Temple Enterprises v. Combs

• Decision Date: 02 April 1940
• Citation: Temple Enterprises v. Combs, 164 Or. 133, 100 P.2d 613, 128 A.L.R. 856 (Or. 1940)
• Parties: TEMPLE ENTERPRISES, INC., <I>v.</I> COMBS ET AL.
• Court: Oregon Supreme Court

164 Or. 133

100 P.2d 613

128 A.L.R. 856

TEMPLE ENTERPRISES, INC.,

v. COMBS ET AL.

Supreme Court of Oregon.

Argued February 13, 1940.

Reversed April 2, 1940.

Corporations — Organization — Statutes

1. Where one-half of the stock of a corporation formed under the laws of the state is subscribed and directors are elected as provided by statute, the corporation comes into full and complete existence with power to sue and be sued, to contract and to begin the prosecution of business or enterprise for which it was organized, notwithstanding statute requiring not less than $1,000 of capital of corporation issuing no par stock to be paid in before it shall begin business.

Corporations — Organization — Statutes

2. Where corporate existence has been achieved, statutory requirement that corporation issuing nonpar stock shall not begin business until less than $1,000 of the capital is paid in is construed as a "condition subsequent" the failure to observe which cannot be called into question collaterally but only by the state in a direct proceeding to forfeit the corporate charter.

Corporations — Transaction of business

3. Corporations having stock without par value are on the same footing with others in respect of their rights to transact business, with the sole exception that, if they fail to meet the condition of the statute requiring payment of at least $1,000 of capital before beginning business, they are liable to have their charters forfeited at the suit on the state.

Corporations — Corporation de jure

4. Where articles of incorporation fixed corporation's capital at 50 shares of common stock without par value and there was evidence that one of the stockholders had spent more than $500 in business and that another stockholder tendered check for similar amount and all preliminary statutory steps were taken by incorporators and stockholders of the corporation before it commenced to do business, corporation was a "corporation de jure" and was not deprived of capacity to transact business or to maintain an action on leases executed by it by reason of statute requiring not less than $1,000 of capital to be paid in where corporation issues nonpar stock.

Corporations — Action by directors

5. Evidence warranted finding that majority of board of directors who owned 26 of 50 shares of stock issued by corporation voted in favor of resolution to take appropriate action to enforce terms of certain leases, and hence corporation was authorized to bring suit.

Corporations — Action by directors

6. Generally, corporate action can be taken only at meeting of board of directors, but such rule has no application when the directors are themselves the only stockholders, and in such case action taken by all of them informally and without a meeting is corporate action.

Corporations — Action by directors

7. Where all stockholders in corporation gave approval to a lease entered into between corporation and theater owner, stockholders' assent, though not attended with the formality of meeting of board of directors of corporation, was binding upon corporation.

Evidence — Written agreement — Parol evidence

8. Where, at the time agreement to lease theater was being discussed, attorney wrote down the terms of each agreement as dis-discussion proceeded and had each of the parties affix his initials to the memoranda and thereafter prepared an instrument which was signed by the parties and lessor agreed to the precise rental terms which were incorporated in lease, parol evidence to vary, add to, or contradict the terms of written agreement was inadmissible.

Landlord and tenant — Lease — Consideration

9. Where theater owner agreed to build and lease theater to corporation which agreed to purchase equipment to be installed by lessor, part of purchase price of which was to be paid when theater was turned over to corporation and balance in installments, and contemporaneously a lease was executed for term of ten years at rental to be determined by box office receipts, the two instruments were a single contract and the mutual promises of parties furnished consideration for agreement, and agreement to pay percentage of gross proceeds of theater business to lessor as rent constituted valuable consideration for lessor's conveyance creating tenancy.

Specific performance — Repudiation of contract

10. Where theater owner agreed to build and lease theater to corporation which agreed to purchase equipment to be installed by lessor, part of purchase price of which was to be paid when the theater was turned over to the corporation and balance in installments, and contemporaneously a lease providing for term of ten years at rental determined by percentage of box office receipts was executed, and lessor, at time that theater and equipment was to be turned over to lessee, refused check for part of consideration then due and made it plain that he had repudiated his contract, no further tender was required nor was it incumbent upon the corporation to pay money into court at time of filing suit for specific performance.

