Olston v. Oregon Water Power & Ry. Co.

• Decision Date: 06 October 1908
• Citation: 97 P. 538,52 Or. 343
• Parties: OLSTON v. OREGON WATER POWER & RY. CO.
• Court: Oregon Supreme Court

97 P. 538

52 Or. 343

OLSTON v. OREGON WATER POWER & RY. CO.

Supreme Court of Oregon

October 6, 1908

On motion for rehearing. Denied.

For former opinion, see 96 P. 1095.

EAKIN, J.

The motion for rehearing is based largely upon the idea that the opinion in effect holds that equitable defenses may be pleaded at law; but such is not the intent of the opinion. Counsel for defendant have attributed that effect to it upon their conclusion that the fraud relied on is "equitable fraud," probably meaning fraud over which equity has exclusive jurisdiction. The opinion is to the effect that even if this is an instrument under seal, yet by operation of our statute it is deprived of the solemnity formerly ascriber to it by reason of the seal. Now the seal is primary evidence of a consideration, which means that the presumption thus arising may be overcome by evidence to the contrary, and is therefore subject to defenses at law, the same as a simple contract in which the consideration is expressed. If a simple contract is induced by fraud, the defrauded party may rescind it without the aid of equity, and may plead the fraud in defense of an action to enforce it or to recover damage for its breach. 24 A. & E. Ency. 343; 14 A. & E. Ency. 158; 9 Cyc. 433; Brown v. Freeman & Bynum, 79 Ala. 406; Strayhorn v. Giles, 22 Ark. 517; Milliken v. Thorndike, 103 Mass. 382; Irving v Thomas, 18 Me. 418. And our statute having reduced sealed instruments to the footing of simple contracts that express consideration, fraud in the consideration is recognized at law and is not exclusively an equitable defense. The only authority cited by defendant in the motion that seems to conflict with this view is Vandervelden v Chicago & N.W. Ry. Co. (C.C.) 61 F. 54. This case recognizes the force of the Iowa statute abolishing the effect of the seal, but ignores that fact and holds that because the instrument is sealed, the defense of fraud is cognizable only in equity. But in Williams v Haines, 27 Iowa, 251, 1 Am.Rep. 268, it is held that, by reason of the statute having abolished the distinction between sealed and unsealed instruments, defenses to sealed instruments going to the consideration may be pleaded at law.

Counsel seek to make a distinction between the effect of the Alabama statute, as construed in Withers v. Greene, 9 How. 213, 13 L.Ed. 109, and our own; but that statute only admits defenses to sealed instruments "as if the said writing had not been sealed." Referring to that statute, Justice Daniel says: "By the enactment herein first cited it is obvious that specialties are divested of any force or solemnity at any time ascribed to them by reason of their having a seal annexed, and are placed with respect to all inquiries which may be instituted into the...