Lea v. Blokland

• Decision Date: 12 July 1927
• Citation: Lea v. Blokland, 122 Or. 230, 257 P. 801 (Or. 1927)
• Parties: LEA v. BLOKLAND ET AL. (REYNOLDS ET AL., INTERVENERS.
• Court: Oregon Supreme Court

257 P. 801

122 Or. 230

LEA v. BLOKLAND ET AL. (REYNOLDS ET AL., INTERVENERS.

Supreme Court of Oregon

July 12, 1927

In Banc.

Appeal from Circuit Court, Union County; J. W. Knowles, Judge.

Action by A. H. Lea against Andrew Blokland, sometimes known as Andrew Von Blokland, and another, partners doing business as Blokland Bros., and others, in which defendant Andrew Blokland filed a cross-complaint in equity, and Edna Reynolds and another intervened and filed a counterclaim. From the judgment, Andrew Blokland and another appeal. Affirmed.

On the 1st day of May, 1920, Edna Reynolds owned a tract of land in Union county, Or., embracing approximately 1,720 acres. On this date she and her husband, J. E. Reynolds, hereinafter called the interveners, entered into a written agreement with appellants Andrew Blokland and Mary A. Blokland, his wife whom we will hereinafter refer to as the defendants. Under the terms of this instrument the defendants undertook to purchase this land for a total consideration of $26,000, and to pay for the same in 10 equal installments of $2,600 each with interest on deferred payments at 7 per cent. per annum. The contract contained, among others, the following provisions:

"It is further agreed by and between the parties hereto that time is of the essence of this contract, and in case the parties of the second part (Bloklands) shall fail to make the payments as herein provided, and each of them, or fail to keep any agreements herein contained, then this agreement shall, at the option of either of the parties of the first part, be null and void, and all rights and interests created or then existing in favor of the parties of the second part as against the parties of the first part hereunder, or to any payment theretofore made thereon shall utterly cease and determine, and the right to the possession of the premises above described, and all other rights acquired by the parties of the second part hereunder, shall revert to and revest in the said parties of the first part, without any act of re-entry or any other act of the said parties of the first part to be performed and without any right of the parties of the second part to the return, reclamation, or compensation for money paid or received on account of the proposed purchase or sale of said property as above described, as fully and perfectly as if this contract and such payments had never been made, and all payments theretofore made on this contract are to be retained by and belong to the parties of the first part, as the agreed reasonable rent of said premises up to the time of the said default. And the said parties of the first part shall, in case of such default, have the right immediately or at any time thereafter, to enter upon the land aforesaid, without any process of law, and take immediate possession thereof, together with all the improvements and appurtenances thereon or thereunto belonging."

Immediately upon the execution of the instrument by Andrew Blokland and wife, they went into possession of the premises and continued in such possession until the latter part of the year 1924.

On the date of the execution of the contract, May 1, 1920, Andrew Blokland executed and delivered to Mrs. Reynolds a promissory note, signed "Blokland Bros., A. Blokland." This note in the principal sum of $2,600 was made payable on or before December 31, 1920, to the order of Mrs. Reynolds. It bore interest at the rate of 8 per cent. per annum from May 1, 1920, and represented the first payment of the purchase price. On May 1st of the following year Andrew Blokland executed and delivered to Mrs. Reynolds another note, signed "Blokland Bros." This instrument is in the principal sum of $4,238, and bears interest at the rate of 8 per cent. per annum. It represented the second installment due under the contract in the principal sum of $2,600, with accrued interest on the unpaid balance of the purchase price, or $23,400. This note was payable 6 months from date.

In June of 1924 these two notes were assigned to plaintiff, A. H. Lea. At this time both notes were long past due, and Blokland was in default as to each of them. On September 15, 1924, Lea brought an action at law against Andrew Blokland and Garret Blokland, as partners doing business under the firm name of "Blokland Bros.," for the balance due on these notes. In his complaint Lea admits a credit on the note of date May 1, 1920, in the sum of $1,000 paid January 8, 1921, also a credit in the sum of $1,291.44, paid on November 15, 1922, and a further credit in the sum of $200, paid on January 5, 1922, leaving a balance due on said note at the time of the filing of the complaint in the sum of $610.77. On the second note Lea admits a credit on account of interest paid November 1, 1922, in the sum of $508.56, and demands judgment in the aggregate sum of $5,482.04, with interest thereon at the rate of 8 per cent. per annum from the 15th day of September, 1924, together with attorney's fees.

