Home Mortg. Co. v. Sitka Spruce Pulp & Paper Co.

• Decision Date: 24 October 1934
• Citation: 148 Or. 502,36 P.2d 1038
• Parties: HOME MORTGAGE CO. v. SITKA SPRUCE PULP & PAPER CO. et al. (ANDERSON et al., Interveners).
• Court: Oregon Supreme Court

36 P.2d 1038

148 Or. 502

HOME MORTGAGE CO. v. SITKA SPRUCE PULP & PAPER CO. et al. (ANDERSON et al., Interveners).

Supreme Court of Oregon

October 24, 1934

In Banc.

Appeal from Circuit Court, Coos County; James T. Brand, Judge.

Suit by the Home Mortgage Company against the Sitka Spruce Pulp &amp Paper Company and others, wherein cross-complaints were filed by Dennis McCarthy, Annie Smith, the Fidelity Warehouse Corporation and the Anglo-California National Bank of San Francisco, and wherein demurrers were filed against the cross-complaints of Dennis McCarthy and Annie Smith, and wherein Nonda Anderson and another were permitted to intervene. From a decree, first named defendant and others appeal.

Affirmed.

L. A. Liljeqvist, of Marshfield (Liljeqvist &amp Swanton and Joseph A. McKeown, all of Marshfield, on the brief), for appellants.

W. U Douglas and John D. Goss, both of Marshfield, Ralph Cake and Lamar Tooze, both of Portland, Bernard C. Flaxel, of North Bend, and Chris Boesen, of Marshfield (W. U. Douglas, of Marshfield, Cake & Cake and Jaureguy & Tooze, all of Portland, Goss, Murphy & Skipworth, of Marshfield, Bernard C. Flaxel, of North Bend, and J. B. Bedingfield, of Marshfield, on the brief), for respondents.

BAILEY, Justice.

On March 30, 1934, the defendants Sitka Spruce Pulp & Paper Company, Fidelity Warehouse Corporation, and Anglo-California National Bank of San Francisco, all corporations, filed a notice of appeal from numerous orders and decrees entered by the circuit court in this proceeding. These are referred to in the notice of appeal as decrees in re priorities of secured creditors entered February 17, 1934, decree and order of sale entered August 8, 1933, amended decree and order of sale entered August 8, 1933, further amendment of said decree and order of sale entered January 6, 1934, and order appointing receiver entered August 3, 1932. The defendants also gave notice of appeal in open court from the order confirming the sale, entered April 2, 1934.

For a better understanding of the questions raised on the appeal it is necessary to refer at some length to the numerous pleadings, orders, decrees, and other proceedings in this cause.

On July 21, 1932, the plaintiff, Home Mortgage Company, a corporation, instituted a suit against the three appealing defendants and others, to recover against the defendant Sitka Spruce Pulp & Paper Company, hereinafter to be mentioned as the Sitka Company, approximately $4,000 on twenty-eight assigned claims for labor performed by the assignors of such claims for and on behalf of the Sitka Company, and to foreclose laborers' liens on lumber and pulpwood at the sawmill of the Sitka Company in Coos county, Or. Each of these assigned claims constituted a separate cause of suit. As a twenty-ninth cause of suit the plaintiff realleged "all the allegations contained in its first to twenty-eighth, inclusive, causes of suit heretofore set forth herein." In the twenty-ninth cause of suit the plaintiff alleged that there were pending at least sixteen actions at law against the Sitka Company for the collection of various sums owing by that defendant, and that in nine of such actions writs of attachment had been issued and levied on the property of said defendant, in the sum of approximately $56,000; that notices of labor liens had been filed by at least 110 different claimants, for wages owing by the Sitka Company; that judgments remained unpaid and unsatisfied, against the said defendant, in the sum of over $11,000; that the sawmill and manufacturing plant of the Sitka Company were in the custody of the sheriff of Coos county, Or.; that the plaintiff was informed and believed that the total of such liabilities was between $600,000 and $700,000, which sum was largely in excess of the value of its assets; and that the Sitka Company was insolvent and "unable to pay its current liabilities for several months last past." The plaintiff further alleged that part of the property of the Sitka Company consisted of lumber and other products located at its mill; that such property was piled outside, exposed to sun and weather and a large part of it was cracking, warping, shrinking, and becoming unsalable; that it was "constantly deteriorating in value" and unprotected from damage by fire; and that plaintiff was informed and believed that the said defendant carried thereon no fire insurance.

