Hill v. Oland

• Decision Date: 22 December 1982
• Docket Number: No. 78-0088,78-0088
• Parties: Craig HILL and Teryl Hill, husband and wife, Appellants, v. Gene OLAND and Sandra Oland, husband and wife, Respondents. ; CA A22905.
• Court: Oregon Court of Appeals

Page 1088

655 P.2d 1088

61 Or.App. 85

Craig HILL and Teryl Hill, husband and wife, Appellants, v. Gene OLAND and Sandra Oland, husband and wife, Respondents.

No. 78-0088; CA A22905.

Court of Appeals of Oregon.

Argued and Submitted May 28, 1982.

Decided Dec. 22, 1982.

Richard D. Curtis, Eugene, argued the cause for appellants. With him on the brief was Curtis, Hendershott & Strickland, Eugene.

James B. Ehrlich, Eugene, argued the cause for respondents. With him on the brief was Larry O. Gildea, P.C., Eugene.

Before THORNTON, P.J., and WARDEN and VAN HOOMISSEN, JJ.

WARDEN, Judge.

Plaintiffs, buyers, appeal from the decree of the trial court denying specific performance of a contract for the sale of land owned by defendants as tenants by the entirety. The negotiations of the parties resulted in a document signed by plaintiffs and defendant Gene Oland only on April 21, 1977. Plaintiffs' complaint alleged that defendants were partners in the subdivision and sale of the property and that Gene Oland acted on behalf of the partnership in the entering into the contract. We affirm.

The facts are disputed. The following is a brief summary as we find the facts de novo. Defendants owned property that plaintiffs were interested in buying as a homesite. A meeting was arranged between Gene Oland and plaintiffs by Teryl Hill's father, Cecil Saxon, a land developer in the area. They met at least twice and on April 21, 1977, signed a document by which Gene agreed to sell the property to plaintiffs for $15,000, with a $4,000 down payment and the balance payable in monthly installments over 10 years. Plaintiffs were told before they entered into the contract that Sandra Oland's approval was necessary. Teryl Hill arranged a meeting with Sandra for the purpose of obtaining that approval.

Plaintiffs claim that that meeting took place before the signing of the April 21 agreement and that Sandra gave her approval. Defendants claim, on the other hand, that the meeting took place after April 21 and that Sandra did not give her approval to the sale but merely indicated that " * * * if it was the Lord's will that her and Mr. Hill moved up there, it would be so." Plaintiffs made the $4,000 down payment and five monthly payments. In October, 1977, Gene refused to accept further payments. On January 5, 1978, plaintiffs brought this action for specific performance or, alternatively, equitable compensation.

Plaintiffs contend that Gene was acting on behalf of his wife when he signed the land sale contract. They contend that he was actually authorized to act because of a partnership between the Olands or because he was acting as agent for his wife, or that Sandra should be estopped to deny that her husband was authorized to act on her behalf. They also argue that, even if Sandra is not bound by the land sale contract, specific performance or equitable compensation can be ordered against Gene. Because plaintiffs did not plead estoppel or agency, we will not consider those arguments. Farley v. United Pacific Ins. Co., 269 Or. 549, 559, 525 P.2d 1003 (1974); Cody v. Ins. Co. of Oregon, 253 Or. 587, 592, 454 P.2d 859 (1969); Goddard v. Avemco Ins. Co., 43 Or.App. 39, 42, 602 P.2d 291 (1979).

The dissent would have us decide this case on an estoppel theory on appeal, even though plaintiffs failed to plead facts out of which an estoppel might have arisen, by relying on language in Rose v. Webster, 51 Or.App. 293, 297, 625 P.2d 1329 (1981). The rule as stated in Rose is that an objection that evidence supporting a particular theory was outside the scope of the pleadings will not be entertained for the first time on appeal, except in instances where it appears that the appellant has been prejudiced. The objection in this case was made at trial, before the entry of judgment. The case was tried and decided on the theory that defendants were partners as alleged in plaintiffs' complaint. Separate causes of action for trespass and deceit were alleged in the complaint and, on stipulation, separated for trial, but at no time did plaintiffs state a cause of action setting forth facts to support a theory of estoppel. Even after defendants made their objection in final argument, plaintiffs did not move to amend to conform the pleadings to proof of an estoppel theory.

