Caine v. Powell

• Decision Date: 15 February 1949
• Parties: CAINE <I>v.</I> POWELL
• Court: Oregon Supreme Court

185 Or. 322

202 P.2d 931

CAINE

v. POWELL

Supreme Court of Oregon.

Argued October 25, 1948.

Affirmed February 15, 1949.

Equity — Forfeiture — Relief

1. Equity will relieve from a statutory forfeiture.

Landlord and tenant — Statute not waived by lease

2. Where grace period in lease was same as provided in statute providing that failure of tenant to pay rent reserved by lease for ten days after rent becomes due, unless a different period is stipulated, operates to terminate tenancy, and provisions of lease giving landlord right to re-enter upon default without notice and demand added nothing to rights granted landlord by statute, provisions of statute were not waived by lease. O.C.L.A. § 8-309.

Landlord and tenant — Breach of covenant — Fraudulent conduct — Forfeiture inequitable

3. If tenant's breach of his covenant is result of fraudulent conduct of landlord, landlord cannot avail himself of breach as ground for forfeiture, and although landlord may not have been guilty of actual fraud, if his conduct has been such as to mislead tenant and render enforcement of the forfeiture inequitable, equity will grant relief.

Landlord and tenant — Breach of covenant — Excusable accident or mistake — Equitable relief — Justice

4. Generally, where breach of tenant's covenant causing a forfeiture of term provided for by lease is due to excusable accident or mistake, equitable relief against forfeiture may be granted under general power of equity to grant relief in case of accident or mistake, but relief from forfeiture should not be granted for accident or mistake, unless relief can be granted with justice to the other party.

Landlord and tenant — Forfeiture — Tenant negligent in failing to read lease — Relief

5. Where tenant in signing lease providing for 10 day grace period for payment of monthly rent was allegedly misled by landlord's attorney into believing that lease provided for a 30 day grace period as had been provided by a previous lease, and payment of rent was promptly tendered when mistake was discovered after 10 day grace period had expired, so that relief from forfeiture would not prejudice landlord, and landlord knew that tenant during the month when delinquency occurred, had expended several hundred dollars in painting and redecorating the leased premises, relief from forfeiture provided by statute upon failure to pay within 10 day grace period, would be granted, notwithstanding tenant was negligent in failing to read lease. O.C.L.A. § 8-309. Contracts — Forfeiture

6. Forfeitures are not favored.

                  See 51 C.J.S., Landlord and Tenant, § 104
                  170 A.L.R., 1156
                  32 Am. Jur., 756
                

Appeal from Circuit Court, Union County.

R.J. GREEN, Judge.

Carl Helm, Jr., argued the cause for respondents. On the brief were Helm & Helm, of La Grande.

S.H. Burleigh argued the cause for appellant. On the brief were Dixon & Burleigh, and R.D.H. Swindley, of La Grande.

Before ROSSMAN^*, Chief Justice, and LUSK, BELT, BAILEY and HAY, Justices.

LUSK, C.J.^†

The purpose of this suit is to obtain relief from the forfeiture of a lease for failure on the part of the lessees to pay an installment of rent within the time stipulated in the lease. The court entered a decree in accordance with the prayer of the complaint, and the defendant appeals.

The lease in question was entered into under date of September 16, 1947, between Marion M. Powell, the defendant, as lessor, and Roy Caine and Rose Caine, husband and wife, the plaintiffs, as lessees. The demised premises comprise space in the Foley Hotel Building in La Grande, Oregon, used for restaurant purposes and known as the Stein Coffee Shop. The term is from October 1, 1947, until March 1, 1951; the rent reserved is $50.00 per month up to June 30, 1949, and thereafter $100.00 per month payable in advance on the first day of each month. The lease contains this provision:

