Corvallis Sand & Gravel Co. v. State Land Bd.

• Decision Date: 10 April 1968
• Parties: CORVALLIS SAND & GRAVEL CO., a corporation, Respondent, v. State of Oregon, acting by and through the STATE LAND BOARD, Appellant.
• Court: Oregon Supreme Court

Page 575

439 P.2d 575

250 Or. 319

CORVALLIS SAND & GRAVEL CO., a corporation, Respondent, v. State of Oregon, acting by and through the STATE LAND BOARD Appellant.

Supreme Court of Oregon, In Banc.

Argued and Submitted March 7, 1967.

Decided April 10, 1968.

Peter S. Herman, Asst. Atty. Gen., Salem, argued the cause for appellant. With him on the briefs was Robert Y. Thornton, Atty. Gen.

Thomas H. Tongue, Portland, argued the cause for respondent. With him on the briefs were Robert Mix, Corvallis, and Hicks, Tongue, Dale & Strader, Portland.

Before PERRY, C.J. and McALLISTER, SLOAN, O'CONNELL, GOODWIN, DENECKE, and LUSK, JJ.

LUSK, Justice.

This is a suit in equity brought by Corvallis Sand & Gravel Co., a corporation, to enjoin the State of Oregon, acting by and through the State Land Board, from prosecuting an action of ejection commenced by the state against the corporation. The state demurred to the complaint on the ground that its allegations 'do not constitute an equitable defense to the allegations of the ejectment action brought by the State of Oregon'; the trial court overruled the demurrer and, the state refusing to plead further, a decree was entered in favor of the plaintiff. The state appeals.

The complaint in the ejectment action alleges that the state, by virtue of its sovereignty, is now, and at all times since the state's admission into the Union, has been the owner of the bed of the Willamette River lying within Benton and Linn Counties in a location particularly described; that the defendant Corvallis Sand & Gravel Co. now wrongfully withholds, and for six years immediately prior to the filing of the complaint, has wrongfully and continuously withheld, possession of such real property from the state and that the reasonable value of the annual use of said real property was $50,000. Judgment was asked for the immediate possession of such property and damages in the sum of $300,000.

The plaintiff (hereinafter referred to as the corporation) in the suit before us, instead of filing a pleading in the ejectment action, filed a complaint in equity, the allegations of which may be summarized as follows: The corporation denies that the state owns the real property in question or has been damaged as alleged in the ejectment action; it alleges that as a result of an avulsive change in the channel of the Willamette River, in November of 1909, a new channel was formed, which flowed over land held in private ownership and said avulsive channel underwent further changes as the result of extensive excavations made therein from 1913 to 1918; that about 1920 the predecessor of the corporation commenced operation of a sand and gravel business on the avulsive channel and the corporation claims ownership 'of the present bed of the Willamette River below high water marks' in the location in controversy; that such sand and gravel business has been conducted by the corporation and its predecessors continuously, openly and notoriously since the year 1920; such business at the present time grosses $1,000,000 per year, has a capital value in excess of $500,000, employs as many as 100 persons, has an annual payroll in excess of $400,000, and supplies 50 per cent of the sand and gravel used in construction in the vicinity of Corvallis and obtains most of its materials from said channel. There follow allegations intended to show laches on the part of the state in bringing the ejectment action, to wit. The state has been aware of the operation of the corporation and its predecessor since prior to 1933 and of the corporation's claim of private ownership of such channel; prior to filing the ejectment action the state, through the State Land Board, filed two suits to establish its claim of ownership to the channel, the first, in 1958, resulting in an involuntary nonsuit 'because the plaintiff had failed to prove its case,' and the second, in 1960, resulting in voluntary dismissal by the state. Further facts are alleged to show prejudice to the corporation resulting from the long delay of the state in asserting its rights--the expense of litigation, the payment of taxes by the corporation on the real property in dispute, and the difficulty of establishing, so long after the event, the facts surrounding the formation of the avulsive channel. The prayer is for a decree perpetually enjoining the state from prosecuting the ejectment action or prosecuting any legal action in the premises or making any claim whatsoever to the portion of the bed of the Willamette River in question.

