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I 21
OREGON SUPREME COURT DECISIONS
Fall Text Published bj Courtesy of I. A. Turner, Reporter of the
Supreme Court
Froeltstel t. Trout and Donaldson, above set forth and under the follow
Multiioiimh County. lng conditions, to-wit:
Decided, November 7, 1911. if said note be not paid when due,
H. 0. Proebstel, plaintiff and re- with interest and other charges due
fipondent, v. V. A. Trout, defendant thereon, In full, then said certificate
and appellant, and 8. J. Donaldson, and shares of stock shall belong ab
defendant and respondent. Appeal solutely to said Florence Rucker,
from the circuit court for Multnomah and the secrtary of said Portland
county. Hon. C. U. Gantenbein, Collapsible Box company, or other
judge Argued and submitted, Octo- proper official Is .hereby authorized
ber 19, 1911. Oral argument by A. and directed to transfer to the said
E. Clark (Collier & Collier and A. E. Florence Rucker on the books of said
Clark on the brief) for W. A. Trout, company and to do any and all things
Oral argument by G. Evert Baker for necessary to a full, correct and legal
Proebstel. L. E. Huntsman on the transfer of the ownership of said
brief for Donldson. Burnett, J. Af-j stock or certificates thereof from the
firmed. 'undersigned to the said Florence
The substance of the complaint In Rucker.
this suit is that about December 8, 1 In witness whereof, I have this day
1908, the defendant Trout borrowed j set my hand this 8th day of Decem-
from Florence Rucker $1,000, giving ber, 1908.
his note therefor, cd at the same
time executed and delivered to her
the following writing
(Signed) W. A. Trout."
It Is further alleged, in substance,
that on July 12, 1909, Florence Ruck-
"Whereas I, the undersigned, W. A. er sold, assigned and transferred the
Trout, secured a loan from Florence debt then due from defendant, Trout,
Rucker this 8th day of December, to G. C. Donaldson and thereafter on
190S. In the amount of S1.000. and:the 21st of July. G. C. Donaldson
due on or before six months from ' for a valuable consideration sold, as
date, as evidenced by a certain prom-1 signed transferred and delivered said
issory note signed by me and payable j debt to one S. J. Donaldson, one of
to said Florence Rucker and due In i the defendants herein,
said amount and due at said time, I It seems that about this time Flor
and being desirous of securing the ence Rucker and G. C. Donaldson In
Tayment of said note, we do hereby Itermarried and on July 21st, 1909,
deposit with said Florence Rucker ; they endorsed and signed upon the
20,000 shares of the stock of the back of the pledge contract the fol
Portland Collapsible Box company, 'lowing writing:
incorporated under the laws of the "We, the undersigned, for value re
state of Oregon, as collateral secur-'ceived, hereby sell, assign and trans
Ity for the payment of said note. (fer all right, title and Interest In
Said stock being evidenced by certl- i and to the within contract and to the
fleate No. 74 to Walter A. Trout for stock therein described and set forth,
20,000 shares. with full power to have said stock
Said stock is deposited with said transferred on the books of the corn
Florence Rucker for the purpose pany, as agreed on In said contract
by Walter A. Trout to S. J. Donaldson."
The plaintiff alleges the subse
quent assignment to himself of the
debt and contract of pledge; that no
part of the debt has been paid by the
defendant Trout, and further; thatS.
J. Donaldson, one of the defendants,
claims to own an equity in the cer
tificate of stock mounting to 6950
shares. The usual prayer is made
for a decree against the defendant
Trout for the sum of $ 1,000 and In
terest and that tha stock be sold for
the satisfaction of the decree.
la the answer of the defendant
Trout he "admits that on or about
the 8th day of December, 1908, he
borrowed from one Florence Rucker
the sum of $1,000. In this connection
the defendant alleges that he execut
ed his promissory note therefor, due
June 8, 1909, payable to the said
Rucker, and bearing Interest at the
rate of JO per cent per annum, and
further admits that he delivered to
Rucker at the time of the execution
of the contract a certificate for 20
000 shares of the capital stock of the
Portland Collapsible Box company
for the purposes set forth In said
contract, 'mat said contract was
executed and the said stock certifi
cate delivered solely as security for
the payment of the promissory note
mentioned In paragraph I. of this an
swer."