Specific performance — Contracts — Mutuality

11. The rule that a contract must be mutual in the sense that it must be such that it might at the time it was entered into have been enforced by either party against the other no longer exists in Oregon.

Specific performance — Equity — Law

12. Whenever a contract concerning realty is in its nature and incidents entirely unobjectionable, it is as much a matter of course for court of equity to decree specific performance of it as it is for a court of law to give damages for the breach of it.

Specific performance — Lease

13. A lease being a conveyance of an interest in land, specific performance would lie to compel its performance.

Specific performance — Landlord and tenant — Lease

14. Where damages would be difficult of ascertainment and remedy would not be as complete and adequate to accomplish the ends of justice as remedy of specific performance, suit for specific performance of a lease and for accounting of rents and profits of leased premises was properly maintained where lessor refused to comply with terms of lease.

Specific performance — Courts — Discretion

15. The discretion of a court of equity in a suit for specific performance is judicial in its nature, and the relief is not of grace and judicial remedies are not in any sense discretionary, but are governed by established principles and rules which constitute the body of equity jurisprudence.

Specific performance — Landlord and tenant — Lease

16. Where contract whereby lessees agreed to purchase theater equipment at time theater was turned over to them and contemporaneous lease of theater for term of ten years' rental based on percentage of box office receipts were certain in their terms and evidence did not disclose that the reserved rental was inadequate so as to suggest fraud and lessor refused to perform contract, a suit for the specific performance of the agreements would lie.

Specific performance — Landlord and tenant — Lease

17. Where owner of property agreed to build a theater and lease it to corporation, which agreed to purchase equipment to be installed by the owner and contemporaneously leased, for term of ten years, the theater at a rental determined by percentage of box office receipts, that theater cost more to build than was anticipated, and that son of owner, whom owner desired to establish in the theater business as a member of a corporation, was

hostile to the corporation, could not be urged as grounds for refusing specific performance.

  Informality of meeting of directors as affecting action taken
                thereat, note, 64 A.L.R. 712. See, also, 13 Am. Jur. 910
                  18 C.J.S., Corporations, § 65
                

In Banc.

Appeal from Circuit Court, Yamhill County.

ARLIE G. WALKER, Judge.

Suit for specific performance of a lease and for an accounting of rents and profits of leased premises by the Temple Enterprises, Incorporated, against Averill Combs and others. From a decree dismissing the suit, plaintiff appeals.

REVERSED.

Robert R. Rankin and John P. Lipscomb, Jr., both of Portland (Wood, Matthiesen & Rankin, of Portland, on the brief), for appellant.

George Neuner, of McMinnville (Burdett & Neuner, of McMinnville, and R.H.C. Bennett, of Newberg, on the brief), for respondents.

This is an appeal by the plaintiff from the decree of the circuit court dismissing a suit for the specific performance of a lease and for an accounting of the rents and profits of the leased premises.

The controlling facts are free from serious dispute.

The leased premises, a lot improved with a theater building in the city of Newberg, Oregon, are owned by the defendants Averill Combs and Millie Combs, his wife, as tenants by the entireties. Mrs. Combs acquired her interest by deed from her husband dated January 5, 1937. The defendant, Avery Combs, is their son. For convenience Averill Combs will be herein referred to as Combs, Sr., and Avery Combs as Combs, Jr.

Prior to the inception of the transactions which give rise to the present litigation, Combs, Sr., had owned and managed motion picture theaters at Wallowa, Burns, and Coquille. He had also been a farmer, and operated hotels and a sawmill. In November, 1936, at the suggestion of Melvin Keller, a salesman of motion pictures for Vitagraph, Inc., he purchased real property in Newberg, Oregon, as a site for a theater. One of his main purposes in doing so was to establish his son, then a senior at the University of Oregon, in the motion picture business. At a meeting held November 28, 1936, in the office of Robert S. Farrell, an attorney at law in Portland, attended by Mr. and Mrs. Combs, their son, Keller and Farrell, it was agreed that Combs, Sr., would erect a theater building upon the Newberg property at a cost of approximately $20,000 and lease it to a corporation to be organized by Keller and Combs, Jr. The lessee was also to purchase the equipment of the theater, when...