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

• Citation: 138 Or. 467,1 P.2d 1100
• Parties: TITLE & TRUST CO. v. UNITED STATES FIDELITY & GUARANTY CO.
• Decision Date: 28 July 1931
• Court: Supreme Court of Oregon

1 P.2d 1100

138 Or. 467

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

Supreme Court of Oregon

July 28, 1931

Department 1.

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

Action by Title & Trust Company, as trustee for Hattie E. Miller and another, against the United States Fidelity & Guaranty Company. From the judgment, defendant appeals, and plaintiff cross-appeals.

Reversed and remanded.

On the 17th day of December, 1914, E. Henry Wemme died testate in Multnomah county, Or., owning 98 of the 100 shares of corporate stock of the E. Henry Wemme Company, a corporation. By his will, Mr. Wemme gave this corporate stock to various people. He also provided, among other things, for the payment to Hattie E. Miller and Mamie Karlan of $35 per month each during their respective lives thus: "Fifth Notwithstanding the devise hereinbefore made of the capital stock of said The E. Henry Wemme Company, it is my will and I hereby direct that before the payment of any dividends on any of the capital stock of said The E. Henry Wemme Company there be first paid from the rents, issues and profits collected and owned by said corporation, the following amounts to the following persons respectively: *** to Hattie E. Miller the sum of $35.00 each month during her natural life, *** to Mamie Karlan, the sum of $35.00 each month during her natural life."

By an appropriate provision in his will, Mr. Wemme also constituted the E. Henry Wemme Company residuary legatee and devisee of his entire estate. His estate was probated, and on the 2d day of August, 1919, the executor thereof was discharged.

On the 7th day of May, 1927, said Hattie E. Miller and Mamie Karlan instituted a suit in the circuit court of Multnomah county to enforce the payment by said corporation of said bequests to them, to enjoin the disposition or transfer of the corporate assets, to impress a lien as security for said bequests upon said corporate assets, and to set apart sufficient of said assets as a trust fund to be administered by a trustee to insure the future payments of said bequests.

Besides the said the E. Henry Wemme Company, the Overlook Land Company, a corporation, and the United States National Bank of Portland, were made parties defendant to said suit. When the suit was instituted, the E. Henry Wemme Company owned 41 shares of the corporate stock of the Overlook Land Company and had $3,000 on deposit with said bank. A temporary injunction was issued restraining said bank from paying out any money on deposit to the credit of said the E. Henry Wemme Company, enjoining and restraining the E. Henry Wemme Company from paying or distributing to its shareholders or officers any moneys or property, or selling or disposing of any of its property, and enjoining and restraining the Overlook Land Company from transferring any of its corporate stock owned by the E. Henry Wemme Company.

On July 19, 1927, the defendants in said suit filed an answer to plaintiff's complaint and a motion to dissolve said injunction. On the 29th day of July, 1927, the following order was made therein (omitting the title of the case and the signature of the judge):

"This matter having come on to be heard this 28th day of July 1927, upon the application of the defendants to dissolve the injunction heretofore granted in the above entitled suit against said defendants, the plaintiffs and defendants being represented by counsel, and it appearing that the said injunction should be dissolved upon the filing of a bond and undertaking in the sum of $10,000, and a bond for that amount having been furnished by the defendants with the United States Fidelity & Guaranty Company, as surety the said bond having been filed in court: It is now ordered, adjudged and decreed that the injunction heretofore granted in the above entitled suit be and the same is hereby dismissed and dissolved and held or naught.

"Done in open court this 29th day of July, 1927."

Omitting the title of the cause, the bond mentioned in the above order is as follows:

"Whereas, an injunction having been heretofore granted in favor of the plaintiffs and against the defendants in the above entitled action; and it being now desired by the said defendants to have the said injunction vacated:

"Now, therefore, we the E. Henry Wemme Company and the Overlook Land Company, as Principals, and the United States Fidelity and Guaranty Company, a corporation organized under the laws of the State of Maryland and authorized under the laws of the State of Oregon to transact the business of surety, as surety, hereby undertakes that if the defendants above named carry out any decree which may be given against them, not exceeding the sum of ten thousand and 00/100 dollars ($10,000.00), then this obligation shall be null and void; otherwise to remain in full force and effect.

