Golden v. Golden

• Decision Date: 14 November 1975
• Citation: 541 P.2d 1397,273 Or. 506
• Parties: Earl H. GOLDEN, Respondent, v. Richard A. GOLDEN and Linda Golden, husband and wife, Appellants.
• Court: Oregon Supreme Court

Page 1397

541 P.2d 1397

273 Or. 506

Earl H. GOLDEN, Respondent, v. Richard A. GOLDEN and Linda Golden, husband and wife, Appellants.

Supreme Court of Oregon.

Argued and Submitted Sept. 9, 1975.

Decided Nov. 14, 1975.

James C. Wilson, Jr., Central Point, argued the cause and filed a brief for appellants.

Steven P. Pickens of Pickens & Webber, Medford, argued the cause and filed a brief for respondent.

Before O'CONNELL, C.J., and McALLISTER, HOLMAN, TONGUE, HOWELL and BRYSON, JJ.

O'CONNELL, Chief Justice.

This is an action for money had and received in which Earl Golden seeks to recover payments he made pursuant to an oral land sale contract. The case was heard without a jury. The court entered a judgment for $3,000 in favor of plaintiff and defendants appeal. Defendants are Richard and Linda Golden, the son and daughter-in-law of plaintiff.

Plaintiff orally agreed to purchase a mobile home and five acres of land from defendants for a total purchase price of $13,500, paying $3,000 down and assuming the obligation to pay $85 per month to the vendor from whom defendants had purchased the property under an installment contract. Defendant Richard Golden testified that defendants had received a previous offer of $13,500 from another prospective purchaser. Plaintiff moved onto the property which was occupied by defendants. They lived together on the property for a short period of time during which plaintiff made six monthly payments of $85 each. As a result of a family dispute, defendants left the property and purchased another home and lot, and a few months later plaintiff left the property. Thereafter he refused to make any further payments and demanded of defendants the return of all the money he had paid pursuant to the oral contract.

When plaintiff refused to make any further payments on the contract defendants made an effort to sell the property for $13,500, the purchase price agreed upon in the oral contract between plaintiff and defendants, but they were unable to find a buyer at that price. Defendants finally sold the property for $12,200.

In the trial of the case defendants attempted to introduce evidence of the oral agreement and the loss suffered by defendants because of the breach of the oral agreement, but the trial court rejected it on the ground that the oral agreement was void under the Statute of Frauds (ORS 41.580(5)). ¹

The record leaves no doubt that plaintiff's action is brought to recover payments upon a contract to purchase the property in question. This is not a case where recovery of funds is sought because there was not a meeting of the minds on the terms of the sale, or because of some other deficiency in reaching an agreement for the sale of the property. The opening statement of plaintiff's counsel makes it clear enough that the plaintiff agreed to purchase the property, made the down payment, occupied the premises and paid six monthly installments pursuant to the agreement to purchase. Plaintiff was forced to admit that a contract existed because without the evidence of the transaction, there was no explanation as to how defendants happened to have money now claimed by plaintiff and why he is now claiming its return. ² However, plaintiff takes the position that he can use the evidence of the oral agreement to explain the nature of his claim, yet at the same time preclude the use of the identical evidence by defendants to show that they were entitled to retain the money claimed by plaintiff. Unless there is some legerdemain in the law which transcends logic and fairness, plaintiff's position cannot be accepted. ³ If the policy of the Statute of Frauds precludes defendants from proving an oral agreement to explain why they are entitled to retain funds received by them, it would seem that the same policy should preclude plaintiff from proving an oral contract to explain why he is entitled to recover funds paid by him.

However, it is not necessary to solve the problem before us on an equation of fairness; the answer can be found by giving the Statute of Frauds the interpretation which comports with its purpose. ⁴ As an eminent legal scholar has said, '(a) contract where the parties have not complied with the requirements of the statute is neither void nor voidable; it has much effect upon the legal relations of the contracting parties with each other and with third persons. It can properly be described as unenforceable, however, inasmuch as the ordinary legal remedies are unavailable.' ⁵

Stated differently, it can be said that the purpose of the Statute of Frauds is to prevent the enforcement of oral contracts relating to land; the statute is not operative when evidence of the oral contract is used not to enforce the contract but to obtain other relief. ⁶ This explains why, in an action to recover the down payment on an oral contract for the sale of land, the vendee can introduce evidence of the oral contract. It also explains why the vendor can interpose a defense resting upon the existence of the oral contract. For these purposes, the oral contract is as valid as if it were in writing. This is recognized again and again in the large number of cases in which the vendee seeks to recover payments made upon an oral land sale contract. ⁷

In such actions for restitution the vendee's right to recover rests upon proof that the vendor would be unjustly enriched were he permitted to retain the moneys paid pursuant to the contract. ⁸ If the vendor is ready and able to perform the oral contract, the vendee is denied recovery. ⁹ If the vendor is unable to perform form the oral contract because of his own conduct, the vendee is entitled to recover payments made pursuant to the contract. ¹⁰

However, if vendor is unable to perform because of the conduct of the vendee, the vendor should be entitled to set off against vendee's claim for a return of his payments the loss suffered by vendor as a result of the vendee's breach. The principle which is applicable here is stated by Corbin, as follows:

'* * * (I)t is clear that the vendee in default should in no case be given restitution of money paid unless it affirmatively appears that the money so paid is in excess of the injury caused to the vendor by the breach. The vendee sues because he asserts that retention of the money is unjust enrichment; but there is no injustice if the defendant is retaining no more than the amount of injury caused by the plaintiff's breach. In cases where the plaintiff may have a right of restitution, he should be permitted to show that the defendant's injury is less than the instalments paid; but unless he successfully shows this, he should recover nothing.' Corbin, The Right of a Defaulting Vendee to the Restitution of Instalments Paid, 40 Yale L.J. 1013, 1023 (1931). ¹¹

In the present case defendants attempted to prove that they were forced to sell the property in question because they had contracted to purchase another parcel of property where they made their home and because they were so committed they did not have the money to make the payments on both contracts. They also attempted to prove that in attempting to sell the property after plaintiff's default they tried to obtain $13,500, but that the best price they could get was $12,200.

Inasmuch as the trial court did not consider this evidence admissible because of the Statute of Frauds, no decision was made as...