Title & Trust Co. v. U.S. Fidelity & Guaranty Co.

• Decision Date: 02 February 1932
• Citation: 7 P.2d 805,138 Or. 467
• Parties: TITLE & TRUST CO. v. UNITED STATES FIDELITY & GUARANTY CO.
• Court: Oregon Supreme Court

7 P.2d 805

138 Or. 467

TITLE & TRUST CO. v. UNITED STATES FIDELITY & GUARANTY CO.

Supreme Court of Oregon

February 2, 1932

In Banc.

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

On rehearing.

Former opinion adhered to, and judgment below reversed and remanded.

For former opinion, see 1 P.2d 1100.

Chester A. Sheppard, of Portland (Sheppard, Phillips & Ralston and R. B. Nason, all of Portland, on the brief) for appellant.

Robert G. Smith, of Portland (Roscoe P. Hurst, of Portland, on the brief), for respondent.

KELLY J.

Both parties herein insist that in our original opinion we have modified the decree rendered in the case of Hattie E. Miller and Mamie Karlan, the E. Henry Wemme Company, the Overlook Land Company, and the United States National Bank of Portland, Or., which case, for convenience, hereafter will be referred to herein as the Miller-Wemme case.

It is true that in the complaint in the case at bar it is alleged that, by the terms of the undertaking upon which this action is based, the defendant herein undertook and agreed to pay any judgment rendered in the Miller-Wemme case against the defendant therein, the E. Henry Wemme Company, not to exceed $10,000. It is also true that the only judgment, as distinguished from a decree, rendered against the E. Henry Wemme Company in the Miller-Wemme case, is a judgment "for the sum of thirty-five dollars per month for the term beginning with the month of March, 1927, and till the month of November, 1928, inclusive, with interest on such sums of thirty-five dollars from the last day of March, 1927, and the last day of each succeeding month." It would logically follow that a breach of the undertaking in suit would render defendant herein liable only for the amount of said judgment, if the covenant contained in such undertaking was as alleged in the complaint herein; but there is no such promise or agreement in the undertaking in question.

In the case at bar, the defendant in its answer alleges: "That the said undertaking was made, executed and delivered for the sole and only purpose of saving harmless Hattie E. Miller and Mamie Karlan from damages they may or might have sustained by and through the failure of The E. Henry Wemme Company and the Overlook Land Company to carry out a certain decree of the above entitled court made and entered heretofore in the case of Hattie E. Miller and Mamie Karlan, plaintiffs, v. The E Henry Wemme Company, The Overlook Land Company and United States National Bank of Portland, Oregon," etc. Moreover, a copy of the undertaking in question is set out in defendant's answer in the Miller-Wemme case.

For the purpose of avoiding to the utmost any delay, even remotely similar to that depicted in Dickens' novel, Bleak House, attendant upon the case of Jarndyce and Jarndyce, erroneously cited in defendant's brief as Jarndyce v. Jarndyce, this court especially noted defendant's answer in the particulars indicated, and fain would have entered judgment under the provisions of section 3, article 7, of the Constitution of Oregon, if the record had afforded any means of determining the life expectancies of the beneficiaries. An affidavit appears in the record that they are over 60 years of age. How much over is not stated. At the age of 60, the life expectancy is 14.1 years, while, at 69, it is but 8.97 years. 41 C.J. 216. This wide variance rendered it impossible to justify this court in definitely fixing any amount as representing the present value of the bequests in suit. In plaintiff's brief, we are reminded of the rule, announced in State v. Huffman, 39 Or. 48, 63 P. 1, to the effect that in a criminal case the jury may determine the age of the defendant from his appearance. There is nothing in the record to show that either Mrs. Miller or Mrs. Karlan was personally present at the trial of this action. Neither of them is named as a witness in the transcript of testimony or bill of exceptions. Moreover, the carefully prepared and valuable written opinion of the learned trial judge discloses affirmatively that no consideration was given to that matter in determining the amount awarded plaintiff.

Defendant contends that the amount of the judgment, upon the matured installments above quoted, comprises the maximum amount plaintiff could recover in this case.

Plaintiff contends that the amount of the trust fund attempted to be created by the court constitutes the measure of damages, subject to the principle that no recovery can be awarded in excess of the penal sum mentioned in the bond.

