Boyce v. Killip

• Decision Date: 22 October 1948
• Citation: 198 P.2d 613,184 Or. 424
• Parties: BOYCE <I>v.</I> KILLIP
• Court: Oregon Supreme Court

184 Or. 424

198 P.2d 613

BOYCEv.

KILLIP

Supreme Court of Oregon.

Argued April 22, 1948.

Affirmed October 22, 1948.

Petition for rehearing denied November 16, 1948.

Waters and water courses — Water supply — Water rights

1. The terms "water supply" and "water rights" generally do not have the same connotation, the latter term meaning generally the right to divert water by artificial means from a natural stream or spring.

See Words and Phrases, Permanent Edition, for all other definitions of "Water Right" and "Water Supply".

Fraud — Preponderance of evidence — Insufficient

2. A mere preponderance of the evidence does not suffice to establish a charge of fraud.

Reformation of instruments — Presumption — Correctness

3. One who seeks a reformation of an instrument faces a presumption that the instrument correctly states the terms of the agreement.

Reformation of instrument — Water rights — Water supply

4. Where vendors in connection with sale of realty spoke of their "water rights", and option agreement referred to "water and water rights" but purchasers admitted that vendors represented that their rights authorized them to divert water, not from a stream or spring, but from a pipe which was part of water system originating at a stream, there was a right to a "water supply" rather than a "water right," and purchasers were not entitled to reformation of contracts which did not refer to water rights, on ground that vendors were guilty of fraud.

                See 35 C.J., Reformation of Instruments, § 67
                  135 A.L.R. 1453
                  45 Am. Jur. 609
                

Appeal from Circuit Court, Lincoln County.

CARL E. WIMBERLY, Judge.

L.E. Schmitt and F.C. Howell, both of Portland, argued the cause for appellants. With them on the brief was G.B. McCluskey, of Toledo.

Peter A. Schwabe, of Portland, argued the cause for respondents. On the brief were Haas & Schwabe, of Portland.

Before ROSSMAN, Chief Justice, and LUSK, KELLY, BAILEY and BRAND, Justices.

Suit by B.I. Boyce and Sudie E. Boyce, his wife, against J.J. Killip and Anna Louise Killip, his wife, to reform two contracts, to require defendants to perform specifically the contracts as reformed, and in the alternative to recover damages. From a decree dismissing plaintiffs' complaint after trial, plaintiff appeal.

AFFIRMED.

ROSSMAN, C.J.

This is an appeal by the plaintiffs from a decree of the circuit court, entered after trial, which dismissed their complaint. The plaintiffs-appellants are husband and wife; the defendants-respondents are likewise husband and wife. The purposes of the suit were (1) to reform two contracts; (2) to require the defendants to perform specifically the contracts as reformed; and (3) in the event specific performance was impractical to award the plaintiffs damages.

The assignments of error are:

"The court erred in finding that the evidence does not sustain plaintiffs' allegation of fraud and dismissing plaintiffs' second amended complaint."

"The court erred in refusing to reform and decree specific performance."

"The court erred in finding and holding that there was no tender made by the plaintiffs and appellants, and that the option in the lease had expired and was of no force and effect."

"The court erred in not decreeing that the defendants and respondents convey to the plaintiffs a water right sufficient for the purposes for which the land was used or in the event that the defendants could not perform, to assess plaintiffs' damages."

The aforementioned contracts pertain principally to two parcels of real property in Kernville, Lincoln County. Both parcels abutt upon the Siletz River and the Coast Highway. They are adjacent to each other and, although their size is immaterial to the issues before us, the one aggregated about one acre and the other about ten acres. The smaller was improved with cabins, a wharf and other facilities suitable for fishermen; it was operated as a fishing resort and was known as Happy Landing. The ten-acre tract was unimproved and much of it was flooded at high tide. Parts of it were used for the parking of automobiles.

One of the aforementioned contracts was signed by the plaintiffs and the defendants April 19, 1943. It is entitled Memorandum Agreement. The other contract was signed by the plaintiffs and the defendants June 14, 1943. It is entitled Lease. Both contracts pertain to the parcels of real property we have described, and both mention a "water right." The representations which were made by the defendants concerning the water right and the provisions in both papers pertaining to it are the parts of the transaction which are called in question by this suit. The plaintiffs contend that (1) the defendants made false representations concerning the water right and thereby induced the plaintiffs to sign both papers, and (2) neither of the papers correctly describes the water right which the defendants are required to transfer to the plaintiffs.

