Multnomah County v. Title Guarantee & Trust Co.

• Decision Date: 10 April 1905
• Citation: 80 P. 409,46 Or. 523
• Parties: MULTNOMAH COUNTY v. TITLE GUARANTEE & TRUST CO. et al.
• Court: Oregon Supreme Court

80 P. 409

46 Or. 523

MULTNOMAH COUNTY v. TITLE GUARANTEE & TRUST CO. et al.

Supreme Court of Oregon

April 10, 1905

Appeal from Circuit Court, Multnomah County; John B. Cleland, Judge.

Action by Multnomah county against the Title Guarantee & Trust Company and others. From a decree for plaintiff, defendants appeal. Reversed.

This is a suit to set aside and cancel a compromise agreement or settlement of a controversy between the plaintiff and the defendants concerning the validity of certain tax certificates held by the plaintiff against block 178 in the city of Portland, and 80 acres of land in the Quinn donation land claim, in or near that city. The property was assessed to P.A. Marquam for the year 1894, and to his successor in interest, the defendant trust company, for the years 1895 to 1897, inclusive. The taxes for these years--amounting, in all, including penalties and costs, to about $25,000--were not paid, and the land was sold to the plaintiff in 1899 under a warrant for the collection thereof. The defendant trust company thereafter commenced suit to quiet its title to the premises. The county answered, setting up the tax proceedings and the purchase of the land by it, and obtained a decree in its favor. From this decree the trust company appealed. Pending the appeal, and on December 12, 1900, the defendant Ross, trustee, who had in the meantime succeeded to the title to the property, made to the board of county commissioners of the plaintiff a written proposition to compromise the pending litigation concerning the plaintiff's title and rights under the tax certificates and also a dispute or controversy between him and the plaintiff as to the validity of the taxes levied against the property for the years 1898 and 1899, which in the meantime had become delinquent, and the land had been sold and purchased by the county. The board of county commissioners after consideration of the matter, deeming the proposition of Ross to be for the best interests of the county, accepted it and caused to be entered in their journal an order that, upon the payment by Ross of $15,774.53 and the costs of the pending litigation, "all the taxes, tax sales, or tax liens, due or held by the county for each and every year prior to 1900 be, and the same are hereby, satisfied and canceled, and that each and every one of the tax certificates held by the county against said property for each and every year prior to 1900 be canceled and surrendered up; it being understood that this compromise and settlement includes satisfies, and discharges all claims of the county for taxes of whatsoever nature prior to the year 1900." Relying upon this settlement or compromise, and assuming that it was valid, Ross paid to the county the amount of money agreed upon, and caused the appeal in the suit brought by the trust company against the county to quiet its title to be dismissed, and the several tax certificates or liens were by the county canceled of record. Two and one-half years or more thereafter the board of county commissioners of the plaintiff made an order attempting to rescind the compromise and settlement on the ground that it was made "without jurisdiction and was illegal and void." This suit was afterwards brought to cancel and annul such settlement, without returning or offering to return to the defendants the amount of money paid by them in reliance thereon, and without restoring or attempting to restore them to the position they occupied prior to such settlement. The complaint sets out in detail the proceedings before referred to, and avers that many of the statements contained in the proposition of Ross, upon which the settlement was based, were and are untrue, and that the order of the board of county commissioners includes and attempts to cancel a large amount of taxes and tax certificates not mentioned in the proposition of Ross, nor involved in the pending litigation between the county and the defendants, and were neither irregular nor invalid. The prayer is for a decree against defendants for taxes, costs, and penalties against the property, less the amount paid on the compromise agreement, canceling all the entries in the records of the county, showing satisfaction of such taxes and tax certificates, and enjoining and restraining the defendants from claiming or asserting the illegality or invalidity of the right or title of the county in the land acquired under the tax proceedings. A demurrer to the complaint was overruled, and, the defendants declining further to plead, a decree was entered in favor of plaintiff as prayed for, except that the court declined to require the defendants to pay and satisfy the taxes against the property. From this decree the defendants appeal.

