Smith v. Farra

• Decision Date: 14 December 1891
• Citation: 28 P. 241,21 Or. 395
• Parties: SMITH v. FARRA. [1]
• Court: Oregon Supreme Court

28 P. 241

21 Or. 395

SMITH v. FARRA. ^[1]

Supreme Court of Oregon

December 14, 1891

Appeal from circuit court, Benton county; MARTIN L. PIPES, Judge.

Action by Cyrus Smith against G.R. Farra and D.B. Montieth on an agreement of compromise. Judgment for plaintiff. Farra appeals. Affirmed.

The other facts fully appear in the following statement by BEAN J.:

This is an action to recover $700 on an agreement of compromise between plaintiff and the defendant, Farra. The facts are these: On July 24, 1888, defendant, Farra, and one Montieth for $305 cash, sold and conveyed by deed containing covenants of title and warranty, lots 7 and 8 in block 4, in West Yaquina, Benton county, Or., to plaintiff. In August, 1890 Farra discovering that he and Montieth did not own the property sold to plaintiff, wrote him the following letter "Corvallis, Oregon, Aug. 7th, 1890. Mr. Cyrus Smith, Amity, Or.--Dear Sir: The men who have been engaged in getting up an abstract of Benton county have made a discovery that we sold you two lots--Nos. 7 and 8, in block 4, in West Yaquina--that had been sold and deeded before to Mr. W.P. Keady. We would like you to select two other lots in or near those, or even in some other portion, of about the same value, and we will deed them to you. Yours, respectfully, G.R. FARRA." To this letter plaintiff replied as follows: "Amity, Oregon, Aug. 11th, 1890. Dr. G.R. Farra--Dear Sir: Your letter of the 7th inst. is at hand, and in reply will say I was very much surprised to hear that Mr. Keedy had a deed made prior to mine to the lots in West Yaquina that you had deeded to me. I was also a little diverted at the idea that you should say, 'The lots Mr. Buford sold you,' when the record shows that you and Mr. Montieth sold me the lots, and Mr. Buford not known in the transaction. I have had those lots in a real-estate man's hands for some time. He has been instructed by me to sell the two for one thousand dollars, and nothing less. I have been offered eight hundred dollars for them, and refused it. I have taken counsel in the matter, and have been told that beyond a doubt I could recover from you and Mr. Montieth all the damage it is to me, but, as I am averse to lawsuits. I had much rather settle the matter ourselves, providing I can do so without too much loss. Please write me how it happened that you deeded those lots to me after you had deeded them to Mr. Keady. In regard to taking other lots in place of them, I would do so, providing I could get what I consider a fair deal. I know every foot of that ground, and, excepting about six lots, I would rather have those lots than any other two lots in West Yaquina. Please send me a plat of West Yaquina, marking all the lots sold. Also make me an offer of what you propose to do, and oblige, yours truly, CYRUS SMITH:" Several other letters of both parties appear in the record, which are unnecessary to be set out here, but which show an honest, bona fide attempt on the part of each to arrive at some satisfactory settlement of the controversy, but, without being able to do so, until September 8, 1890, when plaintiff wrote to defendant the following letter: "Amity, Sept. 8th, 1890. Dr. G.R. Farra--Dear Sir: Yours in answer to my inquiry as to your least cash price on certain lots in West Yaquina came to hand over a week ago, but not before I had informed you that I did not want them at any price. For some reason I have received no answer to my last letter to you, written Aug. 30th. I now write to inform you that something must be done. We have talked this matter over enough to come to some conclusion. I want it understood that I refuse to take the lots you have offered me for those I bought of you, and I presume you will not contend that I am under any obligation to do so. I merely want you and Mr. Montieth to perfect my title to the lots I bought of you, or I want you to pay me eight hundred dollars. I think I am very reasonable in this offer. In fact you have indirectly offered me that, for you have offered me two lots that you valued at $350 each, and $100, which is exactly $800. I am aware that you would rather dispose of the lots than come out with the money, which I presume is the reason you don't give me my choice to take the money or the lots. But the lots I bought of you I bought for a particular purpose, and the lots you have offered me won't fill that purpose in any sense, owing to the lay of the land. In fact I would rather have the lots I bought of you than lots 1 and 2 immediately in front of them. Please let me know immediately your final conclusion. Yours, truly, CYRUS SMITH." To this letter Farra replied as follows: "Corvallis, Oregon, Sept. 22, 1890. Mr. Cyrus Smith, Amity, Or.--Dear Sir: Your last has been to hand for quite a while, but I have been conferring with others of the company to know what best to do. We have decided that we made you a fair proposition on your lots, and more than the lots can be sold for to-day, and more than you can collect for them if carried into litigation. We will make you one more proposition: We will give you, as stated in one of my letters, two lots in block 3, facing as yours face, and one hundred dollars, ($100,) or we will give you seven hundred dollars in cash. If this is not satisfactory, you can proceed to collect your damages by law. Yours, respectfully, G.R. FARRA." Upon receipt of this letter plaintiff wrote, accepting the cash offer of $700, as follows: Amity, Sept. 24, 1890. Dr. G.R. Farra, Corvallis, Or.--Dear Sir: Yours of the 22nd was received yesterday, and in reply will say in justice I believe I am entitled to eight hundred dollars, but I can't afford to go into litigation for one hundred dollars. Therefore I accept your offer of seven hundred dollars, and on receipt of the money I will relinquish all my claims on you and Mr. Montieth for lots seven and eight in block 4 of West Yaquina. Send check on the bank, and I will receipt you for it. Yours, truly, CYRUS SMITH." Defendant having refused to comply with his agreement and pay the $700, this action was brought. The trial in the court below resulted in a verdict and judgment in favor of the plaintiff, from which defendant appeals.

J.R. Bryson and L. Flinn, for appellant.

J.W. Rayburn, for respondent.

BEAN, J., (after stating the facts.)

The only question presented on this record is the validity of the agreement of compromise between plaintiff and defendant under the facts heretofore stated. The contention of defendant is that for a breach of the covenant of title contained in his deed to plaintiff the law fixes the measure of damages at the purchase price and interest, and that, therefore, the claim of plaintiff was a fixed and liquidated one, and in no sense such a doubtful claim as will support an agreement of compromise. Upon this record it must be conceded that plaintiff had a valid cause of action against defendant for a breach of the covenants of the deed upon which he could have successfully maintained legal proceedings, and that both parties in their negotiations for a settlement, in good faith, believed that the measure of damages was the actual value of the property conveyed at the time the negotiations took place, and not the consideration and interest; and, in order to avoid litigation, and compromise the matter in dispute between them, the agreement sued on was made. Both parties were acting in the utmost good faith, with equal knowledge of the facts, and plaintiff had reasonable ground to think, for he had taken legal advice on the question, that his damages amounted to $800, and intended in good faith to assert his claim, but to avoid litigation he forebore to do so, on account of defendant's promise to pay him $700 preferring to accept that amount rather than go into litigation, and defendant preferring to pay that sum rather than to suffer the consequences of a lawsuit. That there was an actual, bona fide dispute between these parties as to the amount of plaintiff's damages, which each in good faith believed to be doubtful, and that the settlement was intended, in good faith, as a compromise of such dispute is not open to question on this record. But it is now insisted that the dispute was about a matter not in fact doubtful, although the parties so considered it, and therefore the agreement of compromise is without consideration. The law favors voluntary settlements of controversies between the parties, which are characterized...