"Dated this 28th day of July, 1927.

"The E. Henry Wemme Company

"By Dow V. Walker, Secretary.

"The Overlook Land Company,

"By Dow V. Walker, Secretary.

"United States Fidelity and Guaranty Company,

"By C. O. Price, Attorney in fact.

"Countersigned: By C. O. Price, Resident Agent.

"Approved 29 July, 1927.

"[Corporate Seal.] Robert G. Morrow, Circuit Judge."

On the 12th day of December, 1928, an order was made, which, omitting the title of the cause, is as follows:

"The above cause was heretofore submitted for a decree upon the pleadings, R. G. Smith for the motion, T. Mannix, contra.

"The court in pursuance of the motion gives its decree upon the pleadings as follows:

"I. It is ordered, adjudged and decreed That the plaintiffs severally each recover judgment against defendant, The E. Henry Wemme Co., 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 sum as thirty-five dollars from the last day of March, 1927, and last day of each succeeding month.

"II. That Title and Trust Company, a corporation of the State of Oregon, be and hereby is appointed trustee by this court to collect and receive from The E. Henry Wemme Co., the sum of Twenty Thousand Dollars to be held by said trustee and invested at interest as a trust fund for the payment of the legacies of the plaintiffs after first paying from said principal sum, the amounts now due said plaintiffs with interest, for which decree and judgment is now given, and the costs of this suit, and a reasonable sum to be allowed the plaintiffs as attorney's fees, which the court will fix by supplemental decree upon a hearing for the determination of that question, upon application of plaintiffs within _____ days.

"III. That said trustee is hereby empowered and directed that after the payments of the sums due on legacies to plaintiffs, and attorney's fees and costs, to pay the said legacies in the future and the expenses and costs of the trustee in performing his duties, from the annual interest that may be received from the said trust fund when created, if sufficient, and if not from the principal sum.

"IV. The trustee is empowered and authorized to begin any suit or action against the defendants or either of them that may have money or property of the E. Henry Wemme Co.

"V. If sufficient to make such trust fund is not now owned by The E. Henry Wemme Co., then the trustee is authorized to commence and prosecute any suit or action proper or necessary against any shareholder in The E. Henry Wemme Company who became such by or through the bequest of shares of stock made by E. Henry Wemme by his will, who received any dividends upon said shares as earnings or as a distribution of proceeds of the sale of the property or assets of The E. Henry Wemme Company, or against any person or corporation that holds or has acquired any of the property of The E. Henry Wemme Company since the probate of the will of E. Henry Wemme, with knowledge or notice of the rights of these plaintiffs as set forth in said will, and also upon any undertaking given in this suit by the defendant The E. Henry Wemme Company or any other defendant for the protection and benefit of plaintiffs.

"VI. It is ordered and adjudged That the plaintiffs also recover from defendants their costs and disbursements herein.

"Dated December 12, 1928.

"Robert G. Morrow, Judge."

The case at bar was instituted to recover for the alleged breach by the defendant herein of the terms of the undertaking above set out. In the circuit court, after trial thereof, a judgment was rendered in favor of the plaintiff against the defendant herein in the sum of $10,000, and for the costs and disbursements in this action. From this judgment defendant appeals.

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. (after stating the facts as above).

It is urged that the written instrument set out in the foregoing statement of fact, being the instrument upon which this action is based, is insufficient to constitute a valid undertaking. Attention is called to the fact that no obligee is named. It is claimed that no penal sum is mentioned. It is also argued that no covenant is stated, and it is alleged that there was no consideration for its execution.

In accordance with the statutory rule, which prescribes that "for the proper construction of an instrument, the circumstances under which it was made, including the situation of the subject of the instrument, and of the parties to it, may also be shown, so that the judge be placed in the position of those whose language he is to interpret" (section 717, O. L., section 9-216, Oregon Code 1930),...