Magness v. Kerr

• Decision Date: 05 April 1927
• Citation: 121 Or. 373,254 P. 1012
• Parties: MAGNESS v. KERR ET AL. [*]
• Court: Oregon Supreme Court

254 P. 1012

121 Or. 373

MAGNESS v. KERR ET AL. ^[*]

Supreme Court of Oregon

April 5, 1927

In Banc.

Appeal from Circuit Court, Benton County; G. F. Skipworth, Judge.

Suit by R. N. Magness to quiet title against Henry A. Kerr and another. From the judgment, plaintiff appeals. Affirmed.

Frank Holmes, of McMinnville, for appellant.

L. E Lange and Earl A. Nott, both of McMinnville, for respondents.

RAND, J.

This is a suit in equity to quiet title to a small tract of land consisting of 1.44 acres, which, on May 31, 1918, was sold and conveyed by defendants to the Equity Queen Canning Company, a corporation, by deed containing the following provision, to wit: "Provided and this deed is made upon this condition, that should said premises at any time cease to be used for co-operative purposes, they shall, upon the refunding of the purchase price and reasonable and equitable arrangement as to the disposition of the improvements, revert to said grantors." The consideration recited in the deed was the sum of $100, which was paid by the issuance and delivery to defendants of capital stock of the corporation of the par value of $144. After obtaining said deed, the corporation entered into possession of the premises, erected a cannery thereon, and operated the same for a short period and then became insolvent, and has since been dissolved. The premises in question were sold at an execution sale made pursuant to a decree foreclosing a mortgage which had been given by said corporation to the bank of Dayton, and plaintiff was the purchaser at such sale, and has received a sheriff's deed therefor. Plaintiff brought this suit to quiet title to said premises.

The defendants answered, alleging, as a defense to the suit, that the premises were not used, and never had been used, for co-operative purposes, and that by reason thereof the condition contained in the deed had been breached, and that the estate granted as limited by the deed had determined, and that the property described in the deed had reverted to, and was the absolute property of, the defendants, and by their answer they offered to pay whomsoever should be entitled to receive the same the amount of the consideration paid as the consideration for the deed, and also whatever sum the court should find to be the value of the improvements which had been placed thereon by the corporation and plaintiff, and at the trial expressly consented to the removal by plaintiff of all of the improvements thereon.

The case was tried upon an agreed statement of facts, with some additional testimony upon the part of the defendants. All of the material facts appear from the stipulation. As so stipulated, it appears that, prior to the execution of the deed to the corporation, the premises in question had been used by plaintiff in conjunction with defendants and others for the operation of a co-operative cannery, and that, in incorporating the corporation, both plaintiff and the defendant H. A. Kerr were corporators, and that, upon its organization, plaintiff became president and a director thereof, and that from March 5, 1918, until on or about July 30, 1918, said defendant Kerr was also one of the directors and the secretary of said corporation, and that, while he was one of the directors and secretary, the corporation borrowed from the bank of Dayton the sum of money for which the mortgage was given.

It is so stipulated that on May 31, 1921, the defendants executed and delivered to J. A. Hewitt and M. J. Hewitt a deed conveying their reversionary interest in said premises and that, on February 1, 1926, the said Mary J. Hewitt, her husband J. A. Hewitt having died, reconveyed the same to the defendants.

It is also stipulated that on October 3, 1923, the defendant Henry A. Kerr, on his own petition, was adjudicated a bankrupt, and on November 19, 1924, was duly discharged in bankruptcy, and that in the bankruptcy proceedings he made no mention in any way of any interest or estate in the premises in question. No objection is raised as to the validity of the decree or as to the regularity of the proceedings under which the sale was made to plaintiff. It was also stipulated that no tender of any sum of money by defendants has ever been made either to plaintiff or to the corporation in repayment of the consideration received by the defendants for their deed to the corporation, but the answer contained the offer to which we have referred.

The court found that the sole consideration paid by the corporation for said deed was the issuance and delivery to plaintiff of capital stock of the corporation of the par value of $144, and that this stock has no value. The court also found that the premises had not been used by the corporation or by plaintiff for any co-operative purpose, and that, because of the limitation contained in the deed, the property had reverted to defendants, and that the defendants and not plaintiff are the owners thereof, and entered a decree accordingly giving to plaintiff the right to remove all of the improvements from said premises.

It is plaintiff's contention that the clause contained in defendants' deed to the corporation to which we have referred constitutes nothing more than a mere condition subsequent, and that, under the doctrine announced in School District v. Wallowa County, 71 Or. 337, 142 P. 320, and Wagner v. Wallowa County, 76 Or. 453 148 P. 1140, L. R. A. 1916F, 303, the transfer by defendants to the Hewitts of their supposed interest in the premises resulted in the defeat and destruction of the condition, and vested the absolute ownership of the premises in plaintiff, while defendants contend that the words used in the deed created not only a condition, but a limitation, and for that reason the case does not come within the rule followed in either of the cases cited.

In those cases the same grantors had first conveyed certain real property to Wallowa county subject to a condition expressed in the deed, which was that the property so conveyed to the county should be used as "a site, or a portion of a site, for a county high school and buildings connected therewith and for no other purpose; and, if not so used for such purpose, the title to said real estate shall revert back to the grantors herein." Following the conveyance, the county established a county high school upon the property, but, just before a local initiative measure to abolish the county high school was to be voted upon by the people of the county, the grantors, in anticipation of the abolishment of the county high school, which in fact was abolished at said election, gave another deed conveying the same property to school district No. 21, with a like condition limiting the use under the second deed to a district high school.

In the case first cited the school district sought, by an action in ejectment, to recover the property from the county, and, upon appeal from a judgment in favor of the county, it was in effect held that the action could not be maintained by the district for breach of the condition by the county, because the right of a conditional grantor before breach and re-entry was not assignable. In the last case cited the conditional grantors themselves, by an action in ejectment, sought to recover the premises from the county because of the county's breach of the condition contained in the deed and it was in effect held that, the grantor's right to enter for breach of a condition not being assignable, a deed purporting to convey such right was not only a nullity, but that an attempted conveyance of the right constitutes a waiver of the condition contained in the deed, and results, not only in defeating the condition itself, but also in determining the grantor's possibility of a reverter. In both cases the language of the deed...