It is further averred that, because of the inferior quality and deteriorated condition of the lumber upon which plaintiff is seeking to foreclose its various liens, and due to the amount of money owing on many other lien claims, the lumber would not at a sale bring a sufficient sum of money to discharge the various claims against the Sitka Company, that plaintiff and other claimants would have to realize a large part of their claims from other assets of the Sitka Company, and that it is to the interest of the plaintiff and other creditors and to the stockholders that all the assets of the Sitka Company be taken into the custody of the court "and preserved and cared for by this court so that all the rights of the creditors and stockholders of said defendant will be protected." As a concluding paragraph it is alleged that a receiver should be appointed.

The prayer asks for judgment in favor of the plaintiff and against the Sitka Company on its first twenty-eight causes of suit, and for the foreclosure of the liens filed with reference thereto, and requests that a receiver be appointed to take immediate possession of the property "for the purpose of conserving each and all of said property and selling or disposing of the same upon the orders of this court as they may hereinafter be made."

On July 22, 1932, summons and complaint were served on the Sitka Company in Coos county, Or. On July 26 there was served on the Sitka Company by the sheriff of Coos county a motion by counsel for plaintiff for the appointment of a receiver to take charge of all the assets and property of said corporation. Attached to this motion was an affidavit in which it was stated that the Sitka Company was insolvent and unable to meet its current liabilities and expenses; that it was indebted for taxes; that its liabilities were between $600,000 and $700,000; and that its assets were wholly insufficient to meet its liabilities. This affidavit also referred to the various judgments against the corporation, attachments, etc., as hereinbefore mentioned in reference to the twenty-ninth cause of suit. Accompanying the motion and affidavit was a notice that the plaintiff would apply to the court on July 30, 1932, at a designated hour, for the appointment of such receiver.

The hearing on this motion was postponed until August 1. After the hearing on that date, the court took the matter under advisement and on August 3 entered an order in which it recited that the court had "determined that a receiver should be appointed to take charge of all the property of each, all and every kind and nature of said defendant," Sitka Company, "for the purpose of conserving each and all of said property and selling or disposing of the same upon the orders of the court as they may hereafter be made." It was then ordered that Mr. R. T. Bourns be appointed such receiver. On the same day the bond of the receiver was approved by the court and filed, as well as his oath of office. At the hearing the Sitka Company was represented by counsel and "various judgment creditors" appeared by their attorneys. The record shows no objection by the attorney for the Sitka Company to the appointment of a receiver, and no counter affidavit was filed by that company.

The defendant Dennis McCarthy on July 30, 1932, filed an answer and cross-complaint in the proceedings, consisting of forty-three causes of suit, each based upon an assignment of claim for labor performed for the defendant Sitka Company, in which cross-complaint McCarthy asked for judgment against the Sitka Company for something in excess of $3,000 and for the foreclosure of laborers' liens filed by the assignors.

On August 1, 1932, the defendant Sitka Company by the same attorneys who represent it on this appeal filed a demurrer to "each and every one of the twenty-eight alleged causes of suit" contained in the complaint, on the ground that each of said causes of suit failed to state sufficient facts, and on that date the same defendant by the same counsel filed a similar demurrer to the forty-three causes of suit contained in the cross-complaint of Dennis McCarthy.

The defendant Annie Smith on August 4 filed an answer and cross-complaint containing thirty-one causes of suit on a like number of assignments of laborers' claims for approximately $2,000 and for the foreclosure of her assigned laborers' liens. On August 19 attorneys for the Sitka Company filed a demurrer similar to the others above mentioned to these thirty-one separate causes of suit.

On September 2 these three separate demurrers came on for hearing, and, according to the order of the court entered of that date, the defendant's sole objection to the first twenty-eight causes of suit in plaintiff's complaint and the cross-complaints of Dennis McCarthy and Annie Smith was the failure to allege therein that the liens therein referred to were verified; whereupon, with the consent of the court and without any apparent objection on the part of counsel for the Sitka Company, these pleadings were amended by interlineation in the proper places of the words "and verified" or the single word "verified." The demurrer to the twenty-eight causes of suit in the complaint appears to have been considered by the court and the interested parties as not referring to the twenty-ninth cause, which had to do with the appointment of a receiver.

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