Oregon & C.R. Co. v. Grubissich

• Decision Date: 17 July 1913
• Docket Number: 2,181.
• Citation: 206 F. 577
• Parties: OREGON & C.R. CO. v. GRUBISSICH. [1]
• Court: U.S. Court of Appeals — Ninth Circuit

206 F. 577

OREGON & C.R. CO. v. GRUBISSICH. ^[1]

No. 2,181.

United States Court of Appeals, Ninth Circuit.

July 17, 1913

The appellee herein had brought an action of ejectment to recover the possession of certain land in the state of Oregon claiming title thereto as the devisee of her grandfather, Ben Holladay, who had died in 1887. The appellant herein, being the defendant in that action, brought the present suit to enjoin the prosecution of the action at law; it claiming to be the equitable owner of the property by virtue of an alleged unwitnessed and unacknowledged instrument of date March 28, 1870, which it alleged should be held in equity to be either a deed, or an agreement to convey, and praying that the instrument be reformed and specifically enforced, and that the appellee be required to convey said property to the appellant. The facts are as follows: On November 19, 1868 the then owners of the land in controversy executed to Ben Holladay & Co., a copartnership consisting of Ben Holladay, C. Temple Emmet, and S. G. Elliott, then engaged in constructing and equipping a railroad for the Oregon Central Railroad Company, a bill of sale of all the fir timber upon the land in controversy, with the right to erect a sawmill thereon. In the course of constructing the first 20 miles of the railroad, all the timber was cut and removed from the land, and thereupon the sawmill was also removed therefrom. While the timber was being removed, a portion of the land on May 4, 1869, and the remainder on October 5, 1869, was deeded to Ben Holladay & Co. The land has never been cleared or cultivated, but has remained in the condition in which it was when the timber was removed. In March, 1905, the land was inclosed by a fence constructed by the appellant for the purpose of initiating a title by adverse possession in the Oregon & California Land Company, a holding corporation for certain of the appellant's lands. From 1869 to 1872, the land was not listed for assessment. From 1873 to 1902, it was included in the corporation property assessed against the appellant, except that in the year 1880 it was assessed to Ben Holladay. From 1902 to 1910 it was assessed in the name of Ben Holladay & Co.

The alleged instrument under which the appellant claims title is as follows:

'Know all men by these presents: That we, the undersigned, Ben Holladay & Co., of Portland, Oregon, in consideration of the cancellation this date by the Oregon Central Railroad Company of Salem, Oregon, of all certain contracts in writing heretofore existing between said company and the undersigned, in relation to the construction of a railroad and telegraph line from Portland, Oregon, through the Willamette, Umpqua and Rogue River valleys to the California line, and the agreement of such company to pay the undersigned for all moneys paid out, expended and incurred under such contracts, to wit, an amount not less than eight hundred thousand dollars in United States gold coin. It being a part of the arrangement that all the property hereinafter specific should be transferred and delivered to said company, and in consideration of the full sum of one dollar to us in hand paid, the receipt whereof is hereby acknowledged, have sold, assigned, set over, transferred, delivered and conveyed, and by these presents we, Ben Holladay & Co., do sell, assign, transfer, set over, deliver and convey unto said Oregon Central Railroad Company, of Salem, Oregon, all sawmills and machinery connected therewith, all machinery, tools, implements, apparatus, of every name and description, all live stock, horses, mules, cattle, work oxen, carts, drays, wagons, gearing-tackle, and all leases and all property of every name and nature owned by us, in the possession of Ben Holladay & Co., all of such property being in the state of Oregon, principally in Multnomah and Clackamas counties, the same being the mills, machinery, tools, implements, apparatus, live stock, horses, mules, cattle, carts, drays, wagons, gearing-tackle, railroad ties, iron rail spikes and other railroad materials now and heretofore used by us in the construction of the Oregon Central Railroad Company. It being the intention of this conveyance to transfer to said Oregon Central Railroad Company all property real and personal of every name and nature now owned or possessed by the undersigned in the state of Oregon.

'To have and to hold the said property and every part thereof unto the said Oregon Central Railroad Company, of Salem, Oregon, its successors and assigns, absolutely and forever.

'In witness whereof, we have hereto set our hands and seals this 28th day of March, A.D. 1870.

'(Five-cent United States stamp canceled.)

'Ben Holladay.

'C. Temple Emmet, by Ben Holladay, Atty. in Fact.

