Newton v. Peay

• Decision Date: 25 June 1952
• Citation: 196 Or. 76,245 P.2d 870
• Parties: NEWTON et al. v. PEAY et al.
• Court: Oregon Supreme Court

Page 870

245 P.2d 870

196 Or. 76

NEWTON et al. v. PEAY et al.

Supreme Court of Oregon.

Argued and Submitted May 6, 1952.

Decided June 25, 1952.

Charles E. Boardman, of Bend, argued the cause and filed a brief for appellants.

Charles R. Marsch, of Bend, argued the cause and filed a brief for respondents.

Before BRAND, C. J., and HAY, LATOURETTE, WARNER and TOOZE, JJ.

TOOZE, Justice.

This is a suit for specific performance of a written contract for the sale of land and for an abatement of the purchase price, brought by Eldridge M. Newton and Dorothy Newton, as plaintiffs, against R. W. Peay and Alice A. Peay, as defendants. Defendants filed an answer denying all the material allegations of plaintiffs' complaint, and a cross-complaint praying a decree of strict foreclosure of the contract. A decree was entered dismissing defendants' cross-complaint and awarding damages to plaintiffs against defendants in the sum of $1,080, and decreeing that the purchase price of the lands described in the complaint be abated and reduced in the said sum of $1,080. Plaintiffs appealed, and defendants cross-appealed.

Plaintiffs' appeal is based solely upon the contention that the court erred in fixing the amount of damages to be used as the basis of an abatement of the purchase price. Defendant's cross-appeal is based upon the claim that, under the evidence, plaintiffs were not entitled to any affirmative relief, and upon the further ground that the court erred in dismissing their cross-complaint.

Prior to and on July 20, 1950, defendants were the owners in fee simple and in possession of the following described real premises located in Deschutes county, Oregon, to-wit:

'The Northeast Quarter of Northwest Quarter (NE 1/4 NW 1/4), Section Four (4), Township Eighteen (18) South Range Twelve (12), that part of what is now known as Tract H-1, Bend Industrial Area Number One, formerly part of Bend Park, more particularly described as follows:

'Beginning at a point 175.27 feet South and 2001.09 feet East of the Northwest corner of said Section Four (4), said point being the Northeast corner of said Tract H-1, thence due South 520 feet, then South 45~ West 127.28 feet, thence due West 310 feet, thence North 110 feet, thence due West 220 feet to a point on the East line of South Fifth Street thence due North 75 feet along the East line of South Fifth Street, thence due East 100 feet, thence due North 75 feet, thence due West 100 feet to the East line of South Fifth, thence due North along the East line of South Fifth 200 feet, thence due East 275 feet, thence due North 150 feet, thence due East 345 feet to the point of beginning.'

On July 20, 1950, plaintiffs and defendants entered into a written contract of purchase and sale of sald premises. As the purchase price of said premises, plaintiffs, as the purchasers, agreed to assume and pay a certain mortgage indebtedness against the property and to pay defendants the sum of $4,512.34, paying $1,500 in cash upon the execution of the contract, and agreeing to pay the balance in monthly installments of $40 each with interest. Plaintiffs were let into immediate possession. The land as described by metes and bounds contains 5.63 acres, though in describing the premises in the contract no mention was made as to the number of acres.

It appears from the evidence that, before the written contract was entered into between the parties, and while negotiations for the sale and purchase were being carried on by them, plaintiffs, upon two or more occasions, inspected the property. Upon at least one of these inspection tours, defendants pointed out to plaintiffs what they considered to be the boundary lines of the property and represented that the entire tract contained 9.5 acres of land. Later it was discovered by the parties that there were only 5.63 acres. There is a dispute in the testimony between plaintiffs and defendants as to whether this discovery respecting the true number of acres in the tract was made prior to or after the written contract was executed. Defendants maintain that it was discovered before the contract was entered into, and that the agreement was executed by the parties with full knowledge of the facts. Plaintiffs dispute this claim and insist that they did not learn the true situation until a few days after the contract was signed. However that may be it will not be necessary for us to settle that dispute in the facts in arriving at our conclusions. There is no dispute between the parties but that defendants did represent to plaintiffs that the tract contained 9.5 acres. Regarding that representation, defendants contended, and offered convincing proof of the effect, that, in making the statement, they acted in good faith, honestly believing it to be true, and did not make it recklessly nor with any intent to mislead and deceive the plaintiffs. Defendants offered a reasonable explanation as to why they themselves labored under a mistaken belief that the tract contained 9.5 acres as they represented to plaintiffs.

