of October 20, 1894, provided...