Kelly v. Tracy

• Decision Date: 19 December 1956
• Citation: 209 Or. 153,305 P.2d 411
• Parties: George KELLY, Respondent, v. Doris F. TRACY, Appellant.
• Court: Oregon Supreme Court

Page 411

305 P.2d 411

209 Or. 153

George KELLY, Respondent, v. Doris F. TRACY, Appellant.

Supreme Court of Oregon.

Argued and Submitted Oct. 18, 1956.

Decided Dec. 19, 1956.

William B. Murray, Portland, for appellant. With him on the brief was Donald R. Stark, Portland.

Samuel M. Bowe, Grants Pass, for respondent.

Before WARNER, C. J., and ROSSMAN, BRAND and PERRY, JJ.

BRAND, Justice.

This is a suit to impress a trust on certain shares of corporate stock held by defendant Doris F. Tracy. From a decree for the plaintiff, George Kelly, defendant appeals.

The complaint, filed on 4 June 1953, alleges that prior to 18 June 1947 plaintiff and defendant were each the owner of an equal interest in a partnership business undertaking, compromising as undivided one-half interest in a business known as Deer Lodge, in Josephine County, Oregon; that on or about 18 June 1947, defendant for herself and as attorney in fact for plaintiff, sold the total interest of both parties in said business to Deer Lodge, Inc., and received as compensation 200 shares of capital stock in the corporation, which was to be divided between the parties in accordance with their interests in the business conveyed; that the certificates were issued to defendant in her sole name, and plaintiff is the owner of and entitled to the transfer of 100 shares; that plaintiff has on several occasions demanded that defendant transfer to him 100 shares of the stock, which she has refused and still refuses to do. The prayer is that plaintiff be adjudged the owner of one-half of the stock held by defendant, and that defendant be declared trustee of plaintiff for the stock, and be directed to cause the stock to be transferred to plaintiff. The answer admits that plaintiff and defendant were owners of equal interests in the partnership business known as Deer Lodge and that together they owned one-half of that business. It admits the alleged demand upon and refusal by defendant to transfer the 100 shares to plaintiff and denies all other allegations of the complaint. Defendant asserts that 'plaintiff seeks to enforce in equity a stale claim which is several years old' and that the claim is barred by laches. Other alleged defenses have been abandoned. The reply is a general denial.

The cause proceeded to trial and on 28 July 1954 a decree was entered that plaintiff was the owner of 100 shares of the capital stock of Deer Lodge, Inc., and that defendant was trustee thereof for the use and benefit of plaintiff. Defendant was ordered to deliver 100 shares of said capital stock to plaintiff and cause it to be transferred in the name of the plaintiff on the corporate books. On 6 August 1954 defendant filed a motion for a new trial which was denied.

On 1 November 1946 plaintiff and defendant, then husband and wife, and Myrtle and C. L. Tapp, husband and wife, all as vendees, entered into a contract with Reynold MacDonald and wife as vendors, for the purchase of MacDonald's Lodge, which became Deer Lodge. The venture on the part of the four vendees was to be a partnership with the couples to share on a 50-50 basis. Business commenced this same month, but in December 1946 domestic difficulties developed between the plaintiff and defendant and in March 1947 they came to an agreement that plaintiff would return to California and obtain work and that defendant would remain with the Tapps and continue to conduct the business until such time as it could be sold, at which time plaintiff would receive his share of the proceeds. We quote from the plaintiff's testimony:

'Q. Had the four of you made an agreement to dispose of the property? A. That was it. Anything we got we were going to split between the four of us.'

Shortly after plaintiff arrived by California, defendant wrote to him, in part, as follows:

'I have just come from an attorney's office after having talked to you on the phone and he has advised me that due to the urgency of the situation it would be better for you to give me a Power of Attorney instead of a Deed. In that way any changes that may come up I will be able to sign the necessary papers. So I am enclosing the forms of Power of Attorney covering only this property here at the Lodge. Please rush them back to me immediately as I have had a knock down and drag-out fight with the Tapps over their percentage of share in the business. * * * Now, Jac as I told you over the phone and in my letters I will do everything I can to save our investment and divide with you 50-50 after all bills are paid, but I will have to have this power of attorney so I can act on a moments notice. * * *'

Plaintiff executed this power and returned it to defendant on 23 May 1947 and thereafter received no communication for a considerable period regarding the partnership affairs, although he made several inquiries. The power of attorney was revoked in 1949.

