Booth-Kelly Lumber Co. v. Oregon & C.R. Co.

• Decision Date: 16 February 1926
• Parties: BOOTH-KELLY LUMBER CO. v. OREGON & C. R. CO. [a1]
• Court: Oregon Supreme Court

243 P. 773

117 Or. 438

BOOTH-KELLY LUMBER CO. v. OREGON & C. R. CO. ^[a1]

Supreme Court of Oregon, En Banc.

February 16, 1926

Appeal from Circuit Court, Multnomah County; Robert Tucker, Judge.

Action by the Booth-Kelly Lumber Company against the Oregon &amp California Railroad Company. Judgment for plaintiff, and defendant appeals. Affirmed.

A judgment was entered in the circuit court in favor of plaintiff and against defendant for the recovery of the sum of $48,209.28. Defendant appeals.

On December 21, 1901, the assignor of the plaintiff and the defendant entered upon a contract, which was supplemented by another contract of January 2, 1903, under the terms of which the assignor of the plaintiff agreed to buy from the defendant, and the defendant agreed to sell to him, 19,283.71 acres of timber lands at the price of $10 an acre, to be paid, principal and interest, in 10 equal annual installments, commencing December 21, 1903. The lands as described in the contract were lands which had been granted by the United States under the act of Congress approved July 25, 1866 (14 Stat. 239), which was amended by the act of April 10, 1869 (16 Stat. 47), in the following respect:

"That the lands granted by the act aforesaid shall be sold to actual settlers only, in quantities not greater than one quarter section to one purchaser, and for a price not exceeding $2.50 per acre."

Patents were issued to defendant by the United States under said acts of Congress prior to December 21, 1901, conveying to the defendant all the lands covered by the contract between the plaintiff and the defendant. These patents were duly recorded in the land records in the counties in Oregon, wherein the land is situated, and contained reference to the act of April 10, 1869, wherein the restrictive covenant, limiting the right of the railroad company to sell the lands, was contained, but made no specific reference to the settlers clause, so called.

The railroad company made sales of the land granted to it by the United States under the acts of Congress above mentioned in violation of the provisions of the act, setting forth the maxima of quantity and price at which said lands were permitted to be sold. Thereafter, on April 30, 1908 (35 Stat 571), Congress adopted a joint resolution authorizing the Attorney General to institute suits for the purpose of enforcing forfeiture in favor of the United States, with respect to the lands included in the two grants. The United States instituted such suits, one of which is designated as No. 3340 (186 F. 861), for the purpose of enforcing a forfeiture against the defendant as to the sold lands remaining; the grants exceeding 2,000,000 acres in quantity. Another suit was brought by the United States against the defendant and these plaintiffs (35 S.Ct. 908, 238 U.S. 393 59 L.Ed. 1360), in which the United States sought to enforce a forfeiture as to the particular lands covered by the contract involved herein.

Pending the determination of either of these cases brought by the United States, Congress, by act approved August 20, 1912 (37 Stat. 320), authorized the Attorney General to enter into a compromise with any purchaser of the granted lands against whom suit had been brought, upon the condition that such compromise should require the entry of a decree of forfeiture against the purchaser, and that within six months from the entry of such decree the purchaser should be entitled to receive a patent from the United States conveying the interest of the United States in the land on the payment by the purchaser to the United States of the sum of $2.50 an acre.

The plaintiff effected a compromise with the United States in pursuance of the provision of the act of August 20, 1912, and received a patent from it upon the payment to it of the sum of $48,209.28, which it seeks to recover in this action, and for which judgment in its favor was entered in the circuit court.

A demurrer was interposed to the complaint, and in support of this demurrer the defendant advanced the contention that the contract was illegal and unenforceable, in which contention it was upheld by the circuit court. In the complaint the plaintiff sought to recover the entire sum of $10 per acre which it had paid to the railroad company, upon the theory that the contract was a nullity, and that the plaintiff received nothing from the railroad company. The circuit court adopted the view of the railroad company as to the illegality of the contract and rejected the contention advanced in the Hammond and Winton Case, that recovery might be had of the $2.50 an acre paid to the United States, and the contention advanced in this case that recovery might be had of the entire $10 an acre paid to the railroad company.

