Bollenback v. Continental Cas. Co.
Jurisdiction | Oregon |
Parties | , 34 A.L.R.3d 228 Clarence X. BOLLENBACK, Respondent, v. CONTINENTAL CASUALTY COMPANY, a corporation, Appellant. |
Citation | 243 Or. 498,414 P.2d 802 |
Court | Oregon Supreme Court |
Decision Date | 25 May 1966 |
Raymond J. Conboy, Portland, argued the cause for appellant. With him on the brief were Hollister & Thomas, Portland.
Clarence X. Bollenback, Portland, argued the cause in pro. per. and filed the brief.
Before McALLISTER, C.J., and PERRY, SLOAN, GOODWIN, DENECKE, HOLMAN, and LUSK, JJ.
Plaintiff was the holder of a policy issued by defendant under a group health and accident plan. The effective date of the policy was August 10, 1954. Premiums were due every six months and were paid by plaintiff. On September 28, 1963, while the policy was in full force and effect, plaintiff was hospitalized for six days with a back injury.
On November 12 he filed a claim with defendant for $107.33. He received no answer. On December 12 he wrote to the defendant calling to its attention that he had filed the claim and had received no acknowledgment. He still received no answer. On January 6, 1964, he wrote to the defendant a third time calling to its attention the filing of his claim and his previous correspondence. On January 20 both plaintiff and defendant wrote to each other. Plaintiff wrote to the assistant to the president of defendant, calling his attention to the plaintiff's payment of premiums, protesting the manner in which he was being ignored, enclosing copies of his previous letters, and asking for action. Defendant's correspondence was an answer to plaintiff's letter of January 6, informing plaintiff that his policy had lapsed in 1959 for nonpayment of premiums. On January 30 defendant wrote again to plaintiff. This letter specified that it was an answer to plaintiff's letter of January 20 to the assistant to the president of defendant. This letter contained the same information previously given plaintiff about the lapse of his policy and called to his attention their previous notification to this effect.
On January 25, plaintiff wrote two more letters to the defendant, one to the accounting department requesting information from its records concerning the premiums it had received from him and the other to the claims department requesting information about the reason for the policy's lapse. Plaintiff had received no answer to these letters when, on February 4, he filed the present case stating that he had elected to rescind the contract because of its repudiation by defendant and requesting judgment against defendant for all premiums previously paid under the policy in the sum of $2,166.50.
To plaintiff's complaint defendant filed an answer denying its repudiation of the contract, pleading the affirmative defense of mistake and tendering the amount of plaintiff's claim into court. A trial without a jury ensued which resulted in findings and conclusions by the judge to the effect that defendant had repudiated the contract by nonpayment of plaintiff's claim, that it had done so because of mistake and that plaintiff was entitled to recover as prayed for in his complaint.
Defendant assigns as error the court's denial of judgment in its favor at the close of testimony, its denial of a conclusion of law that plaintiff was not entitled to rescission, and the entering of the conclusion of law that plaintiff was entitled to recover.
The initial question is whether the proceeding is at law or in equity. This determination is important solely for the purpose of determining whether the Supreme Court can review the facts De novo. This can be done only if the proceeding is in equity. ORS 17.440. 1
This proceeding is drawn as an action at law and defendant's affirmative defense is termed an equitable one. It was tried by a judge without a jury. No stipulation permitting it to be so tried appears in the record.
There is much confusion upon the question whether a proceeding for restitution upon the rescission of a contract is properly an action at law or a suit in equity. Oregon cases may be found where relief of this sort has been sought at both law and equity. In law, Hinkson v. Kansas City Life Ins. Co., 93 Or. 473, 183 P. 24 (1919); Kruse v. Bush, 85 Or. 394, 167 P. 308 (1917). In equity, Mohr v. Lear, 239 Or. 41, 395 [243 Or. 503] P.2d 117 (1964); Pickard v. Oregon Senior Citizens, Inc., 238 Or. 359, 395 P.2d 168 (1964).
The right to rescind is dependent upon placing the other party to the contract in statu quo ante, with some exceptions not important here. If a suit is brought in equity for rescission, no prior return or offer to return is a prerequisite because equity has the power to require of plaintiff that he return the proceeds of the contract. Before he is entitled to equitable relief the court will require that a plaintiff do equity and return that which he has received. On the other hand, a court of law has no such power, and therefore, before an action may be brought to recover the money or property from the other party, plaintiff must have returned or offered to return that which he has received. The distinction is discussed in 5 Pomeroy, Equitable Remedies § 2110, at 4765 (2d ed. 1919) as follows:
The above distinction between rescission in law and in equity was recognized in Federici v. Lehman, 230 Or. 70, 368 P.2d 611 (1962). At page 73, 368 P.2d at page 612, Justice Perry stated for the court as follows:
'If a defrauded party elects to rescind he may bring an action at law if full relief may there be granted or he may bring a suit in equity.
'In an equitable action for rescission, an offer in the complaint is sufficient for equity has the power to render full and appropriate relief to all parties regardless of the specific prayers. Katz v. Obenchain, 48 Or. 352, 85 P. 617; Ruth v. Von Hickman, 214 Or. 490, 330 P.2d 722.
In the present case the facts disclose a contract which required the payment by plaintiff of premiums in return for the protection of defendant's promise to pay covered claims. This is the first claim plaintiff filed under his policy. He had received no benefits which it was possible for him to return or offer to return to the defendant. Therefore, there was no need for him to tender the return of anything as a prerequisite to bringing an action at law or to resort to the powers of a court of equity in the absence of such tender. Under these circumstances an action at law is proper and the findings are binding if sustained by the evidence. ORS 19.125.
As an action at law, this case is in the nature of an action for money had and received. 5 Corbin, Contracts § 1108 (1964). The following comment is found in 4 Am.Jur. 508--509, Assumpsit § 20 (1936), concerning an action for money had and received:
* * *'
Therefore, the applicable principles determining whether plaintiff is entitled to the relief he seeks are the same whether at law or in equity.
Defendant contends plaintiff has adequate redress in an action for damages and that rescission is an extraordinary remedy available only in exceptional cases. The right to rescission and restitution is an alternative remedy where there has been repudiation or a material breach of the contract. 5 Williston, Contracts § 1455, at 4064 (Rev. ed. 1937) states as follows:
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