Court Opinion

ID: 3838356
Source: CourtListenerOpinion
Date Created: 2016-07-06 08:07:20.977437+00
Date Added: 2024-06-11T13:45:36.507152
License: Public Domain

Argued on motion to dismiss appeal March 19; appeal dismissed April 23, 1940                       ON MOTION TO DISMISS APPEAL                             (101 P.2d 420)
The court, heretofore, on motion of the respondent, the plaintiff below, made an order dismissing this appeal, but later vacated this order with leave to present the motion again at the hearing on the merits. The questions arising on the motion have now been exhaustively argued, and have been given full and careful consideration by the court. *Page 296
The attempted appeal is from a joint and several judgment for $17,391.30 in favor of the respondent Silbaugh and against the appellant, Equity Finance Company, a corporation, and its codefendants, Guardian Building and Loan Association, a corporation (hereinafter called the Association), and Charles H. Carey, corporation commissioner of the State of Oregon and ex-officio statutory receiver of the Association. The action was instituted December 8, 1931, against the Association and its then receiver, James W. Mott, corporation commissioner. During its pendency Carey succeeded Mott as corporation commissioner and ex-officio receiver of the Association, and was substituted in Mott's place as a party defendant. As such receiver, Carey, under the order of the Circuit Court for Multnomah County, sold the assets of the Association in his hands to the appellant, Equity Finance Company, which assumed all the liabilities of the Association, with certain exceptions not here material, but including the obligation here sought to be enforced. Thereupon Equity Finance Company was, by order of the court, made a party defendant, and a supplemental complaint was filed setting forth the basis of that defendant's alleged liability. The judgment against the Association and the receiver was predicated on the former's breach of an agreement to pay money to the respondent; that against the appellant, Equity Finance Company, on its assumption of the obligation of the Association arising out of such breach.
The notice of appeal is directed to "C.E. Silbaugh, plaintiff above named, and Maguire, Shields  Morrison, his attorneys", and was served upon the attorneys for the respondent and no one else. It is signed by *Page 297 
"Joseph, Veatch  Bradshaw, attorneys for defendant, Equity Finance Company". The basis of the motion is that the non-appealing defendants are adverse parties under § 7-503, Oregon Code 1930, and since they were not made parties to the appeal, nor served with the notice of appeal, this court has never acquired jurisdiction of the cause.
The appellant gives three reasons why the motion should be denied. First, that the non-appealing defendants are not adverse parties; second, that the attorneys who signed the notice of appeal for the appellant represented all three defendants in the Circuit Court, and therefore service of the notice on the non-appealing defendants was unnecessary; third, that the judgment against the non-appealing defendants is void on its face. We will consider these propositions in the order stated.
First. It is unnecessary to cite again the decisions of this court referred to in our former opinions defining the phrase "adverse party" in this connection. Anyone whose interest in, or relation to, the judgment or decree is in conflict with the modification or reversal sought by the appeal is an adverse party. Here the non-appealing defendants and the appellant are jointly and severally liable to the respondent under the judgment rendered by the Circuit Court. The appellant seeks a reversal of the judgment; it is to the interest of the non-appealing defendants that the judgment against the appellant be not disturbed, because it will still stand as to them in any event; whereas, if the judgment should be reversed and they should be compelled to pay it, they would lose their right to exact contribution from the appellant. Southwestern Surety InsuranceCompany v. Foster, 85 Or. 206, 165 P. 1176; Templeton v.Morrison, 66 Or. 493, 131 P. 319, 135 P. 95. *Page 298 
Second. In support of its second contention the appellant cites the cases of Dodd v. Tebbetts, 198 Cal. 333, 244 P. 1081, and Walker v. Shell, 48 Idaho 481, 282 P. 947, which announce the rule that, where an attorney for an appealing defendant is also attorney for a defendant who does not appeal, it is unnecessary to make service of notice of appeal on the defendant not appealing. Without expressing an opinion as to the correctness of that doctrine, it suffices to say that it can avail the appellant nothing, because our statute (§ 57-503, Oregon Code 1930), as construed by this court in Neppach v.Jordan, 13 Or. 246, 10 P. 341, requires the notice of appeal not only to be served on adverse parties but to be directed to them, and the notice of appeal in the instant case is, as stated, directed only to the respondent and his attorneys. The case ofDodd v. Tebbetts, supra, relied on by the appellant, construing a statute of Idaho similar to ours, held that it was essential that the notice of appeal be directed to all the adverse parties, and for failure to do so in that case the court dismissed the appeal, notwithstanding that the attorney for the appealing defendant was also the attorney for a non-appealing defendant. To the same effect are Hibernia Savings and Loan Society v. Lewis,111 Cal. 519, 44 P. 175; In re Anderson's Estate, 125 Iowa 670,101 N.W. 510; 3 C.J., Appeal and Error, 1224, § 1324.
