Dahl v. Crain

• Decision Date: 21 November 1951
• Citation: 237 P.2d 939,193 Or. 207
• Parties: DAHL et al. v. CRAIN et ux.
• Court: Oregon Supreme Court

Page 939

237 P.2d 939

193 Or. 207

DAHL et al. v. CRAIN et ux.

Supreme Court of Oregon.

Argued Oct. 29, 1951.

Decided Nov. 21, 1951.

Pat H. Donegan, Burns, for appellants.

Robert H. Foley, Bend, for respondents, De Armond, Goodrich, Foley & Gray, Bend, on the brief.

Before BRAND, C. J., and ROSSMAN, LUSK, LATOURETTE, WARNER and TOOZE, JJ.

TOOZE, Justice.

This is a suit for a specific performance of a contract respecting the sale of standing timber, brought by Philip Dahl, Bessie Peterson, and the S. S. Johnson Company, d.b.a. Tite Knot Pine Mill, as plaintiffs, against E. W. Crain and Bernice L. Crain, husband and wife, as defendants. The trial court entered a decree in favor of plaintiffs, and defendants appeal.

The plaintiffs' complaint, after formal allegations as to the legal status of the parties, sets forth in usual form for specific performance the entry into a written contract between plaintiffs and defendants to purchase and sell respectively the merchantable Ponderosa pine timber from 200 acres of land located in section 10, township 21 South, range 24 East of the Willamette meridian, in Crook county, Oregon, and the payment of the consideration of $8,000 by the purchasers to the sellers. It then alleges the agreement of plaintiffs to resell the timber to Edward Hines Lumber Company, free of encumbrances, and the failure and refusal of defendants to remove the encumbrances which, by the contract, they were under obligation to do; that the removal of the encumbrances was necessary in order to permit plaintiffs to consummate their resale. And, in particular, the complaint alleges: '* * * that in accordance with the agreement of said Hines Lumber Company plaintiffs and Hines Lumber Company caused a joint cruise of said timber to be accomplished and from said cruise it was determined that said Tract (a) contained three million one hundred sixty thousand board feet of merchantable pine timber, in accordance with the specifications for such cruise. That plaintiffs agreed to sell the same to said Hines Lumber Company for $10.00 per thousand board feet, or a total of $31,600.00'. (Italics ours.)

Plaintiffs prayed a decree for specific performance of the contract, and, in the event performance could not be had, that plaintiffs recover of defendants the sum of $31,600 as damages.

By their answer and stipulations entered into prior to trial, defendants admitted all the essential allegations of plaintiffs' complaint.

As an affirmative defense, defendants alleged that they had been induced to enter into the contract for the sale of said timber by reason of false representations made to them by plaintiffs respecting the number of board feet of merchantable Ponderosa pine timber located on said tract (a), these representations being that defendants' land contained between 'one and one-half million and two million board feet of merchantable pine timber, and no more'; whereas, and in fact, said land contained 'in excess of three million one hundred sixth thousand board feet of timber; to wit, three million one hundred seventy-three thousand feet of merchantable Ponderosa pine timber'; that they believed these representations to be true and relied upon them in entering into the agreement. Defendants then alleged that, immediately upon discovery of said fraud, they rescinded said contract and tendered back to plaintiffs the monies received by them on account thereof, which tender was refused; and that said monies were tendered into court with the answer. They also alleged a mutual mistake in the making of said agreement, but this claim was abandoned at the outset of the trial. Defendants prayed a decree dismissing plaintiffs' complaint and cancelling, annulling, and holding for naught the contract in question.

By their reply, plaintiffs denied all the new matter alleged in the answer.

The material portions of the contract in dispute are as follows:

'That the Seller, for and in consideration of the covenants and the premises of the Buyer hereinafter contained, and for and in consideration of the sale price hereinafter set forth, does hereby promise and agree to sell, and the Buyer does hereby promise and agree to buy all merchantable Ponderosa Pine belonging to the Seller located in Crook County, Oregon, lying near the Western Boundary of the Snow Mountain Unit of the Ochoco National Forest, consisting of two tracts of timber, (a) comprising approximately 200 acres located in Section 10, Township 21 South, Range 24 East. The second, (b), comprising scattering timber located in the tier of sections immediately west of the National Forest boundary in Township 21 South, Range 24 East.

'All merchantable timber will be sold, provided, however, that the Seller may reserve specific trees deemed necessary for the preservation of his range land.

