Bembridge v. Miller

• Citation: 235 Or. 396,385 P.2d 172
• Parties: William E. BEMBRIDGE and Eva L. Bembridge, his wife, Respondents, v. Lydia H. MILLER and Harry Harris, as Administrator with the Will Annexed of the estate of William Halliett Miller, Deceased, Respondents, Fred C. Shafer and Virginia Shafer, Appellants.
• Decision Date: 05 September 1963
• Court: Supreme Court of Oregon

Page 172

385 P.2d 172

235 Or. 396

William E. BEMBRIDGE and Eva L. Bembridge, his wife, Respondents, v. Lydia H. MILLER and Harry Harris, as Administrator with the Will Annexed of the estate of William Halliett Miller, Deceased, Respondents Fred C. Shafer and Virginia Shafer, Appellants.

Supreme Court of Oregon, Department 1.

Argued and Submitted June 28, 1963.

Decided Sept. 5, 1963.

William E. Dougherty, Portland, argued the cause for appellants. On the brief were Dougherty & Cairns, Portland.

George L. Hibbard, Oregon City, argued the cause for respondents Bembridge. On the brief were Hibbard, Jacobs, Caldwell & Kincart, Oregon City.

Before McALLISTER, C. J., and ROSSMAN, SLOAN, DENECKE and LUSK, JJ.

ROSSMAN, Justice.

This is an appeal by the defendant Fred C. Shafer from portions of a decree entered in a suit for declaratory relief filed by the plaintiffs William E. and Eva L. Bembridge, husband and wife, to determine the rights of the parties in a parcel of real property located near Oswego in Clackamas County.

The decree which was entered May 23, 1962, declared the plaintiffs (respondents) to be the owners of the real property subject to the right of defendant Fred C. Shafer to purchase the property for a price, specified in the decree, together with interest, and granted him a time certain within which to pay the price and receive the title or lose his equitable interest. Defendant Shafer appealed from the portion of the decree which awarded interest to the plaintiffs on the purchase price from the date the contract of sale was executed.

The property, about five acres in area, contains a two story dwelling and was purchased by the Bembridges sometime in 1942. Later, in anticipation of litigation concerning the purchase, the Bembridges conveyed the property to William H. Miller, father of Plaintiff Eva L. Bembridge. The conveyance to Miller, who is since deceased, was without his knowledge. The plaintiffs alleged that Miller held the title in trust for them. The circuit court decreed that neither Miller's estate nor his heirs had any right, title or interest in the property.

The Bembridges and defendant Shafer became acquainted through the fact that they were neighbors during the time the Bembridges occupied this property. Mr. Bembridge and Mr. Shafer were attorneys, but neither was a general practitioner.

In 1953 the Bembridges moved to Seattle, Washington, where they remained until the end of 1961 or the first part of 1962. They leased this property for a monthly rental of $150 which was not paid. In the process of evicting the tenants and collecting the defaulted rent Mr. Bembridge entered into discussions with defendant Shafer relative to his purchase of the property.

During these discussions which occurred early in 1954, Shafer was informed by the plaintiffs that title to the property was in Mr. Miller as trustee and consequently the papers relative to the purchase of the property would have to be signed by him.

These discussions culminated in the execution of an earnest money receipt February 15, 1954, embodying a contract for the purchase of the property. The purchase price was $15,500 with $500 earnest money down payment. The net equity of the Bembridges in the purchase price after deduction of the down payment, a prior mortgage and a roofing obligation was $11,777.28. The contract provided:

'This sale is contingent upon the purchaser obtaining a $12,400.00 FHA loan on the herein described real estate sold hereby and if said contingency is not fulfilled, then the earnest money shall be refunded.'

The earnest money receipt was drafted by defendant Shafer.

Possession of the property was given to Shafer with the execution of the earnest money receipt. Bembridge testified that possession was given for the limited purpose of having the building appraised so it could be mortgaged. He also testified he told Shafer: '* * * be sure you own it before you touch a nail in it.'

March 5, 1954, defendant Shafer applied for a mortgage loan on the property from Prudential Insurance Company of America. The loan was to be insured by Federal Housing Administration (FHA). Subsequently, in April 1954, he was informed that the property did not qualify for FHA approval. Before it would insure the loan FHA required repairs which it did not specify. The physical condition of the property had become impaired by neglect and hard usage. Pursuant to his interpretation of the requirement for repair Shafer commenced renovation work on the house that ultimately cost $13,660.79. Included in the total expenditure were exterior painting, replacement of the front and back porches, installation of a bay window, interior painting, plastering, papering and the installation of cabinets, a sink and dishwasher in the kitchen. The expenditures covered work done in a period from February to September 1954.

