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Wash. 62, 33 L.R.A. (N.S.) 63, 114 Pac. 908.

Burnett, Ch. J., delivered the opinion of the court:

Appeal-striking

less error.

No harmful error resulted in striking out of the original petition the parts thereof above quoted, for they were only conpleading-harm- clusions of law, and the questions raised by them appear on the face of the writing and have been discussed in our presence. A great deal of space was taken in the briefs and much attention devoted in the argument to the matter of probate jurisdiction; the proponents contending that the sole question which can be considered in this proceeding is whether or not the will was the authentic document whereby the testator undertook to dispose of his property, while the petitioner maintains there is involved not only the decedent's freedom from undue influence in the execution of the document, but also the validity of the instrument as a matter of law.

Referring to article 7 of the Constitution of this state as it now stands, we find that by § la thereof it is provided that "the judicial power of the state shall be vested in one supreme court and in such other courts as may, from time to time, be created by law."

This was part of the Amendment of 1910, which also provided in § 2b that "the courts, jurisdiction, and judicial system of Oregon, except so far as expressly changed by this Amendment, shall remain as at present constituted until otherwise provided by law."

The argument seems to have proceeded on the assumption that throughout the state the old system prevailed, as described in the original Constitution, whereby the county court "shall have the jurisdiction pertaining to probate courts." Sec. 12, art. 7. The basis of the argument would be sound had it not been for the provision by law embodied in the Act of February 17, 1919, codified as §§ 3132-3140, Oregon Laws. That statute provided, in substance, that in every judicial district com

prising only one county having over 100,000 population, there should be elected one circuit judge in addition to those then holding office in such district; that he should sit in a department to be designated by rule of the circuit court by an appropriate number, and be known as the department of probate; and that the judge of such department should, in addition to the duties prescribed in the act, perform the general duties of a judge of the circuit court. The county court of such districts and the office of county judge were abolished, and upon the taking effect of the act all judicial jurisdiction, power, and authority of the county judges and county courts, as distinguished from the power and jurisdiction as exercised in the transaction of county business, was conferred upon the circuit court of the judicial district comprising such county. The act goes on to say also, in substance, that in any proceeding or cause over which by existing laws the county court has jurisdiction, all of which are, by the provisions of the act, transferred to and heard by the circuit court, the procedure and practice shall be governed by the existing laws applicable to such proceeding without any change, except that appeals may be taken direct to the supreme court. The court will take judicial notice that the act applies to population of Multnomah county, in the circuit court of which this proceeding was instituted.

Evidencejudicial notice

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(— Or.

jurisdiction to hear and determine the questions involved. It is true that the original judicial scheme was to continue under the new Constitution until otherwise provided by law, but the Act of February 17, 1919, has effected the necessary provision for change. Having before us, then, for review, a decision of a court having all the necessary original jurisdiction to consider any question which might be litigated, we proceed briefly to scan the pleadings upon which the proceeding is based.

Reduced to its lowest terms, the effort of the petitioner is to set aside the will on the ground that it was the product of undue influence exercised over the testator by the trustees named in the will, whereby in fact it was their disposition of the property that was embodied in the will, instead of that of the testator, so that their will was substituted for his; and, further, that the result achieved was a will which is void on its face for reasons which were assigned in the original petition and re-embodied in ¶ 11 of the amended petition already quoted.

As to the mental capacity of the testator, no question is made, and it is sufficient, on that feature, to dismiss the matter with a quotation from the testimony of the petitioner herself:

Q. There never was any question in your mind, was there, but what your father was in possession of all his mental faculties up to the time of his death?

A. No. There never was any question about that. He was in full possession of all of his faculties to within a couple of hours before his death.

As to the matter of undue influence, the testimony goes no further than to show that for some years the defendant Morden had been in the employ of the Oregonian Publishing Company, officiating as manager of the newspaper published by that corporation, of which the decedent held the majority of the stock, and that for a like period the de

199 Pac. 633.)

fendant O. L. Price had been the private secretary of the testator, who had large business interests, having accumulated a fortune estimated in millions of dollars. These two defendants manifestly had the confidence of the testator, and had opportunity to exercise over him such influence as they possessed. This is the utmost that the testimony shows. But the evidence is convincing that at no time or place. did either of the defendants exercise or attempt to exercise any influence over the decedent in the matter of making his will. On the contrary, the testimony is clear that the initiative in the matter came from him, and that the will was the product of his own mind and of his own dictation, without the least suggestion from anyone, so far as the record discloses, about what the document should contain or what disposition should be made of his property. In other words, as disclosed by the record before us, it is apparent that he had very much more influence over the defendants than they had over him; that his word was the law of his business; and that it was theirs to obey, and not to influence or dictate. On the question of undue influence, it is not enough to show that Will-undue the defendant had influence-effect an opportunity to exercise such influence, but it must also appear that the influence was actually exercised, and not only so, but that it was pushed to such an extent that the resultant will was not that of the testator, but that of the parties procuring its execution. Hubbard v. Hubbard, 7 Or. 42; Re Dolbeer, 153 Cal. 652, 96 Pac. 266, 15 Ann. Cas. 207; Re Shell, 28 Colo. 167, 53 L.R.A. 387, 89 Am. St. Rep. 181, 63 Pac. 413; Ginter v. Ginter, 79 Kan. 721, 22 L.R.A. (N.S.) 1024, 101 Pac. 634.

on validity.

