Shaw v. Profitt

• Decision Date: 04 October 1910
• Parties: SHAW v. PROFITT et al.
• Court: Oregon Supreme Court

110 P. 1092

57 Or. 192

SHAW v. PROFITT et al.

Supreme Court of Oregon

October 4, 1910

On petition for rehearing. Denied.

For former report, see 109 P. 584.

EAKIN, J.

The principal contention of defendant relates to the revocability of the license. There is a great conflict in the authorities upon this question, which are thoroughly reviewed in notes to Stoner v. Zucker,

148 Cal. 516, 83 P. 808, 113 Am.St.Rep. 301, in 7 Am. &amp Eng.Ann.Cas. 706, to Gyra v. Windler, 40 Colo. 366 91 P. 36, in 13 Am. & Eng.Ann.Cas. 843, and to Pifer v Brown, 43 W.Va. 412, 27 S.E. 399, in 49 L.R.A. 497. In the note to the first case mentioned, the author, at page 706 of 7 Am. & Eng.Ann.Cas., says: "The cases are practically agreed that on strict common-law principles a bare license is revocable at the will of the licensor, even though executed; but it is held by a very respectable line of authorities, as in the reported case, that on principles of equity the revocation of a license after the licensor has stood by and permitted the licensee to incur considerable expense on the faith of the license would amount to a constructive fraud, working an estoppel in the licensee's favor."

This court long ago adopted the rule that a parol license cannot be revoked after it has been executed by the licensee, who in reliance thereon, has expended money in permanent valuable improvements. In Curtis v. La Grande Water Co., 20 Or. 34, 44, 23 P. 808, 810, Justice Lord, who wrote the principal opinion, says: "An executed license is treated like a parol agreement in equity; it will not allow the statute to be used as a cover for fraud; it will not permit advantage to be taken of the form of the consent, although not within the statute of frauds, after large expenditures of money or labor have been invested in permanent improvements upon the land, in good faith, upon the reliance reposed in such consent. To allow one to revoke his consent, when it was given or had the effect to influence the conduct of another and cause him to make large investments, would operate as a fraud, and warrant the interference of equity to prevent it, under the doctrine of equitable estoppel. The ground of the jurisdiction is to prevent injustice or fraud." He there held that the executed license estopped the licensor and his grantee with notice, but that, in the change of the location of the dam and pipe line, the plaintiff's silence or acquiescence did not estop her, or constitute an irrevocable license, and he affirmed the decree of the lower court. But, on rehearing, it was held by Mr. Justice Strahan that, because of plaintiff's silence and acquiescence while the expenditures were being made, it amounted to an implied license and was irrevocable, and the decree was modified accordingly. But this part of that decision was expressly overruled in Ewing v. Rhea, 37 Or. 583, 587, 62 P. 790, 52 L.R.A. 140, 82 Am.St.Rep. 783, where it was held by Mr. Justice Moore that a mere naked license by acquiescence is not rendered irrevocable by the expenditure of money on the strength of such acquiescence or implied license. The same Justice, in Miser v. O'Shea, 37 Or. 231, 237, 62 P. 491, 493, 82 Am.St.Rep. 751, states the rule thus: "This court has adopted the rule that if a party, relying upon the faith of an express parol agreement, make permanent valuable improvements upon an estate, which may inure to the advantage of the owner thereof, the license upon the faith of which the improvements are made cannot be revoked to the prejudice of the party executing it." And again, in Ewing v. Rhea, supra, it is said "that if a party has paid a consideration therefor, or been encouraged by any participation in a common enterprise, or induced by a definite oral agreement to expend money in making permanent valuable improvements, the parol license upon the faith of which he has acted in executing it cannot be revoked to his prejudice." To the same effect are Lavery v. Arnold, 36 Or. 84, 57 P. 906, 58 P. 524; Hallock v. Suitor, 37 Or. 9, 13, 60 P. 384; Brown v. Gold Coin Mining Co., 48 Or. 277, 284, 86 P. 361; Sumpter Ry. Co. v. Gardner, 49 Or. 412, 90 P. 499; Falls City Lumber Co. v. Watkins, 53 Or. 212, 99 P. 884. These cases seem to determine the law in this state upon this question to the effect that a license implied from silence or acquiescence with knowledge of the expenditures is not made irrevocable by expenditures made in permanent improvements in reliance thereon, but an express license, under such circumstances, is irrevocable; and we think this is supported by the weight of authority. Ruthven v. Farmers' Co-op. Creamery Co., 140 Iowa, 570, 118 N.W. 915; Gyra v. Windler, 40 Colo. 366, 91 P. 36.