"PROVIDED ALWAYS that these presents are upon this express condition, that if the lessees shall fail, neglect or refuse to perform all, or any part, of the covenants herein contained on their part to be observed and performed, or if the above mentioned rental, or any installment thereof, shall be in arrears and unpaid for a space of ten (10) days thereafter after the same shall become due, then upon a breach or non-performance of any of the covenants herein contained on their part to be observed and performed, and while such breach or default shall continue, the lessor or his agent or legal representative may immediately and without any further notice or demand, enter into and upon said premises and any part thereof in the name of the whole and repossess the same of his former estate and expel the lessees and those claiming under them, forcibly if necessary, and without being taken or deemed guilty of trespass in any manner or without prejudice to any other remedies which may otherwise be used for arreas of rent or proceeding for breach of covenant, and said lessees hereby waive any and all statutory notice to quit said premises."

Plaintiffs allowed the January, 1948, installment of rent to become delinquent. On January 13, 1948, the defendant served them with a notice to vacate, and on January 16, 1948, commenced a forcible entry and detainer action against them in the Justice's Court for La Grande District, Union County, Oregon, to recover possession of the leased premises. Immediately after receiving the notice to vacate plaintiffs tendered to defendant the amount of the January rent with interest. The tender was refused. On January 22, 1948, plaintiffs commenced this suit to enjoin the defendant from interfering with their possession of the premises and from prosecuting the forcible entry and detainer action. The tender was renewed and the money brought into court. As stated, the court granted the relief prayed for.

Numerous facts are alleged in the complaint as the basis for equitable relief. Among other things it is alleged:

"That it was the custom and habit of the plaintiffs for plaintiff Roy Caine to pay all of the bills incurred by the business while plaintiff Rose Caine paid no attention thereto, but plaintiffs had prior to the date of the lease plead as Exhibit `A' leased the premises referred to therein and certain additional premises under another lease which provided for re-entry by the lessor on non-payment of rent for a period of thirty days after it became payable rather than after a ten-day period as in Exhibit `A' provided, and upon the execution of the present lease, Exhibit `A', plaintiff Roy Caine was advised that said lease, Exhibit `A', was in all respects the same as the former lease except that said Exhibit `A', provided for a back door entrance to the leased premises and that the premises leased were reduced in size. That said Roy Caine was under the impression and belief at all times prior to the service of Exhibit `B' that said lease provided for a thirty-day period of grace in the payment of rent."

The evidence shows that for some time before the execution of the lease here involved plaintiffs had been in possession of the space in the Foley Hotel Building known as the Stein Coffee Shop and also of other space known as the Fireside, under a lease between a former owner of the hotel property, Ada B. Phy, and J.L. and K.M. Cunningham, and which was assigned to the plaintiffs on February 20, 1946. This prior lease provided for a thirty-day period of grace for the payment of rent instead of ten days. During the continuance of this tenancy, the plaintiffs, the defendant and one Harold A. Decker agreed that the plaintiffs would surrender the Fireside, that Decker would take a lease of that space, and that a new lease should be drawn covering the Stein Coffee Shop to be retained by the plaintiffs. This lease, being the one now sought to be forfeited, was drawn by Mr. Dixon, an attorney who represented the lessor, the defendant herein. The plaintiff, Roy Caine, testified as follows concerning the transaction:

"Q (MR. HELM, JR.) Mr. Caine, you have alleged in your complaint it was your impression that the lease, that is the second lease, covering the property — the one which you have set out as Exhibit `A' in the complaint — provided for a thirty-day period of grace in the payment of rent. Will you tell the Court whether or not that is correct? * * *

"A When we went up, Powell, Decker, my wife and myself, to make this transfer of the Fireside Rooms — I believe Mr. Dixon was the attorney, and he wanted to draw up a new lease. At the time I told him, I said, `The old lease is good enough for me.' But it seemed as though they wanted me to release the Fireside room, instead of leasing it back to Powell, and he told me, `We will just eliminate all these names, Cunningham and Mrs. Frye, and make it between you and Powell. We will make a new clause to put in a new door to your store room, giving you access to the alley, and one or two little...