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net proceeds of which amounted to $1,643.88, and final confirmation of such sale by the court; the dismissal of the first suit to compel a pro rata application of the proceeds of sale of the mortgaged property upon said several judgments, and the refusal of the appellants to make such application of the net proceeds arising from the last sale. The present suit was brought to compel such application, and to recover the sum of $260, claimed to be due respondent as an overpayment.

The answer denies that appellants “have any knowledge or information sufficient to form a belief" as to whether respondent or T. T. Wilson were only sureties on the first and second notes, respectively, as alleged in the complaint, and alleges that after the resale, but not until after the complaint in this suit was filed, the appellants did apply the net proceeds thereof, pro rata, upon the amounts then due thereon and unpaid, which, in the case of the judgment against respondent and T. T. Wilson, appears from the pleadings to have been the balance after deducting the payment made by respondent after the return of the first sale. With the exception of the allegations as to suretyship, the foregoing statements in the complaint and answer are not controverted.

Watson, C. J. The denial of “any knowledge or information sufficient to form a belief” was a good denial, under the statute, and has been so held by this court. Civil Code, $ 713; Robbins v. Baker, 2 Or. 52; Sherman v. Osborn, 8 Or. 66. But the issue thus joined was immaterial. If the respondent was a surety only on the first note secured by the mortgage executed by the principal debtor to Smith, Brassfield & Co., that fact would not of itself entitle him to control the application of the proceeds of sale of the property covered by the mortgage.

It is true that considerable diversity and, perhaps, some conflict exist among the authorities upon this point. But those which hold that a surety in the situation of the respondent has no such right, are not only more direct adjudications upon the precise question involved here than the others, which seem to countenance the opposite view, but the doctrine they announce appears consonant with sound legal principles. Belcher v. Hartford Bank, 15 Conn. 381; Stamford Bank v. Benedict, Id. 437; Wilcox v. Fair. haven Bank, 7 Allen, 270; Mathew8 v. Switzler, 46 Mo. 301.

The appellants in this case held all three of the notes, as well as the mortgage. There is no such question here as is usually presented where there is litigation over the application of payment between creditors holding distinct debts secured by the same mortgage. Be. tween them the rule as to the application of the proceeds of sale of the mortgaged property, contended for by the respondent, applies. But it is not based upon the debtor's contract, under which the mortgage security has been furnished. His engagement is that the security shall be made to pay all the debts in full, and he gives his creditors the power over it for that purpose. He cannot, in ordinary

cases like the present, at least, compel an application of the proceeds of such security according to the rule which obtains between distinct creditors. After the execution of the notes and mortgage in this case, Smith, Brassfield & Co. could have assigned the first note only to the appellants with a distinct stipulation in the contract of assignment that the proceeds of the mortgage security should first be applied in payment of the second and third notes, and to the exclusion of the first in the event of the insufficiency of such proceeds to satisfy all three of the notes; and such stipulation would have been valid. Dicon v. Clayville, 44 Md. 573. There is no conflict among the authorities on this point. And if the debtor cannot insist on the observance of the rule against such an arrangement made exclusively between his creditors, how can his surety? If a creditor, hold. ing all the debts thus secured, can, by means of an assignment, confer à right upon his assignee to apply the proceeds of the mortgage security in contravention of the rule, without the debtors' assent, why should he be held bound by it if he prefers to retain all the debts and obtain payment of them himself? If he can give the power to make the application in a different manner by assignment of one of the debts secured, he certainly may make such application himself. In such a case the debtor's surety would plainly stand in his shoes and not in the creditor's. And as the debtor could not complain, the surety could not. This conclusion virtually disposes of the whole case. For if the appellants had the right which they exercised, of applying the proceeds of the sale of the mortgaged property to the payment of any of the debts held by them and secured by mortgage, as they might see proper, as we hold they had, in view of the facts appearing in the record of this case, then respondent has only paid what he could have been compelled to pay, and cannot recover it back.

Decree reversed, with directions to dismiss the bill.

HUGHES v. OREGONIAN Rr. Co., (Limited.)

The property or funds of a private corporation, not having been declared a divi. dend, in the hands of a stockholder, is subject to execution on a judgment against the corporation, and the execution creditor is entitled to the remedy byproceed. ings supplemental to execution,” provided by the Code, to enforce payment of his demand.

Appeal from Multnomah county.

W. H. Effinger, for appellant.

Bellinger & Gearin, for respondent.