In Marshall v. Wilson, 175 Or. 506, 154 P.2d 547 (1944), relied on by the dissent, the defendants, husband and wife, filed separate answers. In their reply to the answer of the defendant husband, the plaintiffs alleged facts giving rise to an estoppel, 175 Or. at 511, 154 P.2d 547, and in their reply to the answer of the defendant wife, plaintiffs also plead facts giving rise to an estoppel, 175 Or. at 513, 154 P.2d 547. In Young v. Neill et al., 190 Or. 161, 220 P.2d 89, 225 P.2d 66 (1950), it appears that plaintiff alleged that defendants should be estopped to deny the validity of the lease. 190 Or. at 166, 220 P.2d 89. And, in any event, failure to allow the plaintiff to claim that the defendants should be estopped would have been prejudicial to the plaintiff. Rose v. Webster, supra.

We consider then whether the Olands acted as partners in the partition and sale of their land. It is true, as plaintiffs point out, that a partnership for the purpose of dealing in real estate may be established by parol evidence. Terry v. Simmons, 261 Or. 626, 496 P.2d 11 (1972). However, we agree with the trial court's determination that there was no partnership between the Olands. Under the Uniform Partnership Law,

"Joint tenancy, tenancy in common, tenancy by the entireties, joint property, common property, or part ownership does not of itself establish a partnership, whether such coowners do or do not share any profits made by the use of the property." ORS 68.120(2).

The test for determining the existence of a partnership is whether the parties intended to establish such a relationship. Stone-Fox, Inc. v. Vandehey Development Co., 290 Or. 779, 626 P.2d 1365 (1981); Hayes v. Killinger, 235 Or. 465, 385 P.2d 747 (1963); "Unless the intent is clearly proved, the court will not construe a family arrangement as a partnership. * * * " First Nat. Bank of Eugene v. Williams, 142 Or. 648, 661, 20 P.2d 222 (1933).

We see no manifestation of intent on the part of the Olands to be partners in the sale of property. They held the property as tenants by the entirety, with Gene handling most of the business matters and Sandra reserving the right to approve or disapprove land sales. They also shared in the profits from the sale of property, in that the money received was deposited in a bank account to which both had access and from which both withdrew money. Those facts do not establish an intent to form a partnership.

Because no issue of estoppel or agency was pleaded and because we find there was no partnership between the Olands, Sandra is not bound by the agreement signed by her husband. The questions remain whether Gene Oland is bound by that agreement and whether specific performance or equitable compensation may be ordered against him. The parties presented evidence at trial and have argued in their briefs about whether Sandra consented to the sale of the property to plaintiffs, but neither party has tied the issue of consent to any legal theory pertinent to the resolution of this case. In our view, however, the issue of Sandra's consent is relevant to the question of whether the contract between plaintiffs and Gene is enforceable. It is clear from the evidence, and plaintiffs admit, that they were informed by Gene that Sandra's approval was necessary before the land could be sold.

The Restatement (Second) Contracts § 224, defines the term "condition" as follows:

"A condition is an event, not certain to occur, which must occur, unless its non-occurrence is excused, before performance under a contract becomes due."

The question whether Sandra approved the sale of the land to plaintiffs is, therefore, relevant to whether Gene's performance under the contract ever became due.

"Performance of a duty subject to a condition cannot become due unless the condition occurs or its non-occurrence is excused." Restatement (Second) Contracts § 225 (1981).

At the meeting between Teryl Hill and Sandra Oland, no explicit request for approval was made. Both testified that they knew that the purpose of the meeting was for Sandra to determine whether she would approve of plaintiffs' purchase of the property. The testimony of the two women regarding what took place at the meeting differs, not so much in content as in inference. Teryl testified that the meeting was pleasant and that Sandra had said "[s]he knew that God would put the people up there who he wanted up there." Teryl believed that she had the necessary approval. Sandra agreed that she had made that statement, but she testified that she had meant it to indicate that she was maintaining an open mind about the matter.

Plaintiffs argue that Sandra knew that a down payment had been received and that monthly payments were being made. They contend that the fact that she did not object indicates that she had consented to the sale. Sandra testified, however, that she had considered the $4,000 to have been paid so that the land would be held for plaintiffs. She further testified that she had been unaware of the monthly payments until some time later. There was also testimony that plaintiffs had been told in July that it appeared that Sandra would not approve of the sale but that they insisted on continuing to make payments. There is also conflicting testimony whether plaintiffs entered on the property and made improvements and, if they did, whether Sandra knew it.

The trial court determined that Sandra had not given her consent to the sale. To a large extent, that decision depends on an assessment of credibility of the witnesses. Because the trial court was able to observe the witnesses, we give substantial weight to its decision. We conclude that Sandra...