A procedural question will be decided before going to the merits. Since the amendment adopted in 1917, now ORS 16.460, authorizing the defendant in a law action to set up an equitable defense in his answer, cross-bills, such as the corporation's complaint, have not been permissible. Prior to the amendment the statute abolished cross-bills, 'except as hereinafter mentioned,' and provided that 'where the defendant is entitled to relief, arising out of facts requiring the interposition of a court of equity, and material to his defense, he may, upon filing his answer therein, also as plaintiff, filed a complaint in equity, in the nature of a cross-bill, which shall stay the proceedings at law,' etc., L.O.L. § 390. Under ORS 16.460 cross-bills are abolished without any exception, and the provision for filing by the defendant of a complaint in equity in the nature of a cross-bill is eliminated and in its place is substituted the now familiar and frequently invoked provision authorizing the filing of what has become known as an equitable answer.

The question was passed upon in Hopka v. Forbes, 135 Or. 91, at page 93, 294 P. 342, at page 343, where the court said:

'The filing of a cross-bill by a defendant in a law action, interposing an equitable defense to the action, is no longer permissible under our Code. By chapter 95, L. 1917, cross-bills were especially abolished and the procedure existing prior thereto was very much simplified by the amended statute.'

See, also, Hughes v. Flier et ux., 203 Or. 612, 617, 280 P.2d 992.

A ruling to the contrary in Churchill v. Meade, 92 Or. 626, 182 P. 368, was not cited in Hopka v. Forbes, but that decision overruled Churchill v. Meade Sub silentio, and properly so, because the opinion in the latter case fails to give effect to the changes in the statute to which we have called attention and, in particular, to the provision abolishing cross-bills.

Treating the complaint, however, as though the affirmative defense of laches was set forth in an equitable answer filed pursuant to the statute, we are of the opinion that such defense is not available to the corporation. Ejectment is an action at law and laches is available only against a party seeking the aid of equity. It is an application of the doctrine that equity aids only the vigilant or, as stated by Pomeroy, 'in some of its applications it may properly be regarded as a special form of the yet more general principle, He who seeks equity must do equity.' 2 Pomeroy's Equity Jurisprudence (5th ed.) 169--170, § 418. 'Laches is a doctrine peculiarly applicable to suits in equity': Idem, 172, § 419, Note 7, citing numerous cases. This court has never applied the doctrine of laches as a defense to an action at law. The case of State ex rel. Security Savings & Trust Co. v. School District No. 9 of Tillamook County, 148 Or. 273, 287, 31 P.2d 751, 36 P.2d 179, is only a seeming exception to the rule. This was a proceeding in quo warranto, denominated an 'action at law' in the statute, ORS 30.510. The defendants pleaded laches of the relators and the latter urged that this defense was available only in suits in equity. This court held that defense available because the proceeding before it was equitable in nature. After a brief review of the history of quo warranto, the court said:

'* * * Issuing from a court of chancery and commanding a return of a nature foreign to the writs of the courts of law, it follows that by the common law quo warranto was an authorized process for the assertion of a remedy in its nature equitable, namely, the disclosure by defendant of the claim under which he exercises the franchise in question.

'The statute of Oregon gives a remedy in lieu of the common-law writ of quo warranto, and calls that remedy an action at law. It is in truth merely a statutory proceeding for the exercise of the equitable right to compel disclosure as above mentioned, as well as to determine whether the franchise in question is being legally exercised.' 148 Or. at 285--286, 36 P.2d at 181.

By this decision the court gave recognition to the rule that laches may not be used as a defense against a claim purely legal. It is the prevailing rule in this country. In addition to the authorities above cited, see Wehrman v. Conklin, 155 U.S. 314, 326--327, 15 S.Ct. 129, 39 L.Ed. 167; Horner v. Jobs, 13 N.J.Eq. 19; Clark v. Clapp, 14 R.I. 248; Thorpe v. Wm. Filene's Sons Co., 40 F.2d 269 (D.C.Mass.); Kitchens v. Wheeler, 200 Ark. 671, 681, 141 S.W.2d 34; Fox v. Lofton, 185 Ga. 456, 195 S.E. 573; Lowry v. Lyle, 226 Mich. 676, 684, 198 N.W. 245; McClintock on Equity (2d ed.) 75--76; 1 Wood on Limitations (4th ed.) 287; 28 C.J.S. Ejectment § 49, p. 898.

In a few states where law and equity are merged the doctrine under consideration does not apply. But, as we held in Gellert v. Bank of California, Nat. Ass'n., 107 Or. 162, 185, 214 P. 377, 385, ORS 16.460 'does not abolish the distinction between actions at law and suits in equity, although it avoids some of the inconveniences formerly suffered and does away with a few of the merely formal steps which were previously required.' And it need hardly be said that the corporation did not, by filing a suit seeking to enjoin the state's action at law on the ground of laches, succeed in converting that action into a suit equity.

But even on the assumption that the plea of laches would be otherwise available to the...