Hirschfeld v. McCullach

• Decision Date: 12 November 1912
• Parties: HIRSCHFELD v. McCULLACH.
• Court: Oregon Supreme Court

127 P. 541

64 Or. 502

HIRSCHFELD v. McCULLACH.

Supreme Court of Oregon

November 12, 1912

Appeal from Circuit Court, Multnomah County; J.P. Kavanaugh, Judge.

Action by Leo Hirschfeld against J.S. McCullach. Judgment for plaintiff, and defendant appeals. Reversed.

This is an action to recover an amount alleged to be due on a promissory note. The complaint contains these allegations:

"(1) That heretofore on the 28th day of March, 1910, at Portland, Or., defendant herein, for value, made and executed to the Laemmle Film Service of Chicago, Ill., a corporation, his promissory note in letters, words, and figures as follows, to wit: '$9000.00. Portland Oregon. March 28, 1910. For value received I promise to pay to the Laemmle Film Service of Chicago, Ill., or order nine thousand and no/100 dollars in 18 monthly installments of not less than $500.00 in any one payment; the first payment to be made on the first day of May, 1910, and a like payment to be made on the first day of each month thereafter until the whole sum has been paid; if any of said installments are not so paid, the whole of said principal to become immediately due and collectible and in case a suit or action is instituted to collect this note or any part thereof, I promise to pay such additional sum as the court may think reasonable as attorney's fees in said suit or action. [ Signed] J.S. McCullach. Due October 1, 1911, at Portland, Oregon.' And delivered same to said Laemmle Film Service of Chicago, Ill., in Chicago Ill. (2) That heretofore for value and in due course the Laemmle Film Service, of Chicago, Ill., a corporation, duly transferred and assigned all its right, title and interest in and to said promissory note to the plaintiff herein who is now the owner and holder thereof." It is further alleged, in substance, that the last payment of $500 was made September 14, 1910, and that the defendant had been in default upon his payments since October 1st of that year. After alleging that $700 was a reasonable fee for attorney's services, the plaintiff demands judgment for $6,500, with interest since October 1, 1910, and for attorney's fees as stated, together with costs and disbursements. The defendant filed a plea in abatement wherein it is alleged, in substance, that the Laemmle Film Service, mentioned in the complaint, is a corporation organized under the laws of the state of Illinois, with its principal office and place of business in Chicago, for the purpose of buying, selling, leasing, and dealing in motion picture supplies and apparatus and song slides; that for about two years it carried on and conducted a business in the state of Oregon up to and including March 28, 1910; and that during that period it transacted a large volume of business of the kind described in the articles of incorporation. It is further averred in the plea that the corporation was organized for the purpose of gain, and had never filed with the Secretary of State in Oregon any declaration of its intention or desire to engage in the transaction of business within this state, and, further, in many particulars set out and detailed in the plea, it is averred that the corporation failed and neglected to comply with the law of the state of Oregon; that the note was given in payment for certain goods, wares, and merchandise sold by the corporation to the defendant within the state of Oregon, and hence that the note was void and of no effect. It is further alleged that the corporation transferred the promissory note in suit to the plaintiff after it had become due, and that the plaintiff is not the owner or holder thereof for value nor in due course. The plaintiff answered this plea in abatement by denying all its allegations upon information and belief. Further answering the plea, the plaintiff alleged, in substance, that all the negotiations for the sale of the property to the defendant, McCullach, and the execution of the promissory note in pursuance thereof were carried on in Chicago, in the state of Illinois, where the corporation had full authority to negotiate the sale of property and to contract in regard to the same and receive a promissory note in payment thereof, and that the defendant purchased the note in due course and for value. The new matter in this answer was traversed by the defendant's reply thereto. After a trial without a jury, the circuit court made findings of fact in substance as follows: That the Laemmle Film Service is a corporation organized and existing under the laws of the state of Illinois: that for some time, beginning in 1908 and up to about the 28th day of March, 1910, it carried on a business and conducted the same through an agent and office in the state of Oregon, during all of which time it did not comply with the laws of this state in regard to foreign corporations transacting business here; that it failed to appoint an attorney in fact to reside in the state or to pay the license fee or to file a certified copy of its articles of incorporation; that on March 28, 1910, it had ceased to do business in the state of Oregon, and that on that day the defendant made and executed the promissory note as in plaintiff's complaint set forth and forwarded the same, by mail, to the corporation in Illinois; that the note was given as part payment for the stock of merchandise, and good will which the said corporation had at that time at Portland, Or.; that the contract for the sale of the same was made in Chicago, the delivery of the note was in Chicago; that all payments on the note were made in Chicago; that the contract for the sale of the property evidenced by the note was an Illinois contract, and valid under the laws of the state of Illinois, and that, before the commencement of the action, the note was transferred and assigned to the plaintiff, and he is now the owner and holder thereof. Based on the findings of fact, the principal conclusion of law was that the plea in abatement should be dismissed. On July 31, 1911, the court entered an order and judgment that the plea in abatement be and the same is hereby dismissed. Thereafter, on the same day, the defendant announcing that he would stand upon the plea and not further plead, the court rendered judgment for the plaintiff and against defendant as for want of answer for $6,500, with interest at the rate of 6 per cent. per annum from October 1, 1910, together with $500 attorney's fees, besides costs and disbursements taxed at $83.05. From this judgment defendant appeals.

