Libel v. Pierce

• Decision Date: 01 May 1934
• Citation: 147 Or. 132,31 P.2d 1106
• Parties: LIBEL et ux. v. PIERCE.
• Court: Oregon Supreme Court

31 P.2d 1106

147 Or. 132

LIBEL et ux. v. PIERCE.

Supreme Court of Oregon

May 1, 1934

Department 2.

Appeal from Circuit Court, Multnomah County; James W. Crawford Judge.

Action by J. O. Libel and wife against H. A. Pierce. From an adverse decree, defendant appeals.

Reversed and rendered.

G. E Hamaker, of Portland, for appellant.

Arthur I. Moulton, of Portland (Lord, Moulton & Krause, of Portland on the brief), for respondents.

CAMPBELL Justice.

Plaintiffs owned a certain tract of real estate incumbered with mortgages adjacent to the Columbia Boulevard near Portland Or., hereinafter referred to as the Columbia Boulevard property. On this tract of land was located a combination dwelling house and store building, a stock of merchandise, and a gasoline service station. Defendant owned two lots with houses thereon, incumbered with mortgages, in Portland. It appears that on or about May 4, 1931, they entered into a written agreement to exchange these properties subject to the encumbrances thereon. In plaintiffs' agreement to sell, the exception of the encumbrances reads as follows: "Free and clear of all encumbrances except first mortgage of $4,000 with interest at 7% per annum due in 1933 and a second mortgage of $1,000 due in 1932 at 6% per annum."

In addition to the property defendant was to convey to plaintiffs, he was to pay the sum of $1,000, and $317.80 that plaintiff had advanced for taxes, in cash. On May 9, 1931, plaintiffs executed a general warranty deed conveying the property described in their contract of exchange, to defendant, warranting the title against all encumbrances, "except a first mtg. to the Penninsula Security Company in the sum of $4,000 with interest thereon at 7% per annum payable quarterly; and a 2nd mtg. to C. O. Barnes and Mary E. Barnes of Goldendale, Washington in the sum of $1,000 due in April 1932 with interest thereon at 6% per annum."

Defendant was unable to raise the amount of cash agreed upon and on June 3, 1931, conveyed by deed absolute on its face, but as security for that sum, lot 7, block 13, Loveleigh, an addition to the city of Portland, Multnomah county, Or. The consideration stated in the deed was $3,500. On the same day plaintiffs executed a contract agreeing to reconvey said premises to defendant, in consideration of "Thirty-five hundred dollars *** $2,180.20 in cash the receipt whereof is hereby acknowledged, and the remainder in one installment *** $1317.80 with interest at 7% per annum *** on or before the 3rd day of Sept 1931." Time was made of the essence of the contract, and in case the payment was not made promptly defendant was to forfeit all right and interest in or to the property including the amount paid. Defendant remained in possession of said house and lot. Notwithstanding that the contract stated that $2,180.20 had been paid, in fact no money had been paid in the transaction. Shortly prior thereto defendant entered into possession of the Columbia Boulevard property together with the personal property located thereon. He thereupon proceeded to dispose of the personal property from which he received the sum of approximately $900. Defendant failed to pay any part of the $1,317.80 when it was due, or at any other time, so on January 8, 1932, plaintiffs began this suit for strict foreclosure of said contract of sale.

To plaintiffs' complaint, defendant filed an answer denying all the material allegations in said complaint except that he admitted having entered into the contract as alleged in the complaint. For a further and separate answer, he admitted entering into the contract and alleges in effect that because plaintiffs did not exercise their option to declare the contract void, and forfeit the money paid thereon immediately upon the maturity of the said option, that plaintiffs had no right to commence this suit without first having notified defendant that they (plaintiffs) intended to insist on the clause in the contract making time of its essence; that because plaintiffs did so begin this suit defendant now exercises his option to declare all amounts heretofore paid on said contract a lien on said property, and asks that the said sum of $2,180.20 be declared by the court a lien against said property in favor of defendant and that it be foreclosed and that defendant have judgment for that sum.

For a further and separate answer and by way of counterclaim, defendant alleges in effect that he was defrauded by reason of the alleged representations, made by plaintiffs, that the said $4,000 mortgage would be due in 1933, when in truth and in fact said mortgage was past due at the time plaintiffs made the contract. He further alleges that he was defrauded by the alleged false representations of plaintiffs that the $1,000 mortgage would not be due until April, 1932, when in truth and in fact said mortgage was due March 23, 1932; that the owner of the $4,000 mortgage foreclosed the same and the property was sold at sheriff's sale on February 1, 1932; that the defendant was damaged thereby in the sum of $2,500, for which he asks judgment.

The court found against the defendant on his counterclaims and entered an interlocutory decree of strict foreclosure giving defendant...