Wm. A. Munly, for appellants.

Charles H. Carey, for respondent.

BEAN, J. (after stating the facts).

The grounds upon which the plaintiff bases its right to repudiate and rescind the compromise or settlement between its board of county commissioners and the defendants are mainly as follows: First, the board had no authority to make the agreement or settlement, because (a) no such power is conferred upon it by law; (b) other public corporations besides the county, such as the port of Portland, the city of Portland, and the school district, had interests in the tax certificates, which the county could not surrender or dispose of; and (c) the act authorizing the county to purchase property at a delinquent sale provides that it shall hold the title subject to redemption, thus impliedly prohibiting the taxpayer from relieving himself from the effect of the sale in any other manner; second, the compromise included taxes and tax certificates not involved in the suit then pending between the plaintiff and the defendants, and which were not mentioned or referred to in the proposition of Ross for settlement; and, third, the offer or proposition of Ross contained statements and representations which were not accurate.

It cannot be doubted, we think, that the agreement between the board of commissioners and the defendants to compromise or settle the controversy or dispute concerning the tax certificates held by the plaintiff, and the litigation then pending in reference thereto, is a valid and binding compromise and settlement, in view of what has been done under it, and the impossibility of restoring the parties to their former positions and rights, if the county commissioners had power to make it . There was at the time a bona fide dispute as to the validity of the taxes and tax certificates, and as to the rights of the county thereunder. A large part of these certificates were actually in litigation, and the validity of the others was denied. There was therefore sufficient consideration to support the compromise agreement. Smith v. Farra, 21 Or. 395, 28 P. 241, 20 L.R.A. 115. There is no charge that it was fraudulently made, but it was made in good faith, and has been executed. The money which the board of commissioners agreed to accept in full satisfaction of the rights of the plaintiff has been paid and retained. The appeal of the defendants then pending has been dismissed, and the decree of the circuit court become final. It is therefore too late for the county alone to repudiate the contract. The rights of the parties have become fixed, and they cannot be unsettled by one alone. If the plaintiff could rescind at all, it could not be done without restoring to the defendants what it had received under the agreement, and putting them in the position they were before the agreement was made--a manifest impossibility, as their rights under the then pending appeal cannot be restored. It would be unconscionable, therefore for the plaintiff, if the board of commissioners had power to make the agreement, to retain the fruits thereof, and, after the appeal of the defendants had been dismissed, and the decree of the circuit court adjudging the certificates to be valid had become final, to absolve itself from the burdens and obligations of the contract. Nor does the fact that the compromise settlement or agreement included taxes and tax certificates not referred to in the proposition of Ross, nor involved in the pending litigation, alter the question. In making the settlement the county commissioners were not acting as a court, but as a mere financial or business agent of the county; and the contract actually made by them with the defendants, if they had power to make it, is binding, in the absence of fraud, although it may include matters outside the proposition of Ross and the pending litigation. Ross' petition was a mere proposition for a settlement of the controversy between him and the county, stating the terms upon which he was willing to make it. It was nothing more than merely opening negotiations on the subject, and the result of such negotiations is to be ascertained from the contract as actually made, and not from the initiatory proposition therefor. The question is not to be determined as if we were considering a judgment or decree of a court outside the issues, or an award of arbitrators outside the contract of submission, but, rather, as an ordinary contract or agreement between parties. County commissioners in transacting the business of the county, and in the care and management of its property and funds, do not act as a court, but as a financial or managing agent of the county, precisely as an agent of a private corporation in the management of its financial concerns, and all contracts made by them within the power conferred are subject to the same rules. Stout v. Yamhill County, 31 Or. 314, 51 P. 442; Frankl v. Bailey, 31 Or. 285, 50 P. 186. Nor is it of any consequence that the statements in the written proposition of Ross for the settlement as to the amount...