Pennicard v. Coe

• Decision Date: 31 January 1928
• Citation: 124 Or. 423,263 P. 920
• Parties: PENNICARD v. COE. [*]
• Court: Oregon Supreme Court

263 P. 920

124 Or. 423

PENNICARD v. COE. ^[*]

Supreme Court of Oregon

January 31, 1928

Department 2.

Appeal from Circuit Court, Multnomah County; Louis P. Hewitt, Judge.

Suit by C.J. Pennicard against U. C. Coe. From a judgment dismissing the suit, plaintiff appeals. Decree set aside and rendered.

This is a suit for the rescission of a contract for the sale and purchase of certain securities, founded upon the alleged false and fraudulent representations made by the defendant through his agents, and the alleged violation of the provisions of the Blue Sky Law of this state. From a judgment dismissing the suit, plaintiff appeals.

Thomas Mannix, of Portland, for appellant.

Ralph H. King, of Portland (W. Lair Thompson, of Portland, on the brief), for respondent.

BROWN J.

On May 12, 1922, U. C. Coe, defendant herein, executed an agreement and declaration of trust in the city of Great Falls, Cascade county, Mont., and on June 20th of that year caused the same to be recorded in the office of the county recorder of that county. The objects of the agreement are stated in the following language:

"Establishing a trust estate and defining the interest rights, and duties of the holders from time to time of beneficial interests or units to be issued hereunder together with their assigns hereinafter called subscribers or beneficiaries, and themselves, together with their successors hereinafter called trustees, witnesseth:

"That, whereas, the said U. C. Coe, ______, ______, for the following purposes, to wit:

"(a) To locate, purchase, lease, and acquire lands mineral claims, and rights to prospect for, bore, sink, wells and shafts, produce, pipe, convey, and transport, oil petroleum, gas and minerals of any kind and description;

"(b) To carry on the business of searching and prospecting for mining, producing, refining, manufacturing, piping, storing, transporting, buying and selling natural gas, petroleum and other oils and their products and by-products; to buy, sell and market the same, and to contract for the sale and the distribution thereof.

"(c) To bore, build, construct, pump, operate and maintain oil and gas wells; * * *

"(d) To acquire, own, develop, operate, sell and dispose of mines of coal; * * *

"(e) To manufacture * * * tools and conveniences for use in connection with mining or drilling for oil, gas, minerals, and other products; * * * "(o) To carry on any other business or do anything in connection with the objects and purposes above mentioned that may be necessary or proper to accomplish successfully or promote the said objects and purposes herein set forth. The foregoing clause by reason of the specific enumeration of powers, shall not be held to restrict the power to do any of the things within the purview of its general powers;

"And, whereas, the said U. C. Coe, (a line being drawn through the names with the typewriter), as trustee under the designation of Coe Drilling Company, a common-law trust, purpose to issue negotiable beneficial interests or units in the form of certificates to the extent of fifteen thousand (15,000) shares of the expressed value of five dollars ($5.00) each, in the beneficial interest of the trust estate hereby created; it being hereby provided that said shares may be issued unto the subscribers either for cash or by sale and conveyance by them unto the trustees of real and personal property, contracts, services rendered, or other valuable rights and things for the uses, purposes and benefit of this trust, and thereby become and be fully paid-up and nonassessable; which shares shall define the interest of the subscribers and their assigns in such property; which property shall be detailed and described in schedule A on the books of the trustee, and the judgment of the trustee regarding the value of the property acquired or service rendered shall be conclusive.

"Now, therefore, the said U. C. Coe, ______, ______, as trustee, hereby declare that they will hold said property to be conveyed unto him, as well as all other property they may afterwards acquire as trustee, together with the proceeds and profits thereof, in trust; that he will engage such property and funds to such business pursuits as he shall deem most advantageous to his trust; to manage, control, operate, and dispose of the same in any part of the world for the benefit of the holders from time to time of certificates for units issued hereunder in the manner and subject to the stipulations herein contained, to wit:

"First. (a) The legal title of the trustee shall be the 'trustee of the Coe Drilling Company, a common-law trust;' and all property so designated shall be construed as belonging to the trust.