Otherwise the defendant Trout de
nies every allegation of the conv
plaint. Further In his answer the
defendant Trout alleges that on July
23, 1909, he was ready, willing and
able to pay the full amount due on
the promissory note described, and on
that day he duly tendered to Florence
Rucker also to S. J. Donaldson, men
tioned In the complaint, the full
amount, with all accrued Interest
due upon the said promissory note
and demanded the return to him of
the certificate for the said corporate
stock. It will be noted In passing
that he does not allege what amount
of money he tendered at the time
mentioned.
He further states: "that, long
prior to the commencement of this
suit, the owner and holder of the
foresaid promissory note surrend
ered, cancelled and delivered up the
said note to the defendant and the
said note was then and there satis-
fled, discharged and cancelled."
He prays that the plaintiff take
nothing by this suit and further
prays an affirmative order of the
court directing and requiring the
plaintiff to dellved up the certificate
for 20,000 shares of the capital
stock of the company. The new mat
ter In Trout's answer Is traversed
In the reply.
The answer of the defendant, S. J.
Donaldson, asserts title In himself to
6950 of the 20,000 shares named In
the certificate of stock and alleges
that at the time he transferred the
note and contract of pledge to the
plaintiff he gave the latter notice of
that claim.
The new matter In the answer of
the defendant S. J. Donaldson is not
controverted by anyone, either the
plaintiff or the co-defendant Trout so
far as we can discover from the
transcript or abstract of record be
fore us.
After a trial on the Issues Involved,
the circuit court rendered a decree
according to the prayer of the com
plaint, directing a sale of the 13,050
shares of the stock owned by Trout
to be made first to satisfy the decree
and If that were Insufficient that the
6,950 shares belonging to Donaldson
be next sold. The defendant Trout
alone appeals.
Burnett, J. The plea of tender
made by the defendant Trout can
avail him nothing In this suit for the
reason that he does not state the
amount of money vtiieh he tendered
to Donaldson on the date he men
tions. To make the plea of tender
effectual the' amount tendered must
be stated, because without this, it is
impossible for the court to reach the
conclusions which the pleader draws
that the full sum was tendered. The
allegation of the answer, that the
money tendered was the full sum
due, amounts only to a conclusion of
law. The fact of the exact amount
tendered must be stated In order for
the court to draw the same conclu
sions that the pleader has reached In
his statement Goss v. Bowen, 104
Ind. 207; Dickerson v. Hayes, 26
Minn. 100; Knight v. Abbott, 30 Vt
577; Chase t. Welch 7 N. W. 895.
Moreover, the defendant Trout does
not, in his answer, give the court
sufficient data by which, the balance
due could be calculated even tf his
allegation In that respect was suffl
clent, for although he admits giving
a note on the 8th day of December,
maturing June 8th following and
that the note bears Interest at the
rate of 10 per cent per annum, he
does not Btate whether the note was
to bear interest from date or from
maturity Hence, If we were permit
ted to compute the sum then due
when the tender was made, as al
leged, there Is not sufficient material
In the answer to enable us to reach
a correct conclusion on the matter.
As to the tender we are satisfied that
the same result must be reached
upon the merits, for although on July
23, 1909, the defendant Trout offered
In writing to pay S. J. Donaldson
$1,063 without stating to what the
payment was to be applied and de
manding that the certificate of stock
be delivered up to him; still the evi
dence shows that he was not then In
position to have made good his of
fer of payment even If it had been
accepted. He says himself that he
had not the money and that he had
only negotiated with a friend to sup
ply him the money. Even this friend
does not say that he had the money
where it could be Immediately fur
nished but that he would have had
to make further arrangements for It
Hence, we think that although the
writing Itself may have dispensed
with, the immediate . offer of the
money, in specie, yet It must have
been made in good faith and that It
would not dispense with the defen
dant's actual ability and readiness to
pay the money. In short tho effect
of the conduct of the defendant Trout
on that subject, as disclosed In the
evidence was In reality a mere pre
tense or skirmish for advantage. A
strong presumption that the defen
dant Trout was not acting In good
faith when he made the offer In writ
ing is drawn from the fact that he
has not brought the money Into
court so as to keep the tender good.
