Case Name: OREGON & C. R. CO. v. GRUBISSICH
Court: United States Court of Appeals for the Ninth Circuit
Jurisdiction: United States
Decision Date: 1913-07-17
Citations: 206 F. 577
Docket Number: No. 2,181
Parties: OREGON & C. R. CO. v. GRUBISSICH.
Judges: Before GIBBFRT, ROSS, and MORROW, Circuit Judges.
Reporter: Federal Reporter
Volume: 206
Pages: 577–590

Head Matter:
OREGON & C. R. CO. v. GRUBISSICH.
(Circuit Court of Appeals, Ninth Circuit.
July 17, 1913.)
No. 2,181.
1. Evidence (§ 352 ) — Corporate Books and Records.
While a corporation’s books and records are evidence to prove its own acts, they are not competent evidence against third persons to prove contracts with them in the absence of proof that they knew and assented thereto.
[Ed. Note. — For other cases, see Evidence, Cent. Dig. §§ 189S-1403; Dec. Dig. § 352 ; Corporations, Cent Dig. § 1318.]
2. Evidence (§ 208 ) — Pleadings—Admissions.
The name of H. was affixed to the answer of defendant railroad company in a prior suit as president of the company, but ho did not sign the verification thereto, nor did it appear whether he signed such answer or whether the attorney for the corporation did so for him. Attached to the answer as an exhibit was a copy of the bill of sale by which H. transferred personal property to the railroad company. There was nothing, however, to show that H. ever read the answer, or exhibit, or knew that his name was signed thereto. Held, that, H. not being a party to the suit, the signing of his name to the answer under such circumstances did i not constitute an admission against his interest, nor was it sufficient to raise the presumption that he knew of the existence of the instrument attached as an exhibit.
[Ed. Note. — For other cases, see Evidence, Cent. Dig. §§ 713-725; Dee. Dig. § 208. ]
3 Corporations (§ 428 ) — Knowledge of Officiírs.
Where the interests of officers or stockholders of a corporation are adverse to it, their knowledge of facts and circumstances affecting such interest will not be imputed to the corporation.
[Ed. Note. — For other cases, see Corporations, Cent. Dig. §§ 1748-1731; Dec. Dig. § 42.8. ]
4. Ejectment (§ 95 ) — Conveyance of Property — Knowledge.
In ejectment to recover certain property alleged to have been conveyed by H. to defendant corporation, evidence held insufficient to warrant a finding that 11. ever conveyed the property or had knowledge of its conveyance.
[Ed. Note. — For other cases, see Ejectment, Cent. Dig. §§ 280-295; Dec. Dig. § 95. ]
6. Ejectment (§ 82 ) — Issues, Proof, and Variance.
Where, in ejectment to recover certain real property, defendant’s claim of title was based entirely on a written bill of sale by II. to defendant, which plaintiff alleged should in equity be deemed either a deed or an agreement to make a deed, and prayed that the same be reformed and specifically enforced and that plaintiff be required to execute a good and sufficient deed, defendant could not sustain its claim to the property on the theory of a lost grant.
[Ed. Note. — For other cases, see Ejectment, Cent. Dig. §§ 222-228; Dec. Dig. § 82. ]
6. Adverse Possession (§ 104 ) — Lost Grant — Presumption.
It is only where possession of land has been actual, open, and exclusive for the period prescribed in the statute of limitations to bar an action for the recovery of land that the presumption of a deed can be invoked, but it may be invoked where a proprietary right has been exercised beyond such statutory period, though the exclusive possession of the whole property to which the right is asserted may have occasionally been interrupted during .such period, if in addition to the actual possession there have been acts of ownership.
[Ed. Note. — For other cases, see Adverse Possession, Cent. Dig. §§ 595-602; Dec. Dig. § 104. ]
7r .Adverse Possession (§ Í04 ) — Presumption of Title — Statutes.
Under the statutes of Oregon providing that the iiresumption of title shall be based on 10 years’ continuous adverse possession,- mere silent possession, no matter how long continued, will not destroy the right of the true owner.
