Rainey v. Quigley

• Decision Date: 11 March 1947
• Citation: 178 P.2d 148,180 Or. 554
• Parties: RAINEY <I>v.</I> QUIGLEY
• Court: Oregon Supreme Court

180 Or. 554

178 P.2d 148

RAINEY

v. QUIGLEY

Supreme Court of Oregon.

Argued February 18, 1947.

Reversed March 11, 1947.

Equity — Forfeiture

1. Equity may relieve against contractual, but not against statutory, forfeiture.

Landlord and tenant — Lease — Rent — Forfeiture

2. A provision for forfeiture of lease for default in rent is designed to secure payment, and forfeiture will ordinarily be prevented on payment of rent due with interest.

Landlord and tenant — Payment of rent

3. Under statute providing that failure to pay rent reserved for ten days after it becomes due shall terminate the tenancy without notice but that acceptance of rent shall reinstate the tenancy subject to termination by subsequent defaults, the court was without power to relieve against forfeiture of tenancy, where rent payable on or before first day of month had not been paid by the 22nd day of the month, though it had never been paid before the 23rd of the month, and landlord had never objected and tenant had relied on her acquiescence and tender of rent was made after commencement of forcible detainer proceedings.

                  See 19 Am. Jur. 107; 35 C.J., Landlord and tenant, § 239
                

Appeal from Circuit Court, Deschutes County.

RALPH S. HAMILTON, Judge.

Thomas Boeke, of Redmond, for appellant.

Robert H. Foley, of Bend (DeArmond, Goodrich & Foley, of Bend, on brief), for respondent.

Before ROSSMAN, Chief Justice, and LUSK, BELT, BAILEY, HAY and WINSLOW, Justices.

REVERSED.

LUSK, J.

Under date of April 1, 1945, plaintiff, as lessee, and defendant, as lessor, entered into a lease in writing of real property in the Original Townsite of Redmond, Deschutes County, Oregon, for a term of five years commencing April 1, 1945. On July 22, 1946, plaintiff was served with a copy of summons and complaint in a forcible entry and detainer action commenced by defendant in Justice's Court for the restitution of the leased premises. On July 26, 1946, plaintiff brought this suit in equity in the Circuit Court for Deschutes County to enjoin the prosecution of such forcible entry and detainer action. After a trial the Circuit Court entered a decree granting the relief sought, and defendant has appealed.

The case presents the important question whether, in view of the provisions of § 8-309, O.C.L.A., equity will relieve from the forfeiture of a lease for failure of the tenant to pay the stipulated rent within the time fixed by the statute.

By the terms of the lease the lessee promised to pay to the lessor as rent "the sum of Ninety Dollars ($90.00) on or before the 1st day of April, 1945, and a like sum on or before the 1st day of each month thereafter up to and including the 1st day of March, 1950". The instrument did not, by its own terms, provide for a forfeiture in case of failure to pay the rent punctually as agreed.

The case was submitted to the court upon a stipulation of facts as follows:

"That the lease mentioned in plaintiff's complaint and attached as Exhibit `A' thereto, was made and entered into by the parties hereto and the plaintiff entered into possession of the premises mentioned in said lease on or about the 1st day of April, 1945. That the dates of payment of monthly rentals as set forth in said complaint are true and correct; that the action of forcible entry and detainer mentioned in said complaint was commenced on the 22nd day of July, 1946. That at that time, the monthly rental for the month of July, 1946, had not been paid by the plaintiff in this suit. That the defendant at no time during the existence of this lease has given notice to the plaintiff that said lease would be terminated if payments thereunder were not made upon the dates mentioned in said lease.

"That tender of the rental for said month of July, 1946, was made by the plaintiff herein to the defendant herein, after the commencement of said action of forcible entry and detainer and after his commencement of this suit.

"That said tender was sufficient as to amount and said tender was refused by the defendant. That payment of the amount of said tender into Court is waived by the defendant.

"That the parties hereto stipulate and agree that the sum of $100.00 is a reasonable sum to be paid as attorneys fees to the prevailing party in Circuit Court.

"That if appeal is taken from the decree of the Circuit Court, that an additional amount of $150.00 shall be reasonable to be awarded by the Court to the prevailing party in this suit for the appeal in the Supreme Court. That is to say, that in the event of an appeal, the prevailing party upon appeal shall be entitled to reasonable attorneys fees in the total sum of $250.00."

