Jansen v. Tyler

• Decision Date: 30 July 1935
• Citation: 151 Or. 268,47 P.2d 969
• Parties: JANSEN v. TYLER et al.
• Court: Oregon Supreme Court

47 P.2d 969

151 Or. 268

JANSEN v. TYLER et al.

Supreme Court of Oregon

July 30, 1935

In Banc.

Appeal from Circuit Court, Multnomah County; Hall S. Lusk, Judge.

Action by Harrie A. Jansen, receiver of the Municipal Reserve & Bond Company, against Susan B. Tyler, individually and as executrix of the last will and testament of William Anson Tyler, deceased, and acting executrix of his estate in Multnomah county, and others. From an adverse judgment plaintiff appeals.

Modified and affirmed.

W. C. Bristol and E. R. Harvey, both of Portland (W C. Bristol and Manning & Harvey, all of Portland, on the brief), for appellant.

A. E Clark, of Portland (Clark & Clark, Blaine B. Coles, and R. R. Bullivant, all of Portland, on the brief), for respondents.

BEAN Justice.

Plaintiff appeals from a decree of the circuit court adjudging that plaintiff recover out of the funds and property in the hands of the Security Savings & Trust Company, as trustee, under and by virtue of that certain trust agreement dated June 20, 1931, wherein William Anson Tyler, Portland, Or., was trustor, and Security Savings & Trust Company was trustee, and the amendments and supplements thereto dated June 24, 1931, the sum of $1,335, with interest thereon at the rate of 6 per cent. per annum from January 2, 1930, to be paid out of said trust funds and property, and further decreeing that plaintiff has no right, title, interest, or claim upon any of the policies of insurance assigned to or placed in said trust or in the proceeds thereof which came into the possession and custody of said Security Savings & Trust Company, the trustee under said instruments of trust, except to the extent decreed, as mentioned above.

The case is stated about as follows: This suit in equity was instituted by Harrie A. Jansen, as receiver of the Municipal Reserve & Bond Company, for an accounting and the recovery of the amount of the late W. A. Tyler's misappropriation of its funds in violation of his fiduciary capacity and to declare a trust in favor of said corporation in the secret fund created by said Tyler on or about June 20, 1931, and held by defendant Security Savings & Trust Company as trustee. This trust fund exceeds the sum of $305,000 and consists of the proceeds from insurance policies upon Tyler's life. The trust was one created by Tyler, while insolvent, over which he retained in himself full control and power of revocation. The beneficiaries under this secret trust are Susan B. Tyler, the wife, and Sara Bennett Tyler, the daughter of the creator of the trust. Tyler died July 13, 1931, within a month of the date of the establishment of the secret trust, and, aside from the trust fund, his estate was insolvent. Answers were filed by defendant Security Savings & Trust Company, Susan B. Tyler, and Sara Bennett Tyler, by Susan B. Tyler, her guardian. No appearances were entered by the other defendants. The decree of $1,335 was for premiums paid by Municipal Reserve & Bond Company upon two insurance policies on Tyler's life, which policies were transferred into the secret trust.

There was introduced during the trial a vast amount of documentary evidence, and numerous matters of fact relating thereto were covered by stipulation. Weber A. Hattrem and William Anson Tyler, now deceased, were jointly indicted July 10, 1931, for embezzlement on February 14, 1929, of assets of the Municipal Reserve & Bond Company of the aggregate value of approximately $100,000. Mr. Tyler committed suicide soon afterwards; Hattrem was convicted and sentenced to eight years in the state penitentiary. See State v. Hattrem, 140 Or. 371, 13 P.2d 618.

On February 14, 1929, William Anson Tyler acquired all of the "Class B" voting stock of the Municipal Reserve & Bond Company from W. A. Hattrem, and, in payment therefor, Tyler delivered to the latter cash and other liquid assets of the Municipal Reserve & Bond Company to the value of $95,825. Tyler gave to the company his unsecured note for that amount. The stipulation mentioned relates to this transaction. Mr. Jansen, the receiver, as a witness, speaking of this transaction, said: "Now I figured out that Mr. Tyler probably was a goat to Mr. Hattrem's activities." Through this transaction Tyler immediately went into control of the Municipal Reserve & Bond Company, and thereafter controlled and dictated its affairs. He dominated the board of directors, had himself elected president and general manager, and thoroughly represented the corporation.