May 23, 1954, Bembridge went from his home in Seattle to confer with Shafer because he was concerned over the delay in consummating the sale. He testified that he tendered a deed at that time to Shafer and, receiving no payment, handed him a notice that the contract was rescinded. Shafer denied receiving the notice. A second notice was sent on June 25, 1954, by registered mail--this notice Shafer acknowledges. Following the rescission notice plaintiffs engaged a series of attorneys and instituted two law suits to regain possession of the property. The suits were dismissed without trial on the merits. October 4, 1955, the Bembridges impressed a fictitious mortgage on the property designed to defeat a threatened transfer of the property from Miller to Shafer. The lower court's decree declared this mortgage null and void

Subsequent to the notice of rescission, Shafer dealt exclusively with Miller concerning the purchase of the property. September 1, 1954, defendant Shafer received an FHA compliance inspection report which stated briefly that the building improvements had been acceptably completed.

September 8, 1954, a significant date in this litigation, Shafer sent a letter to Miller with a copy to Bembridge's attorney in which he set out the improvements and repairs that had been made, and concluded:

'As the result of a great deal of trouble, as well as substantial expense, to me, the contingency of our contract on my part has now been met, and I have received a compliance inspection report showing that the building improvements have acceptably been completed.

'Accordingly, I now tender you full performance on my part of all of the remaining terms of our contract; and I expect performance on your part.'

Either defendant Fred C. Shafter or defendant Virginia Shafer, from whom he is now divorced, has retained possession and occupied the premises in question to the present date. This suit was instituted by the plaintiffs in September 1961.

Defendant Shafer's (Fred C. Shafer) sole assignment of error contends the lower court erred in decreeing the contract purchaser owes interest on the purchase price of the property from the date of the earnest money receipt (February 15, 1954) to the date of payment.

Appellant first argues that his letter of September 8, 1954, qualifies as a tender in writing pursuant to ORS 81.010 which provides:

'An offer in writing to pay a particular sum of money or to deliver a written instrument or specific personal property is, if not accepted, equivalent to the actual production and tender of the money, instrument or property.'

At common law the term 'tender' has definite legal significance imparting not merely the willingness and intent to perform but also the ability at the time of tender to pay in accordance with the offer. The thing tendered, whether money, documents or chattels, must actually be produced and made available for the acceptance and appropriation of the person to whom it is offered. In essence the only distinction between 'tender' and payment lies in the fact that a 'tender' is not accepted while a payment is. Consequently, if there is an offer to perform but no money is made available, there can be no payment; and likewise, there can be no tender--at best only a naked offer to pay. Equitable Life Assur. Soc. of United States v. Boothe, 160 Or. 679, 86 P.2d 960; Hartman v. Stark, 99 Or. 596, 195 P. 1117.

The legal effect of 'tender' at common law is to cut off the tenderer's liability, other than for the debt, for damages and interest arising from nonpayment. This effect arises because the debtor has done all that is required of him and his liability should not be increased simply because the proffered sum is not accepted by the creditor. The offer has this effect only if it complies with the requirements of 'tender.' It must be an unconditional offer to pay the full amount of the debt and the money must be presently available for acceptance. 86 C.J.S. Tender, §§ 1, 2, 29, 30, 50; Hartman v. Stark, and Equitable Life Assur. Soc. of United States v. Boothe, both supra.

Except as modified by statute, the common law definition of tender is still applicable in this state. Equitable Life Assur. Soc. of United States v. Boothe, 160 Or. 679, 86 P.2d 960. The legislature, in enacting ORS 81.010, did not intend to supersede the common law requirement that the person making the written tender have the present ability to make the tender good if it is accepted. Holladay v. Holladay, 13 Or. 523, 11 P. 260, 12 P. 821; McCourt v. Johns, 33 Or. 561, 53 P. 601; Milton v. Hare, 130 Or. 590, 280 P. 511; Eastern Oregon Land Co. v. Moody, 119 C.C.A. 135, 198 F. 7; Short v. Rogue River Irr. Co., 82 Or. 662, 162 P. 845; Ladd & Tilton v. Mason, 10 Or. 308.

Holladay v. Holladay, supra, involved a loan of approximately $160,000 plus interest. Respondent claimed, inter alia, that interest stopped on the note at the time a written offer of payment was made. This court rejected the contention and after quoting section 842 of Oregon Civil Code (ORS 81.010) continued:

'* * * It is a statute...