Henderson v. Tillamook Hotel Co.

148 P. 57 | Or. | 1915

Mr. Justice Harris

delivered the opinion of the court.

It is claimed that the circuit judge was disqualified, and that he should have declined to preside at the trial. In support of their contention the defendants point to the fact that on January 22, 1914, they filed a motion to secure a ruling on the alleged disqualification of the presiding judge; the motion being accompanied by affidavits to the effect that he was a party in interest. It appears from the record that the trial judge had subscribed for one share of the capital stock of the defendant corporation; that his subscription had not been fully paid; and that on January 14, 1914, two days before tbe commencement of tbe suit, he sold all bis interest in tbe stock subscription to tbe plaintiff, Henderson, wbo on January 21st following paid to tbe company tbe balance due on tbe subscription.

1. Being a suit in equity, tbis cause is tried de novo in tbis court on the entire record as made by tbe parties in tbe nisi prius court. Tbe litigated questions are decided here on tbe facts as we learn them from tbe evidence and tbe admissions made in tbe pleadings. Tbe question of tbe alleged disqualification of tbe circuit judge is neither a persuasive nor a determinative factor in tbe conclusion to be reached by tbis court on tbe merits of tbe dispute between tbe plaintiff and tbe defendants. The appellate tribunal is not prevented from deciding tbis cause on tbe record brought here, even though it be conceded that tbe circuit judge was disqualified.

2. While tbe objection raised by tbe defendants is not an element of tbe case calling for decision here, we note, however, in passing, that although a technical disqualification was not shown to exist within tbe contemplation of Section 956, L. O. L., because all right to tbe share of stock subscribed for bad passed to tbe bands of another person, wbo bad paid tbe balance due on tbe stock subscription at tbe time of filing tbe motion, nevertheless, under tbe circumstances, it would have been more in keeping with prudence and a fine sense of impartiality if tbe presiding judge bad declined to try tbe suit.

3. Tbe defendants complain because an injunction was issued without an undertaking being given or required. Neither tbe restraining order made on January 16, 1914, nor tbe one issued on January 22d provided for tbe giving of an undertaking, and none was required until February 10th. Even though tbe restraining order was made by the judge, upon his own motion, as stated in the order dated February 10,1914, nevertheless the statute required the giving of an undertaking. We read in Section 417, L. O. L., that:

“An injunction may be allowed by the court, or judge thereof, at any time after the commencement of the suit and before decree. Before allowing the same, the court or judge shall require of the plaintiff an undertaking, with one or more sureties.”

The terms of the statute are imperative, and command the court or judge to require an undertaking before allowing an injunction pendente lite.

4. The appointment of a receiver made by the court on May 5, 1914, is questioned by defendants. The record discloses that on January 17, 1914, the plaintiff filed a motion for the appointment of a receiver. The motion and the accompanying affidavits were served on the individual defendants on January 17th., together with a notice that the motion would be presented on January 20th. From all that appears in the record the application for a receiver was not presented on the date designated, and the next step seems to have been taken on January 22d, when defendants filed affidavits in support of their claim that the presiding judge was disqualified. A restraining order was issued, and the accountants were appointed on January 22d. On January 27th an order was made directing the defendants to pay the accountants, and, if need be, to borrow money to make such payments. The defendants on February 7th moved to dissolve the restraining orders, and thereafter, on February 10th, the plaintiff was directed to file an undertaking in the sum of $500 on account of the issuance of the injunction. Not having paid the accountants, an order was made by the court on May 1st, commanding the defendants forthwith to procure funds by loan or otherwise and deposit the same with the clerk of the court for the use and benefit of the accountants. The defendants having refused to comply with the last-mentioned order, the court, on May 5th, appointed a receiver. It clearly appears from all that transpired and from the recitals contained in the different orders that the appointment was prompted by the refusal of the defendants to pay the accountants, and that this was the controlling feature causing the appointment. The affairs of the Tillamook Hotel Company on May 5th were not in a worse condition than on January 22d. The refusal of the defendants to pay the accountants in obedience to the orders of the court did not furnish ground for a receivership. Under all the circumstances, as we read the history of the litigation, a receiver should not have been appointed. It is proper to add, however, that from a careful examination of the record we find that the appointment of the accountants was made under conditions which warrant the conclusion that both plaintiff and defendants sanctioned the selection of the accountants and approved the amount of the compensation fixed by the court; and, in view of the circumstances stated, the corporation should have paid Gaylord and Carlton.

