Zumstein v. Stockton

• Decision Date: 25 November 1953
• Citation: 199 Or. 633,264 P.2d 455
• Parties: ZUMSTEIN v. STOCKTON et al.
• Court: Oregon Supreme Court

Page 455

264 P.2d 455

199 Or. 633

ZUMSTEIN v. STOCKTON et al.

Supreme Court of Oregon.

Argued and Submitted Oct. 21, 1953.

Decided Nov. 25, 1953.

William E. Dougherty, Portland, argued the cause and filed a brief for appellant. With him on the brief was Robin D. Day, Salem.

W. T. Hollen, Newport, argued the cause and filed a brief for respondents. With him on the brief was A. R. McMullen, Newport.

Before LATOURETTE, C. J., and ROSSMAN, LUSK, BRAND and PERRY, JJ.

BRAND, Justice.

The plaintiff Zumstein brought suit as the successor in interest to the vendor in a contract for the sale of real and personal property. The defendants Stockton are the vendees. The trial court held that the defendants were not in default at the time of the filing of the complaint; that the plaintiff by his complaint had rescinded the contract; and that the defendants had elected to agree to the rescission. The court therefore entered a decree adjusting the mutual rights of the parties on the theory of a mutual rescission. The plaintiff appeals.

The construction and legal effect of the pleadings will be determinative of the case. The complaint alleges that the plaintiff was the owner of the property; it sets forth the contract of sale and purchase; the defaults in payment by the defendants, together with other failures to perform according to the terms of the contract. It then alleges that 'plaintiff has elected and does now elect to terminate the contract entered into by and between his predecessor, William E. Coleman, and the defendants, and does declare the same at an end.' The defendants contend that by the foregoing election the plaintiff, in legal effect, declared a forfeiture.

The next paragraph of the complaint alleges 'That $1500.00 is a reasonable sum to be allowed plaintiff as attorneys fees for instituting this suit to foreclose on the contract herein marked 'Exhibit A'.' The prayer of the complaint is for a decree determining the amount of the unpaid balance of purchase price and interest, and that the same be paid by the defendants to the clerk of the court within 15 days from the time of the entry of the decree or within such time as the court may adjudge reasonable; that the plaintiff forthwith deliver to the clerk for the defendants a deed conveying the premises to defendants, to be delivered if the unpaid balance and attorneys' fees are paid by the defendants to the clerk for the plaintiff, but in case default should be made in payment of the required sums within the time specified in the decree, the prayer is that the defendants be strictly barred and foreclosed of all interest in the property. The defendants filed an answer containing denials and affirmative allegations to the effect that the plaintiff had expressly and impliedly waived the time-essence clause in the contract and had given no notice reinstating that clause. Defendants asserted that plaintiff was estopped from declaring remainder of the purchase price to be due and from foreclosing the defendants of their interest in said premises. The answer then offered to pay all sums due under the terms of the contract. The prayer was for a dismissal of the complaint.

It is clear that the defendants at that time considered the plaintiff's suit to be one seeking foreclosure in equity and that they relied upon equitable principles for their defense. There was no plea in abatement.

On the day of the trial the defendants secured an order permitting the filing of an amended answer which repeated the allegations concerning the waiver by the plaintiff of the time-essence clause and his failure to reinstate the same by notice, and then added an allegation that 'plaintiff has elected in his said Complaint to declare said contract null and void * * * and has thereby violated said contract; that as a result of such breach on the part of the plaintiff, defendants are now acquiescing in the recision of said contract.' Defendants then prayed for affirmative relief effectuating the alleged mutual rescission. There was still no plea in the nature of abatement.

Our first question is whether the plaintiff wrongfully rescinded the contract by the quoted allegation of his complaint. The plaintiff contends that his complaint should be construed as one for strict foreclosure and that he did not declare a forfeiture. The paragraph of plaintiff's complaint which alleges that $1,500 is a reasonable amount to be allowed as attorneys' fees for instituting 'this suit to foreclose on the contract' is inconsistent with any theory that the plaintiff had declared a forfeiture. The plaintiff could not claim attorneys' fees unless he was suing upon the contract, and the allegation concerning such fees constituted a recognition that the contract was still in force. Nor is there any ambiguity in the prayer of the complaint. If plaintiff had declared a forfeiture there would be no occasion to ask the court for an adjudication for the balance due. On the other hand, if the suit was for a strict foreclosure, it would be necessary for the trial court to determine the amount due so that the defendant might know the amount which must be paid to avoid strict foreclosure. At the time suit was filed the defendants were in arrears in payment of taxes and purchase price installments under the requirements of the contract, and the trial court so found.

