Carey v. Lincoln Loan Co.

157 P.3d 775, 342 Or. 530, 2007 Ore. LEXIS 346
CourtOregon Supreme Court
DecidedApril 12, 2007
DocketCC 9706-04753; CA A117696; SC S53242
StatusPublished
Cited by17 cases

This text of 157 P.3d 775 (Carey v. Lincoln Loan Co.) is published on Counsel Stack Legal Research, covering Oregon Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Carey v. Lincoln Loan Co., 157 P.3d 775, 342 Or. 530, 2007 Ore. LEXIS 346 (Or. 2007).

Opinion

*532 BALMER, J.

Is the Court of Appeals lawfully constituted? Defendant Lincoln Loan Co. argues that it is not, because — in defendant’s view — the provision of the Oregon Constitution that purports to authorize the legislature to establish courts was improperly adopted in 1910. It therefore follows — again, in defendant’s view — that, when the legislature created the Court of Appeals by statute in 1969, it had no authority to do so. For that reason, defendant asserts, the Court of Appeals decision in this case, which reversed a trial court judgment in favor of defendant, is invalid and must be vacated. The Court of Appeals rejected defendant’s argument that that court was improperly established and ruled against defendant on the merits. For the reasons set out below, we affirm the decision of the Court of Appeals.

I. BACKGROUND

Plaintiffs David Carey and Tanya Carey purchased a house from defendant pursuant to a land sale contract that included various provisions that made it difficult for plaintiffs to sell the house to a third party. Plaintiffs later brought this declaratory judgment action, arguing that those provisions violated statutes applicable to loan agreements of that kind and that a provision in plaintiffs’ loan agreement with defendant that limited plaintiffs’ ability to prepay the contract was an impermissible restraint on alienation. Plaintiffs asserted that those contract provisions rendered the loan agreement unconscionable and unenforceable. The trial court granted plaintiffs’ motion for summary judgment, but the Court of Appeals reversed. Carey v. Lincoln Loan Co., 165 Or App 657, 998 P2d 724 (2000). The Court of Appeals held that defendant was entitled to judgment on some of the claims; however, it also concluded that plaintiffs’ claim that the contract provisions were unconscionable was not susceptible to summary judgment. Id. at 671. Accordingly, the court remanded the case to the trial court for further proceedings.

On remand, the trial court determined that the provisions were not unconscionable. Plaintiffs appealed. Defendant responded to that appeal by challenging the Court of Appeals’ jurisdiction to hear the appeal. Defendant argued *533 that Article VII (Amended) of the Oregon Constitution— which provides, in part, that “[t] he judicial power of the state shall be vested in one supreme court and such other courts as may from time to time be created by law” (emphasis added)— was improperly adopted by the voters in 1910. Defendant based that argument on several constitutional provisions that we describe below. Without Article VII (Amended) in place, defendant claimed, the legislature had lacked the authority to create the Court of Appeals because Article VII (Original), which establishes the judicial power of the state, did not grant the legislature that authority. 1 Therefore, defendant argued, the Court of Appeals was unconstitutionally established and lacked subject matter jurisdiction to consider plaintiffs’ appeal.

The Court of Appeals rejected defendant’s argument, holding that, even if the adoption of Article VII (Amended) were flawed, subsequent amendments to that article cured any defect in the adoption of the provision authorizing the legislature to create new courts. Carey v. Lincoln Loan Co., 203 Or App 399, 407-15, 125 P3d 814 (2006). The Court of Appeals then proceeded to the merits of plaintiffs’ appeal and held that some of the contractual provisions were unconscionable. We granted defendant’s petition for review to consider defendant’s challenge to the constitutionality of the legislation that created the Court of Appeals.

II. DEFENDANT’S CHALLENGE TO ARTICLE VII (AMENDED)

We first note that defendant raised the issue presented here in Lincoln Loan Co. v. City of Portland, 340 Or 613, 136 P3d 1 (2006). There, this court declined to reach the merits of defendant’s argument, because that action was a collateral attack on a judgment in a separate action that had been litigated fully and in which defendant had participated without challenging the Court of Appeals’ jurisdiction. Accordingly, this court concluded that defendant was barred by claim preclusion from challenging the earlier judgment. *534 Id. at 630. Here, however, we do reach defendant’s argument that the Court of Appeals was improperly established and, for the reasons discussed below, reject it. 2

In Lincoln Loan, this court summarized the basis for defendant’s challenge to the validity of the Court of Appeals:

“[Defendant] asserts that the procedure by which the voters adopted Article VII (Amended) in 1910 suffered from three constitutional defects. For that reason, according to [defendant], Article VII (Amended) never became part of the Oregon Constitution, and Article VII (Original) ‘remains in full force and effect today.’ Article VII (Original), section 1, provides, in part, that ‘[t]he Judicial power of the State shall be vested in a Supr[e]me Court, Circuit! ] Courts, and County Courts * * That provision also refers to justices of the peace and to municipal courts. However, Article VII (Original) does not mention or provide for an intermediate Court of Appeals and does not authorize the legislature to create a Court of Appeals — or, indeed, any court. In contrast, Article VII (Amended), section 1, provides, in part:
“ ‘The judicial power of the state shall be vested in one supreme court and in such other courts as may from time to time be created by law. * * *’
“The legislature created the Court of Appeals in 1969. Or Laws 1969, ch 198. If Article VII (Amended), section 1, is a valid part of the Oregon Constitution, then the legislature *535 had the authority to create the Court of Appeals, and [defendant’s argument] fails. If Article VII (Amended), section 1, is not a valid part of the Oregon Constitution, then the legislature had no authority to create the Court of Appeals, [and] the Court of Appeals had no authority to reverse [the trial court judgment in defendant’s favor].”

340 Or at 616-17 (emphasis in original).

Defendant argues that the 1910 initiative petition that created Article VII (Amended) was adopted unconstitutionally because it (1) encompassed more than one constitutional amendment, but did not permit voters to vote separately on each amendment, in violation of Article XVII, section 1, of the Oregon Constitution; (2) was enacted without compliance with the canvass and proclamation requirements of Article XVII, section 1, of the Oregon Constitution; and (3) failed to set forth the full text of the proposed constitutional amendment, in violation of Article TV, section l(2)(d), of the Oregon Constitution.

III. VALIDATION OF ARTICLE VII (AMENDED) BY SUBSEQUENT AMENDMENTS

A. Post-1910 Amendments to Article VII (Amended)

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Bluebook (online)
157 P.3d 775, 342 Or. 530, 2007 Ore. LEXIS 346, Counsel Stack Legal Research, https://law.counselstack.com/opinion/carey-v-lincoln-loan-co-or-2007.