Hall v. Risley

• Decision Date: 24 January 1950
• Citation: 188 Or. 69,213 P.2d 818
• Parties: HALL et ux. v. RISLEY et al.
• Court: Oregon Supreme Court

213 P.2d 818

188 Or. 69

HALL et ux. v. RISLEY et al.

Supreme Court of Oregon, En Banc.

January 24, 1950

William J. Masters, of Portland, argued the cause for appellants. On the brief were Masters & Masters and William B. Creitz, of Portland.

Nathan Weinstein, of Portland, argued the cause and filed a brief for respondent.

BRAND, Justice.

The issues can be set forth without the usual summary of the allegations of the complaint, answer and reply.

On the second day of Auguat, 1946, the plaintiffs and the defendants Risley entered into a written contract whereby plaintiffs agreed to sell to the defendants Risley the real property described in the complaint for the sum of $2,600, on account of which $1,100 was paid on the execution of the contract. The following language was inserted by typewriter in the printed contract immediately after the description of the property 'Sold subject to Zoning and Building restrictions as may be of Record.' The balance was to be paid in monthly installments of not less than $30 including interest until paid in full, the deferred payments to bear interest at six per cent payable monthly. Among other provisions of the contract it was agreed that if the purchasers should strictly and literally perform all and singular the agreements and stipulations of the contract, then 'the first party shall give unto the second party, their heirs or assigns, upon request at Portland, Oregon and upon the surrender of this agreement, * * * Title Insurance Policy showing marketable title continued as to date of deed--Owner's Policy and a good and sufficient deed of conveyance conveying said premises in fee simple, free and clear of incumbrances, excepting, however, the above mentioned taxes and assessments and all liens and incumbrances created by the second party or their assigns.' Then follows the usual provision that, in the event of failure to perform upon the strict terms, time of payment and strict performance being declared to be of the essence, the seller should have the right to declare the agreement null and void or foreclose by strict foreclosure in equity, in either of which events the property should revest in the seller without any declaration of forfeiture or act of reentry, or without any other act by first party to be performed and without any right of the second party of reclamation or compensation for money paid. The contract provides for attorney's fees in the event of suit or action to foreclose the contract. Unless otherwise indicated, we shall refer to Heikkila, who alone appeared, as the defendant.

On the seventh day of November, 1946, the Risleys executed to the defendant a written assignment of all of their right, title and interest in the contract and in the real estate described therein in consideration of $2,000 to them paid, and they directed that upon full compliance of the terms of the contract by the assignee, conveyance be made to him. The contract shows a balance due to the plaintiffs on October 7, 1946 in the sum of $1,454.88. Since then three payments have been made as indicated by the notations on the contract, leaving a balance of $1,386.35 as of January 6, 1947. No payments have been made since that date. The plaintiff Sherman C. Hall testified that he has been ready, able and willing to make a warranty deed in accordance with the contract upon payment of the balance due but that there has been no offer of payment. It is by reason of the failure of the defendant to make the payments in accordance with the terms of the contract that the plaintiffs seek strict foreclosure thereof. It is the contention of the defendant that, on or about the first day of February, 1947, he discovered that the property was 'encumbered' by reason of a certain agreement which had been entered into by the plaintiffs' predecessors in interest, which encumbrance was well known to the plaintiffs. It is for this reason that Heikkila has refused to pay upon the contract and seeks its rescission and the return of his money from the plaintiffs. Heikkila paid to the defendants Risley $2,000 and to the plaintiffs after the assignment $90. He seeks judgment for both sums from the plaintiffs. The question at issue is therefore whether there is any encumbrance and if so whether it is one which is excepted by the provision of the original contract which reads 'Sold subject to Zoning and Building restrictions as may be of Record.' The situation is unique.

