Kohler v. Gilbert

• Decision Date: 27 May 1959
• Citation: 339 P.2d 1102,216 Or. 483
• Parties: Elmer A. KOHLER, Respondent, v. Joseph L. GILBERT and June Doe Gilbert, Husband and Wife, Appellants.
• Court: Oregon Supreme Court

Page 1102

339 P.2d 1102

216 Or. 483

Elmer A. KOHLER, Respondent, v. Joseph L. GILBERT and June Doe Gilbert, Husband and Wife, Appellants.

Supreme Court of Oregon.

Argued and Submitted May 4, 1959.

Decided May 27, 1959.

James C. Goode, Eugene, and Martin P. Gallaher, Ontario, argued the cause for appellants. With them on the brief were Gallagher & Gallagher, Ontario, and Harris, Butler, Husk & Gleaves, and Robert W. Hill, Eugene.

William D. Cramer, Burns, argued the cause for respondent. With him on the brief were Taylor & Miller, Gold Beach, and Cramer & Gronso, Burns.

Before McALLISTER, C. J., and ROSSMAN, LUSK, WARNER, PERRY, CRAWFORD and MILLARD, JJ.

MILLARD, Justice pro tem.

This is an appeal by defendants from a decree of the Circuit Court of Malheur County wherein a warranty deed, bill of sale, and so-called 'defeasance agreement' were construed to be an equitable mortgage. Plaintiff was further decreed to be the owner of certain realty covered by said mortgage, and in connection therewith, in effect it was held that a half interest in said realty deeded by plaintiff's former wife, Dale G. Kohler, to defendant Joseph L. Gilbert, was by operation of a resulting trust, vested in plaintiff. The decree further provided for an accounting by the mortgagee and thereafter allowed plaintiff one year in which to redeem.

From a careful review of the entire transcript it appears that plaintiff, who was an inexperienced rancher, purchased a cattle ranch in 1944 in Jordan Valley, Malheur County, trading therefor equities which he valued at about $60,000, and assumed mortgages totaling about $40,000. He then added two tracts which he purchased from Malheur County on contract. On taking possession he ill-advisely sold off the cattle, numbering about 130 head, in order to pay off one mortgage, leaving two mortgages for $21,000 and $5,000, respectively. Not then having any cattle, he leased the place, which action eventually resulted in a judgment against him for $1,400. For fear of losing his range rights, which were in jeopardy, he attempted a partnership with one Alcorn, which culminated in a lawsuit and judgment against him for $15,000. Plaintiff was desperately in need of money to pay the judgment and mortgages. He also was in like need of money to place cattle on the ranch so as to save his grazing rights. In short, plaintiff was faced with the old adage familiar to farmers generally, to the effect that the larger the ranch, the longer you delay operation, the quicker you go broke.

In his desperate search for finances, plaintiff, in March 1952, met defendant Joseph L. Gilbert, hereafter referred to as Gilbert, a logger of Lebanon, Oregon, who thereafter became his friend and 'angel' advancing him various sums of money, amounting on August 13, 1952 to $24,189.54. In the interim plaintiff's wife, Dale G. Kohler, on July 8, 1952, secured a decree of divorce against him, which decree awarded her a one-half interest in the ranch, against which was charged one-half of the monies advanced by Gilbert up to June 25, 1952. Plaintiff appealed the decision to this court. On August 13, 1952 plaintiff executed a mortgage in favor of Gilbert to cover advances made to that date and future advances, covering all of plaintiff's interest in the realty which was stated as 'constituting not less than an undivided one-half interest therein.'

In addition to his other troubles, plaintiff was now faced with operating the ranch jointly with his former wife. He attempted, through his attorney, to purchase her interest, but the best offer he could obtain was $33,000. He then discussed this problem with Gilbert, who promised to assist him. With regard to this, plaintiff testified as follows:

'He promised to try to help me to settle with my wife, which we were in divorce litigation, so she would be out of the picture and we wouldn't have no problems involving her.'

This testimony was never denied. Further, it appeared plaintiff's attorney, Bardi Skulason, had discussed the matter with Mr. Butler, defendants' attorney, and asked him to attempt a settlement, and a few days before the signing of the defeasance agreement Gilbert told plaintiff that an agreement had been reached. Further, the so-called defeasance agreement by its terms referred to the right of plaintiff to purchase from Gilbert all his right, title and interest 'now or during said period of time obtained or acquired by Gilbert' in and to the realty and further required plaintiff to dismiss his appeal in the divorce case, the effect of which was to clear the title of the land to that extent.