Watson, C. J. The respondent, Hughes, having recovered judgment against the Oregonian Navigation Company (Limited) for $3,800 and costs, in an action at law, instituted this proceeding against the appellant to obtain satisfaction thereof, alleging that it held in its possession a large sum of money belonging to the judgment debtor. The issues were tried by the court, and the findings of fact, upon which the judgment appealed from was rendered, are as follows: That on the seventeenth day of May, 1880, the Oregonian Navigation Company (Limited) purchased and became the owner of these two certain steam-boats mentioned in the allegations, interrogatories, answer, and reply herein, called the "City of Salem” and “Ohio." That thereafter said company rebuilt the said steamer Ohio and gave to it the name of the Salem, the price paid for said boats being $36,000. That about the second day of April, 1881, the Oregonian Railway Company, (Limited,) garnishee herein, purchased 499 shares, of the par value of $100 each, in the capital stock of the Oregonian Navi. gation Company, (Limited,) paying therefor $36,000, being a control. ling interest in the stock of said Navigation Company. That said stock was purchased by the said railway company as a convenient and lawful method of owning and controlling said steamers by the railway company. That said shares of stock were transferred as fully paid up, non-assessable, as shown by the certificate therefor, of which the following is a copy :

"Incorporated May 14, 1880.

"1,000 shares of $100 each. No. 6. “For 499. PORTLAND, OREGON, April 3, 1881. Oregon Navigation

". Company, (Limited.) This is to certify that the Oregonian Railway Company (Limited) is the owner and holder of 499 fully paid shares of the capital stock of the Oregonian Navigation Company, (Limited) transferable only on the books of the company, at its office, in the city of Portland, Oregon, by indorsement hereon and surrender of this certificate.

WILLIAM REID, President. "Ellis G. HUGHES, Secretary."

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That during all the times mentioned herein William Reid was manager, and Ellis G. Hughes was the attorney, of both of said corporations. That Ellis G. Hughes, as attorney for the railway company, advised William Reid, the manager thereof, that the railroad company could not own the steam-boats herein mentioned, as it was a foreign corporation. That said steamers remained the property of said navigation company until November, 1881, when they were sold by it to William Reid for $23,000. That the proceeds of said sale were taken and received by the Oregonian Railway Company, (Lim. ited) garnishee, defendant herein. That said sum of $23,000, so received by the railway company, is still in the possession of said company, garnishee herein. That Ellis G. Hughes has a judgment for $3,800, and costs, which remains unpaid and unsatisfied, in any part, against the said Oregonian Navigation Company, (Limited.) Judg. ment was given for the respondent for the full amount of his judgment against the Oregonian Navigation Company, (Limited,) with costs.

We find no ground for interfering with the judgment of the circuit court. After all, the appellant was only a stockholder, and the legal title to the boats and funds realized from their sale was in the corporation, the Oregonian Navigation Company, (Limited.) Nor is the objection to the proceeding at law well taken. It cannot be inferred from the findings that the appellant received this money as a dividend on its shares of stock, and if it did not it had no greater right to retain it against the judgment creditor than an entire stranger would have. It had no legal title, and simply had possession of funds belonging to the judgment debtor. Hyatt v. Allen, 56 N. Y, 553; Minot v. Paine, 99 Mass. 101.

The judgment is affirmed, with costs.



Filed October 3, 1883.

Where the plaintiff entered into a contract with one K. for the purchase of certain real estate, for which he was to pay $800 in cash and assume a mortgage of $400, which was then a lien upon the land, and $800 was paid to K. on the purchase of the premises, which were the moneys of the plaintiff, procured from one W. as a loan; and where, by agreement, W., to secure himself, took the deed in his own name, and was to use and occupy the premises in place of receiving any interest for the money so loaned by him, until the plaintiff should sell some cattle in which he had his money invested, and from the proceeds repay W.: held, that W. became thereby a trustee for the plaintiff. And where the plaintiff, in a reasonable time after the execution of the deed to W., and before the commencement of his action, sold his cattle and realized the money therefrom to pay W., and tendered to W. the money procured from him as a loan, and requested him to convey the land to him, according to the agreement, and W., instead of so doing, in violation of his agreement, and without the knowledge or consent of the plaintiff, conveyed the land to another party, and received the consideration therefor and converted the same to his own use, further held, that W. is bound to account to the plaintiff for all the money so received for the land, less the mortgage and the $800 loaned by him.


Error from Clay county.

Anthony & Kellogg, for plaintiff in error.

Harkness & Godard, for defendant in error.

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HORTON, C. J. The question presented to this court is as to the sufficiency of the petition of the plaintiff below, raised by objection to the introduction of any evidence under the petition. The contention is that the petition, taken as a whole, does not allege facts from which a trust may be implied. It is assumed against the petition that the money or consideration paid for the real estate described therein belonged to the defendant below, and that there was no consideration passing to him for the $800 paid as purchase money.

It is also said that there was nothing in the petition indicating that the plaintiff below ever obligated himself to repay the defendant the said $500. We think that these assumptions are unsustained. The petition alleges that the plaintiff entered into a contract with one Kress for the purchase of the real estate, and agreed to pay Kress therefor $800 in cash, and to assume the payment of a mortgage of $400, which was then a lien upon the land. By a subsequent agreement the plaintiff contracted with the defendant that the latter was to advance and loan to him the $800 with which to purchase the land, and to secure the money so loaned, and to indemnify the defendant for the use of

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