Aya v. Morson

178 P. 207, 90 Or. 647, 1919 Ore. LEXIS 14

• Court: Oregon Supreme Court
• Decided: January 28, 1919
• Status: Published

Opinion

BENNETT, J.

2. It is urged on behalf of appellant that the contract for the release of the canal stock and the assignment of the Carey Act Liens, while oral in itself, was only a modification of the previous original contract between Morson and the plaintiff, and as such modification was not within the statute of frauds, because the original contract was then fully executed, except as to the mere transfer of the canal stock by Morson in payment of plaintiff’s services.

But it is thought that this latter transaction was in the nature of a new and independent contract, by which the canal stock due to the plaintiff was to be delivered or exchanged for the Carey Act Liens, and, therefore, it is not necessary to consider whether a written contract could be modified by a parol addition, which would itself independently be within the statute of frauds.

3, 4. Our Code in Section 808, L. O. L., re-enacts many of the provisions of the English statute of frauds, but subdivision 6 does not seem tó be as broad as the original statute and only restricts “the sale of real property or of any interest therein,” whereas the English act provides:

“No action shall be brought upon any contract or sale of tenements or hereditaments, or any interest in, or concerning them, unless the agreement upon which such action shall be brought, or some memorandum or note thereof, shall be in writing,” etc.: Smith on Frauds and the Statute of Frauds, § 354, p. 451.

As a consequence, some verbal agreements in relation to lands might not come within our statutes which were within the original statutes of frauds: Anderson v. Powers, 59 Tex. 213. It is plain the contract to transfer these liens comes within Section 808, subdivision 6, L. O. L., if prohibited at all, for it is an “agreement” to transfer and not a transfer under Section 804,' L. O. L.

The question then in this regard is, whether liens under the Carey Act are real property or an interest therein, and, therefore, required to be in writing by subdivision 6. The state of the record in the case leaves it open to some question as to just what was meant by Carey Act liens in the contracts in question. It is assumed, however, that they refer to the segregated liens provided for by the contract between the State of Oregon and the Des Chutes Land Company for lands being reclaimed under the Carey Act. These liens being provided for by law and by executive act, we take judicial knowledge of them under Section 729, subdivision 3, L. O. L. The contract between the Des Chutes Land Company and the State of Oregon, provides:

“The party of the second part hereby declares, fixes and establishes the sum of $36 per acre for each acre of land embraced in this contract which may be reclaimed, as the amount due and payable to said party of the first part for the actual cost and necessary expenses of the reclamation of said lands, and now hereby creates a lien on and against said lands, which shall be valid on and against the separate legal subdivisions, of the land reclaimed from the date of reclamation until disposed of or released to settler, together with interest at 6 per cent per annum on the full amount of said lien from the date of reclamation until paid”: See Report of Desert Land Board, 1911, p. 98, par. 10.

And the contract authorized by the state between the Des Chutes Land Company and the settlers, contains the following:

“The purchaser agrees for himself, his heirs, administrators, executors and assigns, to pay the sum of-dollars, it being the amount of the lien due the company for reclamation as fixed by the said contract with the State of Oregon, with interest thereon at the rate of 6 per centum per annum from the date of reclamation. Payments for said amount are to be made as follows: Cash, as above stated, and the balance of-dollars in-equal payments, with interest thereon from the date of this contract, if executed on or after the date of reclamation, at 6 per centum per annum, payable annually at the office of the company, either in Portland or Crook County, Oregon, all of which deferred payments are for convenience only, evidenced by the purchaser’s promissory notes of even date herewith, which shall bear interest from date, if given after date of reclamation, otherwise from date of reclamation, and said notes shall show on their face that they represent the unpaid balance on the payor’s reclamation contract, dated-day of-, 19 — .”

There may have been some slight changes in these provisions at different times, but they have remained substantially the same.

It seems to be too well settled in this state to be any longer in question that mortgages and liens are not “real property, or any interest therein”: Anderson v. Baxter, 4 Or. 105, 110; Sellwood v. Gray, 11 Or. 534, 537 (5 Pac. 196); Watson v. Dundee M. & T. I. Co., 12 Or. 480 (8 Pac. 548); Adair v. Adair, 22 Or. 115, 131 (29 Pac. 193); Kinney v. Smith, 58 Or. 158 (113 Pac. 854); Hillman v. Young, 64 Or. 73, 82 (127 Pac. 793, 129 Pac. 124); Casner v. Hoskins, 64 Or. 254, 286 (128 Pac. 841, 130 Pac. 55); Hughes v. Lapsing, 34 Or. 118, 124 (55 Pac. 95, 75 Am. St. Rep. 574).

In the case of Anderson v. Baxter, 4 Or. 105, 110, it is said:

“That a suit to foreclose a mortgage is not for the determination of any right or claim to, or interest in real property, but a proceeding to have the mortgaged property adjudged to be sold to satisfy the debt secured thereby. # * If it were a suit to divest a party of title, or to establish some right regarding the title to real property, it would stand upon a different footing.”

So in Sellwood v. Gray, 11 Or. 534, 537 (5 Pac. 196), it is said:

“In this state a mortgage does not operate, as at common law, to vest in the mortgagee an estate upon condition. * * It is, in fact, what the parties intended, and as equity treated it, a mere security for the repayment of the debt or obligation, and serves simply to create a lien or encumbrance upon the property. * * The mortgage works no change of ownership in the property.”