[Ed. Note. — For other cases, see Adverse Possession, Cent. Dig. §§ 595-602; Dec. Dig. § 104. ]
8. Adverse Possession (§ 104 ) — Lost Grant — Particular Instrument.
vVhere defendant’s claim to land in controversy was based entirely on a certain instrument executed by H., the prior owner, defendant was not entitled to rely on the presumption of lost grant under the-, rule that, where the origin of the claim of title is known and is at variance with the supposition of a grant, there will be no presumption of lost grant.
[Ed. Note. — For other cases, see Adverse Possession, Cent. Dig. §§ 595-602; Dec. Dig. § 104. ]
9. Deeds (§ 26 ) — Vendor and Purchaser (§ 21 ) — Bill of Sale — Construction-Transfer of Real Property.
An instrument transferring property of H. to defendant railroad company, after enumerating all sawmills and machinery connected therewith, all tools, implements, apparatus, live stock, horses, cattle, drays, wagons, leases, and property 'of every name and kind owned by the grantors in the possession of H. & Co., provided that the same consisted of machinery, implements, railroad materials used by the grantors in construction of the railroad, and added that it was the intention to transfer to the railroad company all property, real and personal, of every name and nature owned or possessed by the grantors in the state of Oregon. The paper was executed as a bill of sale of personalty, was not stamped as a conveyance of real property, and was not recorded. Held,, that such instrument could not operate as a deed, or a contract for the conveyance of land in Oregon belonging to 'the grantors to the railroad company.
[Éd. Note. — For other cases, see Deeds, Cent. Dig. §§ 50-52; Dec. Dig. § 26;* Vendor and Purchaser, Cent. Dig. §§ 6, 25, 26, 89; Dec. Dig. § 21. ]
Boss, Circuit Judge, dissenting.
Appeal from the District Court of the United States for- the District of Oregon; R. S. Bean, Judge.
„fíjeqtment by Maria de Grubissich against the Oregon & California Railroad Company. Judgment for plaintiff, and defendant appeals.
Affirmed.
The appellee herein had brought an action of ejectment to recover the possession of certain land in the §tate of Oregon, claiming title thereto as the devisee of her grandfather, Ben' Holladay, who had died iñ 18S7. The appellant herein, being the defendant in that action, brought the present suit to enjoin the prosecution of the action at law; it claiming to be the equitable owner of the property by virtue of an alleged unwitnessed and unacknowledged instrument of date March 28, 1870, which it alleged should be held in equity, to be either a deed, or an agreement to convey, and praying that the instrument be reformed and specifically enforced, and that the appellee be required to convey said property to the appellant. The facts are as follow’s: On November 19, 1868, the then owners of the land in controversy executed.. to Bon Holladay & Co., a copartnership consisting of Ben Holladay, C. Temple I'lmmet, and S. 6. 1’lliott, then engaged in constructing and equipping a railroad. for the Oregon Central Railroad Company, a bill of sale of all the iir timber upon the land in controversy, with the right to erect a sawmill thereon. In the course of constructing the first 20 miles of the railroad, all the timber was cut and removed from the land, and thereupon the sawmill was also removed therefrom. While the limber was being removed, a portion of'the land on May 4, 18G9, and the remainder on October 5, 1809, was deeded to Ben Iiolladay & Co. The land has never been cleared or cultivated, but has remained in the condition in which it was when the timber was removed. In March, 3905, the land was inclosed by a fence constructed by the appellant for the purpose of initiating a title by adverse possession in the Oregon & California Land Company, a holding corporation for certain of the appellant’s lands. From 1809 to 1872. the land was not listed for assessment. From 1873 to 1902, it was included in the corporation property assessed against the appellant, except that in the year 1880 it was assessed to Ben Iiolladay. From 1902 to 1910 it was assessed in the name of Ben Iiolladay & Co.
