N.W. Ice & Cold Storage v. Wemme

• Decision Date: 06 July 1938
• Citation: 159 Or. 415,80 P.2d 881
• Parties: NORTHWESTERN ICE & COLD STORAGE CO. <I>v.</I> E. HENRY WEMME ENDOWMENT FUND ET AL.
• Court: Oregon Supreme Court

159 Or. 415

80 P.2d 881

NORTHWESTERN ICE & COLD STORAGE CO.

v. E. HENRY WEMME ENDOWMENT FUND ET AL.

Supreme Court of Oregon.

Argued May 25, 1938.

Affirmed July 6, 1938.

Equity — Mistake

1. Generally, equity will not relieve against a mistake of law.

Equity — Mistake

2. Relief may be granted in equity against an inequitable result which otherwise would ensue because a course of conduct has been pursued in reliance on a mutual mistake or misapprehension of the law.

Contracts — Execution

3. A misrepresentation of the legal effect of an instrument may not be relied on by the signer to impeach the execution thereof as having been fraudulently induced.

Trust — Conveyance of real property

4. Where, in mutual reliance on power of testamentary trustee to convey realty belonging to trust, trustees leased property for 50 years for rental of $460.60 per month for first 158 months and $10 per year thereafter with option in lessee to purchase during term and apply rents paid on purchase price and lessee expended $200,000 in improvement of property, trustees would be required to execute deed pursuant to option provision of lease, notwithstanding that, under will, trustees had not been authorized to convey realty which belonged to corpus of trust.

                  Court's power to authorize sale of property contrary to
                provisions of trust, note, 77 A.L.R. 971
                  See, also, 26 R.C.L. 1283 (8 Perm. Supp., 5867)
                  65 C.J. Trusts, § 670
                

Department 1.

Appeal from Circuit Court, Multnomah County.

ALFRED P. DOBSON, Judge.

Suit for a declaratory judgment for construction of will and a declaration of right under a lease with option to purchase by the Northwestern Ice & Cold Storage Company against E. Henry Wemme Endowment Fund and others, and James R. Bain, district attorney of the county of Multnomah. Decree for plaintiff, and defendants E. Henry Wemme Endowment Fund and others appeal.

AFFIRMED.

Robert L. Sabin, Jr., of Portland, for I.H. Van Winkle.

Malarkey, Sabin & Herbing, of Portland (Samuel H. Martin of Portland, on the brief), for appellants.

Omar C. Spencer, in pro. per.

Maurice W. Seitz, of Portland (Frank S. Sever, of Portland, on the brief), for respondent James R. Bain.

KELLY, J.

This is a suit wherein a declaratory judgment or decree is sought. Certain provisions of the last will and testament of the late E. Henry Wemme, deceased, are involved and also a purported option set forth in two certain leases executed by the trustees of trust property set apart by said decedent in said last will and testament for purposes therein specified, as lessors, and plaintiff, Northwestern Ice & Cold Storage Company, a corporation, as lessee. The case is presented upon an agreed statement of facts.

The pertinent facts are as follows:

Said E. Henry Wemme died in Portland, Oregon, on December 17, 1914, leaving a last will and testament which was duly admitted to probate in Multnomah county, Oregon, wherein said testator devised in trust certain real property, located in Portland, Oregon, to three trustees therein named with instructions that said trustees form a corporation under the laws of the state of Oregon to take over said property and administer said trust. That thereafter and pursuant to the terms of said will the E. Henry Wemme Endowment Fund was duly incorporated and prior to the execution of the first lease in suit said real property, including the tract in suit herein, was by proper conveyance conveyed to said Endowment Corporation which at the time of the execution of the first lease in suit was and ever since has been the owner thereof.

"That after the Endowment Corporation became the owner of said property as aforesaid, there arose certain litigation over the trust clauses in said will, as a result of which the matter came before the Supreme Court of the State of Oregon in the case of Wemme v. First Church of Christ Scientists, reported in 110 Oregon, page 179, and thereafter pursuant to decree order and direction of said court the Circuit Court of Oregon for Multnomah County, appointed five trustees to manage and direct the carrying out of the terms of said will relating to said trust as interpreted by said Supreme Court and to act as directors of said Endowment Corporation. That Irene H. Gerlinger, Omar C. Spencer, Edgar H. Sensenich, E.B. McNaughton and O.C. Bortzmeyer are the present duly appointed and acting trustees of said trust and likewise directors of said Endowment Corporation.

