Portland T. & S. Bank v. Lincoln Realty

• Citation: 187 Or. 443,211 P.2d 736
• Parties: PORTLAND TRUST AND SAVINGS BANK <I>v.</I> LINCOLN REALTY CO. ET AL., McFAUL ET AL. AND HOTEL ST. ANDREWS, AND HOTEL EUGENE
• Decision Date: 12 October 1949
• Court: Oregon Supreme Court

187 Or. 443

211 P.2d 736

PORTLAND TRUST AND SAVINGS BANKv.

LINCOLN REALTY CO. ET AL., McFAUL ET AL. AND HOTEL ST. ANDREWS, AND HOTEL EUGENE

Supreme Court of Oregon.

Submitted on briefs October 12, 1949.

Affirmed November 29, 1949.

Appeal and error — "Law of the case" — Prior appeal

1. Under the "law of the case" doctrine the opinion on a prior appeal is deemed controlling upon a subsequent appeal of the same case although the doctrine generally is not applicable to pure questions of fact.

See Words and Phrases, Permanent Edition, for other judicial constructions and definitions of "Law of the Case".

Appeal and error — Law of the case — Conclusion of fact and law

2. In suit to foreclose mortgage on hotel property where to prevent foreclosure, mortgagor assigned income produced by hotel which was leased to a corporation requiring it to pay monthly sums to the mortgagee on the indebtedness based on room rentals where it was necessary for Supreme Court on prior appeal to determine whether a delinquency existed and its amount, a conclusion that the lessee was delinquent for a specified sum was one of fact and law and binding on subsequent appeal under doctrine of "law of the case".

Appeal and error — Res adjudicata

3. Where notes secured by mortgage constituted basis for judgment for interest at seven per cent but mortgage authorized interest from date of maturity at the "highest lawful rate" and original judgment granted plaintiff judgment with interest at seven per cent and present appellants did not cross-appeal from prior judgment nor contend they should be awarded 10 per cent interest, such contention was foreclosed under the doctrine of res judicata and the law of the case. O.C.L.A. § 66-101.

                  See: 5 C.J.S., Appeal and Error, § 1834
                

IN BANC.

Appeal from Circuit Court, Multnomah County.

JAMES W. CRAWFORD, Judge.

Cake, Jaureguy & Tooze, of Portland, for appellants.

Hall, Caldwell & Roehr, of Portland, for respondents.

Action by the Portland Trust & Savings Bank, an Oregon corporation, against the Lincoln Realty Company, an Oregon corporation, now dissolved and others and George A. McFaul, individually and as trustee, and others to foreclose a mortgage securing notes.

From a decree of foreclosure in the Circuit Court of Multnomah County, James W. Crawford, J., the plaintiff, the Hotel St. Andrews, Incorporated, and Hotel Eugene, Incorporated, appeal.

The Supreme Court, Rossman, J., affirmed the decree holding that the contentions raised by appellants were concluded by a former decree under the doctrines of law of the case and res judicata.

ROSSMAN, J.

This is an appeal by the plaintiff from a decree of the Circuit Court which granted the plaintiff judgment against the defendants in the amount of $97,565.00. This is the second time that this cause has been before this court. The decision upon the first appeal, which is reported in 180 Or. 96, 170, P.2d 568, identifies the parties and delineates the basic facts out of which the controversy originated. The previous appeal was from a decree which awarded the plaintiff judgment in the amount of $125,000.00. Our decision held that the judgment was excessive to the extent of "at least $14,892.05," and remanded the cause to the Circuit Court for the purposes which we will presently mention.

The Lincoln Realty Company, a dissolved corporation, which is one of the defendants, was the owner of a hotel property in Portland known as the St. Andrews Hotel, and was indebted upon a series of negotiable promissory notes totaling $140,000.00, of which the plaintiff was the payee. The notes were secured by a real estate mortgage which named the plaintiff mortgagee. When the notes were issued it was contemplated that they would be sold to investors, and that course was taken. The plaintiff retained no beneficial interest in them. This appeal, as the first, is from the foreclosure decree. The issues concern the amount of the judgment and the rate of interest to which the plaintiff is entitled.