To the complaint of the plaintiff, Lea, the defendant Andrew Blokland filed his amended answer and cross-complaint in equity, under section 390 of the Code (Or. L.). He set up the contract of May 1, 1920, and alleged that he went into possession of the property on the date of the execution of the contract and paid taxes and assessments levied thereon to the amount of $603. He then pleaded the making of the promissory notes mentioned in plaintiff's complaint, following this with a statement of the dates of payment and the amounts paid by himself on these notes. He further alleged his own breach of the terms of the contract of May 1, 1920, which occurred on December 31st of that year, when he defaulted in the payment of the first promissory note in the principal sum of $2,600. The answer and cross-complaint then proceeded on the theory that there had been some depreciation in the reasonable value of the property, which was the subject of the contract, between the date on which the contract was executed, to wit, May 1, 1920, and the date of the breach on December 31st of that year.

In this connection the defendant alleged that on the date of the making of the contract the lands were of the reasonable fair value of $26,000 and that on the date of the breach, to wit, December 31, 1920, they were of the value of $24,300; that as a result of this depreciation the interveners, Edna E. Reynolds and J. E. Reynolds, had been damaged in the sum of $1,700, and no more. He further alleged that because he had paid, under the contract, the total sum of 4,803, Mrs. Reynolds and her husband had received from them the sum of $3,103 over and above any damage resulting to or sustained by them as a consequence of the default and breach of the defendant Blokland.

The answer further alleged that the notes were negotiated after maturity and with notice of the defendants' defense thereto. Blokland further set up in his answer that to permit Mr. and Mrs. Reynolds to retain the sum of $3,103 would be unjust and inequitable; that Blockland was willing to do equity in the matter; that his default and breach of the contract were not the result of any unconscionable or inequitable conduct on his part, but were occasioned by his honest inability to carry out and perform the terms of his contract; that he was ready, able, and willing to surrender possession of the premises; that the legal title to the lands was still in Mrs. Reynolds, and that J. E. Reynolds and Edna E. Reynolds were necessary and proper parties to a full and complete determination of the matters involved in this suit and should be required to appear in the equity side of the cause, and asked that they be brought in as parties to the suit; that the action at law be enjoined and the case proceed in equity; that the notes and the alleged debt evidenced thereby be canceled; and that Blokland have a judgment and decree against Edna and J. E. Reynolds in the sum of $3,103 and against Lea for his costs and disbursements and for equitable relief.

An order was entered by the trial court transferring the case to the equity side of the court, directing that Edna Reynolds and J. E. Reynolds be required to appear in the suit. Thereafter Mr. and Mrs. Reynolds appeared and moved the court for an order requiring Mary A. Blokland to be made a party, whereupon she appeared.

The interveners, J. E. and Edna Reynolds, filed their further and separate answer and defense to the Bloklands' cross-complaint, and as a counterclaim asked for judgment against the defendants Andrew Blokland and Mary A. Blokland for the amount due on the contract, not including the notes, and for attorney's fees.

The Bloklands demurred to the affirmative allegations and counterclaim in the answer of the interveners, which was overruled by the court. The case proceeded to trial upon the issues as an equity suit, resulting in a judgment in favor of plaintiff, A. H. Lea, for the amount of the notes and reasonable attorney's fees, and in favor of the interveners, Edna E. Reynolds and J. E. Reynolds, for $10,098.33, with interest. on the brief), for appellants.

George T. Cochran, of La Grande (Cochran & Eberhard, of La Grande, on the brief), for respondent.

BEAN, J. (after stating the facts as above).

The defendants Blokland submit in their brief the following:

"When a vendee of lands under a contract reserving title in the vendor, and providing for periodic installment payments of the purchase price, in good faith breaches that contract, he is entitled to the equitable doctrine of unjust enrichment by which the vendor is precluded from recovering more than the actual damages sustained by him as a result of the vendee's breach" (citing, among other authorities, Prichard v. Mulhall, 127 Iowa, 545, 103 N.W. 774, 775, 4 Ann.

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