Fargo v. Wade

142 P. 830, 72 Or. 477, 1914 Ore. LEXIS 56

• Court: Oregon Supreme Court
• Decided: July 14, 1914
• Status: Published

Opinion

Mr. Justice Moore

delivered the opinion of the court.

1. The important question to be considered is whether, the conveyance of the land to the plaintiffs constituted such a breach of Ewing’s agreement as to prevent a recovery of any of the remaining installments. The contract is a mere option whereby the defendant, for a valuable consideration, secured the right to elect whether he would, within the time limited, pay for the real property the price stated: 21 Am. & Eng. Ency. Law (2 ed.), 924; 39 Cyc. 1232; Friendly v. Elwert, 57 Or. 599 (105 Pac. 404, 111 Pac. 690, 112 Pac. 1085, Ann. Cas. 1913A, 357). In Ide v. Leiser, 10 Mont. 5, 11 (24 Pac. 695, 24 Am. St. Rep. 17), in referring to an option to buy real property, it is said: “The owner parts with his right to sell his lands (except to the second party) for a limited period. ’ ’ In that case the only question involved was whether or not a consideration had been given for extending the time within which the election could be exercised. What was said in the opinion in respect to the owner of real property, who had parted with his right to sell the land “except to the second party,” must be regarded as a mere observation.

In Elliott v. Delaney, 217 Mo. 14 (116 S. W. 494), however, it was held that the owners of real property who, for a valuable consideration, had given an option to convey the land, had the right, prior to the expiration of the limit specified, to execute a deed of the premises to a third party who took the title subject to the encumbrance.

It is maintained that the doctrine announced in the case last referred to is not controlling in this state where the rule prevailing is the same as that declared in the case first cited. Thus in Wollenberg v. Rose, 45 Or. 615, 619 (78 Pac. 751), it was decided that where a firm contracted to convey real estate and the partners died before the completion of the contract, the vendee was entitled to a conveyance from the heirs of the deceased members of the firm, and was not obliged to accept a deed from any other person. In that case some of the heirs of one of the partners were seeking to set aside their deeds for fraud alleged to have been perpetrated in procuring them. In a subsequent suit instituted for that purpose the deeds were set aside, thus showing that the title tendered as a compliance with the terms of the executory contract was not marketable: De Bow v. Wollenberg, 52 Or. 404 (96 Pac. 536, 97 Pac. 717).

Another case cited in support of the dictum in the case of Ide v. Leiser, 10 Mont. 5 (24 Pac. 695), is Krebs Hop Co. v. Livesley, 51 Or. 527, 533 (92 Pac. 1084), where it was held that if, before the time for performance of an executory contract had arrived, one of the parties to the agreement made it impossible for him to comply with his part of the engagement, the other might treat the contract as terminated and proceed accordingly; but in order to justify such a course there must have been a failure in some substantial particular going to the essence of the agreement, thereby rendering the defaulting party incapable of discharging his undertaking and making it impossible to carry out the contract. In that case the plaintiff had engaged to grow on a particular tract of land hops which were to be delivered to the defendant, but prior to the times for performance the plaintiff conveyed the real property and assigned the sums of money to become due under the contract to a creditor as security, and it was determined that notwithstanding such transfers, it was possible for the plaintiff to perform.

It is believed that the decisions rendered in these cases are not determinative of the question here involved. The principle contended for by the defendant’s counsel, if upheld, might result in defeating every option for the purchase of real property the value of which had increased after the right to buy the premises had been given. In this state there is no statute prohibiting the alienation of land, and when an option to purchase any real property has been given, the owner of the premises has an estate therein which he can transfer, and the party accepting the title, if he has notice or knowledge- of the privilege conferred by the writing, necessarily takes the premises cum onere. An option given by the owner of land for a valuable consideration, agreeing to sell it to another at a fixed price if accepted within a specified time, is binding upon the owner and all his successors in interest with knowledge thereof: Mueller v. Nortmann, 116 Wis. 468 (93 N. W. 538, 96 Am. St. Rep. 997). At any time prior to the expiration of the time limited, Wade could have relinquished his right to purchase the land, and, had he done so, no recovery of any sum of money subsequently accruing could have been had against him. He cannot, however, insist upon a continuation of the validity of the option without being liable for the installments maturing thereon. If the real property was thus obtained, burdened with the option, all the advantages accruing to the vendor from the contract, including the right to receive and collect the installments maturing on account thereof, should also be transferred, particularly so when they were expressly assigned for that purpose.

2. It appears from the evidence that during the greater part of the year 1912, when the installment accrued for which the judgment herein was given Ewing remained the owner of the land. It will be remembered that he covenanted in the option contract faithfully to perform all the conditions that he had undertaken in the lease of the premises to Harvey. It will also be kept in mind that the part of the answer which was stricken out averred that Ewing had failed and refused to make upon the land the improvements specified in the lease. The plaintiffs by an assignment of the installments took choses in action subject to all existing equities, and any defense available against Ewing, had he commenced an action therefor, might have been interposed herein. That part of the answer referred to does not allege that Ewing’s refusal to make upon the land the improvements specified in the lease to Harvey would have augmented the defendant’s interest in the premises or inured to his advantage, nor is it averred that in consequence of such failure he sustained any damage. The further answer, therefore, did not state facts sufficient to constitute a defense, and no error was committed in striking it out, though possibly a demurrer thereto, based on that ground, would have been better practice.

Other errors are assigned, but, deeming them immaterial, the judgment is affirmed.

Affirmed. Rehearing Denied.

Mr. Chief Justice McBride and Mr. Justice Ramsey concur.