Montgomery v. Dant & Russell

JOHNS, J.

On October 14, 1918, at the time the lumber company made the above purported assignment, it wrote the following letter to the defendant:

“Nekoma, Oregon, Oct. 14, 1918.

“Attention: Mr. Chase E. Dant.

“Dant & Russell,

“Portland, Oregon.

“Gentlemen:

• “We are enclosing you herewith invoice for one car of 12x12s to N. H. & H. Ry. Co.

“We are also enclosing you an assignment of this car of lumber which you will please honor and pay the proceeds of said car to the said Montgomery Brothers at Swiss Home, Oregon. * *

“We are enclosing you herewith a copy of assignment that we are giving Montgomery Brothers to assure them of payment of their last month’s logging. You will please write them a guarantee that you will pay this to them, as fast as the invoices come in.”

The important question is the legal force and effect of the purported assignment and how it was treated and what was done after its execution. The defendant admits that it received and accounted to the plaintiffs for three carloads of lumber under the terms of that instrument. The plaintiffs contend that it embraced “all other merchantable lumber on docks of Commonwealth Lumber Company at Nekoma, Oregon, which is now in process of loading”; and that the two cars, numbers 6003 and 40,075, now in dispute, are a portion of the lumber thus described. The complaint is drawn upon the theory that the instrument in question is an assignment of all of such lumber to the plaintiffs and plaintiffs now contend that in legal effect it is a chattel mortgage. There is no serious dispute as to the amount of plaintiffs’ claim against the Commonwealth Lumber Company, in fact, the instrument itself specifies the amount of the claim. It appears that pay-day was on the 10th of each month. That is to say, on October 10th, the lumber company should pay plaintiffs for all logs which were delivered during the month of September. On October 12th, "Will Montgomery, one of the plaintiffs, had the following conversation with the manager of the lumber company:

“I went to him and I says, ‘What are you going to do about paying us?’ And he says, ‘I cannot pay you until I get the airplane cars.’ And I says, ‘I would be foolish to let you ship these cars out of here unless he could pay for them.’ And I says, ‘Pay me or I will tie the lumber up here to-day.’ And he says, ‘That would be hard on us, but,’ he says, ‘I will give you an assignment of all this lumber to Dant & Russell, and, he says, ‘Dant & Russell can pay you the checks as fast as the lumber goes out.’ And so we agreed to do that.”

It was under such conditions that the alleged assignment was executed and the three carloads of lumber were shipped to the defendant, for which it accounted to the plaintiffs. October 26, 1918, E. N. Poe, the wife of the manager of the lumber company, wrote a letter to Charles E. Dant, an officer of the defendant, in which among other things she says:

“You understand, do you not, that the assignment sent for Montgomery Bros, includes pay for logs— put into and up to date, which is not according to contract, as they are only supposed to receive pay up to the 10th. * * Do you not think that the check on one of the cars for which I am now handing you the invoices — should be placed in the bank for me to check out in paying our current bills?”

This letter was written at or about the time the last two carloads now in question were shipped, and is conclusive evidence that they were invoiced to the defendant under the terms and conditions of the purported assignment. In answer to this letter and on October 28th, the defendant, among other things, wrote the lumber company as follows:

“We agree with you that it is very poor business to be assigning invoices, but we have no voice in the matter. These invoices were assigned, we received a copy of the assignment both from Montgomery Bros, and also a lawyer in Eugene. We are sending the cars to San Francisco to be sold, and will remit for them just as soon as we find out what we are going to get for them. If you desire, we will remit Montgomery Bros. $500 on account at once and a final settlement as soon as the cars are sold, as we cannot tell just what we are going to get out of them, the way matters stand now, as the cars have not yet been sold.”

November 30th, the defendant wrote H. W. Eaton:

“We are unable to tell you that we will remit to you for this carload of lumber, for the reason that there is an assignment out against it in favor of Montgomery Bros., which in turn Mr. Kahn has notified us not to consider, but the assignment is nevertheless out and we prefer not to make any promises, as we do not want to pay bills twice.”