Third. The contention that the judgment against the Association is void is, as we understand it, based upon the grounds that the court at no time acquired jurisdiction over the Association, and that it was dissolved before the judgment was rendered. In support of the former ground the appellant calls our attention *Page 299 
to the following provision of the act relating to savings and loan associations:
"Any suits or actions by or against or on behalf of any association in the possession of the corporation commissioner, or the supervisor, or a deputy, shall, if by the association, be instituted by the corporation commissioner, or the supervisor or the deputy in charge of the association, in his official capacity as statutory receiver of the association, and if against the association, shall be against such corporation commissioner, supervisor or deputy in charge as statutory receiver thereof, any pending suits or actions by or against or on behalf of the association to be continued only by and in the name of or against such corporation commissioner, or supervisor, or deputy in charge, in his official capacity." Oregon Laws 1933, Ch. 328, § 16, p. 520.
Chapter 328, Oregon Laws 1933, is an act amending certain sections of Ch. 373, Oregon Laws 1931, under the provisions of which the corporation commissioner of the state of Oregon is made statutory receiver of insolvent savings and loan associations. Under § 60 of the original act, creditors of an association, which has been taken over by the corporation commissioner for the purpose of liquidation, are required to file their claims with the commissioner within a designated time, and, in the case of claims which are rejected, action to enforce them must be brought within thirty days after notice of rejection has been mailed to the claimants. The present action against the Association and the receiver was commenced December 8, 1931, and was pending in 1933 at the time of the taking effect of the amended act, which contained the provision above quoted requiring all actions to be instituted or, if pending, to be continued against the corporation commissioner. *Page 300 
The record shows that after the 1933 amendment became effective, as well as before, the Association appeared in the case by its attorneys, who represented the receiver as well, and filed various motions and pleadings contesting the case on its merits, and appeared at the trial. But in no way was it ever suggested until now, either by the Association or the receiver, that the court had no jurisdiction to hear and determine the case as to the Association.
Under that state of the record, we think it is not open to doubt that the jurisdictional objection was waived. The purpose of the provision in question was not to impair or destroy any substantial right of a creditor of the Association. Any attempt to do so would have been clearly unconstitutional. Stateex rel. v. Sears, 29 Or. 580, 582, 43 P. 482, 46 P. 785, 54 Am. St. Rep. 808; Fisk v. Leith, 137 Or. 459, 463, 299 P. 1013,3 P.2d 535; 12 C.J., Constitutional Law, 1073, § 739. All that the legislature intended or did was to alter the remedies which creditors otherwise would have had against an insolvent association, evidently to facilitate the orderly liquidation of such an association's affairs by the statutory receiver. The effect of the provision was, for the time being, to withdraw from the Circuit Court jurisdiction over the association with respect to the enforcement of a creditor's claim. It is well established that, in order to avail one's self of a jurisdictional defense of that character, the objection must be made promptly, either by demurrer, where the defect appears on the face of the pleadings, or by plea in abatement. As stated in 1 C.J.S., Abatement and Revival, 46, § 16:
"The cause, in such a situation, is not one which lies of itself beyond the zone wherein the court is authorized to act; and of course it is not one where the *Page 301 
court has absolute power to exercise control; it is rather one lying at the periphery of the zone of judicial operations as to which there is a conditional power to act exercisable in the absence of any proper and effective dissent by a party authorized to oppose such action * * * Such objections, going to the incidents rather than to the essence of the court's authority, may not be held in reserve to be used at such time in the trial as suits defendant's interest, nor may they be disregarded or overlooked at first and thereafter discovered and asserted; instead they must ordinarily be urged, by such plea or answer, demurrer, or motion, as is appropriate in view of the plaintiff's pleadings and the locally prevailing practices and rules of procedure, at the very threshold of the case, before any steps taken to submit the merits of the case for determination, and any failure to challenge in that manner at that time rids the jurisdiction of the condition to which it initially was subject and renders it thenceforth indefeasible."
To the same effect, see 1 C.J., Abatement and Revival, 28, § 9. Compare, Big Basin Lumber Co. v. Crater Lake Co., 63 Or. 359,127 P. 982; Callender Nav. Co. v. Pomeroy, 61 Or. 343, 347,122 P. 758.
A somewhat similar question was presented (though not collaterally, as here) in the case of Garden of Eden DrainageDist. v. Bartlett Trust Co., 350 Mo. 554, 567, 50 S.W.2d 627, 84 A.L.R. 1078. A statute relating to insolvent banks provided, in substance, that, when an official known as the commissioner of finance had taken possession of such bank, this would operate as a bar to proceedings against the bank, "and if any such action is begun, then all such proceedings shall be summarily dismissed and for naught held, upon the certificate of the commissioner being filed in such cause, showing that he has taken possession of the assets of such bank, banker or trust company, and any court in *Page 302 
which such proceedings are pending shall have no power, authority, or jurisdiction to proceed further in any such cause." It was held that the provision was for the benefit of the commissioner of finance to prevent inconvenience and embarrassment to him in the orderly administration and settlement of the affairs of insolvent banks, and that, even though a plea in abatement had been filed, the provisions were waived by failure to file with the court the certificate mentioned in the statute. That is a far stronger case than the instant case, because the question was raised by the party affected on the trial.