'Ben Holladay & Co., by Ben Holladay.'

The bill alleged that on March 28, 1870, the land in controversy belonged to Ben Holladay & Co. The answer denied that it was the property of Ben Holladay & Co., and alleged that it was the property of Ben Holladay, and it denied that by the alleged instrument, or otherwise, it was intended to be conveyed to the appellant. Upon the issues and the testimony, the court found that the appellant was not the owner, either legally or equitably, of the land in controversy, and ordered that the bill be dismissed.

William D. Fenton, Kenneth L. Fenton, Ben C. Dey, and Alfred P. Dobson, all of Portland, Or., for appellant.

Henry Conlin, of San Francisco, Cal., and H. W. Hogue, of Portland, Or., for appellee.

Before GILBERT, ROSS, and MORROW, Circuit Judges.

GILBERT Circuit Judge (after stating the facts as above).

The appellant relies upon the alleged copy of the instrument of date March 28, 1870, and contends that at the date thereof the property in controversy belonged to Ben Holladay & Co., and that, although it is not described in the copy of that instrument, it was intended to be included therein and conveyed thereby. There is no legal proof, however, that the alleged instrument was ever executed, or that it was ever seen or was in existence or was lost. The evidence offered to prove that there was such an instrument is the minutes of a meeting of the board of directors of the Oregon Central Railroad Company of March 28, 1870, which contain a record of the agreement of cancellation of the construction contract of Ben Holladay & Co., and what purports to be a copy of the instrument which is relied upon, together with certain admissions which are alleged to have been made by Ben Holladay in the answer in the suit of Nightengale & Elliott v. Oregon Central Railroad Company and the Oregon & California Railroad Company, and in an affidavit made by Ben Holladay and filed in that suit, which is referred to in the record as Exhibit 52. We agree with the court below that this evidence is not sufficient to overcome the legal title of record. There is no evidence as to the original of the alleged copy of the instrument which is found in the minutes. It is shown in whose handwriting the copy is made, but it is not shown that the copyist was at any time an officer or employe of the corporation.

While a corporation's books and records are evidence to prove its own acts, they are not competent evidence against third persons to prove contracts with them, in the absence of proof that they knew and assented thereto. Carey v. Williams, 79 F. 906, 25 C.C.A. 227; Edwards v. Bates County (C.C.) 117 F. 537; Harrison v. Remington Paper Co., 140 F. 402, 72 C.C.A. 405, 3 L.R.A. (N.S.) 954, 5 Ann.Cas. 314; Rudd v. Robinson, 126 N.Y. 113, 26 N.E. 1046, 12 L.R.A. 473, 22 Am.St.Rep. 816. In Thompson on Corporations (1st Ed.) Sec. 7740, it is said:

'The general rule is believed to be that, excepting for the purpose of proving what the corporation did, or what action its corporators took in effecting its organization, its books and records are not evidence as against a stranger, or as against a stockholder holding adversely to it.'

Nor does the record show that Ben Holladay ever admitted his knowledge of the alleged conveyance. It does appear that his name was affixed to an answer made by the Oregon & California Railroad Company in the Nightengale suit, to which was annexed as an exhibit what purports to be a copy of the instrument which is copied in the minutes. The execution of the instrument, however, was not made an issue in that case. But Holladay did not make the verification to the answer. His name appended thereto appears only as that of the president of the corporation. It does not appear whether he signed it, or whether the attorney of the corporation signed for him. There is nothing to show that Holladay ever read the answer or the exhibit attached thereto, or knew that his name was signed thereto. No presumption that he did can arise from the fact that his signature is found subscribed to the answer as an officer of one of the corporations defendant. He was not a party to that suit, and it was not his answer, and, in the absence of proof that he knew and assented to the contents of the answer, nothing contained therein can be properly considered as an admission by him against his individual interest.

In McCaskill Co. v. United States, 216 U.S. 504-514, 30 Sup.Ct. 386, 391 (54 L.Ed. 590), the court said:

'Undoubtedly a corporation is, in law, a person or entity entirely distinct from its stockholders and officers. It may have interest distinct from theirs. Their interests, it may be conceived, may be adverse to its interest, and hence has arisen against the presumption that their knowledge is its knowledge, the counter presumption that, in transaction with it, when their interest is adverse their knowledge will not be attributed to it.'

The affidavit of Ben Holladay (complainant's Exhibit 52)...