Renard v. Allen

• Decision Date: 29 April 1964
• Citation: 391 P.2d 777,237 Or. 406
• Parties: M. B. RENARD, Appellant, v. George W. ALLEN, Respondent.
• Court: Oregon Supreme Court

Page 777

391 P.2d 777

237 Or. 406

M. B. RENARD, Appellant, v. George W. ALLEN, Respondent.

Supreme Court of Oregon, In Banc.

Submitted on Brief Jan. 6, 1964.

Decided April 29, 1964.

George G. Van Natta, St. Helens, for appellant.

No appearance for respondent.

Before McALLISTER, C. J., and ROSSMAN, PERRY, SLOAN, O'CONNELL, GOODWIN and DENECKE, JJ.

DENECKE, Justice.

The purchaser-defendant defaulted in making the payments due under a land sale contract. The plaintiff-vendor obtained relief in the nature of strict foreclosure. Plaintiff appeals upon the ground that he was entitled to a decree requiring the defendant to specifically perform the contract.

The land sale contract was on the printed form commonly used in this state. The contract contained the usual provision that upon default the vendor, at this option, could declare the whole unpaid principal balance due. The plaintiff alleged the purcahser's failure to make his instalment payments and his failure to pay the taxes and insurance premium (total delinquency of about $470). He alleged the purchase price was $6,000 and there was now owing the principal balance of $5,537.22. Plaintiff alleged he was ready, willing and able to perform his obligations under the contract. Before plaintiff rested he offered to deposit a deed with the clerk conveying clear title to defendant, if the court believed it necessary. The court indicated it did not believe this necessary and the defendant did not object.

The prayer to plaintiff's complaint is as follows:

'WHEREFORE the plaintiff prays for a decree requiring the defendant to perform the contract herein described strictly in accordance with the terms thereof; and that for such purpose the plaintiff be awarded a recovery of and from the defendant in the sum of $5537.22 with interest thereon at 6 1/2% per annum from Nov. 16, 1962; for $10.66; for $550.00 as attorney's fees; for costs and disbursements; for a declaration providing for the sale of Lot ONE in Block FOUR, SPANTON'S ADDITION to the City of Portland, Multnomah County, Oregon, and application of the proceeds of such sale in or toward payment of the sums herein awarded to plaintiff, if said sums remain unpaid for more than 60 days or other reasonable time as the Court may specify; and for such other and further relief as my be appropriate.'

Plaintiff insisted throughout the trial that he was seeking specific performance. However, the trial court believed the suit was one for foreclosure. The trial court gave plaintiff a decree for the amount of the unpaid instalments and other unpaid obligations (but not for the balance of the principal). The decree further provided that the defendant has 60 days within which to pay the amount of the decree and if he does not do so and does not also resume paying the monthly instalments, as due, 'the said real property shall revest in the plaintiff.' Apparently, as long as the decree is for strict foreclosure, rather than specific performance, it is immaterial to the plaintiff whether the trial court entered a decree for the entire balance owing or merely for the instalments and other minor amounts owing at the time suit was brought.

Plaintiff contends he is entitled to a decree of specific performance, i. e., a decree requiring the buyer to pay the balance of the contract price. Marquardt v. Fisher, 135 Or. 256, 258, 295 P. 499, 77 A.L.R. 265 (1931). Such a form of decree is identical to a money judgment for the balance of the purchase price awarded in a law action. 3 Casner, American Law of Property, 176, § 11.68 (1952).

The decree entered required defendant to pay money; however, if he did not, plaintiff's relief was regaining the property and not a personal judgment against defendant. The difference in effect of the two alternative types of relief can be substantial.

A vendor's rights upon the default of a buyer under a land sale contract are stated in Marquardt v. Fisher, supra (135 Or. at 258, 295 P. at 500):

'* * * Where a valid executory contract for the purchase and sale of real property is broken by the vendee's failure to pay the purchase money as stipulated in the contract, the vendor has in equity a choice of remedies. He may tender a deed and sue for the specific performance of the contract, or he may sue for strict foreclosure of the contract. * * *'

In Sanford v. Wheelan, 12 Or. 301, 7 P. 324 (1885), this court stated that the vendor of real property could enforce the payment of the purchase price in equity. Johnston v. Wadsworth, 24 Or. 494, 34 P. 13 (1893), specifically held that the vendor could obtain a decree of specific performance of a land sale contract. The court rejected the argument that the vendor had an adequate remedy at law.