The appointment of a receiver for an insolvent corporation does not work the destruction of the corporate entity. Jackson v. McInnis, 33 Or. 529, 54 P. 884, 55 P. 535, 43 L.R.A. 128, 72 Am. St. Rep. 755; Metropolitan Savings Bank Trust Co. v. Farmers' State Bank, 20 F.2d 775; 16 Fletcher Cyclopedia Corporations (Perm. Ed.) 768, § 8004; 8 A.L.R. 456, annotation. That the legislature did not intend to pass sentence of death upon insolvent savings and loan associations by placing them in the hands of the corporation commissioner for liquidation, is evident from the provisions in the savings and loan act which require the commissioner, upon completion of the liquidation, to prepare and file with the board of directors of the association a full and final statement of the liquidation, and to deliver all the records and effects of the association over to the directors. Oregon Laws 1931, Ch. 373, § 60, p. 774. These provisions contemplate that the existence of the association shall continue. An insolvent corporation in receivership remains, as previously, subject to suit, although by appropriate action designed to promote the orderly conduct *Page 303 
of the receivership and short of measures which impair the obligations of contracts the remedies of creditors may be modified and curtailed. But notwithstanding such legislation if the corporation chooses not to take advantage of its temporary immunity to suit and particularly if it waives its immunity with the apparent consent and approval of the receiver as in this case there is no basis whatever for asserting that a judgment against it is a nullity. Indeed if the challenge now made had come not from a third person and in this kind of a proceeding but from the corporation itself urging it directly on appeal to this court, we should have thought that the court would have said that such a judgment was in all respects regular and valid. In any event, we are of the opinion that "if the corporation was in existence, so that it could appear in a suit, it was bound by the appearance of its attorneys." Habich v. Folger, 20 Wall. 1, 22 L. Ed. 307,315.
We find no merit in the claim that the judgment is void because, as it is asserted, the corporation had been dissolved at the time that the judgment was rendered. This matter is attempted to be brought into the record by an ex parte affidavit, from which it appears that the Association was dissolved by proclamation of the governor on January 4, 1937. At that time this case was pending in the Circuit Court, and judgment was not entered until May 17, 1939. It appears from the findings of fact, which are part of the record before us, that the Association on the date of the rendition of the judgment was "a building and loan association duly incorporated, organized and existing under and by virtue of the laws of Oregon". The showing made, therefore, contradicts the record, and, under the decision *Page 304 
of this court in Merriam v. Victory Mining Co., 37 Or. 321,329, 56 P. 75, 58 P. 37, 60 P. 997, may not be received or considered by this court for the purpose of determining its action.
But even though it had been made properly to appear that the Association had been dissolved on January 4, 1937, that fact would in no way affect the jurisdiction of the Circuit Court to render judgment against it, since, under the provisions of § 25-221, Oregon Code 1930, as amended by Ch. 40, Oregon Laws 1937, and Ch. 404, Oregon Laws 1939, it would still continue to exist as a body corporate for the purpose of prosecuting or defending any actions, suits or proceedings by or against it. And it may still today be reinstated and restored to all its franchises and privileges upon compliance with the conditions stated in § 25-254, Oregon Code 1930.
In view of the foregoing, it is unnecessary to consider the attack on the judgment as to the receiver, since, if there is a valid judgment against either of the non-appealing defendants, the motion must be granted.
In Alliance Trust Company v. O'Brien, 32 Or. 333, 50 P. 801, 51 P. 640, relied on by the appellant, where it appeared that a judgment against a non-appealing defendant was a nullity because the record showed affirmatively that the lower court had never acquired jurisdiction over that defendant, this court held that the seeming judgment would be disregarded in determining whether the defendant against whom it was rendered should have been served with notice of appeal. The case here is wholly different. The defendant Association submitted itself to the jurisdiction of the court, with the evident approval of the statutory receiver, and the objections urged by the appellant are *Page 305 
either such as should have been presented to the Circuit Court or are not in the record and not properly here for our consideration. We hold that as to the Association at least the judgment is valid, certainly so as against a collateral attack such as the appellant has made in opposing the motion.
The court regrets the necessity of dismissing an appeal, but, where, as in this case, an essential statutory requirement has not been observed, it has no alternative and is without power to enter upon a consideration of the merits.
The motion to dismiss the appeal is allowed.
RAND, C.J., and ROSSMAN, KELLY, BELT and BAILEY, JJ., concur.
BEAN, J., not sitting. *Page 306