The alleged instrument under which the appellant claims title is as follows:
“Know all men by these presents: That wo, the undersigned, Ben Holladay & Co., of Portland, Oregon, in consideration of the cancellation this date by the Oregon Central Railroad Company of Salem, Oregon, of all certain contracts in writing heretofore existing between said company and the undersigned, in relation to the construction of a railroad and telegraph line from Portland, Oregon, through the Willamette, TTmpqua and Rogue River valleys to the California line, and the agreement of such company to pay the undersigned for all moneys paid out, expended and incurred under such contracts, to wit, an amount not less than eight hundred thousand dollars in United State's gold coin. It being a part of the arrangement that all the property hereinafter specific should be transferred and delivered to said company, and in consideration of the full sum of one dollar to us in hand paid, the receipt whereof is hereby acknowledged, have sold, assigned, set over, transferred, delivered and conveyed, and by these presents we, Ben Holladay & Co., do .sell, assign, transfer, set over, deliver and convey unto said Oregon Central Railroad Company, of Salem, Oregon, all sawmills and machinery connected therewith, all machinery, tools, implements, apparatus, of every name and description, all live stock, horses, mules, cattle, work oxen, carts, drays, wagons, gearing-tackle, and all leases and all property of every name and nature owned by us, in the possession of Ben Iiolladay & Co., all of such property being in the state of Oregon, principally in Multnomah and Clackamas counties, the same being the mills, machinery, tools, implements, apparatus, live stock, horses, mules, cattle, carts, drays, wagons, gearing-tackle, railroad ties, iron rail spikes and other railroad materials now and heretofore used by us in the construction of the Oregon Central Railroad Company. It being the intention of this conveyance to transfer to said Oregon Central Railroad Company all property real and personal of every name and nature now owned or possessed by the undersigned in the state of Oregon.
“To have and to hold the said property and every part thereof unto the said Oregon Central Railroad Company, of Salem, Oregon, its successors and assigns, absolutely and forever.
"In witness whereof, we have hereto set our hands and seals this 28th day of March, A. D. 3870.
“[Mve-cent United States stamp canceled.]
“Ben Holladay.
“C. Temple Iflmmet, by Ben Holladay, Atty. in Fact.
“Ben Holladay & Co., by Ben Iiolladay.”
The bill alleged that on March 28, 1870, the land in controversy belonged to lien Iiolladay & Co. The answer denied that it was the property of Ben Iiolladay & Co., and alleged that it was the property of Ben Holladay, and it denied that by the alleged instrument, or otherwise, it was intended to be conveyed to the appellant. Upon the issues and the testimony, the court found that the appellant was not the owner, either legally or equitably, of the land in controversy, and ordered that the bill dismissed.
William D. Fenton, Kenneth L. Fenton, Ben C. Dey, and Alfred P. Dobson, all of Portland, Or., for appellant.
Henry Conlin, of San Francisco, Cal., and H. W. Hogue, of Portland, Or., for appellee.
Before GIBBFRT, ROSS, and MORROW, Circuit Judges.
For other cases see same topic & § number in Dec. & Am, Digs. 1907 to date, & Rep’r Indexes
Rehearing denied October 20, 1913.
For other cases see same topic & § number in Dec. & Am. Digs. 1907 to date, & Rep’r Indexes

Opinion:
GILBERT, Circuit Judge
(after stating the facts- as above). The appellant relies upon'the'alleged copy of the instrument of date March 28, 1870, and contends that at the date thereof the property in controversy belonged to Ben Holladay & Co., and that, although it is not described in the copy of that instrument, it was intended to be included therein and conveyed thereby. There is no legal proof, however, that the alleged instrument was ever executed, or that it was ever seen or was in existence or was lost. The evidence offered to prove that there was such an instrument is the minutes of a meeting of the board of directors of the Oregon Central Railroad Company of March 28, 1870, which contain a record of the agreement of cancellation of the construction contract of Ben Holladay & Co., and what purports to be a copy of the instrument which is" relied upon, together with certain admissions which are alleged to have been made by Ben Holloday in the answer in the suit of Nightengale & Elliott v. Oregon Central Railroad Company and the Oregon & California Railroad Company, and in an affidavit made by Ben Holladay and filed in that suit, which' is referred to in the record as Exhibit 52. We agree with the court below that this evidence is not sufficient to overcome the legal title of record. There is no evidence as to the original of the alleged copy of the instrument which is found in the minutes. It is shown in whose handwriting the copy is made, but it is not shown that the copyist was at any time an officer or- employé of the corporation.
