Lincoln County v. Fischer

• Citation: 216 Or. 421,339 P.2d 1084
• Parties: COUNTY OF LINCOLN, a political subdivision of the State of Oregon, Respondent, v. H. L. FISCHER, Blanche Fischer, and Spaulding Pulp & Paper Company, a corporation, Appellants.
• Decision Date: 20 May 1959
• Court: Supreme Court of Oregon

Page 1084

339 P.2d 1084

216 Or. 421

COUNTY OF LINCOLN, a political subdivision of the State of

Oregon, Respondent, v. H. L. FISCHER, Blanche Fischer, and Spaulding Pulp & Paper

Company, a corporation, Appellants.

Supreme Court of Oregon, Department 1.

Argued and Submitted Dec. 3, 1958.

Decided May 20, 1959.

William F. Lubersky, Portland, argued the cause for appellant Spaulding Pulp & Paper Co. With him on the brief were Koerner, Young, McColloch & Dezendorf, Paul D. Hanlon, and Phillips, Coughlin, Buell & Phillips, Portland.

David P. Templeton, Portland, argued the cause for the respondent. With him on the brief were A. R. McMullen, Newport, and Humphreys, Jones & Templeton, Portland.

Before PERRY, ^* C. J., and ROSSMAN, McALLISTER ^** and O'CONNEELL, JJ.

ROSSMAN, Justice.

This is an appeal by Spaulding Pulp & Paper Company, one of the three defendants, from the decree which the circuit court entered in this suit which was instituted January 7, 1955, by the plaintiff, County of Lincoln, to quiet its title to the quarter section of land described in the complaint. The challenged decree awarded the requested relief. The asserted cloud consists of a contract that the plaintiff and one of the defendants, H. L. Fischer, signed on February 8, 1944. The third defendant is the wife of H. L. Fischer. Hereafter, when we use the name of Fischer we will refer to H. L. Fischer. The contract provided for the sale of the quarter section by the plaintiff to Fischer for a price of $500, $110 of which was paid at the time of the execution of the contract and the balance was payable in ten annual installments of $39. None of the installment payments were made. June 21, 1945, the defendant Spaulding Pulp & Paper Company, to which we will hereafter refer as Spaulding, purchased Fischer's interest in the contract. In its answer Spaulding, which in 1952 had tendered to the county the entire balance of the unpaid purchase price, made counter claim for specific performance of the contract. The challenged decree quieted title in the county and rejected Spaulding's plea for specific performance. Spaulding alone has appealed.

The contract between the county and Fischer contained a time of the essence clause and gave the county option to declare the contract forfeited. Nothing other than the down payment of $110 was paid on the contract; but April 9, 1952, Spaulding, upon discovering that no installment payment had been made, tendered to the county the full amount due and to become due on the contract including interest. The tender ($581.56) was refused by the county on the ground that its amount constituted insufficient consideration. Prior to that time, and up to and including June 30, 1954, Spaulding had paid in full all taxes assessed by the county against the property. While some of the early tax statements were addressed to Fischer, those sent in the later period were addressed to Spaulding and its checks in payment thereof were accepted.

March 25, 1947, the Lincoln County court issued an order which purported to cancel the contract, but the order was not called to the attention of Spaulding until October 26, 1954, and service of the order was not attempted in the manner provided by ORS 275.220 which says:

'(1) In case of breach of condition or other default in performance of any contract made pursuant to ORS 275.180 or 275.200, the county court may, by order made and entered in its records, declare such breach or default and cancel such contract or enter into a new agreement in writing. If the contract is canceled, a certified copy of the order shall be served as a summons is served by the sheriff upon the holder of such canceled contract if he is found within the county, and if he is not so found, then by mailing it to him by registered mail at his last known address. * * *

'(2) Within 20 days after the service of the order of cancelation upon him, the holder of the canceled contract may appeal from such order to the circuit court * * *.'

Lincoln County had acquired title to the quarter section December 17, 1929, by a tax foreclosure proceeding. The circuit court held that the notice given by the county did not effect a cancellation.