Conceding, without deciding, that
an Issue Is raised as to the ownership
of the defendant Donaldson in 6,950
shares of the stock In question, we
think his ownership Is sustained by
the "weight of the testimony on the
merits of that controversy
lust rated by the following authori
ties: Texas v. Hardenberg, 10 Wall.
(C. S.) 89; Craig t. Leslie, S Wheat
(U. S.) 578; Campbll v. Freeman, 99
Cal. 546; Dofld v. Wilson, 4 Delch
114. 408; Sandeford r. Lewis, 6SGa.
4S4; Pomeroy v. Benton, 57 Mo. 551;
Hardin v. Emmons, 63 Pac. 854;
Stockton t. Central R. Co. 50 N. J.
Eq. 73; Meier v Cardlngton, 55 Ohio
St 460; Frlnk v. Cole, 10 111.339;
Bennettv. Minott 2S Ore. 339. With
this rule In mind let us examine the
facta as disclosed by the testimony.
S. J. Donaldson became the owner
of the note and its accompanying
collateral by virtue of the endorse
ment of the payee and her then hus
band, G. C. Donaldson. Being thus
in possession of the note, and it hav
ing matured and become past due as
suming, perhaps, that he could fore
close the mortgage by Its terms, he
took the note and delivered It to the
defendnt Trout, who was at the time
secretary of the corporation, and de
manded that in accordance with the
letter of the collateral contract he
should transfer the 20,000 shares
named In the certificates to the de
fendant Donaldson. Trout took the
note and said in substance he would
attend to It soon, but Instead of
transferring the stock he made the
offer In writing to which njluslon
has already been made, although he
retained possession of the note. Trout
contends that the surrender of the
note extinguished not only the note
Itself, but also the debt which It rep
resented. All the circumstances of
this case show that no such Intention
can be derived from the conduct of
either of the parties. Donaldson was
evidently attempting to foreclose the
pledge and realize upon the security
and not to discharge the debt until
that end was accomplished. That
Trout did not so Intend the transac
tion Is shown by his offer at a sub
sequent time on the same day to pay
the money, evidently upon that debt
although It Is unspecified In his of
fer. We conclude that at least in
eqully the debt Itself was 'not extin
guished. ' -
Being In possession of tne pledged
property, after default In payment of
the debt for which the stock was
pledged, S. J. Donaldson had a quail
tied property in the stock. Relnstln
v. Roberts, 34 Ore. 87; Swank v. Ell
wert. 55 Ore. 487; 105 Pac. 902. Be
ing the owner of the debt Itself and
having this qualified property In
pledge, Donaldson could convey that
to the plaintiff either as the absolute
owner of the same or bo as to give
him authority to collect It for the
We think the main question In this! f? 1 Ofl! FfftCf
case should be decided according to
the maxim that equity regards the
substance rather than the form. "By
force of this principle, equity goes
behind the form of a transaction In
order to give effect to the Intention
of the parties either, to aid an act
abortive at law because formally de
fective or to Impose a liability as
against an evasion by a formal con
cealment of Its true character." 16
Cyc. 134.
This general prlnclpl Is further II-
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OUR THANKSGIVING SALE
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All Coats Reduced.
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MEUCHAXDISE PKICES t
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benefit of Donalduon, We think tbe
acta of the parties, as detailed. In the
testimony and their Intent to lie
drawn therefrom, show that the prop
erty waa regularly transferred to
ProobHtel for tho purpose of enabling
Iilm to collect It for the benefit ot
the defendant Donaldson and that
for the purposes of this suit Proeb
stel stands In the same right that his
grantor Donaldson stood.
On tho merits, Propbstel Is shown
to be acting In good faith for the rea
son that he had another cause ot
Butt against said Trout In connection
with stock In that corporation and It
was thought best to Include the two
In the wuiie complaint In the first In
stance. From a legal standpoint as
well as from the substantial equities
of the caBe we think the defense ot
tho defendant Trout Is without merit
and the decree of the court below
should be affirmed.
When at Portland!
Go to the
8ii!s.M,js.aJLt .. . J
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