The complaint must be construed as one for strict foreclosure. The defendant argues in substance that the prayer is not to be considered as a part of the pleading, and we have held that the prayer is 'technically no part of the complaint.' Andersen v. Turpin, 172 Or. 420, 142 P.2d 999, 1004; Elliott v. Mosgrove, 162 Or. 507, 91 P.2d 852, 93 P.2d 1070. But the situation in those cases was unlike that in the one at bar. In the Elliott case it was held that a defective prayer did not prevent the court from awarding the relief warranted by the allegations of the complaint. In the Andersen case it was held that a prayer for greater relief than was warranted by the facts alleged did not make the complaint demurrable.

In the case at bar the prayer merits consideration along with the other allegations of the complaint to which we have referred. It shows that the plaintiff is seeking the relief of equity to foreclose an interest which the pleader recognizes as still existing. As said in Atkochunas v. Gustafson, 156 Or. 126, 129, 66 P.2d 1192, 1193;

'The relief sought by strict foreclosure is that the defendants be compelled to comply with the terms of the contract and, upon their failure so to do, that their rights under it be foreclosed and barred. * * *'

Such a suit is not merely for strict foreclosure. It is for alternative relief in that it asks either for payment or for foreclosure. The relevancy of the prayer in cases of this kind was recognized in Nielsen v. Baldridge, 173 Or. 555, 565, 146 P.2d 754, 757, where this court said:

'* * * By praying for a foreclosure of the contract, the plaintiff, of course, deemed the contract to be a subsisting one which conferred upon the vendee a correlative right of redemption: [Citing authorities]. By appealing to the equitable jurisdiction, the plaintiff must be deemed to have submitted herself to the court's discretion as to what is necessary, so that justice may be done to all parties under equitable principles * * *.'

The fact that a vendor has declared a forfeiture, or that a forfeiture has automatically occurred, does not prevent the vendor from suing for strict foreclosure. The forfeiture is waived when the plaintiff seeks strict foreclosure. Furthermore, the fact that the plaintiff alleges in his complaint that a forfeiture has been or is declared will not prevent the court from awarding a strict foreclosure where that relief is sought.

In Edwards v. Wirtz, 167 Or. 625, 118 P.2d 114, this court held that there was an automatic forfeiture of the vendees' interest under the particular provisions of the contract. Whether we correctly held that the forfeiture was automatic is immaterial, for if it was not automatic it was sufficiently declared when the defendant vendor ousted the purchaser from possession. In either event the case is authority for the proposition that an automatic forfeiture or a declared forfeiture does not of itself prevent the vendee from bringing a suit for strict foreclosure.

In Turnbow v. Keller, 142 Or. 200, 12 P.2d 558, 19 P.2d 1089, plaintiff brought suit to foreclose the vendee's rights under a contract of sale. Reference to the complaint will show that the plaintiff exercised his option and declared the contract forfeited. As in the case at bar, the plaintiff asked for attorneys' fees and for a strict foreclosure, which was awarded by the decree.

In Marquardt v. Fisher, 135 Or. 256, 295 P. 499, 77 A.L.R. 265, the forfeiture provision was identical to that in the case at bar. The complaint alleged that because of breaches by the vendee 'said contract is by the plaintiffs hereby declared null and void and forfeited * * *.' In the case at bar the corresponding allegation was, 'plaintiff has elected and does now elect to terminate the contract * * * and does declare the same at an end.' We see no substantial difference in the parallel allegations. In the Marquardt case this court construed the suit to be one for strict foreclosure. The court denied plaintiff's prayer for judgment for the balance due on the contract, but ordered a strict foreclosure. See also Lyons v. Chaffee, 79 Or. 485, 154 P.2d 688.

Defendants rely upon Akochunas v. Gustafson, supra. That case does not support their contention but it does conclusively establish the rule that suit for strict foreclosure of a contract brought when the vendee has failed to comply with the provisions for payment is not a disaffirmance of the contract but is one for the enforcement of a contract right which could exist only if the contract is still in force. See also Flanagan's Estate v. Great Cent. Land Co., 45 Or. 335,...