Bollenback v. Continental Cas. Co.

CourtSupreme Court of Oregon
Writing for the CourtBefore McALLISTER; HOLMAN
Citation243 Or. 498,414 P.2d 802
Decision Date25 May 1966
Parties, 34 A.L.R.3d 228 Clarence X. BOLLENBACK, Respondent, v. CONTINENTAL CASUALTY COMPANY, a corporation, Appellant.

Page 802

414 P.2d 802
243 Or. 498, 34 A.L.R.3d 228
Clarence X. BOLLENBACK, Respondent,
v.
CONTINENTAL CASUALTY COMPANY, a corporation, Appellant.
Supreme Court of Oregon, In Banc.
Argued and Submitted Oct. 4, 1965.
Decided May 25, 1966.

[243 Or. 500]

Page 803

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.

HOLMAN, Justice.

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 [243 Or. 501] 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

Page 804

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 [243 Or. 502] 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:

'* * * Many of the courts have, in dealing with this question, completely lost sight of the plain distinction between the equitable remedy of rescission or cancellation (where, as in all equity decrees, complete relief is awarded to the defendant as well as to the plaintiff), and the legal remedies, based upon rescission of a contract by the act of a party thereto, where, in the act of rescission itself, the plaintiff must restore or attempt to restore the consideration, since, in legal

Page 805

theory, the Ex parte act of rescission reinvests him with the legal title to the thing for the possession of which he subsequently sues, and must, therefore, be conditioned upon a surrender of the thing already received by him in pursuance of the transaction which he thus avoids. Restoration or tender before suit is thus a necessary element in legal rescission, but is wholly superfluous as a prerequisite to the commencement of a suit in equity for rescission or cancellation * * *.'

[243 Or. 504] 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.

'This is not true in an action at law and therefore one who claims a right to rescind must place the party in status quo or attempt to do so before bringing his action at law. T. B. Potter Realty Co. v. Breitling, 79 Or. 293, 155 P. 179.'

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 [243 Or. 505] in 4 Am.Jur. 508--509, Assumpsit § 20 (1936), concerning an action for money had and received:

'The action for money had and received was invented by the common-law judges to secure relief from the narrower restrictions of the common-law procedure which afforded no remedy in too many cases of merit. The action is a modified form of assumpsit. * * * Though an action at law, it is equitable in its nature, and is said to resemble or to be, in its nature, a substitute for a suit in equity, and to lie wherever a suit in equity would lie. * * * It lies where there is an express promise, if nothing remains to be done but the payment of money, but it is not a proper form of action to recover damages for breach of an actual subsisting or executory contract. The action is not dependent, however, upon an express promise, or even upon one implied in fact, although the action is contractual in form. The action for money had and received is founded upon the principle that no one ought unjustly to enrich himself at the expense of another, and it is maintainable in all cases where one person has received money or its equivalent under such circumstances that in equity and good conscience he ought not to retain it and, ex aequo et bono, it belongs to another. * * *'

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

Page 806

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:

'The right of rescission and restitution generally exists as an alternative remedy to an action [243 Or. 506] for damages where there has been repudiation or a...

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17 practice notes
  • Ironwood Homes Inc. v. Bowen, No. 08-CV-0098-BR.
    • United States
    • United States District Courts. 9th Circuit. United States District Court (Oregon)
    • June 14, 2010
    ...a species of remedy for an injury in tort-plaintiffs assert no breach or repudiation of contract. See Bollenback v. Continental Cas. Co., 243 Or. 498, 414 P.2d 802 (1966). The Court concludes Sterling, albeit cursorily, appears to have addressed Plaintiffs' claim for equitable rescission by......
  • Mc Baldwin Financial Co. v. DiMaggio, No. 1-04-3394.
    • United States
    • United States Appellate Court of Illinois
    • February 27, 2006
    ...and Unjust Enrichment (Tentative Drafts) § 37, Comment e, Illustration 12 (2004), citing Bollenback v. Continental Casualty Co., 243 Or. 498, 414 P.2d 802 (1966). Thus, DiMaggio essentially contends that Baldwin had a claim for restitution in that Baldwin conferred a benefit in the form of ......
  • George Washington University v. Scott, No. 96-CV-1178.
    • United States
    • District of Columbia Court of Appeals of Columbia District
    • May 21, 1998
    ...modifications. See, e.g., State Farm Gen. Ins. Co. v. Chambers, 260 Ark. 637, 543 S.W.2d 470 (1976); Bollenback v. Continental Cas. Co., 243 Or. 498, 414 P.2d 802 (1966); Williams v. Mutual of Omaha, 297 F.2d 876 (4th Cir.1962). Other states and federal circuits see each renewal as a new an......
  • Goodyear Tire & Rubber Co. v. Tualatin Tire & Auto, Inc.
    • United States
    • Court of Appeals of Oregon
    • July 27, 1994
    ...is for "any amounts to which the franchisee would be entitled upon an action for a rescission." In Bollenback v. Continental Casualty Co., 243 Or. 498, 414 P.2d 802 (1966), the Supreme Court explained that, historically, a party induced to enter a contract by fraud could obtain restitution ......
  • Request a trial to view additional results
18 cases
  • Ironwood Homes Inc. v. Bowen, No. 08-CV-0098-BR.
    • United States
    • United States District Courts. 9th Circuit. United States District Court (Oregon)
    • June 14, 2010
    ...a species of remedy for an injury in tort-plaintiffs assert no breach or repudiation of contract. See Bollenback v. Continental Cas. Co., 243 Or. 498, 414 P.2d 802 (1966). The Court concludes Sterling, albeit cursorily, appears to have addressed Plaintiffs' claim for equitable rescission by......
  • Mc Baldwin Financial Co. v. DiMaggio, No. 1-04-3394.
    • United States
    • United States Appellate Court of Illinois
    • February 27, 2006
    ...and Unjust Enrichment (Tentative Drafts) § 37, Comment e, Illustration 12 (2004), citing Bollenback v. Continental Casualty Co., 243 Or. 498, 414 P.2d 802 (1966). Thus, DiMaggio essentially contends that Baldwin had a claim for restitution in that Baldwin conferred a benefit in the form of ......
  • Easterday Dairy, LLC v. Fall Line Capital, LLC, 2:22-cv-01000-HL
    • United States
    • United States District Courts. 9th Circuit. United States District Court (Oregon)
    • November 22, 2022
    ...Inc. v. Parker, 223 Or.App. 321, 349 (2008). To rescind a contract, a breach must be “substantial.” Bollenback v. Continental Cas. Co., 243 Or. 498, 506 (1966). The party seeking rescission must also establish their claim by clear and convincing evidence. Venture Props, 223 Or.App. at 349. ......
  • George Washington University v. Scott, No. 96-CV-1178.
    • United States
    • District of Columbia Court of Appeals of Columbia District
    • May 21, 1998
    ...modifications. See, e.g., State Farm Gen. Ins. Co. v. Chambers, 260 Ark. 637, 543 S.W.2d 470 (1976); Bollenback v. Continental Cas. Co., 243 Or. 498, 414 P.2d 802 (1966); Williams v. Mutual of Omaha, 297 F.2d 876 (4th Cir.1962). Other states and federal circuits see each renewal as a new an......
  • Request a trial to view additional results

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