The plaintiffs do not seek to be relieved from either agreement. The prayer of the complaint asks that the defendants be ordered to transfer to the plaintiffs the water right which the complaint describes, or respond in damages.

The memorandum agreement which the parties signed April 19, 1943, was preliminary in character and contemplated that it should be succeeded by other instruments. It bound (1) the plaintiffs to purchase the smaller tract (Happy Landing) for the sum of $5,500.00, payable $1,000.00 at the time of signing, $1,750.00 in sixty days, and $2,750.00 in monthly installments represented by a note secured by a mortgage; (2) the defendants to lease the larger tract to the plaintiffs for a term equal to the life of the mortgage at an annual rental of $100.00; (3) the defendants to grant the plaintiffs an option extending for the term of the lease to purchase the larger tract for the sum of $2,000.00; and (4) the defendants to convey to the plaintiffs "sellers' interest in water right known as Douty water right" if the plaintiffs exercised their option and purchased the larger tract.

The Memorandum Agreement reads as follows:

"This memorandum agreement made and entered into this 19th day of April, 1943, by and between J.J. Killip and Anna Louise Killip as the sellers, and Brewster I. Boyce and Sudie E. Boyce, his wife, as buyers.

"WITNESSETH:

"That the sellers agree to sell and the buyers agree to buy all of the improved portion of Siletz River water front property owned by them except that part occupied by warehouse, at and for the agreed sum of Five Thousand Five Hundred Dollars ($5,500.00) payable One Thousand Dollars ($1,000.00) upon the signing of this agreement, balance of Seventeen Hundred Fifty Dollars ($1,750.00) within 60 days and balance of Twenty-seven Hundred Fifty Dollars ($2,750.00) be represented by note and mortgage, payable One Hundred Dollars ($100.00) or more per month including interest at 6% per annum.

"That the buyers and sellers above named, agree that the unimproved portion of the Siletz River water front property owned by the sellers, be leased to the buyers at an annual rental of One Hundred Dollars ($100.00) per year. First year's rent to be paid upon the signing of this agreement, said lease to be in effect until mortgage on above described property is paid in full, at which time buyers have an option to purchase said unimproved portion of said property for Two Thousand Dollars ($2,000.00) and the rental paid under the lease applied upon the purchase price and if said option is not exercised, then the One Hundred Dollars ($100.00) rental shall be deemed and considered as rent. Balance of purchase price to be paid One Hundred Dollars ($100.00) per month with interest at 6% per annum.

"It is agreed between the parties hereto that if the option to purchase of unimproved portion of property is exercised, there shall be conveyed with said property sellers interest in water right known as Douty water right.

"Sellers reserve easement over right of way leading to warehouse property and agree with buyers that in case they sell the real property known as warehouse property and reserved by them, they will place a condition in the conveyance that said property be used for private purposes only and not be used by the public or in a way that will compete with business conducted by the owners on the property conveyed to buyers.

"It is mutually agreed that definite description of the property above referred to will be provided as soon as the necessary surveying can be done and at that time contract and lease with option will be prepared and executed in accordance with the terms of this memorandum.

"It is understood that no water or water rights are to be conveyed by the sellers to the buyers, but the sellers will furnish water when available at the rate of One Dollar ($1.00) per family unit and the arrangement as to water to continue until such time as buyers can secure water from Douty water right."

Concurrently with the signing of that document, the plaintiffs paid the defendants $1,000.00 of the purchase price of Happy Landing. It will be observed from the instrument just quoted that it was contemplated that the parties should meet again within sixty days and that upon that occasion the plaintiffs should pay the defendants $1,750.00 of the purchase money. The meeting occurred June 14, 1943, and in its course the plaintiffs made the required payment, signed a note and mortgage for the unpaid balance and received a deed for the Happy Landing tract. Likewise, on June 14 the parties signed the second paper which we have mentioned, that is, the one which is entitled Lease. It let the larger tract to the plaintiffs and gave them an option to purchase it for the sum of $2,000.00. Its provision in regard to the water right will receive mention in later parts of this opinion.

We shall now consider the first two assignments of error. We think that a consideration of them will be facilitated by an analysis of the parts of the complaint which...