Howes v. Sherlock

• Decision Date: 20 February 1963
• Citation: 233 Or. 429,378 P.2d 713
• Parties: Rose L. HOWES, Appellant, v. John M. SHERLOCK, Shirley L. Palmer, Everett R. Phipps and Helena S. Phipps, husband and wife, LeRoy Miller and Rudy Hemmerling, Respondents.
• Court: Oregon Supreme Court

Page 713

378 P.2d 713

233 Or. 429

Rose L. HOWES, Appellant, v. John M. SHERLOCK, Shirley L. Palmer, Everett R. Phipps and Helena S. Phipps, husband and wife, LeRoy Miller and Rudy Hemmerling, Respondents.

Supreme Court of Oregon, Department 2.

Argued and Submitted Jan. 11, 1963.

Decided Feb. 20, 1963.

Malcolm J. Montague, Portland, argued the cause for appellant. With him on the briefs were Williams, Montague, Stark & Thorpe, Portland, and Fitzwater, Fitzwater & Andrews, Portland.

George P. Winslow, Tillamook, argued the cause for respondents Everett R. Phipps and Helena S. Phipps. On the brief were Winslow & Winslow, Tillamook.

Before McALLISTER, C. J., and PERRY, O'CONNELL, DENECKE and LUSK, JJ.

O'CONNELL, Justice.

This is a suit to foreclose a land sale contract and to quiet plaintiff's title. Defendants, Everett and Helena Phipps, cross-complained asserting a superior title and prayed for a partition or foreclosure. Plaintiff appeals from a decree awarding the defendants Phipps a one-fourth interest in the land sale contract, establishing an equitable lien on the property, and ordering foreclosure.

The question presented is one of pleading and procedure arising out of the following facts. On September 13, 1960 plaintiff entered into a land sale contract whereby she agreed to sell and defendant, John M. Sherlock, agreed to purchase certain real and personal property at a price of $45,170.00. Contemporaneously with the execution of the contract plaintiff executed an assignment of a one-fourth interest in the contract to defendants, Everett and Helena Phipps. Defendant Sherlock made only one payment of $2,000 on the contract. Phipps received one-fourth of that amount.

Plaintiff brought suit to foreclose the contract. The complaint contained the following allegation:

'* * * That on or about the 13th day of September, 1960, plaintiff executed and delivered to defendants Everett R. Phipps and Helena S. Phipps an assignment of contract. That a copy of said assignment is hereto attached, and marked 'Exhibit B' and by this reference thereto made a part of this complaint as fully and completely as though set out in full herein.

'That said assignment among other things provides that said assignees by virtue of said assignment shall have one-fourth (1/4) interest in and to the contract hereinabove stated and marked as 'Exhibit A.' That such right, title or interest of Everett R. Phipps and Helena S. Phipps is inferior and subordinate to the right of plaintiff.'

The prayer of the complaint is that the interest of the defendants be foreclosed and that plaintiff's title be quieted against all the defendants. The pertinent parts of the assignment to the Phipps read as follows:

'IN CONSIDERATION of Ten and No/100ths--($10.00) Dollars to me in hand paid, the receipt whereof is hereby acknowledged I hereby assign, sell, transfer and set over unto EVERETT R. PHIPPS and HELENA S. PHIPPS, husband and wife, or the survivor thereof, their heirs and assigns, one-fourth (1/4) interest in and to that certain written Contract of Sale and in and to all moneys due or to become due thereon, * * * [describing the contract]. There is now due and owing upon said contract the sum of $45,170.00.'

Defendants Phipps filed an answer and cross-complaint which contained the following allegation:

'That defendants, Everett R. Phipps and Helena S. Phipps, rendered and furnished valuable services to the plaintiff at plaintiff's special instance and request and that as a direct result thereof, plaintiff became indebted to said defendants; that the agreed and reasonable value was and is $11,292.50; that as a direct result of said indebtedness and as security for said debt, plaintiff assigned, transferred for valuable consideration, to said defendants an undivided one-fourth (1/4) interest in that heretofore described real property, personal property, goodwill, business and contract of sale and the right to collect money and distribute the same in regard to the sale of said property and business; that $2,000 was collected and $1500 was distributed to plaintiff and $500 to defendants.'

Plaintiff filed her reply generally denying the allegations in the answer and cross-complaint.

In his opening statement, Mr. Fitzwater, attorney for plaintiff, explained the theory of plaintiff's case as it related to defendants Phipps, as follows: 'We contend that they [Phipps] had a right to a one-fourth interest in moneys to be received and once the purchasers failed to make their payments under the contract that there were no more rights in the contract as to Phipps. * * * It is our theory the contract is a personal property right, and the assignment passes a personal property right only. It doesn't pass any vested interest in the property. If that was such, it would have been--there would have been a deed to one-fourth interest, or whatever percentage there would have been. Passing by assignment, it passes the personal property rights to the moneys to be received, moneys due under the contract, and only that.'

From defendant's opening statement it appears that the assignment was made to the Phipps for services performed by Mr. Phipps in negotiating the sale of the property. Counsel put it this way: 'And as a result of his [Mr. Phipps] labors, and so forth, he was to be compensated and secured.'

In the presentation of plaintiff's case in chief counsel asked plaintiff to explain the circumstances attending the execution of the assignment to Phipps. The court sustained an objection to this evidence on the ground that plaintiff needed only to prove the execution and default of the contract and that the circumstances under which the assignment was executed could not be put in evidence as a part of plaintiff's case in chief. Defendants again objected when plaintiff questioned the attorney who had drafted the contract and assignment as to the discussion which took place at the time of the execution of the documents. The objection was sustained. The following colloquy discloses the basis for the court's ruling and counsel's explanation for offering the evidence:

'THE COURT: The objection will be sustained. You see, the point is, Counsel, I know what you have in mind and what you want to do, or try to do, but under the pleadings we can't go behind the instruments themselves.

'MR. FITZWATER: Your Honor, my attempt isn't to vary the instrument. It's the intent behind what the instrument was, is my contention. I'm trying to show to the Court what that intent was behind these instruments. That is the essence of the case, whether it's a mortgage--any type instrument--whether it's for security or what.

'THE COURT: But under these pleadings there isn't anything pled here----

'MR. FITZWATER: Well, the defendants set up their one-fourth interest in the property and by so denying that, it's my thought that we bring out the fact that they do not have a right to that, whether it be on a legal basis or the actual intent behind the instrument, or what.

'I would like to offer proof here of the intent behind the instrument; bring it in. If it's necessary to tie...