Spaulding claims that the county court's order of March 25, 1947, by which the county attempted to cancel the contract was void. We have mentioned the fact that a copy of the order was not delivered to Spaulding until October 26, 1954. Spaulding urges that the contract was never canceled and that the plaintiff's suit is an attempt to effect a forfeiture.

The brief of Spaulding, as appellant, submits five propositions accompanied by supporting arguments. Their essence is that the county never canceled the contract and that Spaulding is entitled to its specific performance. The county argues that it canceled the contract. It also argues that equity will deny specific performance to a purchaser (1) when the contract has been in default for seven years, (2) when the contract contains a time of the essence provision and (3) when the market value of the property has greatly increased in the period of default.

The contract involving the land in suit was not an isolated transaction; to the contrary, the quarter section comprised only one parcel of many which Fischer bought from the county in 1943 and 1944. Similarly, it was only one of many which Fischer sold to Spaulding. At the time of the county's sale to Fischer one-third of the property in the county was off the tax rolls. The county during those years accepted payments from Fischer on his various contracts when he possessed sufficient funds whether the payments were timely made or not. Nowhere in the evidence is there an intimation that the provision requiring the installment payments to be made on a designated day was strictly enforced. Although Fischer stated on direct examination by the defendant that he was aware that he had not completed his payments on 'the contract,' he apparently referred thereby to the fact that when he later left Oregon he still owed a balance of several hundred dollars on all of his contracts. He testified on cross examination by the plaintiff that he was under the impression that he had made installment payments on this particular contract.

Since the exact balance due on all of the contracts does not appear but was limited by Fischer's testimony to several hundred dollars, it seems that he had fully discharged many of the contracts before the final payment dates which were sometime in 1953 or 1954 and that he was not bound to discharge all of them before those dates.

At the time of the execution of the contracts the county desired to sell the many properties which it had acquired through tax foreclosure proceedings and thereby return them to the tax rolls. Since purchasers were hard to find, the county was willing to sell this quarter section for $500 although it is now worth $50,000 or possibly more. The county had been unable to find a purchaser for the quarter section for $1,000 only the year before the defendant purchased it. The trial judge found that the contract was reasonable at the time it was made. The plaintiff does not challenge the finding. The trial judge also found that the contract was not properly canceled by the county.

Although Fischer bought the land for speculative purposes he did not do so by means of an option. He entered into a binding bilateral contract with the county which bound him to pay the purchase price. Fischer's delays in payment both on this contract and the others were not the result of speculative motives. That is, he was not waiting to see if the value of the land increased before he paid, but rather he waited until he could get the needed cash through selling properties to buyers such as Spaulding.

The foregoing is a brief statement of the facts. We are now confronted with the question as to whether the county effectively canceled the contract before Spaulding in 1952 made tender of the full purchase price. We think that the contract was fair in its terms when it was made.

After the circuit court had concluded that the contract had not been canceled it found that Spaulding was not entitled to specific performance, because Spaulding's conduct did 'not square with any principles of good sound business.' Thus, the court felt that neither party could ask its aid to enforce the terms of the contract and decided to leave them where they were 'at the time of the execution of the original contract.' On that basis the trial court declared that the county was the sole owner of the property and granted to it the relief which it sought. It ordered the county to return the tax payments to Spaulding, but no mention was made of a return of the down payment. We do not believe that the court's action did no more than return the county to its former status. Since it quieted the county's title it thereby improved the county's condition materially.

In effect, the challenged decree recognizes in a court of equity power to enforce a forfeiture without giving the vendee opportunity to make his default good. Epplett v. Empire Investment Company, 99 Or. 533, 194 P. 461, 194 P. 700, 703, holds that where a land contract contains provisions that time is of the essence and that the vendor has an option to declare a forfeiture, a declaration of a forfeiture which was made without notice is a breach of the contract by the vendor which entitles the vendee to rescind. The court phrased the rule as follows:

'* * * The right to declare a forfeiture can, when arising out of contracts like the one presented here, be exercised either at or after the maturity of any installment; but, whether exercised at or after maturity, the right does not exist and cannot be lawfully exercised unless reasonable notice has been previously given. * * * the right to forfeit cannot be fully exercised unless: (1) The vendor gives reasonable notice; and (2) the purchaser fails to pay within the time fixed by...