One question here is, which remedy did plaintiff assert in his complaint? The allegations of the complaint, apart from the prayer, do not indicate what relief is sought. In this kind of suit we have held the prayer should be considered in determining what remedy the vendor has elected. Zumstein v. Stockton, 199 Or. 633, 639, 264 P.2d 455 (1953). That part of the prayer asking for a decree requiring the defendant to perform the contract 'and that for such purpose the plaintiff be awarded a recovery of and from the defendant in the sum of $5537.22' is a prayer for specific performance. The quoted portion, for a recovery of a sum of money, is also part of a foreclosure decree if coupled with a further statement that if such sum is not paid, the purchaser's rights in the property will be foreclosed. The portion asking for a sale if the judgment is unpaid for 60 days is proper in a prayer for foreclosure. The 60-day period, or some other reasonable period to pay, is customary in foreclosure. The sale provision is akin to a portion of the prayer for foreclosure by sale. However, the word 'foreclosure' is not found in the prayer.

The plaintiff maintains that the prayer for a sale is not inconsistent with the remedy of specific performance. As the plaintiff pointed out in his brief, this court in Slattery v. Gross, 96 Or. 554, 564, 187 P. 300, 303, 190 P. 577 (1920), ordered specific performance of a contract for sale and decreed as follows:

'* * * and if said execution shall still remain unsatisfied [on the money decree for the purchase price] then the vendors' lien of the said Nancy J. and J. M. Shelley upon the property in controversy shall be foreclosed and the property shall be sold to satisfy the amount remaining unpaid; * * *.'

Many other jurisdictions have approved of the coupling of a decree of specific performance with a provision for a sale if the money decree is not paid. Typical of these cases is the decision in Morgan v. Lewis, 203 Ala. 47, 82 So. 7 (1919):

'Bill by a vendor (appellee) to compel specific performance on the part of the vendee (appellant) of a complete written contract to purchase certain lands owned by the vendor. The appellant insists here, as he did in the court below, that this remedy is not available to a vendor, and that an enforceable decree in the premises cannot be soundly contrived. Both reason and authority confirm the correctness of the view entertained by the trial court, viz.: That the remedy by specific performance is available to a vendor of land; that the nature of the subject-matter of the contract, real estate, invests the vendor with the right to elect either to sue at law for damages for the vendee's breach of the contract or to invoke equity to compel specific performance of the contract of purchase by the vendee; and that appropriate decree may enter requiring specific performance on the part of the vendee, by a fixed time, after the vendor has deposited in the court, for the vendee, a conveyance to him of a good title to the land; failing acceptance of the deed and payment of the purchase price and interest by the vendee, it may thereupon be contingently decreed that the land be sold to satisfy the vendor's demand, and that execution against the vendee issue to enforce the payment of the unpaid balance of the purchase price and interest that the net proceeds of the sale fail to satisfy. * * *' (82 So. at 7)

The last portion of the above quotation in effect provides that if the net proceeds of the sale are not sufficient to satisfy the money decree, the balance still owing remains a personal decree against the purchaser which can be enforced as any other money decree or judgment. This would necessarily follow from a decree granting an in personam money decree and providing for a sale and the application of the proceeds of the sale to the satisfaction of the money decree. If the proceeds are insufficient to fully satisfy the decree, the unsatisfied portion remains an obligation of the purchaser.

In a mortgage foreclosure the obligation for the balance remaining unpaid after applying the proceeds of the foreclosure sale is known as a 'deficiency judgment.' An Oregon statute expressly prohibits deficiency judgments in the foreclosure of purchase money mortgages. ORS 88.070 provides:

'When a decree is given for the foreclosure of any mortgage given to secure payment of the balance of the purchase price of real property, the decree shall provide for the sale of the real property covered by such mortgage for the satisfaction of the decree given therein, but the mortgagee shall not be entitled to a deficiency judgment on account of the mortgage or note or obligation secured by the same.'

The statute, however, expressly refers to mortgages and mortgage foreclosures. As Mr. Justice Harris commented in his concurring opinion in Wright v. Wimberly, 94 Or. 1, 33, 184 P. 740, 750 (1919): 'The words 'deficiency judgment' have a well-understood meaning when used in connection with mortgage foreclosures, * * *.' In Stretch v. Murphy, 166 Or. 439, 446, 112 P.2d 1018, 1021 (1941), we stated that the legislature used the term 'deficiency judgment' to mean 'a personal judgment against a mortgagor for the mortgage debt...