5. The main grievance of plaintiff is that P. J. Worrall, by reason of his conduct, has acquired the reputation of being a quarrelsome, dangerous and disagreeable man, and, on account thereof, the hotel lost much patronage. We gather from the evidence that the hotel in question is better furnished and'equipped than any other one in Tillamook. If any loss of patronage could properly be traced to Worrall, at least some information would be afforded by the hotel register. The company commenced business July 18, 1913, and the number of guests registering during that month was 142, qnd during the subsequent months as follows: August, 815; September, 377; October, 382; November, 444; December, 320; January, 90; February, 298; March, 363; April, 357; and the first four days in May, 35. Nearly all the persons who registered were assigned rooms, but some guests took meals only. It will be observed that, with the exception of August and January, the patronage was practically the same. The business done in January is accounted for by the fact that the train service was tied up nearly all of that month. No doubt, Worrall’s conduct, which was not at all times exemplary, gave rise to some discussion, but the conditions are not sufficiently grave to warrant the court in removing him from the management of the business, especially in view of the fact that Worrall and his wife have invested $17,100 of their money in the property, and have loaned the corporation the additional sum of $6,500. The evidence does not warrant the claim that P. J. Worrall is seeking by fraudulent or other means to depreciate the value of the stock. Although books of account were not kept with as much care and completeness as might be desired, still the plan employed afforded means of knowing how much was received from the dining-room, the rooms and the bar; and the disbursements were evidenced by checks.

The final decree, in effect, removed the directors and officers of the corporation, and placed the management in the hands of a person selected by the court. Assuming that a court of equity does have the power to remove the officers of a corporation and substitute a managing receiver, or even to decree the dissolution of the corporation, nevertheless it is a well-settled rule that such court will proceed with extreme caution in. the appointment of receivers over corporate bodies: High on Receivers (4 ed.), § 292. The financial statement made on February 14, 1914, shows that the loss up to that time aggregated $828.14. A subsequent report was made by A. H. Gaylord showing that the receipts between January 24, 1914, and April 30th following amounted to $6,088.25; and the monthly overhead expense, including light, water, fuel, telephone, laundry, rent, taxes, salaries of employees, the installments paid to the Equitable Loan & Savings Association and the National Cash Register Company, was $1,141.65. When the receiver was appointed pendente lite the corporation was a going business concern, and was neither insolvent nor in such imminent danger of insolvency as to warrant the appointment of a receiver. The evidence does not disclose any material change in conditions when on June 19th the final decree was rendered: Sabin v. Columbia Fuel Co., 25 Or. 15 (34 Pac. 692, 35 Pac. 854, 42 Am. St. Rep. 756). Minority stockholders are entitled to protection against fraud or gross and reckless mismanagement on the part of the officers of a private corporation; but, under the evidence, the instant case does not afford an illustration of fraud, and no such mismanagement has been shown as to warrant a court to adopt the extreme measure of taking complete charge of the business and conducting it through a receiver.

6. The defendant P. J. Worrall was in the habit of using liquor owned by the company, and also made a practice of liberally treating patrons of the hotel bar at the expense of the corporation; and on other occasions he used the money and liquor of the corporation for the entertainment of himself and friends, although he contends that it was done for advertising purposes. He cannot use or give away property of the company in the manner indicated, and should be enjoined from doing so in the future. While it is impossible to determine with exactness the amount of money and liquor so used and consumed, still we think that $250 will fairly reimburse the company, and therefore the de-' fendant Tillamook Hotel Company is awarded a judgment against P. J. Worrall for that sum.

The respondent objects to some of the disbursements claimed by appellants in their cost bill, and files motion to retax costs.

Motion Overruled.

While the appeal was pending the receiver filed a report and the findings made therein by the trial court are here for review on a separate appeal, and consequently the question of the costs of the receivership will be reserved for determination' hereafter.

