Nelson v. Hampton

• Decision Date: 01 March 1956
• Citation: 294 P.2d 329,206 Or. 573
• Parties: Henry A. NELSON and Thomas Patterson, partners doing business as Nelson & Patterson, Respondents, v. Lewis Warner HAMPTON and Bessie D. Hampton, Appellants.
• Court: Oregon Supreme Court

Page 329

294 P.2d 329

206 Or. 573

Henry A. NELSON and Thomas Patterson, partners doing business as Nelson & Patterson, Respondents, v. Lewis Warner HAMPTON and Bessie D. Hampton, Appellants.

Supreme Court of Oregon, Department 2.

Argued and Submitted Dec. 8, 1955.

Decided March 1, 1956.

W. C. Winslow, Salem, argued the cause and filed briefs for appellants.

Robert A. Leedy, Portland, argued the cause for respondents. On the brief were Barzee, Leedy & Keane, Portland.

Before WARNER, C. J., and TOOZE, LUSK and BRAND, JJ.

TOOZE, Justice.

This is a suit for specific performance of a contract to sell and deliver logs, for an injunction, and for damages, brought by Henry A. Nelson and Thomas Patterson, copartners, dba Nelson & Patterson, as plaintiffs, against Lewis Warner Hampton and Bessie E. Hampton, husband and wife, as defendants. A decree was entered denying specific performance, cancelling the contract, and awarding damages to plaintiffs. Defendants appeal.

The contract in this case was entered into between the parties on February 3, 1951, and by its terms defendants agreed to sell and plaintiffs agreed to purchase all the merchantable fir and hemlock logs delivered by defendants to plaintiffs from defendants' real property described as lots 1, 2, and 3, in sec. 19, township 7 south of range 9 west of the Willamette Meridian, Lincoln county, Oregon. Defendants specifically agreed to deliver 1,000,000 feet of said merchantable fir and hemlock logs. The falling and bucking was to begin within two weeks of the signing of the contract, and all the $1,000,000 feet were to be delivered by defendants on or before October 30, 1951, weather conditions and Acts of God permitting. Plaintiffs agreed to and did advance $5,000 to defendants so that the operation might begin, and this amount was to be repaid by deducting $5 per thousand feet from the price to be paid to defendants as the logs were delivered. The contract also gave to plaintiffs a first right and option to purchase logs from any other timber owned by defendants in Lincoln county; it further provided that if the defendants did not log the balance, of the timber and desired to sell it, plaintiffs were given the exclusive right for 10 days within which to purchase the remaining timber owned by defendants.

The complaint charged in substance that defendants willfully and arbitrarily failed and refused to fulfill the duties imposed upon them by this agreement in that they made delivery of less than 200,000 feet of logs during 1951 and less than 15,000 feet during 1952, in August of which year this suit was commenced. It was further alleged that defendants were selling logs from this land to other persons, in direct violation of the agreement.

Plaintiffs sought $20,000 damages for the alleged breach of the contract and also asked for a temporary injunction during the pendency of this suit, to be made permanent at its conclusion, and for specific enforcement of the contract. The request for equitable relief was based primarily upon the contention that, both at the time the contract was entered into and at the time the suit was brought, logs were scarce and could not be 'freely purchased on the open market,' and that plaintiffs needed these logs to insure the continuity of their operation during the summer and as a means of accumulating 'cold decking' for winter operation. Closely allied to this contention was the further claim that sales to third persons worked an irreparable injury upon plaintiffs and dangerously diminished the security to which they were entitled for the money that they had advanced to defendants. As a further ground entitling plaintiffs to equitable assistance, it also was alleged that defendants were financially irresponsible.

For an answer to the complaint defendants affirmatively alleged that plaintiffs had breached the contract in numerous stated particulars, and for that reason were not entitled to any of the benefits under it. Defendants asked the court for an accounting to adjust the financial rights of the parties and for a cancellation of the contract.

A temporary injunction against further sale of timber by defendants to third parties during the pendency of the suit was granted. A trial was then had, at the conclusion of which the court entered a decree to the following effect: (1) the injunction was dissolved; (2) the contract was cancelled; (3) specific performance was denied; (4) damages of $2,544.50 were assessed against defendants because of their breaches of the contract; (5) the sum of $4,515.39 was adjudged owing to plaintiffs on account of the moneys advanced by them to defendants; and (6) costs were awarded against defendants.

For their first assignment of error defendants contend that the court erred in entering judgment in favor of plaintiffs and against defendants in the several sums noted above and in not dismissing plaintiffs' complaint. In support of this assignment of error defendants urge upon us the proposition that when the court denied specific performance and other equitable relief to plaintiffs, it was without jurisdiction to award damages to plaintiffs. They rely upon the well-established rule in this state that an equitable right must not only be averred but also must be established by evidence as a prerequisite to the determination or adjudication by a court of equity of a purely legal matter. Barnes v. Eastern & Western Lumber Co., Or., 287 P.2d 929, 956; Barber v. Henry, 197 Or. 172, 183, 252 P.2d 802; Walker v. Mackey, 197 Or. 197, 207, 251 P.2d 118, 253 P.2d 280; Powell v. Sheets, 196 Or. 682, 696, 251 P.2d 108; Ward v. Town Tavern, 191 Or. 1, 228 P.2d 216, 42 A.L.R.2d 662.

At the outset, we note the fact that defendants did not demur to plaintiffs' complaint in equity, nor did they at any point throughout the trial make a demand that the matter be transferred to the law side of the court where the question of damages might be determined by a jury. In the absence of a demurrer, the complaint must be construed most liberally in favor of plaintiffs. Liberally construed, it states a good cause of suit in equity. It also contains the necessary allegations to sustain an action at law for damages. However, defendants treated the case as a suit in equity, and they themselves prayed for equitable relief, an accounting, and cancellation of the contract. Barnes v. Eastern & Western Lumber Co., supra.

Moreover, after a careful review of all the evidence in the...