'The Buyer is to pay $8000.00 for all merchantable timber located in the tract described as (a) above. The Buyer is to pay $3.75 per thousand for all logs scaled by a joint scaler using the Scribner Decimal C rule and deducting for all visible defects, in tract (b) indicated above * * *.

'* * *

'Payment for tract (a) above shall be made immediately upon the acknowledgement of this contract by the Seller. Payment for Tract (b) above shall be made as the timber is felled and the logs are scaled. * * *

'* * *

'The Buyer agrees to abide by all Oregon State laws concerning forest practice, disposal of slash and fire control. The Seller agrees to pay all taxes levied against the land in which the Buyer is interested through this agreement, and keep this same land free of all liens or encumbrances of any nature whatsoever.

'The Buyer agrees to sell the Seller a certain portion of land described as follows: SE 1/4 NE 1/4; SW 1/4 NE 1/4; W 1/2 SE 1/4 of Section 10, Township 21 South, Range 24 East W. M. when the timber from said land has been removed.

'Agreed and subscribed to in duplicate the day, month and year first set forth above.

'(Sgd.) E. W. Crain

'(Sgd.) Bernice L. Crain

'Seller

'Snow Mountain Lumber Company

'By (Sgd.) Philip Dahl, President

'Buyer

'In consideration of One Dollar we hereby sell and assign all of the rights and interest in the above contract to the Tite Knot Pine Mill.

'Snow Mountain Lumber Company

'By (Sgd.) Philip Dahl, President

'(Sgd.) Sam S. Johnson, Secretary' (Italics ours.)

It will be observed that this contract was executed on behalf of Snow Mountain Lumber Company by Philip Dahl, one of the plaintiffs herein, as president, and that the assignment of the contract to plaintiff Tite Knot Pine Mill was executed on behalf of said Snow Mountain Lumber Company by Philip Dahl, as president, and Sam S. Johnson, another of the plaintiffs, as secretary.

The evidence discloses that in all the negotiations leading up to the execution of the contract in dispute, the Snow Mountain Lumber Company was represented by its secretary, Sam S. Johnson. This also is true respecting dealings between plaintiffs and defendants subsequent to the execution of the agreement; that is to say, defendants' dealings were largely, if not wholly, with Sam S. Johnson, as representative of himself and his associates.

It also appears from the record that before and at the time of the negotiations between Johnson and defendants, Johnson and Dahl were engaged in buying up other large tracts of merchantable timber in the vicinity of defendants' holdings and, in fact, had purchased from the Dant and Russell company a tract of timber located in the above-mentioned section 10, immediately adjacent to defendants' timber. The land upon which the Dant and Russell tract of timber was located is that particularly described in the latter part of the contract as above set forth.

In passing, we note plaintiffs' contention that, during the course of negotiations for the purchase of defendants' timber, it was the intention of Johnson and his associates to erect a medium-sized sawmill within the vicinity of the timber being purchased, for the purpose of manufacturing the same into lumber. However, there is no independent evidence in the record of any overt act on the part of Johnson and his associates toward the erection of any such mill at any time, and the alleged fact that the construction of such mill was contemplated rests entirely upon the self-serving and uncorroborated declarations of Johnson. In the light of subsequent events, viz., the acquiring of sixty-six million feet of timber in the same vicinity and the entering into arrangements for its sale to Hines Lumber Company (which was consummated in 1948), it may well be inferred that such construction was never really intended, but, on the contrary, the sole purpose of the purchasers was to buy timber for speculation. If that is the case, and we think it is, much of what occurred in connection with the purchase of defendants' timber is better understood.

In October, 1945, defendants purchased on contract from one Clark, ten thousand acres of land located in Crook, Harney, Deschutes, and Lake counties, and also a lease to twenty thousand additional acres. They moved upon this land in November, 1945. Section 10 referred to above was a part of the deeded lands. Clark had exchanged the use of section 10 for the use of an equivalent tract of land more conveniently located in connection with his operations, and this exchange of use continued after defendants took possession. Section 10 was located entirely outside defendants' ranch operations. Up to the time of the negotiations between Johnson and defendants, defendants had never been on section 10, nor did they have any definite knowledge concerning the growth of any substantial amount of timber thereon. Virgil Ammons, a witness for plaintiffs, testified that he went to defendants' ranch in April, 1946, after Johnson had already been there, in an endeavor to purchase the timber in question, and in answer to the question, 'Did you have any discussion with him [Crain] there then where ...