Bartlett Cole, of Portland (Cole & Cole, of Portland, on the brief), for appellant.

Alexander Bernstein, of Portland (Bernstein & Cohen, of Portland, on the brief), for respondent.

BURNETT J. (after stating the facts as above).

It appears from the records that the circuit court entered two orders in this case on July 31, 1911, one dismissing the plea in abatement, so called, and the other rendering final judgment against the defendant as for want of an answer for the sum of money demanded in the complaint.

The defendant gave notice of appeal from the final judgment. The plaintiff argues that, not having in terms appealed from the order dismissing the plea in abatement, the defendant is in no position here to have this court determine the questions arising on the plea. Something was also said in the debate at the hearing about the matter contained in the plea being really in bar and not in abatement, so that for all purposes, although there were two orders as mentioned, there was in effect but one judgment, and that a final one upon the merits from which the appeal was properly taken. It is not necessary to decide whether the initial pleading of the defendant was in bar or in abatement. If it was in abatement, the decision of the circuit court dismissing it was an interlocutory order, the merits of which are properly reviewable on appeal from the final judgment. La Grande v. Portland Public Market Co., 58 Or. 126, 113 P. 25. If in bar, its dismissal was properly part of the final judgment, the splitting of which into two journal entries does not affect the case.

As to the right of the plaintiff to sue on the note in question, he alleges "that heretofore for value and in due course" the corporation transferred and assigned the note to him, and he is now the owner and holder thereof. It may well be doubted if the quoted words here mentioned constitute anything else than a conclusion of law, or whether the pleader should not have set out the time and consideration of the transfer, so that the court might have the data from which to reach the conclusion desired by the plaintiff that the note came to him in due course so as to cut off defenses applicable to dishonored commercial paper. Be that as it may, however, the only testimony on that point is that of Carl Laemmle, the president of the corporation, who testifies that the note was indorsed to the plaintiff October 29, 1910. Bearing in mind that an installment of $500 was due on the note on the 1st day of that month, that, as alleged in the complaint, no payment has been made since September 14, 1910, that by its terms the whole principal of the note became immediately due on such a default in payment and that plaintiff so construes it in his complaint, the conclusion is plain that the paper was dishonored to his knowledge when the plaintiff took it, and that as against him it is open to any defense which could have been urged against the corporation payee.

It is required substantially by section 6726, L.O.L., that every foreign corporation transacting business within this state shall file the declaration, and pay the entrance fees provided by law, and execute and acknowledge an irrevocable power of attorney, constituting some...