Meyers v. Hot Lake Sanatorium Co.

161 P. 697, 82 Or. 587, 1916 Ore. LEXIS 134

• Court: Oregon Supreme Court
• Decided: December 27, 1916
• Status: Published

Opinion

Opinion by

Mr. Chief Justice Moore.

The plaintiff’s counsel move to dismiss the appeal on the ground that the appellant had assigned all its interest in the property affected by the decree before attempting to review that final determination. It appears from the uncontradicted affidavits, filed supplemental to the motion, that the Boise Cold Storage Company secured against the Hot Lake Sanatorium Company a judgment for $1,938.29, exclusive of costs and disbursements, that was assigned to the Phoenix Land Company, a corporation, which thereafter took and perfected an appeal in the name of its assignor.

1. Our statute, which is the foundation of the right asserted by the appellant’s counsel, reads:

“Every action shall be prosecuted in the name of the real party in interest, except as otherwise provided in Section 29, but this section shall not be deemed to authorize the assignment of a thing in action not arising out of contract”: Section 27, L. O. L.

“No action shall abate by the death, marriage, or other disability of a party, or by the transfer of any interest therein, if the cause of action survive or continue. In case of the death, marriage, or other disability of a party, the court may, at any time within one year thereafter, on motion, allow the action to be continued by or against his personal representatives or successors in interest”: Section 38, L. O. L.

“Any party to a judgment or decree other than a judgment or decree given by confession, or for want of an answer, may appeal therefrom”: Section 549, L. O. L.

Construing these clauses in pari materia, our court is committed to the doctrine that after an action or suit has been commenced no substitution is required, except in case of the death of a party: Long v. Thompson, 34 Or. 359 (55 Pac. 978); Merriam v. Victory Min. Co., 37 Or. 321 (56 Pac. 75, 58 Pac. 37, 60 Pac. 997); Culver v. Randle, 45 Or. 491 (78 Pac. 394); Burns v. Kennedy, 49 Or. 588 (90 Pac. 1102); Fildew v. Milner, 57 Or. 16 (109 Pac. 1092); Oregon Auto-Dispatch v. Cadwell, 67 Or. 301 (135 Pac. 880); Dundee M. & T. Inv. Co. v. Hughes (C. C.), 89 Fed. 182. ¥e conclude, therefore, that as the Boise Cold Storag'e Company was made a party to this suit and assigned all its interest in the property affected by the decree herein after it was rendered, the assignee, under the provisions of our statute, was authorized to take and perfect an appeal from such determination in the name of the assignor, and having done so, the motion to dismiss the appeal is denied. The conclusion thus reached is deemed essential to a determination of jurisdiction of the appeal, in order to consider the merits of the cause which relate to the action of the trial court in overruling the demurrer. In order properly to understand the question involved, it becomes necessary to call attention to clauses of the trust deed. Article I thereof, as far as deemed material, reads:

“Until the said Hot Lake Sanatorium Company shall make default in the payment of the principal or interest of the said bonds or some of them, according to the tenor thereof, or of the coupons thereto annexed, or some one or any of them, at the time or in the manner named for the payment thereof, and snch default shall continue for the period of six (6) months, or shall make default or breach in the performance or observance of any condition, obligations or requirements contained in said bonds or this deed of trust or mortgage, the said Hot Lake Sanatorium Company may possess, manage, operate and enjoy all the said property and premises hereby mortgaged and receive, take and use the income, tolls, rents, issues and profits thereof to the same effect as if this deed of trust or mortgage had not been made.”

Article 3 declares:

“If, and whenever the said Hot Lake Sanatorium Company, or its successors shall make any default in the payment of the principal or interest of said bonds, ■or some one or any of them, or of the coupons thereto annexed, or some one or any of them, according to the tenor or effect thereof at the time and in the manner of the payment thereof and such default shall continue for the period of six (6) months # * it shall be lawful for the trustee * * by its attorney or agent to sell and dispose of all and singular said property belonging to the Hot Lake Sanatorium Company and all said real property hereby mortgaged as a whole, by public auction,” etc., prescribing the place of sale and the notice requested.

Article 4 provides:

“If the Hot Lake Sanatorium Company, or its successors, shall make default in the payment of any interest or any of said bonds according to the tenor thereof, or make default in the payment of any of the •sums of money herein promised to be paid, then and thereupon such trustee shall, if requested by the holder or holders of at least one half in amount of said bonds then outstanding, declare the principal of all of said bonds to be immediately due and payable and thereupon all said bonds shall be due and payable, provided nevertheless that at any time after such default shall have been made, and have continued as aforesaid, and before tbe actual payment of tbe principal, it shall be lawful for the holders of a majority in amount of said bonds then outstanding, to direct the trustee, either forthwith to exercise its power of declaring the principal of said bonds due and payable, or waive the exercise of said power, if nnexercised, or to withdraw or annul the exercise thereof, if exercised either absolutely or with the consent of the Hot Lake Sanatorium Company, or its successors, and to direct the trustee to dismiss any suit brought against the Hot Lake Sanatorium Company, or to abandon any proceeding for the sale of the property herein described, provided, nevertheless, that no action taken by the trustee, or by the bondholders, under' this article shall prejudice or affect the powers or rights of the trustee or of said bondholders, in the event of any subsequent default.”