On the first appeal of this case, which is reported in 193 P. 463 98 Or. 21, this court reversed the judgment of the lower court, overruled the demurrer of the defendant, held that the Booth-Kelly Lumber Company was not in equal fault with the railroad company, rejected the contention of the Booth-Kelly Lumber Company that it was entitled to recover $10 an acre and further held that, upon the facts alleged in the complaint, it is entitled to recover the sum of $2.50 per acre paid to the United States to perfect its title to the lands purchased by the railroad.

A more extended discussion of the law of the case is to be found in an opinion of this court in the case of Hammond and Winton v. Oregon & Cal. R. R. Co., 193 P. 457, 98 Or. 1. After the case was remanded, issue was joined by answer, in which several defenses were interposed, which were rejected by the circuit court upon the trial, and which the defendant now seeks to have reviewed by this court.

The substance of the complaint is set forth in the former opinion of this court commencing at page 22 of 98 Or. (193 P. 463), and a synopsis of the several defenses interposed by defendant are set forth in an opinion of this court in the case of Hammond and Winton v. Oregon & Cal. R. R. Co., 243 P. 767, this day rendered, and need not be repeated here.

Alfred A. Hampson, of Portland (Ben C. Dey, of Portland, on the brief), for appellant.

S.W. Williams, Sp. Asst. U.S. Atty. Gen., amicus curiæ, in behalf of United States.

Glenn E. Husted, of Portland (Mark Morris, of Grand Rapids, Mich., on the brief), for respondent.

BEAN, J. (after stating the facts as above).

There is one defense which is contended for in the case at bar, which was not presented in the Hammond and Winton Case. This is denominated the second defense, and sets forth that, when the plaintiff had completed the performance of the obligations resting upon it by the payment of the moneys due to the defendant, it demanded of the defendant the execution of a deed, surrendered to the defendant the contract which forms the subject-matter of this action, and that the defendant executed and delivered to plaintiff a deed in fulfillment of the obligations of the contract, which deed was accepted by the plaintiff in discharge thereof, and by it duly recorded in the Record of Deeds of the county of Lane, state of Oregon.

The defendant submits, as the salient facts relating to the defense of the delivery of the deed, the following:

The contract which forms the subject-matter of this action, among other things, required the payment of 10 annual installments of principal and interest in advance, on deferred installments. The title of the defendant to the lands covered by the contract was not subject to serious attack until the year 1908. It was made the matter of specific attack by the United States by a bill of complaint filed by the United States on the 23d day of January 1909, in which this plaintiff and this defendant were joined as defendants.

Subsequent to the filing of this bill, the plaintiff made payments on account of the principal sum due under the contract on December 20, 1909, December 17, 1910, and December 19, 1911. Each of these payments was accompanied by a written declaration that the payment so made was not a waiver of any of the rights of the Booth-Kelly Lumber Company, under the contract. Such written reservation was not made in connection with the final payment due December 21, 1912. But little progress was made in the litigation instituted by the United States against this plaintiff and this defendant until 1912. It appears that the Booth-Kelly Lumber Company, and others similarly situated, deemed themselves prejudiced by this inaction on the part of the government in the suits brought against them, which resulted in an inability on their part to carry on their lumber enterprise. Remedial legislation was sought from Congress and finally enacted into a law on August 20, 1912. This act is usually denominated the "Innocent Purchaser's Act," which permitted, under the conditions therein outlined, the plaintiff to pay to the United States the sum of $2.50 an acre in satisfaction of any claim of the government. This sum it did pay in pursuance of the provisions of that act, and here seeks to recover the same from the defendant.

It is contended by the defendant that the execution and delivery of the deed issued by the grantor, upon the surrender of an executory contract calling for a deed, and reciting upon its face that it is issued for such executory contract, in the absence of fraud or mistake, merges the contract in the deed, and limits the right of the vendee in the contract and the grantee in the deed to those rights created by the deed; that the facts demonstrate that the plaintiff intended to accept the deed in satisfaction of the contract.

Plaintiff maintains that the deed was only part performance of the contract, and cite Davis v. Lee, 100 P. 752, 52 Wash. 330, 132 Am. St. Rep. 973, and Thompson v....