171 Or. 379
135 P.2d 769
Supreme Court of Oregon.
Argued January 26, 1943.
Affirmed April 6, 1943.
Rehearing denied May 11, 1943.
Application for stay of execution denied May 25, 1943.
1. Forfeiture of leasehold estate conveyed in trust as security for indebtedness evidenced by interest-bearing bonds would render "functus officio" limitations on the right of individual bondholders to sue provided for in trust indenture in order to protect security and would make the extent of such limitations a "moot question".
2. Where conveyance of leasehold estate in trust as security for indebtedness evidenced by interest-bearing bonds, in order to protect such security, provided certain limitations on right of individual bondholders to sue, individual bondholder seeking personal judgment on bonds had burden of proving, as an excuse for failure to comply with such limitations, that lease had been forfeited.
3. Courts will not take judicial notice of facts allegedly established in a cause between other parties.
4. Whether limitations on right of individual bondholders to sue prevent individual actions at law against debtor or merely circumscribe bondholders' rights with respect to security afforded by a collateral agreement containing such limitations depends upon an interpretation of language used in bonds and collateral agreement, and courts should not be influenced by unwarranted interest in fortunes of defaulting debtor or necessities of a bondholder.
5. Unless bondholder is put on notice by terms of bond that limitation on his right to sue contained in collateral agreement affording security for bonded indebtedness is a condition of his contract, such limitation should not be given effect merely on ground that it is good "public policy" to insist upon unity of action by bondholders.
6. In absence of a prohibitory statute or an express stipulation to the contrary, individual bondholder may maintain an independent action at law on a corporate bond or coupon if not paid at maturity, even though it is secured by a mortgage or trust deed containing general provisions for mode of collection or foreclosure in case of default.
[171 Or. 380]
7. A mere general reference in bond to a mortgage securing its payment will not suffice to incorporate in bond restrictions contained in mortgage upon common law rights of holder to bring action upon bond after default but bond itself must in apt language refer to mortgage in such a way as to bring home notice to bondholder that mortgage contains such restrictions.
8. Bond must either expressly or by necessary implication refer to provision of mortgage securing its payment imposing limitations on bondholders' right to sue on bond after default and obscure or ambiguous references are not sufficient but doubts will be resolved against debtor who issued bond and in favor of holder thereof.
9. A "bond" consists of direct obligation of issuing debtor to holder for payment of a sum of money by debtor to holder and vests in holder the subsidiary and coexisting benefit of the security of a mortgage lien represented by an indenture made between debtor and trustee.
10. Reference in bond to mortgage securing its payment for a description of property mortgaged, nature and extent of the security, and rights of the parties, does not put bondholder upon inquiry as to existence of conditions in mortgage limiting his right to maintain action at law upon the bond after default.
11. Reference in bonds negotiable on their face to trust deed securing their payment for statement of property conveyed to trustee, extent of security, rights of bondholders, and conditions upon which bonds were issued, did not put bondholder upon inquiry as to existence of conditions in trust deed limiting his right to maintain action at law upon bond after default so as to make such conditions available to debtor as a defense to action upon bond.
12. It is the policy of the law to resolve all doubts in favor of the negotiability of bonds placed upon the market and dealt with as negotiable instruments.
13. Construction of bonds negotiable on their face as containing by reference limitations on right to maintain action at law upon bond after default provided for in trust deed affording security for bonds would destroy negotiability of the bonds.
[171 Or. 381]
ON APPLICATION FOR STAY OF EXECUTION
14. An application for a stay of enforcement of judgment of the Supreme Court to enable applicant to obtain a writ of certiorari from the United States Supreme Court was addressed solely to the discretion of the Supreme Court of Oregon.
15. To secure a review by the United States Supreme Court of a decision of a state court on certiorari, the necessary prerequisite is exemplification of a federal question that was affirmatively presented, that its decision was necessary to determination of the cause, that it was actually decided or that the judgment as rendered could not have been so without deciding it.
16. The United States Supreme Court is not authorized to interfere with a state court's decision on a question of purely local state law involving construction of a contract governed by the state's laws.