The principal point of attack on the will is what we may call for convenience the "Oregonian clause," reading thus: "None of my stock in the Oregonian Publishing Company shall be sold, but shall be held' intact during the entire period of

this trust. I direct that my trustees shall vote said stock in favor of themselves as directors of such corporation, and it is my desire and I request that C. E. Morden shall be elected as manager of the corporation and shall be retained as such, and that Edgar B. Piper shall be retained as editor of the Oregonian until he shall become incapacitated or until he may voluntarily resign."

The effort of the pleader is to show not that this will was the product of any corrupt agreement, but that it is void upon its face, no matter how pure the motive of the maker. The argument by the petitioner-and she devoted much attention in the evidence trying to prove the same-is that without consulting the minority stockholders, Mr. Pittock, being the owner of two thirds of the stock of the Oregonian Publishing Company, for the purpose of retaining control of the paper, perpetuating his policies, and directing its policy, management, and board of directors for twenty years after his death, and to keep Piper as editor and Morden as manager from leaving him, entered into an agreement with Piper to have the corporation pay him an increased salary, and to keep him in his position as managing editor until Piper should become incapacitated or voluntarily resign, but not exceeding twenty years after Mr. Pittock's death, and that he carried out his part of this agreement by directing his trustees to vote for themselves as directors, and requesting them to elect Morden as manager and to retain Piper as editor. Further, according to her brief, the petitioner insists that this agreement is null and void, illegal, and contrary to public policy. No hint of such an agreement is found in the pleadings.

So far as the petition is concerned, it might be called a demurrer to the sufficiency of the will on the ground that it carried upon its face defects fatal to its validity. A great many cases have been cited where combinations have been entered into by stockholders among

themselves, whereby, for personal advantage not to be shared in by other stockholders, they sought to dictate the policy of the corporation of which they were members. That is not the present case. We have before us an individual stockholder dealing only with his own property, exercising an attribute of such property, that of testamentary disposition. It is not made to appear by the pleading that he so disposed of it on account of any sinister motive or by reason of any corrupt consideration or advantage accruing to himself which did not equally inure to the benefit of the minority stockholders. holders. The vicious principle of illegal combinations of directors to pursue certain policies generally for their own aggrandizement seems to be that each surrenders in advance his individual judgment irrespective of the good of the corporation or the rights of other stockholders. The essence of the fault lies in the combination, which cannot exist where a single majority stockholder, for himself and in the management of his own property, formulates a certain corporate policy and undertakes to carry it out.

"Of the general proposition that certain kinds of conduct not criminal in any one individual may become criminal if done by combination among several, there can be no doubt. The distinction is based on sound reason, for a combination may make oppressive or dangerous that which, if it proceeded only from a single person, would be otherwise; and the very fact of the combination may show that the object is simply to do harm, and not to exercise one's own just rights." 2 Beach, Priv. Corp. § 854.

In

Some of the precedents cited by the petitioner are here noted. Scripps v. Sweeney, 160 Mich. 148, 125 N. W. 72, it is held, according to the syllabus, that "the execution of a contract between four of the directors and stockholders of several corporations, holding a majority of stock in each, without the consent of other stockholders, for purposes of

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personal gain, containing provisions for the continued employment of one of the contracting parties as manager at a fixed salary, and determining the business policy of the several corporations, is contrary to is contrary to public policy, and may not be enforced specifically."

In that case Scripps and Sweeney were leading stockholders in several newspaper corporations. In effect, they, while occupying a position of trust, were contracting with each other for their own use personal gain at the expense of the corporation, and consequently to the injury of other stockholders. Here, however, if contracting at all, Pittock was bargaining with strangers, or at least nonstockholders, so far as appears, and was carrying out with his own property what he had a right to do if he had lived.

In Manson v. Curtis, 223 N. Y. 313, 119 N. E. 559, Ann. Cas. 1918E, 247, a section of the syllabus reads thus: "It is not illegal or against public policy for two or more stockholders owning the majority of the shares of stock of a corporation to unite upon a course of corporate policy or action or upon the officers whom they will elect. An ordinary agreement, among a minority in number, but a majority in shares, for the purpose of obtaining control of the corporation by the election of particular persons as directors, is not illegal. Agreements upon a sufficient consideration between them, of such intendment and effect, are valid and binding, if they do not contravene any express charter or statutory provision, or contemplate any fraud, oppression, or wrong against other stockholders or other illegal object."