In Casner v. Hoskins, 64 Or. 254, 286 (128 Pac. 841, 130 Pac. 55), it is said by Mr. Justice Moore:

“The rule is quite general that, a mortgage being only an incident of a debt, the validity of the security, so far as it may be affected by usury, is, in the absence of any enactment to the contrary, governed by the principles of law applicable to personal contracts.”

In Hughes v. Lansing, 34 Or. 118, 124 (55 Pac. 95, 75 Am. St. Rep. 574), a mechanic’s lien was involved and the question was as to the waiver of the same. It was claimed, as is said by the court,

“That it is a transaction concerning real property in which the supposed agent, Baker, had no competent authority to bind Groodale under the statute of frauds. ’ ’

And Chief Justice Wolverton, delivering the opinion of the court, said:

“As it concerns the second ground of objection, it is clear that the mere right or privilege of preserving and perpetuating a mechanic’s lien upon buildings is not an interest in land.”

So whatever may be the rule in other states it may be considered as settled in Oregon, that a mortgage or lien on land is a mere incident to the personal debt, and is not real property or interest therein, within the meaning of our statute of frauds.

5-7. But there is still left the question as to whether or not the agreement here presented to transfer these liens was void under subdivision 5 of this section, as an agreement for the sale of personal property greater than $50.

This transaction was a barter rather than a sale, being in the nature of a delivery of the right to the canal stock for the right to the lien. Nevertheless, barter has been generally held to be within such statutes : 20 Cyc. 239, subd. B, and authorities cited.

The only question, therefore, is whether or not the canceling of the agreement for the canal stock and the release of Morson from his agreement to deliver the same, was a payment of the price or some part of the price of the liens.

At the time of this new transaction the plaintiff seems to have been clearly entitled to the transfer of 500 shares of the canal company’s stock. The allegation of the complaint is,

“that plaintiff did thereupon release Ms interest in and to the Canal Construction Company; and agreed, to the release and concellation of the- irrigation contract then existing between the Canal Construction Company and the Des Chutes Land Company,” etc.

The offer of proof is

“that thereupon Aya agreed to release Morson from his obligation to deliver said stock in the Canal Construction Company and did release Mm and did vote for the cancellation of the Canal Construction Company contract.”

It does not appear how the release of Morson was. accomplished but the • allegation and offer of proof seems to be of a present release at that time, and it is thought that the plaintiff should have been permitted to make his proof upon that allegation, when'it would have appeared whether the release and cancellation actually took place, as alleged, and whether it was accomplished in such a way as to take the agreement for the transfer of the liens out of the statute.

In Milos v. Covacevich, 40 Or. 239, 241 (66 Pac. 914),. the agreement was to deliver a fishing net to the plaintiff in part payment of a balance due him for services,, and the question was whether the agreement to accept the fishing net on the previous indebtedness took the transaction out of this subdivision of the statute, and it is said by Mr. Chief Justice Bean :

“The mere oral agreement of the creditor that the goods shall go in settlement of the debt is not sufficient to satisfy its requirement. Unless the contract is in writing, the statute requires something more than mere words, however carefully they may he considered. * * There must he acts which, in the nature of things, are less open to misconstruction and misunderstanding. If payment is relied on, it must he made in money or property, or in actual discharge, inowhole or in part, of some antecedent debt. A mere agreement to apply the purchase money on the debt will not suffice, because the contract would still rest in words, and nothing more. There must be an actual cancellation and discharge of the indebtedness on the books of the creditor, or a written receipt executed by him, or some other like unequivocal act, not resting in mere words, which will bind him.”

In this case we cannot say from the record before us, whether the release and cancellation of the canal stock in payment for the liens was effected by such unequivocal act as will bring the case out of the statute of frauds. That will no doubt appear definitely one way or the other in another trial of the cause.

The statute of frauds was adopted originally for a good and beneficial purpose. It seems to have stood the test of time for it has been re-enacted in some form in the Codes of almost every state in the Union. But it seems there is no law which human foresight can provide, however good in its general result, which does not sometimes work a hardship in particular instances and become a cover for wrong and unjust advantage.

It would not be right to presume in any case because a party takes advantage of the statute that he is attempting to perpetrate a fraud under cover of its shadow. It would not be right to say that the defendant is in that position in this case; nevertheless, there are some things in the record which suggest, as contended by the plaintiff, that this may possibly be so.

We have no choice hut to declare the principles of law as they are established by the legislative enactments.

It is sometimes said, “that the statute will not be permitted to become a cover for fraud,” but we know of no way of preventing it from sometimes having that effect, at least in a court of law, if one party, is cunningly dishonest and the other improvident.

It is also urged that the contract for the transfer of the lien was void because a part of the consideration was the voting for the cancellation of the canal company’s contract with the Des Chutes Land Company, and thereby the rendering of the canal company’s stock worthless. And it is urged that where the director of a corporation receives a promise or an agreement in consideration, that he votes against the interest of the corporation the promise or contract to him is void.

But we cannot see that this, question is in the record. We cannot find from the record that the plaintiff was a director of the corporation. There is such an allegation in the answer, but it is denied in the reply and we cannot assume that it is so in the absence of proof.

Besides, the doctrine invoked would only apply in the case of fraud, and here there might not be any fraud. The canal company’s contract is alleged to have been canceled by vote of the stockholders, as well as the director's, and it may be that all of the stockholders consented to the transaction. All of these are questions which are not presented at this state of the case.

It follows the case should be reversed and remanded to the court below for a new trial.

Reversed and Remanded.