This suit is dismissed as to the defendants Anna A. Worrall and Charles Kunze; the receiver is directed to turn over to the officers of the corporation all the property in his hands belonging to the Tillamook Hotel Company; the defendants P. J. Worrall, Anna A. Worrall and Charles Kunze are granted judgment against plaintiff for costs and disbursements in this court; but neither plaintiff nor defendants shall have judgment for the costs and disbursements of suit incurred in the Circuit Court. The decree of the Circuit Court should be modified in conformity with this opinion; and it is so ordered. Modified.

Mr. Chief Justice Moore, Mr. Justice Eakin and Mr. Justice Bean concur.

Overruled .Tune 1, 1915.

On Motion to Retax Costs.

(149 Pac. 473.)

Mr. H. T. Botts, Mr. Geo. R. Bagley and Mr. Edmund B. Tongue, for the motion. Mr. Ralph R. Duniway and Mr. E. J. Claussen, contra.

Department 2.

Mr. Justice Habbis

delivered the opinion of the court.

This is a motion to retax costs. The decree awarded to the appellants their costs and disbursements in this court. The cost bill contains an item of $261 paid to the official stenographer for transcribing the testimony after the trial court had decided the cause in order that the testimony might be included as a part of the transcript on appeal. The plaintiff objects to the item mentioned, and claims that it cannot be taxed as a disbursement in the Supreme Court, but is taxable in the Circuit Court only.

7. Referring to the practice in law actions, this court has held in De Vall v. De Vall, 57 Or. 128 (109 Pac. 755, 110 Pac. 705), that:

“It is settled that in a law action the sums of money paid by a party to the official reporter as his legal fees must be taxed in the lower court and cannot be entered here as a disbursement.”

See, also, Allen v. Standard Box & Lumber Co., 53 Or. 10, 18 (96 Pac. 1109, 97 Pac. 555, 98 Pac. 509); Sommer v. Compton, 53 Or. 341 (100 Pac. 289); McGee v. Beckley, 54 Or. 250, 254 (102 Pac. 303, 103 Pac. 61); West v. McDonald, 64 Or. 203 (127 Pac. 784, 128 Pac. 818); Heywood v. Doernbecher Mfg. Co., 48 Or. 359, 371 (86 Pac. 357, 87 Pac. 530); Boothe v. Farmers & Traders’ Nat. Bank, 53 Or. 576, 589 (98 Pac. 509, 101 Pac. 390). In a suit in equity, however, the fees paid to the official stenographer for transcribing the testimony may be taxed as a disbursement in this court. The cause is tried de novo if it be a suit in equity. The disbursement objected to was for a transcript which was not used by the trial court. The expense of preparing a transcript of the testimony in a suit in equity for the use of the Circuit Court before a decision of the cause is taxable in the Circuit Court, because it is in fact a disbursement made for the trial in that court; and the cost of such transcript is not taxable in this court under the rule announced in Albert v. Salem, 39 Or. 466, 480 (65 Pac. 1068, 66 Pac. 233). If, however, a transcript of the testimony in a suit in equity is not prepared until after a decree by the trial court and is made only for the purpose of the appeal, then the expense of such transcript is properly taxable in this court. The question involved in the objection made by plaintiff was determined in Young v. Hughes, 39 Or. 586, 597 (65 Pac. 987, 66 Pac. 272):

“The stenographer’s notes of the testimony not having been transcribed when the decree was rendered in the lower court, it was necessary that a transcript thereof should be made, in order that the cause might be tried de novo in this court; and, it appearing from the amended verified statement that the sum of $40 paid therefor is reasonable, it is allowed.”

In Litherland v. Cohn Real Estate Co., 54 Or. 71, 76 (100 Pac. 1, 102 Pac. 303), a like disbursement was taxed after making certain deductions from the cost of the brief and abstract and disallowing the expense of a carbon copy of the evidence. Since the decision made in Young v. Hughes, 39 Or. 586, 597 (65 Pac. 987, 66 Pac. 272), the practice in this court has been to tax as a disbursement the necessary expense incurred for a transcript of the testimony in a suit in equity when such transcript is prepared for the appeal and after a decision by the trial court. The objection to the cost bill is overruled. Motion Overruled.

Mr. Chief Justice Moore, Mr. Justice Eakin and Mr. Justice Bean concur.