Article 5 asserts:

“It shall be lawful for the trustee to exercise the said power of entry or the said power of sale, or both, or to proceed by suit or suits in equity or at law to enforce the rights of the bondholders in the several cases of default on the part of the Hot Lake Sanatorium Company, or its successors herein specified, in the manner and subject to the qualifications herein expressed upon the request as herein prescribed.”

The complaint, inter alia, charges:

“That all of said $250,000 in bonds are outstanding and unpaid, and no part of the interest maturing upon said bonds or any thereof on September 1, 1915, has been paid, and that said Hot Lake Sanatorium Company has made default in such payment, and that after such default was made and prior to the commencement of this suit [a majority of] the holders of more than one half of the amount of said bonds so outstanding requested plaintiff, F. L. Meyers, as such trustee, to-declare the principal of all of said bonds immediately due and payable, and to commence suit for the foreclosure of said trust deed and mortgage and the collection of the sums, both principal and interest, due upon all of said bonds, and that accordingly plaintiff, as such trustee, did and does here now declare the principal of all of said bonds immediately due and payable.”

2. The holders of a majority of the outstanding bonds, as provided in Article IV of the trust deed, must have owned or controlled more than $125,000 of such evidence of indebtedness. “A majority of the holders of more than one half of the amount of said bonds so outstanding,” as alleged in the complaint,, would be required to have a title or legal right to only a fraction more than $62,500 of such securities. The averment of the complaint hereinbefore quoted is technically defective in stating a cause of suit in this particular. The fault referred to is not mentioned in the-brief of appellant’s counsel, and, this being so, it must be assumed that the attention of the trial court was never attracted to this imperfection.

3. At the argument in this court, however, much stress was laid upon the words, “a majority of,” as-used in the complaint and hereinbefore indicated by brackets, and it is contended the facts so stated are-insufficient to constitute a cause of suit, and, this being so, the decree should be reversed in consequence-of the error committed in overruling the demurrer. If the primary pleading had omitted a material averment, the rule now insisted upon would undoubtedly be controlling, for in such case no foundation would exist upon which to support a judgment rendered in-conformity to the prayer of the complaint. So, too,, in case of a mere technical defect in a pleading, if it appear that the attention of the court was called by the interposition of a demurrer which distinctly specified the grounds of objection to the complaint, thus affording an opportunity for an amendment, and the-demurrer was overruled, a different question would be presented in reviewing the judgment or decree-The assertion of “the law’s delay,” of which complaint is often made, would he verified by sanctioning such a mode of practice as was evidently pursued at the trial of this cause.

The phrase, “a majority of,” as used in the complaint, is unquestionably a mistake, and the technicality may have occurred by oversight of plaintiff’s counsel in dictating, or by a stenographer in transcribing the notes. But, however the error may have resulted, it can be corrected by eliminating the words in the brackets referred to, and, having done so, the complaint will then state facts sufficient to authorize an enforcement of the conditions of the trust deed, if such relief was contemplated under the circumstances mentioned. By striking out such phrase, it is not to be supposed that the remaining allegation of the part of the complaint hereinbefore quoted could have been truthfully denied, for if the plaintiff had not been requested, by the holders of more than one half of the then outstanding bonds, to declare a maturity of such ■evidences of corporate indebtedness and to foreclose the trust deed, a plea in abatement would undoubtedly lave been interposed. The technical defect which was adverted to at the argument in this court will be disregarded.

4. The remaining question to be considered is whether, under the terms of the trust deed, a suit can be maintained to foreclose the lien at the request of "the holders of more than one half of the outstanding bonds, before the expiration of six months from the ■default in paying the coupons. A careful reading of the articles of the trust deed, hereinbefore set forth, will show that two remedies are prescribed. After a ■default of six months in the payment of the interest •coupons, the trustee may, on his own motion, proceed "by strict foreclosure or for an ordinary foreclosure by a suit instituted for that purpose, to bar tbe right of the Hot Lake Sanatorium Company in and to the real and personal property mortgaged. It is unnecessary now to consider whether or not a strict foreclosure can be had, since such a remedy has not been invoked. Article IV reserves to the holders of a majority of the bonds power to set aside any proceedings instituted by the trustee on his own motion, and also to cancel their own previous request, to declare a maturity of the corporate indebtedness, and to commence a suit to foreclose the lien. It is believed a fair construction in pari materia of all the conditions of the trust deed authorized the trustee to maintain a suit to foreclose the lien, immediately upon default of any of the provisions specified, if so requested by the holders of a majority of the then outstanding bonds.

This being so, no error was committed in overruling the demurrer and in granting the relief awarded. The decree is therefore affirmed.

Affirmed. Rehearing Denied.