The vice upon which the court condemned the agreement in question consisted in the express stipulation that the president of the corporation should be only nominally so; that no interference with plaintiff's policy as manager should be tolerated; and that in effect the board of directors should be mere dummies, whereas the statute required that

the affairs of the corporation should be controlled by the directors, either in person or by subordinates under their authority. In the instant case the testator proposed to work out his policy by the legal election of directors by a majority of the stock which he himself owned and would have had a right to vote in that way without question, if he had lived.

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In Funkhouser v. Capps, Tex. Civ. App., 174 S. W. 897, it was held that a contract pooling what constitutes a majority of corporate stock, on condition that the same shall be voted so as to put one of the parties in the management of the company, with certain advantages in sale of his stock on severance of his relations with the concern, is void as against the Texas statute giving to the directors the general management of the affairs of corporations. In that case, as in others, one of the conditions of the agreement was to give to one of the parties thereto a private advantage not enjoyed by other members of the corporation. The same vicious element appeared in Gage v. Fisher, 5 N. D. 297, 31 L.R.A. 557, 65 N. W. 809, where it was decided that a contract to allow another to control the voting of stock, based upon a promise of one who is to control such stock to secure for the owner of the stock an office in the corporation, is illegal. So, in Gilchrist v. Hatch, Ind. App. -, 100 N. E. 473, it is said that, "as a general rule, a contract by a director or a majority stockholder of a corporation whereby he undertakes, in consideration of a private benefit or advantage accruing to himself, to secure the appointment of another to a lucrative office or a position of profit in the corporation, is against common honesty, and therefore against public policy."

In Guernsey v. Cook, 120 Mass. 501, the defendants, owners of a majority of the stock of a corporation, agreed to make the plaintiff treasurer of the company in consideration of his taking part of the defendants' stock. The court there said, among other things: "The

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contract, if reasonably susceptible of two meanings, one legal and the other not, must indeed receive an interpretation which will support rather than ndefeat it, and the presumption is in favor of its legality. But this contract necessarily implies that the defendant intended to derive, and the plaintiff intended to give him, a private advantage, not shared by the other stockholders, in consideration of his election as treasurer. It was the purpose and effect of the contract to influence the defendant, in the decision of a question affecting the private rights of others, by consideration foreign to those rights. The promisee was placed under direct inducement to disregard his duties to other members of the corporation, who had a right to demand his disinterested action in the selection of suitable officers. He was in a relation of trust and confidence, which required him to look only to the best interest of the whole, uninfluenced by private gain. The contract operated as a fraud upon his associates."

All through the authorities cited by the petitioner runs the vein of pooling among a group of stockholders, whereby they conspired either to seek some private advantage not common to other members of the corporation, or to pass the control of the concern to others than the directors in whom the statute vests the management. Such instances are found in Woodruff v. Wentworth, 133 Mass. 309; Hampton v. Buchanan, 51 Wash. 155, 98 Pac. 374; Jackson v. Hooper, 76 N. J. Eq. 592, 27 L.R.A. (N.S.) 658, 75 Atl. 568; Luthy v. Ream, 270 Ill. 170, 110 N. E. 373, Ann. Cas. 1917B, 368; Rush v. Aunspaugh, 179 Ala. 542, 60 So. 802; Timme v. Kopmeier, 162 Wis. 571, L.R.A.1916D, 1114, 156 N. W. 961; Withers v. Edmonds, 26 Tex. Civ. App. 189, 62 S. W. 795.

There is another class of cases which holds that each stockholder has a right to rely upon the judgment and interest of his fellow

stockholders, and that no shareholder has a right to separate himself irrevocably from the power of voting his own stock. One sample of such cases is Morel v. Hoge, 130 Ga. 625, 16 L.R.A. (N.S.) 1136, 61 S. E. 487, 14 Ann. Cas. 935.

On the other hand, viewing the present situation as a combination among several stockholders-which it is not, however the rule is thus laid down in 14 C. J. 913, § 1418: "While there is some authority apparently opposed to this view, the weight of authority holds that stockholders may combine for the purpose of controlling the management and business of a corporation, and agree in pursuance thereof that they will vote their stock as a unit according as a majority of them may determine, provided no fraud is committed or undue advantage taken of stockholders who are not members of the combination."

See also 1 Thomp. Corp. 2d ed. §§ 893, 895.

In Winsor v. Commonwealth Coal Co. 63 Wash. 62, 33 L.R.A. (N.S.) 63, 114 Pac. 908, it is said: "Persons owning stock have the unqualified right to combine their interests to secure the management of the corporation when such management is fair to all stockholders alike."

In White v. Snell, 35 Utah, 434, 100 Pac. 927, a majority of stockholders placed their stock in the hands of other stockholders to vote, manage the corporation, and generally to do all things with the shares that the owners themselves might do, for two years and five months, the trustee to pay the owners a fixed sum per month as well as all assessments and indebtedness incurred by them, and it was held not to be void as against public policy to do this.

Barnes v. Brown, 80 N. Y. 527, was a case where the plaintiff was director and president of a corporation and owned a majority of the stock then issued. The corporation owed him for money loaned. Prior to his election as director and president third parties had made a construction contract with the com

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