While a corporation's books and records are evidence to-prove its own acts, they are not competent evidence against third persons to prove contracts with them, in the absence of proof that they knew and assented thereto. Carey v. Williams, 79 Fed. 906, 25 C. C. A. 227; Edwards v. Bates County (C. C.) 117 Fed. 537; Harrison v. Remington Paper Co., 140 Fed. 402, 72 C. C. A. 405, 3 L. R. A. (N. S.) 954, 5 Ann. Cas. 314; Rudd v. Robinson, 126 N. Y. 113, 26 N. E. 1046, 12 L. R. A. 473, 22 Am. St. Rep. 816. In Thompson on Corporations (1st Ed.) § 7740, it is said:
"The general rule is believed to be that, excepting for the purpose of proving what the corporation did, or what action its corporators took in effecting its organization, its books and records are not evidence as against a stranger, or as against a stockholder holding adversely to it."
Nor does the record show that Ben Holladay ever admitted his knowledge of the alleged conveyance. It does appear that his name was affixed to an answer made by the Oregon & California Railroad Company in the Nightengale suit, to which was annexed as an exhibit what purports to 'be a copy of the instrument which is copied in the minutes. The execution of the instrument, however, was not made an issue in that case. But Holladay did not make the verification to the answer. His name appended thereto appears only as that of the pres- ideiit of the corporation. It does not appear whether he signed it, or whether the attorney of the corporation signed for him. There is nothing to show that 'Holladay ever read the answer or the exhibit attached thereto, or knew that his name was signed thereto. No presumption that he did can arise from the fact that his signature is found subscribed to ihe answer as an officer of one of the corporations defendant. He was not a party to that suit, and it was not his, answer, and, in the absence of proof that he knew and assented to the contents of the answer, nothing contained therein can be properly considered as an admission b}i him against his individual interest.
In McCaskill Co. v. United vStates, 216 U. S. 504-514, 30 Sup. Ct. 386, 391 (54 L. Ed. 590), the court said:
"Undoubtedly a corporation-is, in law, a person or entity entirely distinct from its stockholders and officers. T1 may have interest distinct from theirs. Their interests, it may be conceived, may be adverse to its interest, and hence has arisen against the presumption that their knowledge is its knowledge, ihe counter presumption that, in transactions with it, when their interest is adverse their knowledge will not be attributed to it."
The affidavit of Ben Holladay (complainant s Exhibit 52) which is said to contain an admission of his knowledge of a conveyance of the property may be searched ,in vain for any statement or suggestion, directly or indirectly, or even remotely, relating to the question of a conveyance of this real estate or the title thereto. It contains no reference whatever to any sale or conveyance of real or personal property from Ben Holladay & Co. to the Oregon Central Railroad Company. Holladay's statements as to the proceedings at the stockholders' meeting of March 28, 1870, and the vote of the stockholders in favor "of said sale and transfer," refer only to the sale and transfer of the franchises and property of the Oregon Central Railroad Company to the Oregon & California Railroad Company. From the fact that Holladay admitted that it was the common judgment of all the stockholders of the Oregon Central Company, its directors, and'himself, that the corporate proceedings of March 28 and 29, 1870, were had for the best interests of all concerned in said company, it is not to be inferred that he ratified or affirmed the alleged instrument of March 28, 1870, as a conveyance of, or as expressing an intention to conve}', real estate to the Oregon Central Company.
It is contended that the decree of the court: below should be reversed on the ground that upon the facts proven the presumption arises that a deed was executed from Ben Holladay or Ben Holladay & Co. to the Oregon Central Railroad Company. The presumption of a deed is not only not suggested by the facts alleged in the bill, but is directly at variance with those facts and with the prayer for relief. The appellant's claim of title, as presented in the bill, is based entirely upon the alleged instrument of date March 28, 1870, which it alleges should in equity be deemed either a deed or an agreement to make a deed, and the prayer is that the same be reformed and specifically enforced, and that the appellee be required to execute a good and sufficient deed of conveyance of the premises in controversy; in other words, the appellant by the allegations of its bill expressly negatives the presumption of a conveyance and rests its claim of title wholly upon a specified instrument which it says has .been lost, but the terms of which it presents to the court as shown by an entry in the minute book of the Oregon Central Railroad Company. The presumption of a conveyance is said to be aided by the proof of two facts: First, the payment of the taxes upon the property bjf the appellant, and the failure of Ben Holladay or his heirs to pay the same; and, second, tho'se alleged admissions by Ben Holladay of the appellant's title which have already been discussed in this opinion.
