Shepherd v. Hub Lumber Co.

• Decision Date: 16 October 1975
• Citation: 541 P.2d 439,273 Or. 331,75 Or.Adv.Sh. 3414
• Parties: Ray SHEPHERD, Respondent, v. HUB LUMBER CO., Appellant. . *
• Court: Oregon Supreme Court

Page 439

541 P.2d 439

273 Or. 331

Ray SHEPHERD, Respondent, v. HUB LUMBER CO., Appellant.

Supreme Court of Oregon, In Banc. ^*

Argued and Submitted Sept. 5, 1975.

Decided Oct. 16, 1975.

William C. Wolke, Roseburg, argued the cause for appellant. With him on the brief were Luoma, Kelley & Wolke, Roseburg.

Robert H. Anderson, Roseburg, argued the cause for respondent. With him on the brief were Stults, Murphy & Anderson, Roseburg.

TONGUE, Justice.

This is an action for rent allegedly due under a rental contract for the use of a log skidder, with a counterclaim for the value of repairs made by defendant. The case was tried before a jury. Defendant Hub Lumber Co. appeals from an adverse judgment.

The facts.

On or about November 10, 1972, the timber manager of defendant Hub Lumber Co., a Mr. Lawson, entered into an oral rental agreement with plaintiff for the use by defendant Kenwisher of a log skidder owned by plaintiff. Defendant Kenwisher was one of Hub's contract loggers and was logging timber purchased by Hub in Douglas County. ¹

The testimony is in conflict whether the agreed rental payments were to be $600 per month, as claimed by Mr. Lawson, the Hub timber manager, or 'upon the rate of $600 per two weeks,' as claimed by plaintiff. In any event, $600 was paid by Hub to plaintiff at that time. It was also agreed that the rent for the equipment was to be paid by Hub. The skidder was then picked up by Hub and delivered to Kenwisher at the logging site.

At the time of the rental agreement there was no agreement or discussion between plaintiff and defendant Hub about maintenance of the skidder. Plaintiff testified that upon delivery, the skidder had three gallons of 'anti-freeze' in it, which would not evaporate.

In early December 1972, there was severe cold weather. Plaintiff called Lawson at his office to express concern about the skidder and a 'cat' also rented by him to Hub. Lawson went to check the 'cat' and plaintiff went to check the skidder at the place where it was being used. According to his testimony, when he arrived there were icicles hanging from it and it 'had probably been frozen for quite some time.'

The next morning plaintiff called Lawson to say that 'he thought the radiator was broke and he didn't know what else,' according to Lawson, who then arranged for repairs to be made despite the fact that, according to him, plaintiff did not ask him to repair it. Lawson also testified that in December, after the skidder had frozen and was unusable, he told plaintiff that 'we would have to terminate that contract' and that plaintiff 'didn't say anything.' Plaintiff denied that conversation and testified that he told Lawson that he 'wanted the machine returned as it was when it went out.'

In any event, Hub made repairs to the cooling system of the machine, but did not redeliver it to plaintiff until early February. It then developed that the engine block had been cracked. Hub again took the equipment back to its shop, installed a new motor, and returned it to plaintiff on or about April 10, 1973.

Plaintiff testified that the engine block cracked because of a lack of sufficient anti-freeze or a failure to drain the radiator. Defendant Hub contended that if there had been sufficient anti-freeze in the radiator when the skidder was delivered to it by plaintiff the engine would not have frozen.

1. Defendant's affirmative defenses.

Defendant Hub first assigns as error the sustaining of plaintiff's demurrer to two affirmative defenses alleged in its original answer.

Plaintiff's only response to this assignment is to contend that upon 'pleading over' by the filing of an amended answer defendant waived its right to assign as error the sustaining of a demurrer to these affirmative defenses alleged in its original answer. Such a contention was rejected in Moore v. West Lawn Mem'l Park, 266 Or. 244, 248, 512 P.2d 1344 (1973), overruling previous decisions to the contrary.

The first affirmative defense in defendant's original answer alleged that the skidder became 'totally unusable' as a result of weather conditions which were so 'unprecedented' and 'unforeseen' as to constitute an 'Act of God' and that this terminated the lease.

Defendant contends that the obligation to pay rent under a lease of personal property may be terminated not only by its total destruction, but also by damage which renders such property 'totally unusable,' at least in the absence of fault or want of care by the lessee. See New York, L.E. & W.R. Co. v. New Jersey Electric Ry. Co., 60 N.J.L. 338, 38 A. 828 (1897). In any event, a lessee of personal property has a duty to return it to the lessor in good condition, unless otherwise provided by contract or unless its failure to do so is excused as not being due to its fault or want of care. National Fire Ins. Co. v. Mogan et al, 186 Or. 285, 289, 206 P.2d 963 (1949).