That on the 29th day of January, 1926, the said Endowment Corporation, acting by and through the then duly appointed trustees, of whom the said present trustees are successors in trust, leased a part of said trust property, to-wit: All of the South 120 feet of block 72, East Portland, Multnomah County, Oregon, to the plaintiff herein for a term of ten years, beginning on the first day of December 1926, and ending on the last day of November, 1936. That in consideration of the obligation assumed by the plaintiff under said lease the Endowment Corporation granted to the plaintiff the exclusive right, privilege and option to purchase said premises at any time within five years after the first day of December, 1926, for the purchase price of fifty thousand ($50,000.00) dollars, the plaintiff to receive credit on said purchase price for certain rentals theretofore paid under said lease.

That at the time said lease and option was given as aforesaid said property was improved by a four story, concrete and mill constructed building, approximately 200 by 60 feet in dimension. That said building had formerly been used by said testator as a wool warehouse but had been vacant and unproductive for a number of years. That said building was not suitable or readily adaptable to ordinary commercial purposes and was for that reason unprofitable to the trust estate. That the value of said building and property at the time said lease was executed was not to exceed $50,000, the amount of the purchase price set forth in said lease. That said lease was a distinct benefit and enhanced the value of said trust estate and was so deemed and considered by said trustees and said Endowment Corporation.

That at the time said lease was executed it was contemplated between the parties that the plaintiff would at its own cost and expense remodel and improve said building and adapt the same for the purposes of a cold storage plant and warehouse and that thereafter the plaintiff relying upon said lease and the option to purchase said property thereunder expended in the permanent improvement and reconstruction of said building approximately $100,000.

That the plaintiff performed the obligations of said lease within the time therein stated and notified the Endowment Corporation and said then trustees that it desired to purchase said property in accordance with said option and was ready, able and willing to pay the purchase price as therein provided, upon receiving proper conveyances of said property, free and clear of encumbrances as of the time said lease was executed.

That the Endowment Corporation and said trustees were at said time willing and anxious, but unable to convey said property due to litigation then pending and desired to defer the transfer of said property until such time as said corporation and said trustees were in a position to convey said property by good and sufficient deed of conveyance as provided in said lease.

That in the latter part of the year 1929 the Endowment Corporation and the then trustees expressed their willingness to carry out the terms of the option contained in said lease and to execute conveyances of said property to the plaintiff as therein provided, but at said time plaintiff was advised of the doubtful right of the Endowment Corporation and the trustees to sell and convey said property and requested the then trustees to take such steps as might be necessary to definitely establish that right. That at that time said then trustees were not agreeable to taking such action, believing that they possessed the necessary right to convey. That thereupon as a temporary expedient and pending further deliberation as to the proper course to pursue in order to carry out the agreement and intention of the parties with reference to the transfer of said property a new lease was executed by and between Endowment Corporation, acting by and through its then trustees, and the plaintiff, wherein and whereby said Endowment Corporation leased said property to the plaintiff for a term of fifty (50) years. That said second lease was executed for the purpose and was intended to be an extension of said former lease and to preserve the rights of the plaintiff in and to said property as existed under and by virtue of said former lease, and that said second lease was executed between the parties with that intention and upon that understanding and agreement. * * *

That by the terms of said latter lease and for the purpose of preserving the rights and privileges of the plaintiff and to accord with the original understanding and agreement between the plaintiff, said trustees and said Endowment Corporation said lease gave to the plaintiff the exclusive right and privilege at any time thereafter and while the plaintiff was not in default thereunder to purchase said property for the consideration therein set forth. That the plaintiff has in all things kept and performed said lease on its part to be kept and performed and has heretofore notified the Endowment Corporation and said trustees and the defendant trustees that it desires to exercise said option of purchase and has offered to pay to the Endowment Corporation and said defendant trustees the purchase price provided for in said lease upon receiving adequate and proper conveyances conveying a fee simple title in said property to the plaintiff; that the said Endowment Corporation and the said defendant trustees are now willing and desirous to execute a conveyance thereof as originally agreed upon...