We have mentioned the personal inspections of the property made by plaintiffs before purchasing. The evidence shows that defendants did not assume to point out to plaintiffs the exact boundary lines of the property in question. The testimony regarding what defendants did, in a more or less general way, designate as the boundary lines is quite indefinite. However, it may fairly be concluded from the evidence that defendants, in outlining the boundaries, did include a parcel of land that they did not own. If this tract had been included within the description of the premises set forth in the contract, there would have been at least 9.5 acres in the entire piece.

It is this difference in the number of acres of land which forms the background for the instant litigation.

At the outset, it might be stated that, because of the misrepresentation made by defendants as to the number of acres of land in the tract, plaintiffs had the right to rescind the contract, even though the false statement was innocently made. Dahl v. Crain, Or., 237 P.2d 939; Weiss and Hamilton v. Gumbert, 191 Or. 119, 227 P.2d 812, 228 P.2d 800; Sharkey v. Burlingame Co., 131 Or. 185, 197, 282 P. 546; 17 C.J.S., Contracts, § 147, p. 502; Restatement, Contracts, 908, § 476.

But plaintiffs did not rescind, nor attempt to rescind. On the contrary, they affirmed the contract and commenced the instant suit.

On December 8, 1950, plaintiffs duly filed their complaint in the circuit court for Deschutes county, by which complaint (omitting formal parts), it is alleged:

'I.

'That defendants are husband and wife and owners in fee of the following described real property situate in the City of Bend, Deschutes County, Oregon, to-wit: [Description is the same as previously set forth.]

'II.

'That defendants to induce the plaintiffs to purchase said lands fraudulently represented that it contained 9.5 acres and comprised certain adjacent lands shown to plaintiffs, when in fact said lands contained not more than 5.63 acres and did not comprise said adjacent lands shown, all of which was known to defendants, but that the plaintiffs believed the representations to be true and in reliance thereon entered into a contract with the defendants to purchase the same to plaintiffs' damage in the sum of $3012.34.

'III.

'That by the terms of said contract plaintiffs assumed a certain mortgage against the lands in the sum of $2987.66 and paid defendants a cash balance of $1500.00, and plaintiffs further agreed to pay defendants $3012.34 and interest thereon at 4 per cent per annum in monthly installments of $40.00 per month on the 11th of each month beginning August 11th, 1950, in consideration of which defendants agreed to give a deed conveying the same together with an abstract of title or title insurance policy showing marketable title free and clear of all incumberances [sic] excepting the mortgage against said lands assumed by plaintiffs, upon the payment of said sum of money, and further agreed to pay such sum as might be adjudged by the Court reasonable as attorney's fees in case suit was filed to enforce said agreement.

'IV.

'That plaintiffs have done and performed all of the covenants on their part to be performed under the contract except payment of said balance of $3012.34 and that it is inequitable that plaintiffs should pay the said sum to defendants, but just that there be an abatement in the purchase price and that defendants be required to perform all of the covenants on their part to be performed by conveying said land to plaintiff [sic] free and clear of all incumberances [sic] excepting said mortgage and to provided [sic] evidence of marketable title as agreed upon without further payment of money by plaintiffs, but that defendants refuse and neglect to do so though demand has been made upon them.

'V.

'That $450.00 is a reasonable sum to allow as attorney's fees in this suit.'

Defendants appeared by answer, by which they denied all the material allegations of the complaint. As an affirmative defense, they pleaded as follows:

'I.

'That prior to entering into a contract for the sale of real property with the defendants, the plaintiffs and both of them were advised by the defendants of the property description. And that the said plaintiffs made inquiry and satisfied themselves as to the extent of the property which they intended to purchase. That the defendants advised the plaintiffs that they did not know the exact acreage encompassed within said property description, but that the plaintiffs notwithstanding entered into said contract and agreed to purchase said property according to the terms of that said contract.'

By cross-complaint, defendants alleged the contract, attaching a true copy thereof; alleged a breach of the contract by plaintiffs in failure to pay the monthly installments on the purchase price, and a further breach in plaintiffs' neglect to keep the property insured against...