On 10 June the defendant Doris Tracy (then Kelly) and two others as incorporators, secured the issuance of a charter for Deer Lodge, Inc., an Oregon corporation having an authorized capital stock of 300 shares. Doris Kelly subscribed for 200 and the Tapps for 100 shares. At the organization meeting on 18 June 1947 Doris Kelly was elected secretary, and, she, acting for herself and as attorney in fact for the plaintiff, conveyed to Deer Lodge, Inc. all of their right, title and interest in the MacDonald contract and in all of the real and personal property of the partnership. The Tapps joined in the conveyances so that the partnership was divested of all of its assets and those assets were transferred to the corporation organized by defendant and in which she was the principal stockholder. The evidence showed that plaintiff and defendant had owned equal shares in the partnership and that together they certainly owned at least one-half of the partnership assets. The agreed distribution of stock in the corporation would indicate that at the time of incorporation the plaintiff and defendant were recognized as owners of two-thirds of the partnership assets, for defendant took 200 and the Tapps 100 shares.

On issuance of the capital stock the defendant retained the 200 shares without notifying plaintiff of the transaction. Plaintiff first learned that a corporation had been organized, that the partnership property had been transferred to it, and that defendant had received 200 shares of stock representing the former partnership interest of plaintiff and defendant, upon reading a letter written by defendant's attorney dated 5 January 1948. Thus the plaintiff's interest in the partnership property constituted the payment for 100 shares of stock in the corporation which was issued to defendant. Plaintiff made several demands for his share of the stock before bringing suit. A divorce, or purported divorce, was obtained by defendant in Idaho on 6 September 1947.

A preliminary question is presented by plaintiff's motion to dismiss the appeal on the ground that the case has become moot 'in that the Appellant has recognized the validity of the decree of the lower court by expressly recognizing the effectiveness of said decree and permitting Plaintiff to have and enjoy the benefits thereof.' The undertaking on appeal recites the order of the trial court requiring the defendant to transfer 100 shares of stock to the name of the plaintiff on the books of the corporation and to deliver the stock to plaintiff. It then recites that the defendant has executed a transfer of the shares as ordered by the decree and 'said certificate of stock for one hundred shares issued to the said George Kelly, plaintiff, is herewith deposited with the Clerk of the above-entitled Court * * * to abide the Decree of the Appellate Court herein in accordance with Section 19-040 O.R.S.;'.

The motion to dismiss the appeal is supported by the affidavit of one Reynold MacDonald, which states that he was the authorized agent of the plaintiff and had a written proxy authorizing him to vote all shares of stock owned by the plaintiff. It is further stated that the cause was tried in January 1954 and that he attended the annual stockholders meeting in January 1955, the defendant being present as secretary of the corporation; that at that time a list of eligible voters was circulated by the defendant as secretary; that he was recognized as entitled to vote 100 shares as proxy for the plaintiff and did vote such shares. A similar statement is made with reference to the voting of plaintiff's shares by Don Eva as proxy for plaintiff at the annual meeting of the corporation in January 1956. The affidavit of MacDonald concludes thus:

'That at no time subsequent to the trial of the above case has the Defendant refused to recognize the voting rights of the Plaintiff with respect to said one hundred (100) shares of stock.'

A party may waive the right to appeal by acquiescence in or recognition of the validity of a judgment or decree rendered against him through acts inconsistent with his position on appeal. Ehrman v. Astoria Railway Co., 26 Or. 377, 38 P. 306; Moores v. Moores, 36 Or. 261, 59 P. 327; Elwert v. Marley, 53 Or. 591, 99 P. 887, 101 P. 671; Kellogg v. Smith, 70 Or. 449, 142 P. 330; Lange v. Devlin, 80 Or. 238, 156 P. 260; Duniway v. Cellars-Murton Co., 92 Or. 113, 170 P. 298, 179 P. 561; Fluhrer v. Bramel, 158 Or. 694, 72 P.2d 47, 73 P.2d 265, 77 P.2d 824; Lewis v. Shook, 182 Or. 483, 188 P.2d 148; 4 C.J.S., Appeal and Error, § 212, p. 396. In this case, however, the defendant deposited the stock certificates in court in compliance with ORS 19.040(2), which provides:

'When the decree appealed from requires the execution of a conveyance or other instrument, execution of the decree is not stayed by the appeal, unless the instrument is executed and deposited with the clerk within the time allowed to file the undertaking, to abide the decree of the appellate court.'

Compliance with ORS 19.040(2) for the purpose of obtaining a stay of execution on appeal...