November 29th the defendant wrote Smith & Bryson, who were then acting for the plaintiffs :

“Will say that we have been advised by Mr. Kahn to remit no money to Montgomery Brothers.”

As a final result the defendant refused to pay or account to the plaintiffs for the two carloads of lumber,. and, among other things, it now contends that those two cars were not loaded with lumber which was in the docks at Nekoma, or “in process of loading,” on October 14th, at the time of the assignment.

Although the instrument on its face purports to be an assignment, yet its purpose and intent was to turn over and deliver to the plaintiffs the specified lumber at the dock to secure the payment of plaintiffs’ claim against the lumber company. The real dispute is whether the two carloads of lumber in question were embraced within the description. The evidence shows that within a very few days after the assignment was made an attachment was levied on all of the property of the lumber company, but the date of the attachment is not specified. It also shows that the sawmill was shut down prior to the attachment, but the testimony is indefinite and uncertain as to how long it had then been closed. It also appears that at the time the mill was shut down there were seven carloads of lumber on the dock and that the last two cars were delivered to and shipped out by the assignee of the lumber company in the July following. It is not shown how much lumber was cut by the mill after the assignment to the plaintiffs on October 11th. There is evidence tending to show that there were at least five carloads of lumber on the dock at that time. The above letter of Mrs. Poe to the defendant and the letter of the defendant to the company, of October 28th and its letter to Eaton of November 30th, are strong evidence that both the lumber company and the defendant knew and recognized that the two ears of lumber were invoiced, shipped to and received by the defendant under the terms and conditions of the assignment, and that, if that instrument was valid and enforceable, the net proceeds from the lumber should be paid to the plaintiffs. By the terms of that writing the lumber was to be shipped to the defendant as brokers, and the shipment was made for the use and benefit of the plaintiffs. The defendant was to sell the lumber and convert it into money and pay the net proceeds to the plaintiffs. In its letter to the lumber company of October 28th, the defendant says:

“If you desire we will remit Montgomery Brothers $500 on account at once and a final settlement as soon as the cars are sold.”

1,2. The evidence is conclusive that the lumber company shipped and invoiced the two carloads in question as the property of plaintiffs and that the defendant knew and recognized the fact that they were shipped under the terms and conditions of the purported assignment, and that, having received and accepted them, it was then its duty to account to the plaintiffs for the proceeds of those two carloads, under the terms and conditions of the assignment. Under all the surrounding facts and circumstances, the defendant cannot at this time deny that the lumber in those two cars was not embraced or included in the lumber specified and defined in the assignment.

It was vigorously contended in the lower court and in this court that the plaintiffs had a complete and adequate remedy at law, and that equity did not have jurisdiction. The lumber was shipped to and received by the defendant as a broker for the plaintiffs, to whom it never did render a statement as to the net proceeds or the amount of its charges and commissions and refused to make any statement.

3. In legal effect, the purported assignment was a chattel mortgage given to the plaintiffs to secure the payment of the amount of their claim against the ■lumber company. It was good as between the parties and the defendant had notice of the purpose and intent and the reasons why it was given. In fact, it recognized the validity of the instrument and accounted to the plaintiffs for the first three carloads of lumber shipped under its terms and provisions.

4. The instrument does not provide as to how it should be enforced or the manner of its foreclosure. The lumber company shipped and invoiced the lumber in question to the defendant under the terms and provisions of that assignment, and it received and accepted the lumber in the manner in which it was shipped and refuses to account or pay over the proceeds to the plaintiff. The complaint alleges that they “do not know and are unable to say what the proceeds of the said two carloads of lumber were, but that this is known to and within the knowledge of the defendant,” and that they are entitled to an accounting from it for such proceeds. No demurrer was filed to the complaint. The answer admits that no accounting was ever made and denies any liability or the right of the plaintiffs to an accounting. Under such a state of facts, equity did have jurisdiction of the subject matter of the suit.

The decree is affirmed. Affirmed.

Burnett, C. J., and Harris and McBride, JJ., concur.