On February 28, 1929, Tyler, then being in control of the affairs of the corporation, acting as president, attempted to wipe out his obligation represented by his note of February 14, 1929, for $95,825, by canceling the same through the transfer to the company of valueless properties. It is stipulated in the record that the properties which were turned into Municipal Reserve & Bond Company on or about February 29, 1929, had no value. Defendant Susan B. Tyler joined with her husband in transferring the valueless equities to the company.

March 11, 1929, Tyler took, and charged to the company, his expense amounting to $483.68, of the funds of the Municipal Reserve & Bond Company to cover his own and Davidson's expenses of a trip to Texas, where they went to look after their own and Susan B. Tyler's property; the company having no interest whatever in Texas. May 1, 1929, Tyler transferred 984 shares of the voting stock of the company to defendant Susan B. Tyler and retained 1 share for himself. On June 11, 1929, Tyler credited himself with the payment of $2,000 upon a nonexisting mortgage supposed to have been upon the Arch Cape Park properties, and the journal explanation is as follows: "The above entry made to set up amount paid on this mortgage by W. A. Tyler and crediting his account with it." Tyler overdrew his salary account at various times, and at one time gave a note to the company for $5,000, which was credited to his salary account and never paid, and, among the properties appropriated to himself by Tyler, at the time he severed his connection with the corporation, were the worthless note of George W. Davidson, his associate, for $6,696.67; Oregon Linen Mills obligation of $1,000; Town of Browning bond for $1,000; Village of Paul, Idaho, 6 per cent. bond $400, and the Josephine Apartments. Tyler sold out his interest in the company May 13, 1930, to Horal and Blanchard. On about July 13, 1930, Tyler, who continued to act for the corporation, appropriated $1,500 in commissions earned by the company in Magnus & Co. sale. On December 5, 1930, suit for a receivership of the Municipal Reserve & Bond Company was instituted in the circuit court for Multnomah county. On the same date, Tyler, upon demand, restored to the corporation the major portion of the assets abstracted on or about May 13, 1930, retaining, however, the Akin note, the office furniture and fixtures, and the furniture in the Josephine Apartments, the three properties not covered by stipulation.

On December 15, 1930, Tyler gave his note to the Municipal Reserve & Bond Company for $4,612.23, the purpose of which is not shown. On December 24, 1930, Jansen, the plaintiff, was appointed receiver of the Municipal Reserve & Bond Company. June 20, 1931, William Anson Tyler executed a trust agreement with defendant Securities Savings & Trust Company and transferred to the trustee several policies of insurance. March 1, 1932, in the case of Security Savings & Trust Co., Trustee, v. Susan B. Tyler and Sara Bennett Tyler, a decree was entered authorizing payment from the trust fund of the sum of $25,000 in settlement of the government's claim for income taxes for the year 1924 against the estate of William Anson Tyler, Susan B. Tyler, and Sara Bennett Tyler, by her guardian ad litem, having consented thereto.

It is alleged in the complaint, and not denied by the answers, that, as appears by the inventory and appraisement filed in the matter of the estate of W. A. Tyler, deceased, his estate was appraised at $10,809.38, that exclusive of the claim of the government of the United States there were known claims against the estate in excess of $150,000, and the estate was hopelessly insolvent.

The books of the Municipal Reserve & Bond Company, from a bookkeeping standpoint, were well kept. In a bookkeeping sense the entries were correctly placed from the information furnished the bookkeeper by Tyler, although not sustained in fact. Mrs. M. J. Woodworth, treasurer of the company, was its bookkeeper, and was a witness in the case and explained many transactions.

The complaint, as filed, seemed to proceed on two theories which are not wholly consistent. Some parts alleged that all of the insurance policies and their proceeds rightfully constituted a part of the estate of W. A. Tyler, while other parts alleged clearly that they were the property of the Municipal Reserve & Bond Company for the reason that all premiums thereon had been paid by funds embezzled from the company. The court required plaintiff to elect upon which theory he would proceed, and plaintiff, reserving an exception, elected to proceed upon the theory that the proceeds of the policies were the property of the Municipal Reserve & Bond Company by reason of its having paid the premiums thereon, and all of the facts bearing upon the case, and it would seem many more, were delineated in the testimony. We find no error in the court's ruling in this respect. Counsel for respondent, in support of the ruling, cite Harvey v. Southern Pac. Co., 46 Or. 505, 80 P. 1061; Whitten v. Griswold, 60 Or. 318, 118 P. 1018; Rehfuss v. Weeks, 93 Or. 25, 182 P. 137; Johnson v. Homestead-Iron Dyke Mines Co., 98 Or. 318, 193 P. 1036; 49 C.J. 742.

In order for plaintiff to recover, it was necessary...