'To sustain the contention the following authorities are cited: Fletcher v. Fuller, 120 U. S. 534, 7 Sup. Ct. 667, 30 L. Ed. 759; Holtzman v. Douglas, 168 U. S. 278, 18 Sup. Ct. 65, 42 L. Ed. 466; and United States v. Chavez, 175 U. S. 520, 20 Sup. Ct. 159, 44 L. Ed. 255. In Fletcher v. Fuller, the count held that although, as a general rule, it is only where the possession has been actual, open, and exclusive for the period prescribed in the statute of limitations, to bar an action for the recovery of land that the presumption of a deed can be invoked, yet that presumption may. properly be invoked where a proprietary right has been exercised beyond such statutory period, although the exclusive possession of the whole property to which the right is asserted may have occasionally been interrupted during such period, if in addition to the actual possession there have been other open acts of ownership. In that case there had been an exclusive working of a quarry on the land for more than 28 years under a claim of title of the whole tract by virtue of conveyances in which it was described, and the parties in possession had paid taxes on the property for a period of 77 years. In Holtzman v. Douglas, there was no question or discussion of a presumption of a conveyance. The defendants relied entirely upon title derived through a tax deed, and continued adverse possession thereunder for more than twenty years. In United States v. Chavez, the proof showed uninterrupted possession of lands in Mexico for more than 100 years prior to the transfer of the territory in which they were situated to the United States, and continuing thereafter until the presentation of a petition to the court of private land claims for a decree confirming the title of the petitioners. It was upon these facts that the court remarked:
"Upon a long and uninterrupted possession, the law bases presumptions as sufficient for legal judgment, in the absence of rebutting circumstances, as formal instruments, or records, or articulate testimony. Not that formal instruments or records are unnecessary, but it will be presumed that they once existed and have been lost."
It is apparent that the facts in those cases differ widely from the facts in the case at bar.
As to-the possession of the land in controversy, the court below found that it has never been in the actual possession or occupancy of any person or persons since Holladay & Co. ceased logging operations thereon in 1869. It is admitted that the land has never been cleared or cultivated, and that it was not inclosed until March, 1905. ' It is true that the complainant has paid taxes on the land since 1873, but in the year 1880 the property was assessed to Ben Holladay, and from 1902 to 1910 it was assessed as the property of Ben Holladay & Co. The mere fact of the payment of these taxes is certainly no ground on which to presume a conveyance to the taxpayer. The land had been denuded of its timber, and in 1870 it was of little value. There is no evidence of any act of possession, or any assertion of ownership, by the Oregon Central Company or by the appellant, other than the payment of taxes, until after the death of Ben Holladay. The first act of assertion of ownership that is claimed was in 1890, when an agent of the appellant examined the land to ascertain its value. In 1905, the appellant placed a wire fence about it, the explanation of which was that:
"Inasmuch as there was no record title, it would be inadvisable to stir tbe matter up, and thought we would just fence it, and assert our possession in that way, and I presume to take advantage of the statute of limitations in that case."
The statutes of Oregon assume to declare upon what the presumption of title may be based. It is upon ten years of continuous adverse possession. Under those statutes mere silent: possession, no matter how long continued, does not destroy the right of another.