In our original opinion, we held that the amount of damages sustained by plaintiffs in the Miller-Wemme case, by reason of the failure of the defendants therein to carry out the terms of the decree, constitutes the maximum of plaintiff's recovery herein subject at all times to the restriction that no recovery can be had in excess of the penal sum mentioned in said undertaking. These damages would amount to the value at the time of the trial of the aggregate amount of the installments of the bequests in question of which said plaintiffs were deprived, and would be deprived during their natural lives by reason of said failure to carry out the terms of said decree.

This is not an equitable proceeding. It is not a suit to enforce specific performance. It is an action at law wherein a trust fund can neither be created, administered, nor perpetuated. Its purpose is to award a single judgment, in case plaintiff prevails, by which the damages, if any, arising from the breach of the bond may be compensated. The real parties in interest are the plaintiffs in the Miller-Wemme case and the defendant herein. The trustee appointed in the Miller-Wemme case is only a nominal plaintiff, whose right to represent the real parties in interest was not challenged until defendant interposed a motion for nonsuit.

Plaintiff also urges that the penal sum named in the bond should be considered as liquidated damages. To this point plaintiff cited Secord v. Portland Shopping News et al., 126 Or. 218, 223, 269 P. 228, 229; Star Sand Co. v. Portland, 96 Or. 323, 189 P. 217; Salem v. Anson, 40 Or. 339, 67 P. 190, 56 L. R. A. 169, 91 Am. St. Rep. 485.

In all of these cases, the actual damages were speculative, uncertain, and incapable of definite ascertainment. In such case, the presumption ordinarily is that the parties have taken that into consideration in making the contract, and have agreed upon a definite sum to be paid in case of a breach, in order to put the question beyond dispute and controversy, and to avoid the difficulty of proving actual damages.

Since the English statutes, 8 & 9 Wm. III, c. 11, and 4 Anne c. 16, §§ 12 and 13, the penalty is a bond has not been considered the measure of damages, where the actual damages are susceptible of ascertainment.

In Secord v. Portland Shopping News et al., supra, Mr. Justice Rossman says:

"In determining whether any particular stipulation is to be regarded as one fixing a penalty, or whether it really liquidates the damages, the adjudicated cases present us with an abundance of rules to guide our determination. For instance, the situation must be appraised as of the time when the contract was effected, and not as it appears at some other time. Baltimore Bridge Co. v. United R., etc., Co., 125 Md. 208, 93 A. 420. It is well settled that in the determination of the problem the court should consider all of the circumstances which surrounded the parties, together with the ease of difficulty of measuring the breach in damages. A comparison of the size of the stipulated sum, not only with the value of the subject-matter of the contracts, but also with the probable consequences of the breach as they appeared when the contract was executed may be helpful. 17 C.J. 'Damages,' § 234."

Applying the rule above quoted to the case at bar, we find that the case in which the undertaking in suit was given is one to enforce payment of bequests to the two plaintiffs therein of $35 each month during their natural lives. Given the exact ages of the legatees, which would enable the court or jury, by the use of duly authenticated mortality tables, to determine their life expectancies, the value of the annuities thus bequeathed is susceptible of appraisal.

To the writer, it seems vacuous to hold that the present value of an annuity, payable in monthly installments during the remainder of a given person's life, is so difficult of ascertainment where the age and general condition of such person is known that the question ought not to be submitted to a jury.

Our statute imposing a tax upon inheritances requires the appraisers in the first instance, subject to reappraisement by the county court, to appraise annuities (section 10-628, Oregon Code 1930), by the rules and standards of mortality and of value commonly used by actuaries' combined experience tables. Certainly such a course will not be more onerous for the court or a trial jury in the case at bar.

As the writer views it, plaintiff's contention that the amount of the trust fund determines the amount of damages is tantamount to saying that, in an action at law for damages, because of the breach of an undertaking, such a judgment should be rendered as to enforce the terms of an administrative decree.

The writer believes that all parties, the plaintiffs Miller and Karlan, the defendants, the E. Henry Wemme Company et al and the defendant herein, had in mind the value of the bequests to plaintiffs in said suit as the measure of defendant's liability when the bond in suit was executed. Nothing else was at stake. The method employed by the circuit court in an attempt to enforce payment of these bequests could in no sense increase or otherwise change their...