Because of the condition of the prior mortgages and judgment and threatened foreclosure on account of the depreciated condition of the ranch, a meeting was arranged between the parties and their attorneys whereby plaintiff, by warranty deed and bill of sale, ostensibly conveyed his interest in the realty and the personalty on the ranch, including his personal effects, to Gilbert, and at the same time the so-called defeasance agreement, prepared by Mr. Butler, Gilbert's attorney, was executed after having been corrected at the instigation of plaintiff, as shown therein. This agreement is as follows:

'Witnesseth

'Recitals:

'A. Coincidently with the signing of these presents, and in consideration of the payment by Gilbert to Kohler of the sum of $6,000.00 in cash, receipt of which sum is hereby acknowledged by Kohler, Kohler has sold, assigned, transferred and conveyed to Gilbert all right, title and interest of Kohler in and to all real property owned by Kohler and situated in the County of Malheur, State of Oregon, by an instrument of transfer and conveyance a true copy of which is attached hereto, marked Exhibit A, and by this reference expressly made part of this memorandum agreement. It was intended by the parties hereto, by the execution of said transfer and conveyance, to vest in Gilbert the entire right, title and interest of Kohler in and to all properties owned by Kohler in said county and state and particularly all right, title and interest of Kohler in and to real properties more particularly described in said Exhibit A. Kohler represents and warrants that at the time of the execution of said transfer and conveyance he was the owner of an undivided one-half interest in and to all said real properties.

'B. Gilbert is the owner of certain personal properties located on said real properties and the parties intend that Gilbert shall place on said real properties certain cattle in order to establish a going ranch operation and to protect whatever grazing rights now attach to said properties.

'The parties have agreed that for the period of time hereinafter limited Kohler shall have the first right of refusal of purchasing from Gilbert the said real properties, all personal properties owned by Gilbert and now or hereafter within said period of time placed on said ranch properties, and desire to reduce to writing their said agreement in the manner following.

'Agreements:

'Now Therefore, in consideration of the foregoing premises which are expressly made part of this memorandum of agreement, it is agreed that Kohler shall have and is hereby extended and granted, for a period of 6 months from and after the date hereof, the first right of refusal to purchase from Gilbert all right, title and interest of Gilbert now or during said period of time obtained or acquired by Gilbert in and to the real properties in said Exhibit A described, together with all personal properties owned by Gilbert and placed on said real properties for purposes of assisting in the operation thereof, and all cattle placed on said real properties by Gilbert during said 6 month period, at an amount ( ) (Sgd.) J.L.G. (Sgd.) E.A.K., in cash in a sum not less than the total amount heretofore and now advanced and paid by Gilbert to Kohler including amounts invested or expended by Gilbert up to said time in or on account of said real and personal properties, and particularly including cattle, plus an amount equal to 10 per cent of all sums of money so advanced, invested or expended by Gilbert, ( ) (Sgd.) J.L.G. (Sgd.) E.A.K., the purchaser to assume and agree to pay and in all respects perform and carry out the terms and conditions of mortgages running to F. G. Salstrom and Gerda Salstrom, husband and wife, and to Earl Coulter and Helen Coulter, husband and wife, and to satisfy judgment in favor of Richard E. McGosh, now constituting a lien against said real properties, if the same shall remain unpaid at time of said sale; ( ) (Sgd.) J.L.G. (Sgd.) E.A.K. It is further agreed that in event that sale to any other person, firm or corporation is effected during this 6 month period, wherein the amount of the sale and purchase price of the above mentioned real properties shall exceed the sum of $100,000.00, free and clear of encumbrances attaching to said real properties, the amount of the same and purchase price allocated to said real properties, over and above the sum of $100,000.00 shall belong and be divided 80 per cent to Kohler and 20 per cent to Gilbert.

'In event Kohler fails to purchase all said real and personal properties, including cattle, within said period of 6 months from date hereof, or in case sale is not effected to any other person, firm or corporation during said period of time, this agreement shall automatically terminate and expire absolutely and Kohler shall have no further right, title or interest in or to this memorandum of agreement or in or to any of the rights or privileges hereby extended to him.

'Gilbert agrees to keep and maintain accurate records of all his expenditures on account of said real and personal properties, including cattle, during the life of this agreement, the parties acknowledging that the amounts expended by Gilbert by way of advances and payments to Kohler and others in or on account of said real and personal properties to the date hereof are within the knowledge...