The allegation of the complaint (the correctness of which is admitted in the foregoing stipulation) as to the dates on which payments of rent were made by plaintiff shows that, during the sixteen months that the lease was in effect prior to July, 1946, no payment of rent was made at a date earlier than the twenty-third day of the month in which it became due. The plaintiff alleges in his complaint "that defendant made no objection whatsoever to the plaintiff's paying the rentals or lease monies at this period and the plaintiff relied upon the defendant's failure to object to the rental being so paid and was lulled into a sense of security thereby as to the time of payment of the monies due the defendant under the present lease agreement." And the plaintiff contends that it would be inequitable to permit the defendant to enforce a forfeiture of the lease for a mere failure to pay the rent promptly, which can be adequately compensated.

The defendant, on the other hand, relies upon the statute, which provides:

"The failure of a tenant to pay the rent reserved by the terms of his lease for the period of ten days (unless a different period be stipulated in the lease) after the same becomes due and payable, shall operate to terminate his tenancy, and no notice to quit or pay said rent shall be required to render the holding of such tenant thereafter wrongful; provided, however, if the landlord shall, after such default in payment of rent, accept payment thereof, such acceptance of payment shall operate to reinstate such lease for the full period fixed by its terms, subject to be defeated or terminated by subsequent defaults in payment of rent." § 8-309, O.C.L.A.

1. Courts of equity have long recognized a distinction between forfeitures agreed upon by the parties and those provided by statute. Equity may relieve from the former, but not from the latter. The earliest reported case seems to be Peachy v. The Duke of Somerset, 1 Str. Rep. 446 (1721), which was a bill by a copyholder to be relieved from a forfeiture of his estate for making leases contrary to the custom of the manor, and for other breaches. Lord Chancellor Macclesfield there said:

"Cases of agreements and conditions of the party, and of the law, are certainly to be distinguished; you can never say the law has determined hardly, but you may say that the party has made a hard bargain."

Lord Chancellor Manners, in Keating v. Sparrow, 1 B. & B. 367 (1810), applied this principle to a case where a tenant neglected to pay certain fines for a renewal of his lease. A statute provided that a court of equity could relieve such a tenant upon adequate compensation being made "unless it shall be proved to the satisfaction of such Courts that the landlord, or lessors, or persons entitled to receive such fines, had demanded such fines from such tenants or their assigns, and that the same had been refused or neglected to be paid, within a reasonable time after such demand." The Lord Chancellor said that the principle that equity leans against forfeitures "is applicable to cases of contract between the parties, but not to the provisions of an act of Parliament"; and, after quoting the above language from Peachy v. The Duke of Somerset, said:

"Taking then the principle from Lord Macclesfield, it is manifest that in cases of mere contract between parties, this Court will relieve, when compensation can be given, but against the provisions of a statute no relief can be given. Apply that to cases arising under this act of Parliament. Here, before a demand made by the landlord upon the tenant to renew after the fall of a life, the tenant would be entitled to a renewal upon making compensation, whatever time may have elapsed, it being then but in contract; but after a demand by the landlord, the provisions of the statute apply it then ceases to be merely a contract between the parties, and comes within the opinion of Lord Macclesfield, that relief cannot be given against the provisions of the law."

These two cases have been frequently cited and relied on by the courts and authoritative text writers of this country as enunciating the correct rule of law upon this subject.

Smith v. Mariner, 5 Wis. 551, 68 Am. Dec. 73, involved a purchase of school land from the state pursuant to statute which provided that in case of nonpayment of principal or interest when due the purchaser should forfeit all right or interest in the land. A purchaser, asserting the existence of certain equitable circumstances, sought to be relieved from a forfeiture which had been enforced by the state for failure to pay interest when due. He claimed, as does the plaintiff here, that, since the object of the forfeiture was to secure the payment of the unpaid purchase money, the case fell within the principle applicable to all cases of penalties and forfeitures intended to secure the payment of money only. The court held otherwise, saying, in substance, that where the law prescribes there shall be a forfeiture the court cannot say there shall be none; that the expression of the legislative will was most clear and explicit; and was not to be defeated upon the ground that the law is harsh and severe in its character.

A number of Missouri cases applied the same principle to leases of their lands made by cities pursuant to authority...