17. On application to Supreme Court of Oregon for a stay of enforcement of judgment to enable applicant to obtain a writ of certiorari from the United States Supreme Court, where there were no averments establishing that the suggested federal question was one real and substantial, the suggestion was insufficient to require grant of the application.
18. Where from filing of the complaint to denial of appellant's petition for rehearing, record did not contain a suggestion of a federal question, the claim came too late on subsequent application to entitle appellant to a stay of enforcement of judgment of the Supreme Court of Oregon to enable him to obtain a writ of certiorari from the United States Supreme Court.
19. Even when the federal question is first presented by a petition for rehearing in the state court, the United States Supreme Court will not take jurisdiction on certiorari unless that question was thereupon considered and passed on adversely by the state court or the grounds of the decision supply a new and unexpected basis for a claim by the defeated party of the denial of a federal right.
20. Where it was highly improbable, if not in law impossible, that the United States Supreme Court would look with favor upon
[171 Or. 382]
appellant's petition for certiorari to review a decision of the Supreme Court of Oregon, appellant's application to the Supreme Court of Oregon for stay of enforcement of its judgment to enable him to apply for a writ of certiorari from the United States Supreme Court was denied.
21. Wherever there is any reasonable ground for believing that the United States Supreme Court might on certiorari take jurisdiction of cause pending in the Supreme Court of Oregon, the Supreme Court of Oregon will apply liberally in favor of application for a stay of enforcement of its judgment the considerations which guide its discretion upon the application.
See 13 Am. Jur. 851.
See 14 Am. Jur. 454.
1 C.J.S., Action, § 17.
36 C.J.S., Federal Courts, § 277.
Before BELT, Acting Chief Justice, and ROSSMAN, KELLY, LUSK, BRAND and HAY, Associate Justices.
Appeal from Circuit Court, Multnomah County.
CHARLES W. REDDING, Judge.
Action at law by Eueidas K. Scott against Robert Treat Platt to recover a personal judgment against defendant upon certain interest-bearing bonds executed by defendant and another. Trial before the court without a jury resulted in judgment for plaintiff, and defendant appeals.
AFFIRMED. REHEARING DENIED.
Wilber Henderson, of Portland (Platt, Henderson, Warner & Cram, of Portland, on the brief) for appellant.
W.J. Prendergast, Jr., and David Weinstein, both of Portland (Leo Levenson, of Portland, on the brief) for respondent.
[171 Or. 383]
This is an action to recover on four matured interest-bearing bonds executed under date of June 1, 1925, by Harrison G. Platt and the defendant and appellant, Robert Treat Platt. Both makers were sued, but only the defendant, Robert Treat Platt, was served with summons or appeared. Judgment in a trial before the court without a jury went against him, and he has appealed.
The bonds are in the following form:
"Number M 31 Number M 31
UNITED STATES OF AMERICA
STATE OF OREGON
SIX AND ONE-FOURTH PER CENT
TWENTY YEAR SERIAL GOLD BOND
"HARRISON G. PLATT AND ROBERT TREAT PLATT, for value received, acknowledge themselves and each of themselves to be indebted to the bearer in the sum of
ONE THOUSAND DOLLARS
($1000.00), which sum the said Harrison G. Platt and Robert Treat Platt and each of them hereby promises to pay to bearer, or if registered, to the registered holder of this bond, at the office of Title and Trust Company in the City of Portland, Oregon, hereinafter called `Trustee', on the First day of June, 1936, together with interest thereon at the rate of Six and One-Fourth per cent per annum from June 1, 1925, payable semi-annually at the office of said Trustee in Portland, Oregon, on the First days of June and December of each year, upon surrender of the interest coupons hereunto attached as they severally mature.
"Both the principal and interest above mentioned are payable only in gold coin of the United States of America of the present standard of weight
[171 Or. 384]
and fineness, or its equivalent in lawful money of the United States of America, without deduction for any tax or taxes or Governmental charges which may be imposed thereon by any present or future law of the United States of America, or any State, County or Municipality therein, and which the said Harrison G....