Earls v. Clarke

• Decision Date: 07 September 1960
• Citation: 223 Or. 527,355 P.2d 213
• Parties: Emmett S. EARLS and Mary W. Earls, husband and wife, Respondents, v. John CLARKE, Pauline Betty Frye and The Guaranty Co., Inc., an Oregon corporation, Defendants, The Guaranty Co., Inc., Appellant.
• Court: Oregon Supreme Court

Page 213

355 P.2d 213

223 Or. 527

Emmett S. EARLS and Mary W. Earls, husband and wife, Respondents, v. John CLARKE, Pauline Betty Frye and The Guaranty Co., Inc. an Oregon corporation, Defendants The Guaranty Co., Inc., Appellant.

Supreme Court of Oregon, Department 2.

Argued and Submitted July 13, 1960.

Decided Sept. 7, 1960.

John E. Walker, Portland, argued the cause and filed a brief for appellant.

Warde H. Erwin, Portland, argued the cause and filed a brief for respondents.

Before McALLISTER, C. J., and WARNER, O'CONNELL, GOODWIN and MILLARD, JJ.

McALLISTER, Chief Justice.

This suit was instituted by the plaintiffs, Emmett S. Earls and Mary W. Earls, his wife, ostensibly to foreclose a land sale contract entered into by plaintiffs, as sellers, and the defendant Pauline Betty Frye, as purchaser, and assigned by said purchaser to the defendant The Guaranty Co., Inc., hereinafter referred to as 'Guaranty'. However, during the trial the issue was narrowed to the sole question of whether Guaranty took the premises as assignee subject to the lien of the plaintiffs for certain taxes in the sum of $171.95 paid by plaintiffs after the contract was entered into but prior to said assignment. From a decree in favor of plaintiffs, Guaranty has appealed. The trial court found that the defendant John Clarke had no personal interest in this controversy and it will not be necessary to again refer to him.

This spirited litigation involving a modest amount resulted from the following circumstances. By a land sale contract dated February 3, 1955, the plaintiffs agreed to sell to the defendant Pauline Betty Frye certain real property in Multnomah county. The sale price was $13,250 of which $2,750 was paid down and the balance of $10,500 was to be paid in monthly installments of not less than $85, including interest at 6 per cent on the unpaid balance. The plaintiffs appointed the Albany Branch of the First National Bank of Portland as their agent for the collection of the balance due on the contract. The bank issued to Mrs. Frye a payment receipt book in which the bank thereafter entered the payments made, the amount applied to interest and principal and the current balance due on the principal.

The contract provided that if the purchaser did not pay the taxes on the real property when due, the sellers could pay such taxes and add the amount so paid to the balance due on the contract. Mrs. Frye did not pay the 1955-56 taxes on the property when due and in November 1955 the plaintiffs paid said taxes in the sum of $171.95.

On December 11, 1957, Mrs. Frye assigned to the defendant Guaranty her interest in the contract of sale and the real property therein described. The assignment was promptly recorded and notice thereof given to plaintiffs. Plaintiffs made frequent demand both on Mrs. Frye and Guaranty for the $171.95 paid by plaintiffs for taxes but were not reimbursed by either defendant. Guaranty made the monthly contract payments when due but refused to pay plaintiff the amount expended for taxes. Plaintiffs then demanded payment of the entire balance due under the contract and when this was refused, brought this suit.

Guaranty concedes that plaintiffs have a valid claim against Mrs. Frye for repayment of the 1955-56 taxes paid by them but Guaranty claims that plaintiffs are estopped from enforcing said claim against it for two reasons. First, Guaranty claims that in settling with Mrs. Frye it relied on the contract balance as shown on the bank's payment receipt book which showed the correct balance due on the original purchase price but did not include the taxes paid by plaintiff. Secondly, Guaranty claims that before it paid Mrs. Frye for her interest in the property it asked the plaintiffs how much was owing on the contract and that both plaintiffs and their attorney refused to tell it.

In its brief Guaranty states that the primary question is whether plaintiffs are estopped from enforcing payment of the disputed item of $171.95 as a lien on the land. A secondary question concerns the award of attorney's fees.

The essential elements of an equitable estoppel are set out in Bennett v. City of Salem et al., 192 Or. 531, 541, 235 P.2d 772, 776 as follows:

'To constitute an equitable estoppel, or estoppel by conduct, there must (1) be...