The agreement which, in the opinion of the defendant, has resulted in encumbering the property is one made between the City of Portland and Don and Edona Stansbery who were the predecessors in interest of the plaintiffs. The agreement relates to the use and occupancy of the premises. The answer pleads Ordinance 76947 of the City of Portland, Known as the 'War Code', which was approved on March 26, 1942 together with various amendments thereof and which ordinance is entitled 'Relaxing In Certain Particulars The Housing And Other Codes And Ordinances' of the City of Portland. Section 22-1301 of Article 13 of said ordinance provides that notwithstanding the provisions of the housing, building and other codes: '* * * and during the time mentioned in Section 22-1320 hereof the use or alteration of buildings and dwellings and the construction of new buildings designed to be used as apartments or housekeeping rooms or as single family dwellings may be in accordance with the regulations of the following sections, and the regulations of existing housing, building and other codes and ordinances if in conflict with the regulations of this Article shall not apply to property which shall have been brought under the provisions hereof. In other particulars the buildings brought under the provisions of this Article shall comply with the regulations of the housing, building and other codes and ordinances and nothing contained in this Article shall be deemed to allow any person to construct, maintain or repair any premises without obtaining permits for such work as provided in the appropriate codes.'

Section 22-1320 which is referred to, supra, in Section 22-1301, provides:

'The provisions of this Article shall be applicable only during the duration of the present national emergency and the owner or agent in charge of any premises coming under the regulations of this Article or desiring so to do shall first sign an agreement approved by the City Attorney as to form that within six (6) months after the termination of the present wars against the United States and a declaration of peace, the owner or agent in charge shall change the premises and its use to comply with the housing, building and/or other codes and ordinances applicable at that time to existing or new buildings or that he shall cause the building or other improvement to be demolished or removed beyond the city limits and the permitted use to be discontinued, or if the use of the building previous to the changes allowed in this article was a legal use under the then existing codes, to remodel the building or other improvement so as to restore the same to its previous use and condition.

'No permit for the use, construction, renovation, alteration or change of any building or other improvement under the terms of this Article shall be issued until the agreement above provided for shall have been executed, approved by the City Attorney as to form and filed with the Bureau of Buildings. Such agreement shall be deemed to attach to the premises irrespective of change of ownership and it shall be the duty of any person filing such an agreement, before selling or encumbering the property, to inform all parties acquiring an interest in the property of said agreement, and each owner or holder of an encumbrance shall in turn give like notice before selling or assigning his right, title or interest.'

The defendant alleges and the plaintiffs admit paragraphs IV and V of the answer which are as follows:

'IV.

'That by reason of the said ordinance, as amended, permits were issued for the construction, or conversion of certain buildings for temporary housing in the City of Portland, Oregon, for the war emergency period, and for six months thereafter upon application for such permit, without complying with the building code and regulation of the said City of Portland, Oregon, and stipulating that the said buildings were not to be used for residential purpose after six months following the cessation of hostilities.

'V.

'That on the 14th day of January, 1944, the City of Portland, Oregon, issued to the predecessors in interest a permit to convert the said structure to a dwelling unit for temporary occupancy for a period not to exceed six month [s] following the cessation of hostilities.'

The quoted provisions of the War Code were in effect at the time of the execution of the agreement with the city by plaintiffs' predecessors in interest. The agreement which was signed by plaintiffs' predecessors in interest is as follows:

'Agreement

'Know All Men by These Presents, that whereas the City of Portland, Oregon, by Ordinance No. 76947, as amended, has provided for relaxing upon certain terms, the provisions of the Housing Code and other codes and ordinances of said city during the present war emergency, and the undersigned Don Stansberry and Edona Stansberry, his wife, of Portland, Oregon, are applying to have a relaxing of said provisions made applicable to the building and premises owned by them at No. 6931 NE 15th Avenue, Portland, Oregon, particularly described as Lot 1, Block 6, Lowell, Addition, in the City of Portland, County of Multnomah, State of Oregon,

'Now, Therefore, the undersigned do hereby covenant and agree to and with said City, a municipal corporation, that in consideration of a relaxing, as...