Tooze v. Heighton

• Decision Date: 14 March 1916
• Citation: 79 Or. 545,156 P. 245
• Parties: TOOZE v. HEIGHTON ET UX.
• Court: Oregon Supreme Court

156 P. 245

79 Or. 545

TOOZE v. HEIGHTON ET UX.

Supreme Court of Oregon

March 14, 1916

Department 2.

Appeal from Circuit Court, Marion County; Wm. Galloway, Judge.

Action by B. C. Heighton and wife against Charles T. Tooze, and complaint in equity in the nature of a cross-bill by defendant against plaintiffs. From a decree for defendant on the cross-bill, plaintiffs appeal. Decree reversed, and demurrer to cross-bill sustained.

B. C Heighton commenced an action at law against Charles T. Tooze for the recovery of $3,482 on account of the failure of the latter to comply with an alleged agreement concerning land. The complaint in the action at law alleges that Tooze agreed in writing to sell to Heighton 80 acres of timber land for the sum of $5,000; that Heighton paid $1,000 in property, and was to receive a deed when the balance of the purchase price was paid. The pleading then relates that Heighton and Tooze exchanged their interest in the timber land for certain hotel property in Polk county, and that pursuant to their agreement Tooze took the deed to the hotel and executed to Heighton a contract for the sale of the hotel in lieu of the one for the sale of the timber land, giving Heighton credit for the $1,000 payment, and also allowing other credits which reduced Tooze's interest in the hotel property to $3,000. It is then alleged that they desired to exchange the hotel for a farm in Marion county and two promissory notes, one note being for $90. and the other for $30, and agreed that Tooze should receive the deed to the farm, and then deliver to Heighton another contract for the sale of the farm in lieu of the agreement which had been made for the sale of the hotel property; that Tooze was to execute such a contract to Heighton for the purchase of the farm "as would give plaintiff ample and sufficient time to pay therefor, and that plaintiff should have possession of said property during the continuance of said contract, and that, when the same was fully paid for, defendant should execute to plaintiff a deed to the same, it being understood and agreed at said time that in said contract defendant would again credit plaintiff upon the purchase price" of the farm the amount of the credits on the hotel property. The complaint also avers that it was understood that the two notes would "be turned over and become the property of plaintiff"; that the exchange was made, the farm being conveyed to Tooze and the two notes delivered to him; that Heighton took possession of the farm upon which he has placed improvements valued at $512; that Tooze has broken the agreement by refusing to execute a contract, notifying Heighton to vacate the farm bringing an action against Heighton for the possession of the premises, and collecting and appropriating moneys due on the two notes; and that because of the failure of Tooze to keep his agreement Heighton is damaged in the sum of $3,482, for which amount judgment is demanded. Tooze filed an answer to the complaint in the action at law, and then filed a complaint in equity in the nature of a cross-bill which, in substance, alleges: That Heighton purchased the hotel property, and, not having enough money to close the deal borrowed $3,000 from Tooze, and secured the loan by causing the hotel property to be conveyed to Tooze, who then delivered to Heighton a written contract for the sale of the property; that afterwards Heighton exchanged the hotel for the farm, the exchange being effected by Tooze conveying the hotel and receiving a deed to the farm as security for the moneys due from Heighton; that upon completion of the exchange Heighton owed Tooze $3,665.34; that the two notes were received by Tooze with the understanding that he should collect and apply the moneys on the indebtedness of Heighton that when Tooze received the deed to the farm Heighton agreed to reduce his indebtedness to $3,000 on or before October 1, 1914, and that, if the indebtedness was not so reduced, the farm should be the absolute property of Tooze, but, if the reduction was made, Tooze would deliver to Heighton a contract for the sale of the farm upon the same terms and conditions and in the same form as the contract concerning the hotel property, and that Heighton was not to go into possession of the farm until a contract was delivered to him; that no payments have been made except $120 received on the two notes; that Heighton took possession of the farm, and then incurred indebtedness amounting to $340 in the construction of buildings which Tooze was obliged to pay in order to free the premises from liens; that Tooze paid $33 as interest on a mortgage for $1,100 on the farm held by the state land board, and that the principal of the mortgage is now due; that at the request of Heighton $25 was paid to attorneys when the hotel was exchanged for the farm; that Heighton agreed to pay 6 1/2 per cent. interest on all moneys due Tooze. The prayer of the complaint in equity asks for a judgment for the amount due from Heighton and a decree enjoining the prosecution of the action at law and foreclosing the interest of Heighton by a sale of the farm. The trial court overruled a demurrer to the complaint in equity. Heighton refused to plead further, and thereupon a decree was rendered in accordance with the prayer of the complaint.