"(b) In executing all instruments in writing, the trustees shall sign, 'Coe Drilling Company, a Common-Law Trust,' and thereunder sign his own name, either above or below the word 'Trustee.'

"Second. (a) The trustee shall hold the legal title to all property at any time belonging to the trust, and shall have and exercise the exclusive management and control of the same; he shall assume all contracts, obligations and liabilities in connection with or growing out of the property conveyed unto him, and the management of the same in the business of this trust as hereinbefore specified, and to the extent and value of such property, but not personally; shall agree to hold the subscribers and their assigns, and any person associated or acting with him, harmless and indemnified from and against any loss, cost, obligation or liability, by reason of or in connection with such contract, obligation or liability; * * * he may sue for, receive and receipt for all moneys at any time coming due to his trust; * * * he may purchase, lease, option, contract for, locate or otherwise acquire, own, hold, improve, operate, lease, * * * grant, mortgage, pledge, hypothecate, redeem, sell, or otherwise deal in and dispose of such real and personal property as he shall deem most advantageous to his trust; * * * he may accept and extend credit, borrow and loan money, issue notes, bonds, debentures, certificates of interest or other evidences of indebtedness, and may secure the payment thereof by mortgage, pledge of property, deed of trust, or otherwise; * * * and, in general, may do and perform such other acts and things and transact such other business, not inconsistent with the terms of this instrument or general law, either alone or in conjunction with others, as he from time to time may deem best for the benefit of his trust. * * *

"Third. (a) U. C. Coe, ______, ______, shall be the trustee hereunder, and shall hold his office during the continuance of this trust. * * *

"(b) As compensation for marketing the units to be issued hereunder for benefit of this trust, U. C. Coe personally shall be entitled to receive a cash commission of ______ per cent. of the expressed value of the units by him disposed of, in which negotiations he shall have the right to employ brokers, agents, underwriters, salesmen, or others to assist him in marketing said units, and to pay them their compensation as he sees fit for their services.

"(c) As compensation for administering the affairs of the trust estate, Trustee U. C. Coe shall be entitled to receive a salary of ______ dollars per month. * * *

"Fourth. (a) The trustee may make * * * rules and regulations * * * for the government of himself, his agents, employees or representatives.

"(b) The trustee may employ, engage, hire, appoint and discharge such skilled and common labor, agents, salesmen, * * * assistants and representatives as he may from time to time deem necessary. * * *

"(c) The trustees shall not be liable for error of judgment in * * * operating or disposing of any property for the benefit of his trusts. * * *

"Fifth. (a) Units or beneficial interests hereunder shall be expressed of the value of five dollars ($5.00) each. In the event of liquidation of the assets of the trust estate, the proceeds of such liquidation shall first be applied to redeeming the units or beneficial interests at their expressed value. * * *

"(b) As evidence of ownership of such units or beneficial interests, the trustee shall issue or cause to be issued unto each subscriber or assigns a negotiable certificate or certificates, in which shall be specified the number of units or beneficial interests by them owned. * * *

"Sixth. * * *

"(b) The ownership of units or beneficial interests issued hereunder shall not entitle the holder thereof to any individual title to the trust estate whatsoever, or the right to call for a partition or division thereof, or for an accounting, or any voice or control whatsoever of the trust property, or the management thereof, or the business connected therewith by the trustee.

"Seventh. * * *

"(b) In every written order * * * which the trustee shall give or enter into, it shall be his duty to stipulate therein that neither the subscribers nor the trustee shall be held to any personal liability. * * *

"Eighth. * * * The duration of this trust shall in no event continue for a period of time extending beyond twenty-one (21) years from date of the death of the said trustee."

The body of the instrument shows that U. C. Coe, Tom Taylor, and H. H. McGovern were named therein as trustees; but the names of Taylor and McGovern appear to have been erased therefrom. Furthermore, the instrument apparently was never executed by either Taylor or McGovern.

Pursuant to the provisions of the above declaration of trust, the defendant issued and delivered to plaintiff certificates for 230 units, and received in payment therefore the sum of $900. The first certificate thus issued and delivered reads as follows:

"No. 3.

Units, 20.

"The Coe Drilling Syndicate, Great Falls, Montana.

"Fully Paid.

Undivided

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