173 P. 251 | Or. | 1918
The principal question to be determined is the validity of the personal judgment rendered against the plaintiff. The only thing to which this adjudication can be attributed is the effect of the decree of the California court admitted in evidence and which distributed the cash and bonds in custody of the plaintiff in Los Angeles. The theory advanced in the argument in support of the decision attacked by the instant appeal is that the consent of the plaintiff to the California decree amounted to a conversion of the property, justifying the Oregon court in casting the plaintiff in judgment here.
*674 “The counterclaim of the defendant shall be one upon which a suit might be maintained by the defendant against the plaintiff in the suit; and in addition to the cases specified in the subdivisions of Section 74, it is sufficient if it be connected with the subject of the suit.”
The provisions of Section 74 require that a counterclaim must be one existing in favor of a defendant, and against a plaintiff, between whom a several judgment might be had in the action, and arising out of one of the following causes of action:
(1) “A cause of action arising out of the contract, or transaction set forth in the complaint, as the foundation of the plaintiff’s claim; and (2) In an action arising on contract, any other cause of action arising also on contract, and existing at the commencement of the action.”
. The wrongful conversion of property is a tort for which an action at law and not a suit can be maintained. The transaction involved in this suit is the execution of the trust deed for the purpose of securing the bonds of the Northwestern Company. The alleged conversion of the cash and bonds upon which the instant judgment seems to be based did not arise out of the negotiation of the loan or the execution of the trust deed securing the samé. It was, if anything, a separate and independent tort not arising on any contract and confessedly, it occurred, if at all, long after the commencement of this suit so that in any view of the case it is not a proper counterclaim.
A great deal is said in the receiver’s brief about the action of the California court being in derogation of the jurisdiction of the Circuit Court of Multnomah County, and that the latter tribunal having assumed jurisdiction of the subject of foreclosing the trust deed,
“This, we think, was not sufficient to justify the injunction for which the appellant prayed. At law the pendency of a former action between the same parties for the same cause is pleadable in abatement to a second action because the latter is regarded as vexatious. But the former action must be in a domestic court; that is, in a court of the state in which the second action has been brought,” citing authorities.
Under the doctrine enunciated in the excerpt from this opinion of the United States Supreme Court it is not apparent how the suit pending in the Oregon court, not being in a tribunal domestic to California, could prevent a decree of the court there, respecting property which the receiver says was in that state.
“Where the defendant has established his right to recover by evidence, to the introduction of which no objection was made in the lower court, or where evidence is introduced by the plaintiff which supports a right to recover in the defendant, thhn, in either case after judgment for the defendant, the plaintiff cannot on an appeal secure a reversal because of any imperfection in the pleadings.”
In support of his contention he cites Davidson v. Oregon & C. R. R. Co., 11 Or. 136 (1 Pac. 705) , Roseburg Ry. Co. v. Nosler, 37 Or. 299 (60 Pac. 904), and other similar cases. These precedents allude to instances where there is merely a defective statement of a good cause of action which is cured after verdict. They are not authority for giving a judgment where there is an
“By reason of the fact that the plaintiff herein while acting as trustee under the trust deed described in the*680 complaint, violated its duty as such trustee, and by reason of the several transactions described in these findings of fact it and its associates made large profits unlawfully and at the expense and to the loss of said defendant, Northwestern Long Distance Telephone Company, the court finds that said trustee is not entitled to receive any compensation for bringing this suit.”
The question of attorneys’ fees is eliminated by waiver of counsel for the plaintiff in its brief. As to its compensation the trustee appears before a court of chancery claiming relief personal to itself. To that extent it is litigating in its own interests and must occupy the position of any other suitor seeking equitable relief. It is quite apparent from the testimony that the plaintiff by its directors, some of whom were at once in like authority not only in the Northwestern Company, but also in the Securities Company, managed the affairs of the Northwestern Company to its loss and the gain sometimes of its own directors and in other instances to the advantage of the Securities Company in which the plaintiff was largely interested. Under such circumstances the Title Company does not come into a court of equity with clean hands and so far as it seeks relief for itself its prayer ought to be denied. It ill accords with the high standard of good faith demanded of a trustee to award it compensation for personal services when its own conduct, even when cloaked under interlocking boards of directors, did so much to put the cestui que trust in default. It is indeed permissible according to the weight of authority, when the transactions are conducted fairly, for one corporation to deal with another where some of the directors hold such a position in both concerns. The following cases treat of the duties of such boards of
The analogy to be drawn from these decisions is that when a corporate trustee assumes control of the board of directors of its cestui que trust and through them conducts its affairs to the loss of the latter and its own gain it is guilty of inequitable conduct not to be countenanced by a court of chancery. It is the duty of every trustee to act with the utmost fidelity with respect to the interests of the cestui que trust which have been lodged in its keeping. He cannot rightfully assume a position in which his own profits will be enhanced and those of his principal diminished. Neither can he accomplish this result by indirection; and the camouflage of an intervening corporation under identical control designed to effect the same purpose will not conceal its conduct from the scrutinizing eye of a court of conscience. For these reasons we hold that the action of the Circuit Court in denying the plaintiff’s claim for $10,000 as its fee should be affirmed.
On the whole case the conclusion is that the decree of the Circuit Court foreclosing the trust deed and ordering a sale of property for the satisfaction of $750,000 par value of the bonds of the Northwestern Company is affirmed. Its action in denying a fee to the trustee is also affirmed and the present judgment
Modified.