Thus, defendant was entitled to plead as an affirmative defense facts showing that damage to this equipment was not due to its fault or want of care, but was the result of weather conditions which were so 'unprecedented' and 'unforeseen' as to constitute an 'Act of God' which was the sole cause of the damage to the equipment, so as to relieve defendant from responsibility for damage to the equipment (cf. Schweiger et ux v. Solbeck et ux, 191 Or. 454, 464--65, 230 P.2d 195 (1951)). Thus, the trial court erred in sustaining plaintiff's demurrer to this affirmative defense.

In this case, however, defendant was permitted to amend its answer to allege, again as an affirmative defense, that the skidder was totally destroyed and rendered unusable by a cold snap and that such destruction was not caused by defendant's negligence. That defense, which was a proper one if supported by substantial evidence did not require that defendant sustained the more difficult burden of proof that the 'cold snap' was so extraordinary and unforeseeable as to constitute an 'Act of God' which was the sole cause of the damage. See Schweiger et ux v. Solbeck et ux, supra at 464, 230 P.2d 195.

ORS 19.125(2) provides that 'No judgment shall be reversed * * * except for error substantially affecting the rights of a party.' In our opinion, defendant suffered no substantial prejudice from the sustaining of the demurrer to the affirmative defense as originally alleged.

The second affirmative defense to which plaintiff's demurrer was sustained alleged that on or about December 12, 1972, defendant notified plaintiff that the skidder 'was of no use due to its damage'; that Hub 'did not desire to use' it and 'thus terminated any liability to pay rent.'

It is well established that the lease of personal property for an indefinite period of time is ordinarily terminable at any time at the will of either party. See Sawman Oil Co., Inc. v. Bush, 136 S.W.2d 938, 940 (Tex.Civ.App.1940); Karp v. Parry, 164 N.Y.S. 685 (S.Ct.1917).

It is equally well established, however, as discussed below, that such a lessee ordinarily has a duty to return the leased property upon termination of the lease. Nat. Cash Reg. Co. v. I.M.C., Inc., 260 Or. 504, 509--10, 491 P.2d 211 (1971); cf. National Fire Ins. Co. v. Mogan et al, supra, 185 Or. at 289, 206 P.2d 963. In addition, it is held by most courts which have considered the question that if the lessee does not do so the lessor may elect to treat the lessee's continuance in possession as a renewal of the lease and demand payment of rent at the agreed rental rate for the entire period during which the lessee retains possession of the property. See Annot., 144 A.L.R. 1024 (1943), and cases cited therein. Indeed, this was the theory of the plaintiff in this case and the theory upon which the case was submitted to the jury.

It is conceded by defendant Hub that even after it claimed to have given notice to plaintiff in early December 1972 that it was terminating the lease, defendant nevertheless did not return the equipment to plaintiff until February. It follows, in our judgment, that regardless of whether defendant was liable for rent for the subsequent period from February to April, the giving of notice to terminate the lease in December 1972 in and of itself would not have been sufficient to relieve defendant from the obligation to pay at least some further rent, at least unless defendant was able to establish that the damage to the equipment which caused it to be 'totally unusable' was not due to defendant's fault or want of care.

The affirmative defense alleged in defendant's original answer was that the giving of notice alone was sufficient to terminate this lease. Defendant's amended answer alleged as an affirmative defense that the damage to the machine was due to plaintiff's fault (rather than defendant's fault) and that defendant then notified plaintiff of the damage.

It follows again, in our opinion, that under the facts of this case any error in sustaining the demurrer to the affirmative defense as originally pleaded did not substantially affect the rights of this defendant.

2. The instruction that either plaintiff was entitled to rent for the period that defendant had the equipment or defendant was entitled to recover on its counterclaim for repairs.

Defendant Hub assigns as error an instruction that 'either plaintiff is entitled to recover for rentals for the period of time that the defendant had the equipment or the defendant is entitled to recover for cost of repairs, one or the other.'

First of all, defendant's assignment of error does not set forth the exception taken by it to this instruction at the time of trial, as required by Rule 6.18 of the Rules of Procedure of this court. Accordingly, we could completely disregard this assignment of error. See Wynn v. Sundquist, 259 Or. 125, 130--31, 485 P.2d 1085 (1971); and Clubb v. Hanson, Or., 75 Adv.Sh. 2084, 2089, 536 P.2d 528 (1975). Because, however, this assignment of error goes to the heart of this case, we shall consider it.

In order to...