Thorp v. Rutherford

• Decision Date: 16 April 1935
• Citation: Thorp v. Rutherford, 150 Or. 157, 43 P.2d 907 (Or. 1935)
• Parties: THORP v. RUTHERFORD.
• Court: Oregon Supreme Court

43 P.2d 907

150 Or. 157

THORP v. RUTHERFORD.

Supreme Court of Oregon

April 16, 1935

In Banc.

Appeal from Circuit Court, Columbia County; E. K. Zimmerman, Judge.

Action by James Warren Thorp, as executor of the estate of Frank M Thorp, deceased, against L. R. Rutherford. Judgment for plaintiff, and defendant appeals.

Reversed and remanded, with instructions.

G. C. & A. C. Fulton, of Astoria, for appellant.

Glen R Metsker, of St. Helens, for respondent.

CAMPBELL Chief Justice.

On January 10, 1928, Frank M. Thorp, since deceased, contracted in writing to sell to L. R. Rutherford, a certain parcel of real estate in Columbia county, Or., at the price of $2,500 which L. R. Rutherford agreed to pay. The terms of payment were $100 cash at the time of the execution of the contract and the balance on or before five years from date with interest at the rate of 6 per cent. per annum, the interest to be paid monthly, any part of the principal payable any interest pay day; vendee to pay all taxes; keep all buildings on the premises insured; time was made the essence. If all conditions be performed by the vendee which he obligated himself to perform, the vendor "*** shall give unto the second party (the vendee) his heirs or assigns, upon request at St. Helens, Oregon, and upon the surrender of this agreement, an abstract showing marketable title continued as to the first party and good and sufficient deed of conveyance conveying said premises in fee simple, free and clear of encumbrances excepting, however, the above mentioned taxes and assessments and all liens and encumbrances created by the second party or his assigns."

The vendee also agreed to pay one-half of the cost of the abstract in excess of $20.

The contract also provided that in case of default on the part of the vendee,

"*** to make the payments aforesaid or any of them, punctually and on the strict terms, and at the times above specified, or fail to keep any of the other terms and conditions of this agreement time of payment and strict performance being declared to be the essence of this agreement, then the first party shall have the right to declare this agreement null and void, and in such case all the right and interest hereby created or then existing in favor of the said party of the second part derived under this agreement, shall utterly cease and determine and the premises aforesaid shall revert and revest in the first party without any declaration or forfeiture or act of reentry, or without any further act by first party to be performed and without any right of the second party of reclamation or compensation for money paid or for improvements made as absolutely, fully and perfectly as if this agreement had never been made.

"And in case suit or action is instituted to foreclose this contract or to enforce any of the provisions thereof, second party agrees to pay such sum as the court may adjudge reasonable for attorney's fees in said suit or action."

The vendor retained possession, or at least there is no showing that the vendee went into possession.

On January 14, 1928, L. R. Rutherford sold and assigned an undivided one-half interest in said contract to P. M. Bewley.

On June 13, 1932, F. M. Thorp, the vendor, died testate and on January 18, 1933, plaintiff herein was duly appointed and thereupon qualified as sole executor of the last will and testament of decedent.

Nothing more than the down payment of $100 was paid on the purchase price and interest was paid to July 10, 1932. Thereafter defendants failed to make further payments, and plaintiff, as executor, instituted this action to recover the amount due on the contract, and tendered to defendant an executor's deed conveying the said real estate to defendant in fee simple with warranty against encumbrances, and tendered said deed into court for the benefit of defendant, and asked for judgment for the balance of the purchase price.

Defendant filed an answer to the complaint which consisted of denials and admissions not material here, and then by way of affirmative matter set up his further defense, alleging in substance the execution of the contract set out in the complaint; the assignment of an undivided one-half interest to P. M. Bewley; that the vendor was duly notified of said assignment and consented thereto and acquiesced therein and accepted payments of interest on the contract from said P. M. Bewley; that plaintiff breached the conditions of the contract by refusing to furnish an abstract showing marketable title; by refusing to make a deed conveying said premises to defendant and P. M. Bewley as tenants in common; that because plaintiff failed to have an executor appointed after the death of the vendor until January, 1933, there was no one to whom defendant could pay the interest; that upon defendant being notified of plaintiff's refusal to execute a deed of conveyance to defendant and his assignee, defendant thereupon rescinded said contract and so notified plaintiff and demanded return of the money that had been paid thereon, to wit, $748, and prayed for judgment for that amount.

