Simms Co. v. Wolverton

• Decision Date: 17 October 1962
• Citation: 375 P.2d 87,232 Or. 291
• Parties: The SIMMS CO., a corporation, Respondent, v. William J. WOLVERTON and Orval W. Sorenson, Respondents, trew Corporation, a corporation, Appellant.
• Court: Oregon Supreme Court

Page 87

375 P.2d 87

232 Or. 291

The SIMMS CO., a corporation, Respondent, v. William J. WOLVERTON and Orval W. Sorenson, Respondents trew Corporation, a corporation, Appellant.

Supreme Court of Oregon, Department 1.

Argued and Submitted Sept. 7, 1962.

Decided Oct. 17, 1962.

Donald H. Joyce, Portland, argued the cause and filed the brief for appellant.

Clifford B. Olsen, Portland, argued the cause and filed the brief for respondent Wolverton.

Before McALLISTER, C. J., and ROSSMAN, PERRY, GOODWIN and DENECKE, JJ.

ROSSMAN, Justice.

This is an appeal by the defendant, Trew Corporation, from a decree of the circuit court which ordered the disbursement of $3,000 of earnest money which Trew had deposited with the plaintiff June 7, 1960, when Trew proposed to purchase a parcel of real property owned by the defendant Wolverton and which he had listed for sale with the plaintiff real estate broker. At the time of the proposal Trew signed a part of a paper entitled Earnest Money Receipt which constituted upon Trew's part a conditional agreement to purchase; at that time Trew made the aforementioned deposit of the earnest money. The agreement to purchase contemplated that Trew should obtain $60,000 of the purchase money ($93,500) through the execution of a mortgage upon the property. Trew presented evidence which showed that it was unable to find a mortgage lender who would make the loan. When, through Trew's alleged inability to find a lender, the sale failed, conflicting demands were made upon the plaintiff for the disbursement of the earnest money. The plaintiff thereupon instituted this suit which prayed for a decree of interpleader. It was directed by the court to deposit in the registry the sum of $3,000; it did so.

The challenged decree ordered that (1) $250 of the earnest money be disbursed to the plaintiff for the payment of its attorney fee and (2) the remainder be divided equally between the defendant Wolverton and the defendant Sorenson, the plaintiff's salesman who handled this transaction. The part of the decree which awarded the plaintiff $250 for the services of its attorney in instituting the suit has not been criticized. This appeal challenges only the part of the decree which directed the division of the remainder of the earnest money between Wolverton and Sorenson.

Sorenson filed an answer in the circuit court which consisted of admissions and denials, but no prayer for relief. He did not appear during the trial, and has filed nothing upon appeal. The record contains no findings.

The appellant (Trew) submits six assignments of error. The second, to which we will now give attention, reads:

'The court erred in finding that the intending seller might substitute his mortgage for that of the intending purchaser so as to work a forfeiture of the intending purchaser's deposit.'

In May of 1960 negotiations began between Wolverton and Trew. They were conducted on behalf of the plaintiff through Sorenson. The paper which Trew signed June 7, 1960, and which reflected the agreements of the parties, contained this provision:

'Purchaser to furnish at the time of closing $23,500.00 Balance of $70,000.00 payable at time of closing to come from first mortgage in principal amount of $60,000.00 and second mortgage in principal amount of $10,000.00. Obtaining of these mortgages as specified on the sheet hereto attached is a condition of this offer. If not obtained, earnest money to be refunded.'

The 'sheet hereto attached' is a typewritten paper which sets forth the details of the proposed mortgages.

Although Trew made a serious effort, it was unable to obtain the needed 'first mortgage in principal amount of $60,000.' When Wolverton discovered this difficulty he conferred with an officer of the Oregon Mutual Savings Bank who expressed willingness on the part of his bank to make a first mortgage loan on the property upon substantially the terms outlined in the addenda attached to the earnest money receipt. But it would do so only on condition that Wolverton himself be the mortgagor. The bank would not accept the Trew Corporation as Mortgagor. Wolverton thereupon suggested to Trew that he (Wolverton) become the mortgagor and thereafter convey the property to Trew subject to the mortgage. Trew declined. It contended that with Wolverton rather than itself as mortgagor the legal relationship between the parties would be materially altered from what the agreement contemplated.

Trew contends that in the event of future adverse conditions that might necessitate application for a renewal of the mortgage or its foreclosure it (Trew) would fare better if it were the mortgagor rather than Wolverton. We take the following from 59 C.J.S. Mortgages § 401, page 566, headnote b.

'Although there is some authority to the contrary, a mortgagor may be released from liability where the mortgagee grants to a purchaser of the property an extension of time for payment without the knowledge or consent of the mortgagor. * * * In some jurisdiction the mortgagor is released only to the extent of the value of the land at the time the extension agreement is made * * *.'

The text cites Hulin v. Veatch, 148 Or. 119, 35 P.2d 253, 94 A.L.R. 1319. Hulin v. Veatch quoted with approval the following from McFarland v. Melson, 323 Mo. 977, 20 S.W.2d 63:

'* * * The notes...