W. C. Winslow, of Salem, for appellants. John A. Carson, of Salem, and Walter L. Tooze, Jr., of Dallas (Carson & Brown, of Salem, on the brief), for respondent.

HARRIS J. (after stating the facts as above).

Omitting the details and reciting only the result of the transactions, the complaint, in substance, states that Tooze delivered to Heighton a written contract for the sale of the hotel upon which Heighton made substantial payments; that Tooze and Heighton exchanged their interests in the hotel for the farm; that Tooze was to deliver to Heighton a written contract containing specified stipulations for the sale of the farm in lieu of the contract for the sale of the hotel; that Tooze failed to keep any of his promises; and that Heighton is therefore entitled to recover the payments made by him together with other damages. The complaint in equity, which for convenience we shall call a cross-bill, although it is only in the nature of a cross-bill, sets forth that Heighton borrowed money from Tooze, who received the farm as security for the loan; that it was agreed that, if Heighton reduced the indebtedness to $3,000 by October 1, 1914, Tooze would make him a contract for the sale of the farm, but, if the reduction was not so made, the farm "should be the absolute property" of Tooze.

If the agreement was as claimed by Heighton, and if Tooze has committed the breaches complained of by the former, then Heighton is entitled to recover a judgment. If, however, the agreement was as alleged by Tooze, and if Heighton has been guilty of the violations charged against him, then Heighton would not be entitled to treat this agreement as rescinded and to recover the payments made by him. Both parties admit that there was an agreement but they differ radically as to the terms of the agreement. The right of Heighton to recover in the action at law depends upon whether he can prove the agreement alleged by him; and it is plain that Tooze can prevent a recovery by pleading and proving in the action at law the contract and a breach of the contract as claimed by him. Heighton argues that Tooze could have pleaded in the action at law every fact recited in the cross-bill, and that therefore the latter was not entitled to convert the litigation into a suit in equity by filing a cross-bill. Tooze contends that his right to foreclose the contract entitled him to file a cross-bill, because only a court of equity could foreclose the interest of Heighton; and therefore the single question for decision is whether Tooze had the right to transfer the controversy from an action at law to a suit in equity by the filing of a complaint in the nature of a cross-bill as provided for in section 390, L. O. L.

In 1862 the Legislature passed an act to provide a Code of Civil Procedure, section 377 of which reads thus:

"Bills of revivor and bills of review of whatever nature, cross-bills, exceptions for insufficiency, impertinence, or irrelevancy are abolished; but a decree in equity may be impeached and set aside, or suspended or avoided, or carried into execution, by an original suit. The mode of proceeding in a suit from the commencement to the determination thereof, and thereafter until satisfaction or performance of the decree be had, shall be as provided in this chapter and not otherwise." Laws 1862, pp. 99, 100, Code of Civil Procedure; section 377, Deady's Code.

In 1870 section 377 of the Code of Civil Procedure was amended. Laws 1870, p. 30. The amendment, as reproduced in section 390, L. O. L., appears as follows:

"Bills of revivor and bills of review, of whatever nature, exceptions for insufficiency, impertinence, or irrelevancy, and cross-bills, except as hereinafter mentioned, are abolished; but a decree in equity may be impeached and set aside, suspended, avoided, or carried into execution by an original suit; and in an action at law, where the defendant is entitled to relief, arising out of facts requiring the interposition of a court of equity, and material to his defense, he may, upon filing his answer therein, also

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