To this answer, plaintiff filed a reply in which he admits the death of F. M. Thorp, leaving plaintiff and Amy Thorp as sole heirs, the appointment of plaintiff as executor; that payment of certain installments of interest by P. M. Bewley to plaintiff's decedent, but denies that there was any understanding or agreement or knowledge on the part of the decedent of Mr. Bewley's interest in said contract. Plaintiff further alleges that said F. M. Thorp, during his lifetime, and plaintiff as his executor, and the sole heirs at law of said F. M. Thorp, were at all times and are now ready, willing, and able upon request and upon payment of the purchase price to deed said real property as in said contract described, to any person or persons whatsoever whom defendant might designate; that the sole heirs at law of plaintiff's decedent are personally known to defendant and have been so known for many years.

On these issues the case was tried to a jury which returned a verdict in favor of plaintiff for the sum of $2,400. Judgment was entered thereon and defendant appeals.

At the beginning of the trial, defendant made a general objection to the introduction of any testimony for the reason that the complaint did not state facts sufficient to constitute a cause of action. The objection was overruled and the first assignment of error is based thereon.

Defendant contends that the contract limits the right of plaintiff to the remedy provided therein. In support of this proposition defendant cites Mitchell v. Hughes, 80 Or. 574, 157 P. 965. The decision on this point in that case is based on Potter Realty Co. v. Derby, 75 Or. 563, 147 P. 548, 551, wherein it was said: "The parties having agreed upon their own remedy for a breach of the contract, that remedy is exclusive." However, the conditions in the contract under consideration in that case were that in the event the vendee failed to comply with all conditions on his part to be performed, "*** then and in any such case, all payments which shall have been made by the party of the second part hereunder shall be absolutely and forever forfeited to the said party of the first part, and this contract shall be null and void as to both parties hereto without notice. ***"

In the contract under consideration in the instant case, the vendor is not so limited. He may exercise an option. He is not obliged to declare the contract at an end and forfeit all payments made thereon and resume complete ownership.

It is further contended that, if the contract does not limit the remedy of the vendor, nevertheless the law limits his right to: (a) A suit in equity for specific performance; or (b) to a foreclosure of the contract; or (c) an action at law for damages for breach of the contract.

"Where a valid executory contract for the purchase and sale of real property is broken by the vendee's failure to pay the purchase money as stipulated in the contract, the vendor has in equity a choice of remedies. He may tender a deed and sue for the specific performance of the contract, or he may sue for a strict foreclosure of the contract." Marquardt v. Fisher, 135 Or. 256, 295 P. 499, 500, 77 A. L. R. 265.

Defendant contends that plaintiff has not sought relief in equity, but in law, and therefore his only action should be one for damages for breach of the contract. The authorities would seem to be in hopeless conflict as to whether a vendor, under such circumstances as exist in the instant case, may bring an action at law to recover the purchase price. This conflict arises, to a great extent, from the fact that no two states draw the same distinction between actions at law and suits in equity. Oregon is one of the states where the line of demarcation is quite sharply drawn. Text-writers and courts sometimes use the word "suit" and "action" as synonymous.

"The vendor has his option to sue for the purchase price on default of the purchaser. He need not rescind the contract. Such an action will prevent rescission. The action is in the nature of an action for specific performance." Thompson on Real Property, 1929 Sup. 1262.

It appears that where an independent instrument, such as a negotiable note is given for the purchase price at the same time as the execution of the contract, the vendor or his assignee may bring an action to collect the purchase price even without tendering a deed, if the contract provides that the vendee shall first pay the purchase price and the vendor thereafter make a deed. Walker v. Hewitt, 109 Or. 366, 220 P. 147, 35 A. L. R. 100; Lea v. Blokland, 122 Or. 230, 257 P. 801; Loud v. Pomona Land and Water Co., 153 U.S. 564, 14 S.Ct. 928, 38 L.Ed. 822...