Multorpor Co. v. Reed

• Decision Date: 18 October 1927
• Citation: 260 P. 203,122 Or. 605
• Parties: MULTORPOR CO. v. REED.
• Court: Oregon Supreme Court

260 P. 203

122 Or. 605

MULTORPOR CO. v. REED.

Supreme Court of Oregon

October 18, 1927

Department 1.

Appeal from Circuit Court, Clackamas County; J. U. Campbell, Judge.

Action by the Multorpor Company against Lucy Mae Reed. From the judgment, defendant appeals. Affirmed.

This is an action brought by the plaintiff as assignee of the following named firms or associations, each alleged in the complaint to be corporations, to recover for goods, wares and merchandise alleged to have been sold and furnished to defendant:

The first cause of action was for a balance of $177.98 for goods purchased of the M. L. Kline Company. The allegation in regard to this purchase being duplicated in each of the other alleged causes, we give it in full.

"That heretofore, and between the 1st day of September, 1921, and the 31st day of May, 1922, the M. L. Kline Company, a corporation, sold and delivered to said defendant, at her special instance and request, goods, wares, and merchandise of the value of $416.54, which said sum said defendant promised and agreed to pay therefor.

"That prior to the commencement of this action said the M. L. Kline Company, for a valuable consideration, and for collection purposes, assigned, sold, and transferred its said claim and demand against defendant unto plaintiff herein, and plaintiff is now the owner and holder thereof.

"That no payments have been made thereon, except payments in cash and return of merchandise in the sum of $238.56, leaving a balance due, owing, and unpaid in the sum of $177.98, which said latter sum defendant neglects and refuses to pay although often requested so to do."

Then follow similar allegations in regard to four other causes of action and assignments to wit: Laher Auto Spring Company $14.98; New York Lubricating Oil Company, $41.73; Pacific States Electric Company, $39.33; Goodyear Rubber Company $200.44.

The defendant's answer is a general denial, couched in the following language:

"Comes now the defendant, Lucy Mae Reed, and for answer to the complaint of plaintiff filed herein denies each and every allegation, matter, and thing set out and contained in said complaint, and the whole thereof."

O. D Eby, of Oregon City, for appellant.

H. S. McCutchan, of Portland, for respondent.

McBRIDE, J. (after stating the fact as above).

A brief statement of the facts, which, in our opinion, are satisfactorily proved in this case, and which will serve as a basis for our conclusions as to the law of the case, is as follows:

In Estacada there was a partnership firm consisting of the defendant's husband, J. W. Reed, and Earl Shibley, doing business as Reed & Shibley. Some time prior to the institution of this action, Reed died, and the defendant, this widow, was, by the consent of Shibley, appointed administratrix of the estate, and purchased Shibley's interest in the partnership estate. Thereafter she filed a petition in the county court to the effect that it would be to the advantage of the estate and the creditors to carry on the business of the estate as a going concern, and asked to be authorized to employ J. W. Denning, her son-in-law, at a salary of $100 a month, to assist in the management of the business, and to be allowed to employ her son Russel G. Reed as a salesman at a salary of $75 to assist in the business. Pursuant to such petition, the county court made the order requested, permitting her to continue the business, also authorized her to employ Reed and Denning; and, in pursuance of said order, Denning, as manager of such business, ordered the goods and incurred the debts sued for herein, notifying the sellers, in substance, that Mrs. Reed, as administratrix, was conducting the business under the name of Reed Auto Company. It may be said here that there was a voluntary nonsuit as to the second cause of action, which is not here considered.

The able counsel for defendant made many technical and adroit objections to the admission of testimony advanced to establish the above facts, and to discuss them in detail here would consume much needless space in the reports and be of no general value. We are satisfied that the facts are as above stated.

It is now thoroughly established in this state that the administratrix of an estate has no authority to carry on the business of the estate as a going concern. This point is finally settled in this state by the decision in the case of In re S. Marks & Co.'s Estate, 66 Or. 340, 133 P. 777. Having proceeded to so carry on the business under a void order, the administratrix is personally liable for debts contracted in so doing. 11 R. C. L. § 142; Willis v. Sharp, 113 N.Y. 586, 21 N.E. 705, 4 L. R. A. 493. See note in Swaine v. Hemphill, 40 L. R. A. (N. S.) 218.

This brings us to a very important and difficult question, upon the solution of which this case must turn. The corporate capacity of plaintiff, as assignee of these claims, is admitted, but there is no evidence as to whether the various assignors are natural persons, partnerships, or corporations. Defendant urges with great plausibility the view that it is not only necessary that a plaintiff claiming to be a corporation should allege and prove its corporate existence, but that it should also allege and prove the corporate or other entity of each of its assignors when it sues in the capacity of an assignee.

It is to be borne in mind that this is not the usual case of a question of the plaintiff's legal capacity to sue, because it is admitted that plaintiff is a local corporation. Having such capacity, neither is it questioned that the facts stated in regard to the claims assigned, if true, show that some entity, natural person, partnership, or corporation has a cause of action against defendant. The contention here is that, because the complaint and evidence does not differentiate between the various entities and make clear which entity it is claimed the defendant dealt with, plaintiff cannot recover in this action.

The early decisions of this court seem to be that, even as to a plaintiff, the plea of nul tiel corporation was a plea in abatement, and could not be enjoined with a plea to the merits. Oregon Central R. R. Co. v. Wait, 3 Or. 91; Oregon Central R. R. Co. v. Scoggin, 3 Or. 161; Oregon Cascade R. R. Co. v. Baily, 3 Or. 164. These were cases involving the exercise of the right of eminent domain by railroad corporations and the inconvenience of such a rule, although well established in other jurisdictions, led the Legislature of 1882 to so amend the statute in regard to condemnation actions as to allow a plea of nul tiel corporation to be pleaded at the same time as defense on the merits. General Laws of 1882, p. 53. Both the title to this act and the act itself show that this rule of pleading was intended to apply to condemnation actions only, leaving the general rule as to the manner of pleading the defense of the nonexistence of a corporation, as it existed before, which as we shall presently show, required such a defense to be set out by a plea in abatement. Subsequent to the passage of the above act, the case of Bridal Veil Lumbering Co. v. Johnson, 25 Or. 105, 34 P. 1026, came before this court. The plaintiff in that case brought a condemnation action, alleging it was a corporation, and that certain land was necessary for its right of way, and sought to condemn the same. The court held that under the act last quoted the denial of plaintiff's existence as a corporation was sufficient to put the plaintiff upon proof of its existence, but intimated that, but for the...