The presumption of a grant had its origin at a time when there was no registration of conveyances, and the muniments of title were subject to loss or destruction. It was indulged upon the theory that long-continued, open, notorious, and adverse possession of property must have had its origin in a conveyance, which had been lost. The best expression of the doctrine is found in Ricard v. Williams, 7 Wheat. 59, 108 (5 L. Ed. 398) where Judge Story said:
"Presumptions of this nature are adopted from the general infirmity of human nature, the difficulty of preserving muniments of title, and the public policy of supporting long and uninterrupted possessions. They are founded upon tlie consideration that the facts are such as could not, according to the ordinary course of human affairs, occur, unless there was a transmutation of title to, or an admission of ail existing- adverse title in, the party in possession. They may therefore he encountered and rebutted by contrary presumptions, and can never fairly arise where all the circumstances are perfectly consistent with the nonexistence of a grant."
With this doctrine for our guidance, we have to inquire whether the elements on which such a presumption is based are to be found in the case at bar. It is to be observed, first, that during the period of the* appellant's alleged possession there has been no difficulty in the way of preserving muniments of title; the registration laws having obviated that difficulty. Nor, according to the policy of the present laws of the states, is there a necessity for indulging a presumption to support long and uninterrupted possession; the policy of the law in that respect being definitely expressed in statutes of limitation, and in provisions for the acquisition of title through short periods of adverse possession. These statutes leave little or no room for the indulgence of the presumption of a grant. In Wigmore on Evidence, § 2522, it is said:
"But the systematic extension of the principle of acquisition by limitation, the reduction of tbe required possession to short periods, and (in the United States) the practice of compulsory registration of deeds of conveyance, have left little scope for the presumption."
Again, all the circumstances in the present case are "perfectly consistent with the nonexistence of a grant," and, in fact, those circum stances, instead of supporting the presumption of a deed, tend strongly to rebut it. The alleged copy of the instrument found in the minutes, if it has any probative effect, establishes the fact that no other instru-m'ént was executed, and that therefore there was no conveyance. "Where the origin of the claim of title is known, there will be no presumption of a lost grant." Claflin v. Boston & Albany R. R. Co., 157 Mass. 499, 32 N. E. 659, 20 L. R. A. 638. And the presumption cannot arise "where the claim is of such a nature as is at variance with the supposition of a grant." Ricard v. Williams, supra, 7 Wheat, page 108, 5 L. Ed. 398.
There is no legal proof whatever of the execution of the alleged instrument of date March 28, 1870. There is no evidence that the instrument ever was signed or was in the 'possession of any one, or that it was lost. There is only the bare fact that what purports to be a copy of an instrument is found in the minute books of the Oregon Central Railroad Company. And that copy does not appear to be the copy of a deed, but of a bill of sale of personal property. In the granting part thereof there is enumerated:
"All sawmills and machinery connected therewith, all machinery, tools, implements, apparatus of every name and description, all live stock, horses, mules, cattle, work oxen, carts, drays, wagons, gearing-tackle, and all leases and all property of every name and nature owned by us, in the possession of Ben Iiolladay & Co."
Then follows the further specification:
"The same being the mills, machinery, tools, implements, apparatus, live stock, horses, mules, cattle, carts, drays, wagons, gearing-tackle, railroad ties, iron rail spikes, and other railroad, materials, now and heretofore used by us in the construction of the Oregon Central Railroad Company."
So far there is no mention or suggestion of any real property. But next there is added, as through inadvertence or afterthought, the words:
"It being the intention of this conveyance to transfer to said Oregon Central Railroad Company all property, real and personal, of every name and nature now owned or possessed by the undersigned in the state of Oregon."
That it was not the intention of the parties to the instrument to convey real property is shown by the form of the instrument itself. If such a paper was executed, it was executed as a bill of sale, for it was not sealed, witnessed, or acknowledged, and it was stamped with the revenue stamp of a bill of sale, and not with the stamp required of a conveyance of real estate. If it was ever delivered, it was treated as a bill of sale, for it was never recorded; no recording of a bill of sale being necessary under the registration laws of Oregon. Now, this very copy of an instrument, which is not a copy of a deed nor of an agreement to make a deed, is referred to to support the presumption that there was another instrument, and that that other instrument was a deed, and this in the face of the evident fact and the distinct allegation of the bill that the appellant's claim of title had its origin in the very instrument of which the minute book contains the alleged copy.- We find no ground on which to sustain such a presumption and no ground for reversal oí the decree of the court below.
The decree is affirmed.