The Lincoln Realty Company became financially embarrassed and unable to meet the obligation evidenced by the notes. In an effort to prevent foreclosure of the mortgage, it first made an assignment of the income produced by the hotel and, next, without terminating the assignment, leased the hotel to a corporation entitled Hotel St. Andrews, Inc., by an instrument which required the lessee to pay the plaintiff monthly $900.00 applicable to the indebtedness evidenced by the notes and $157.50 upon the unpaid balance due upon the purchase price of the furnishings of the hotel. The rental stipulated in the lease was 25 per cent of total room rentals. If 25 per cent of that gross was less than $1,057.50, the lessee was, nevertheless, bound to pay $1,057.50. If 25 per cent of the gross room rental was more than $1,057.50, the lessee was bound to pay the larger sum, but was entitled to credit for the excess in a future month when 25 per cent of gross was less than $1,057.50. It was not the duty of the lessee to pay $1,057.50 plus 25 per cent of room rentals. If 25 per cent of room rentals equalled or exceeded $1,057.50 and the sum was paid, the lessee had discharged its full duty. Hotel St. Andrews, Inc., and the plaintiff are two of the three appellants. The third is Hotel Engene, Inc., the parent of Hotel St. Andrews, Inc., and owner of all of its corporate stock. The characterization in our prior decision of the two hotel companies as "one and the same entity" has not been challenged. The respondents are the succesors to the title of Lincoln Realty Company.

The payments exacted of the lessee by the provisions of which we have taken notice were not payable to the Lincoln Realty Company. The monthly item of $157.50 was payable to the conditional vendor of the hotel's furnishings and the amount of $900.00 (or more) was payable to the plaintiff. For an adequate delineation of the terms of the lease and the assignment, reference is made to our prior opinion.

The plaintiff was obliged, upon receipt of the $900.00 (or more) portion of the monthly payment, to apply it upon the mortgage indebtedness (interest and principal). In that way, a total of approximately $15,000.00 of notes were retired and the indebtedness was reduced to $125,000.00. As indicated in our previous decision, the successors in interest to the Lincoln Realty Company (appellants in the first appeal, respondents in the present one) contended that the lessee failed to pay the full amount of the monthly rentals exacted of it by the lease and submitted that if the required rentals had been paid the aggregate of the notes would have been reduced to a sum materially less than $125,000.00. Our decision held that the lessee diverted rental moneys amounting to "at least $14,892.05" to unauthorized purposes and that at least that much should be deducted from $125,000.00 in determining the amount of the judgment to which the plaintiff was entitled. We used the term "at least" because all needed figures were not before us. The total of $14,892.05 was made up as follows: $10,129.47 represented an amount which the lessee had paid for repairs; $2,214.36 represented items which the lessee had paid for carpet, insurance premiums and taxes upon personal property; $2,548.22 was the amount of rentals delinquent November 1, 1942, and not thereafter paid. It is not claimed upon this appeal that we made any error in the two sums first mentioned ($10,129.47 and $2,214.36), but the appellants argue that the lessee was not delinquent in the payment of rentals November 1, 1942, and, therefore, that we erroneously reduced the mortgage indebtedness by the deduction of $2,548.22.

Our opinion said:

"* * * It is our belief that the judgment is excessive to the extent of at least $14,892.05. It is apparent that rentals have become due since the complaint was filed, and, of course, so far as the record goes, they have not been applied upon the mortgage debt. The circuit court should determine their amount. If a part of their total was applicable to the payment of interest or of taxes, the proper deductions should be made. The balance should be applied upon the mortgage.

"The challenged decree is set aside and the cause is remanded to the circuit court to enter the proper decree."

The mandate which issued from this court said:

"* * * the judgment is excessive as to principal to the extent of at least $14,892.05.

"It is, therefore, considered, ordered and decreed that the decree of the Circuit Court be reversed and set aside, and that the Circuit Court should determine the amount of rentals since the institution of this suit to be applied upon the mortgage debt. If a part of their total was applicable to the payment of interest or of taxes, the proper deductions should be made and the balance should be applied upon the mortgage.

* * *

"It is further ordered and decreed that this cause be remanded to the court below from which the appeal was taken with directions to set aside the decree and the sale...