Rouse v. Roy L. Houck Sons' Corp.

• Decision Date: 24 April 1968
• Parties: Fred ROUSE and Alice E. Standley, co-partners doing business as West Coast Crushing & Contracting, Appellants, v. ROY L. HOUCK SONS' CORPORATION, an Oregon corporation, Respondent, Jimmie A. King and Betty J. King, Intervenors.
• Court: Oregon Supreme Court

Page 856

439 P.2d 856

249 Or. 655

Fred ROUSE and Alice E. Standley, co-partners doing business

as West Coast Crushing & Contracting, Appellants, v. ROY L. HOUCK SONS' CORPORATION, an Oregon corporation, Respondent, Jimmie A. King and Betty J. King, Intervenors.

Supreme Court of Oregon, Department 1.

Argued and Submitted March 6, 1968.

Decided April 24, 1968.

Gordon G. Carlson, Roseburg, argued the cause and filed briefs for appellants.

Vernon L. Burda, Salem, argued the cause and filed brief for respondent.

Before PERRY, C.J., and O'CONNELL, GOODWIN, DENECKE, and LANGTRY, JJ.

GOODWIN, Justice.

Plaintiffs, claiming to be the assignees of a license to quarry and remove rock, appeal a judgment denying recovery in an action for damages for 'conversion' ¹ against a construction company which quarried and removed rock under a subsequent license from the landowner.

The assignment of error challenges the granting of a judgment notwithstanding the verdict after a jury had awarded the plaintiffs general and punitive damages against Roy L. Houck Sons' Corporation.

The controversy grew out of an instrument apparently prepared by the plaintiffs' assignors and captioned 'option contract.' The document reads as follows:

'OPTION CONTRACT

'THIS AGREEMENT made this 3 day of Sept., 1964, between Jimmie A. King and Betty J. King, hereinafter known as the owners, and Dewey Strong and Leonard Boekelman, hereinafter known as the Buyers.

'WITNESSETH:

'In consideration of the sum of Ten and no hundreths dollars Dollars and other valuable consideration hereinafter provided for, the owners hereby give the buyers the sole and exclusive right to test, remove, quarry, crush any and all rock or gravel material upon the following described real property, situated in the State of Oregon, County of Coos, to-wit:

'* * * (Legal description omitted.)

'This sole and exclusive right is granted for a period of time not to exceed 6 months from date above. It is understood and agreed that in addition to the consideration hereinbefore provided for, the Buyers shall pay the owners the sum of 17 1/2 cents per yard for rock thru crusher 6 cents per yard for free rock per yard for all rock or gravel material removed from the above described property. For a period of 5 year Jimmie King

'In the event that Buyers should discontinue the operation of the quarry herein provided or fail to remove any rock or gravel or material from the premises for a period of one year, this agreement shall terminate and be null and void.

'Owners hereby grant Buyers the right of ingress and egress and road construction over the above premises to accomplish the rights granted herein, providing that all existing roads, cattle guards etc. are kept in as good shape or condition as they are at present time.

'IN WITNESS WHEREOF we have hereunto set our hands and seals the day and year first above written.

'* * * (Signatures omitted.)

'(Note: Blank spaces in the above form were filled in by typewritten words and figures. Words in italics were handwritten in ink.)'

On September 3, 1964, King executed the foregoing memorandum with the plaintiffs' assignors. At some later time, at the request of the plaintiffs' assignors, King wrote in his own hand the words 'for a period of 5 year Jimmie King' on the margin of the document.

On January 10, 1966, King wrote a letter to the assignors advising them that any option created by the agreement of September 3, 1964, had not been exercised, and that he accordingly considered it expired. On April 3, 1966, King entered into an option for a lease with Houck. Houck shortly thereafter began removing rock, and a lease was signed on June 3, 1966.

Plaintiffs assert that the agreement of September 3, 1964, had given the plaintiffs' assignors an option for six months to commence operations to quarry and remove rock from the King land. Once their operations had commenced, they argue, the agreement granted them the exclusive right for five years to remove rock (provided the work was not suspended for a period of more than one year). Plaintiffs contend that their proof established that they had commenced all work necessary to cause the so-called option to ripen into an irrevocable servitude upon King's land.

It was King's position that the agreement of September 3, 1964, created no exclusive or irrevocable rights extending beyond the six-month period stated therein, but that it did give buyers an option to enter a five-year lease. Since no such lease was entered during the six-month period, King argues that all rights under the option contract expired at the conclusion of six months.

We believe that both parties intended to create an exclusive option in the assignors for a period of six months, but that the agreement failed to include terms essential to the creation of such an option. The most conspicuous omission is the manner in which the option was to be exercised. Also missing are many important terms of any lease that might be drawn. Because of these inadequacies, the agreement cannot be enforced as an option. To treat it as an option would bind one or both of the parties to terms and conditions never agreed upon.

Since it is clear, however, that King intended to give the 'optionees' a five-year right to remove rock under some unspecified circumstances, the agreement can be construed as creating a license to remove rock. A license consists of a...