Wittick v. Miles

• Decision Date: 15 January 1976
• Citation: 545 P.2d 121,274 Or. 1
• Parties: George E. WITTICK and Beverly Wittick, husband and wife, Appellants, v. Roberta MILES, Personal Representative of the Estate of Charles C. Miles, Deceased, Respondent.
• Court: Oregon Supreme Court

Page 121

545 P.2d 121

274 Or. 1

George E. WITTICK and Beverly Wittick, husband and wife, Appellants, v. Roberta MILES, Personal Representative of the Estate of Charles C. Miles, Deceased, Respondent.

Supreme Court of Oregon, In Banc.

Argued and Submitted Oct. 7, 1975.

Decided Jan. 15, 1976.

[274 Or. 2-A] James C. Lynch, Conn, Lynch & Story, Lakeview, argued the cause and filed briefs for appellants.

Forrest E. Cooper, Lakeview, argued the cause for respondent. With him on the brief was Vernon W. Robinson, Bend.

McALLISTER, Justice.

The plaintiffs, George and Beverly Wittick, husband and wife, filed this suit asking for specific performance of a land sale contract for the purchase of certain real and personal property in Lake County. After a hearing on the merits the trial judge dismissed the case with prejudice. Plaintiffs have appealed.

The suit was originally filed on February 19, 1973, against Merritt Parks as personal representative of the estate of Charles Miles. On June 4, 1973 Merritt Parks resigned and Roberta Miles was appointed personal representative of the estate and was substituted as the party defendant in this case. A demurrer to the complaint was sustained on the ground that plaintiff had not alleged payment of the purchase price into court. Plaintiffs appealed to this court where we held that payment into court was not required and remanded the case for trial. 268 Or. 451, 521 P.2d 349 (1974).

The case arose out of the following facts. Charles Miles died testate on January 8, 1972. The principal asset of his estate was a 240 acre cattle and hay ranch in Lake County. Pursuant to the will Merritt Parks was appointed personal representative of the estate. At the time of Charles Miles' death there was an outstanding recorded leasehold interest in the ranch for a period of six more years.

On August 2, 1972 the plaintiffs signed and delivered to an agent of Merritt Parks an earnest money receipt for the purchase of the ranch, farm and irrigation equipment, livestock and crops for a total purchase price of $75,000. At the time the receipt was signed plaintiffs paid $6,000 as an earnest money deposit. Subsequently Parks signed the earnest money receipt. On September 1, 1972 pursuant to the agreement, plaintiffs took possession of the ranch and paid an additional $16,500 on the purchase price. Plaintiffs were ready, willing and able to pay the balance of $52,500 upon tender of a deed and title insurance as required by the agreement. Parks refused to perform, repudiated the agreement, and returned to plaintiffs the total of $22,500, which had been paid by plaintiffs. Plaintiffs thereupon filed suit, asking for specific performance and attorney fees.

Defendant admitted the execution of the earnest money agreement, but defended on the ground that specific performance was impossible and inequitable. Defendant claimed that Parks, the original personal representative, had breached his fiduciary duty to the beneficiaries of the estate by offering to sell the ranch to the plaintiffs at a price below the fair market value and by offering the plaintiffs a fee simple title free of encumbrances while aware of the existence of a lease and without ascertaining the cost to the estate of extinguishing the leasehold interest. Defendant contended that a decree of specific performance would force her to breach her fiduciary duty to the beneficiaries.

After a trial on the merits the court on December 18, 1974 dismissed the complaint. The court declined to rule on whether or not there was a binding contract between the parties. Instead, the court held that even if there was a valid contract specific performance was not appropriate under the facts of this case. The court found that specific performance would be impossible because of the existence of the leasehold interest. The court further found that specific performance would be inequitable because of a gross inadequacy of consideration to the injury of innocent parties, namely, the beneficiaries of the estate. The court acknowledged that the personal representative did not need court approval to sell the property in question, but held that it was still the right of the court to consider adequacy of consideration in determining whether or not to grant specific performance.