A distinction is made by counsel between a license and an easement. The latter, he contends, can only be created by solemn writing. The rule is that an easement can only be created by writing under seal, but there are exceptions well recognized in equity. It may be created by adverse user, by estoppel, or part performance of a parol agreement. An express oral license may be revocable at any time before it is executed, for it creates no interest in the land; but if executed--that is, if expenditures be made in permanent improvements in reliance thereon, inuring to the benefit of the licensor--then it becomes irrevocable, and if it relates to the use or occupation of real estate it becomes an easement. This is recognized in many cases. In Curtis v. La Grande Water Co., supra, Mr. Justice Lord, quotes with approval from Jackson v. Railroad Co., 4 Del.Ch. 180, which, in laying stress upon the necessity for a clear case to make a license irrevocable, says that the effect will be to convert what was originally a bare privilege into an easement in the licensor's land, perpetually binding it and transmissible from the licensee. The author of the note at 49 L.R.A. 497, says: "The moment it [the license] ceases to be so revocable it creates an interest in the land, and rises to the dignity of an estate or an easement." See, also, Pope v. Henry, 24 Vt. 560; Snowden v. Wilas, 19 Ind. 10, 81 Am.Dec. 370; Metcalf v. Hart, 3 Wyo. 513, 546, 27 P. 900, 31 P. 407, 31 Am.St.Rep. 122.

The licensee's right to relief is on the ground of fraud, against which equity will always relieve by estoppel on account of the fraud or by specific performance of an oral agreement partly performed to prevent fraud, whether the fraud be actual or constructive, intentional or nonintentional. Metcalf v. Hart, 3 Wyo. 513, 547, 27 P. 900, 31 P. 407, 31 Am.St.Rep. 122. See note to Hall v. Chaffee, 13 Vt. *157, by Mr. Justice Redfield. In Metcalf v. Hart, supra, it is said: "Cases may arise and have arisen where a license to occupy land has been intended and understood as a mere personal favor to the licensee to give him a place to live, or to occupy for some other beneficial purpose not transmissible, but revocable at will. Then expenditures would naturally be made accordingly. In other cases the granting of the license has been in terms an assurance of permanent possession. It is evident that the same rule cannot apply to both classes of cases. The revocation of the license, even after expenditures made in consequence of it, in the one case is a right, in the other a fraud. No general rule can be made as to the revocability of such licenses after such expenditures. Each case stands upon its own circumstances. When we have traveled through the mass of decisions, cloudy and conflicting at times, and have arrived at the principle that equity will relieve where there is fraud, actual or constructive, we have arrived at a principle in regard to which there is no conflict. And courts of equity *** are very generally agreed that the revocation of a parol license to permanently occupy and improve realty after any considerable expense has been incurred on the faith of such license, under circumstances such that the parties cannot be placed in statu quo, is either actual or constructive fraud." Much of this language is quoted evidently with approval as a conclusion to the note in 7 Am. & Eng.Ann.Cas. 717. See, also, Mason v. Hill, 27 E.C.L. 15, Liggins v. Inge, 20 E.C.L. 304, and Lowe v. Adams, 2 Ch. (Eng.) 598, in which a doubt is expressed as to whether Wood v. Leadbitter, 13 Meeson & Welsby's Rep. 538, which seems to hold to the contrary and is frequently quoted as expressing the rule in England, is good law.

The license in this case, as gathered from the letter of Failing, which is: "I have just *** found your letter of the 19th inst., asking for right of way through my land in Powder River Valley. Would say go ahead. The more ditches you build, the better it will suit me"--is express authority to construct the ditch, and, in view of all the circumstances, did not contemplate a temporary affair, but a permanent right of way. It is indefinite as to the location and extent of the ditch; but, when they were located and constructed, both became definite. The whole ditch was constructed at great expense, viz., $6,000 or $7,000, to convey water for irrigation upon plaintiff's land, and the part upon defendants' lands is only a small part thereof; the ditch being about 16 miles long. A permanent way appears to have been the intention of the parties, and such intention must control. Brown v. Honeyfield, 139 Iowa, 414, 116 N.W. 731; Pifer v. Brown, 43 W.Va. 412, 27 S.E. 399, 49 L.R.A. 497, 509.

Again it is urged that, even though the license is irrevocable as to the licensor, it is not so as to his grantee. But the authorities that hold the license irrevocable also hold...