Since this is a suit in equity we review de novo on the record. ORS 19.125(3).

The first issue is whether the parties agreed that the termination of the leasehold estate was a condition precedent to the validity of the earnest money agreement. The trial court did not decide this issue because it held that its finding that specific performance was neither possible nor equitable disposed of the case. The holding of the trial court that plaintiffs would have to seek their remedy at law was in error.

Once equity has jurisdiction over a controversy it should proceed to decide the case and award complete relief even though the rights of the parties are strictly legal and the final remedy is of a kind normally granted by a court of law. Walker v. Mackey et al., 197 Or. 197, 209--210, 251 P.2d 118, 253 P.2d 280 (1952), and authorities there cited. If either specific performance or partial performance is impossible, impracticable, or unjust, the equity court retains jurisdiction to award plaintiff damages. Walker v. Mackey, supra at 209, 251 P.2d 118, 253 P.2d 280.

Plaintiff George Wittick testified that he knew of the lease before the earnest money receipt was signed, but that he was told that the estate would buy out the lessees. The real estate broker who handled the sale for the seller was also told that the lease would be terminated and that the sale to the plaintiffs would be of the ranch, free of all encumbrances. The attorney who represented the seller Parks, the original personal representative, testified he was handling a 'package' for the estate, the sale of the ranch and the termination of the lease. There was no testimony by either Parks or any of his agents or the plaintiffs that the sale was contingent on the termination of the lease at a reasonable price. In fact, plaintiffs took possession of the ranch pursuant to the agreement on September 1, 1972 before the lease was terminated. Plaintiffs put the lessees on the payroll, filed a business name, started a bookkeeping system, took miscellaneous equipment to the ranch, branded some cattle, and worked on the ranch every weekend in September. The earnest money receipt clearly stated that the conveyance was free of all encumbrances and no mention was made on the receipt of the lease or any condition precedent pertaining thereto. In view of this and other evidence we hold that the parties did not agree that the termination of the leasehold estate was a condition precedent to the validity of the earnest money agreement.

In view of our holding, we need not consider whether the parol evidence rule prevents consideration of an oral condition precedent agreed to by the parties if it is inconsistent with the writing. See, however, J & J Construction Co. v. Mayernik, 241 Or. 537, 539, 407 P.2d 625 (1965).

The second issue is whether the existence of the leasehold interest makes the granting of equitable relief impossible. We hold that it does not.

[3-6] Either party to a contract for the sale of land generally may have specific performance of the contract. Re Estate of Denning, 112 Or. 621, 628, 229 P. 912 (1924). The granting of specific performance, however, is not a matter of grace, but of sound judicial discretion, and is 'governed by the established principles and rules which constitute the body of equity jurisprudence.' Temple Enterprises v. Combs, 164 Or. 133, 158, 100 P.2d 613, 623, 128 A.L.R. 856 (1940); Anderson v. Allison, 256 Or. 116, 123, 471 P.2d 772 (1970); Renard v. Allen, 237 Or. 406, 417, 391 P.2d 777 (1964). If the written contract provides that the vendor shall convey the premises free from encumbrances, it is immaterial that the purchaser had knowledge, at the time of contracting, that there was an encumbrance on the property. The vendor assumed the risk of acquiring clear title and the purchaser has the right to insist on the terms of the contract, Crahane et al. v. Swan, 212 Or. 143, 154--155, 318 P.2d 942 (1957). Where the defect in title is extreme purchaser may be denied complete specific performance, but he is entitled to receive such partial performance as the vendor can give. 11 Williston on Contracts (3d ed.) 903--904, § 1436; Fry, Specific Performance (6th ed.) 587, § 1267. Equitable compensation is the remedy in equity where complete performance is impractical. winters v. Shelton et ux., 225 Or. 104, 108, 357 P.2d 284 (1960); Restatement of Contracts 659, § 365. Equitable compensation is not synonymous with damages at law for breach of contract; it is given ancillary to specific performance or as a modification of specific performance. Caveny...