Knight v. Woolley Logging Co.

565 P.2d 748, 278 Or. 691, 1977 Ore. LEXIS 1018
CourtOregon Supreme Court
DecidedJune 21, 1977
DocketTC 75-2001, SC 24701
StatusPublished
Cited by4 cases

This text of 565 P.2d 748 (Knight v. Woolley Logging 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
Knight v. Woolley Logging Co., 565 P.2d 748, 278 Or. 691, 1977 Ore. LEXIS 1018 (Or. 1977).

Opinion

TOMPKINS, J.,

pro tempore.

This is a suit to set aside an instrument executed by the plaintiff and her husband in 1968. The instrument is an "Extension to Timber Deed” and extended the original deed of April 7, 1958, given by the plaintiff and her husband to the defendant for another 10 years to midnight, April 6, 1978.

The trial court denied the relief requested and entered a decree for defendant. Plaintiff appeals.

The timber involved is on 160 acres of land located on the Smith River Road near Drain, Douglas County, Oregon. An employee of the Forest Service estimated the tract contained 3.4 million board feet of timber in 1958 and 3.7 million board feet in 1968. The value of the timber was $50 to $60 a thousand in 1968 and about the same in 1958. The amount of timber now is about four million board feet and none of it has been removed. Needless to say, the value of the timber on today’s market is much greater.

The tract involved was originally owned by the plaintiff and her husband. Plaintiff’s husband transferred his interest to the plaintiff by quitclaim deed in 1957.

Harold Woolley, who died in 1970, was president of the defendant Woolley Logging Company. The plaintiff and Harold Woolley had a common ancestor in that plaintiff’s father was a brother of Harold Woolley’s father.

Pertinent portions of the Timber Deed and Extension to Timber Deed read:

"TIMBER DEED
"The rights of grantee herein to cut and remove said timber shall extend from and after the date hereof to and including April 7, 1968, at which time all rights given hereunder shall cease and determine, except upon written notice Thirty (30) days prior to termination date that [694]*694an extension of Ten (10) years shall be granted, if so requested by the grantee.”
" EXTENSION TO TIMBER DEED
"FOR AND IN CONSIDERATION of the sum of One and Other Dollars and other valuable consideration paid to them by WOOLLEY LOGGING COMPANY, an Oregon corporation, WILLIAM A. KNIGHT and BEATRICE M. KNIGHT, husband and wife, do hereby grant unto WOOLLEY LOGGING COMPANY an extension of time in which they may fall, cut and remove any and all timber, standing and fallen, living and dead, of whatever size, located on the following described properties:
The Southeast Quarter (SE-%) of Section Twenty-two (22), Township Twenty (20) South, Range Seven (7) West, W. M., all in the County of Douglas, State of Oregon,
which is an extension of that certain Timber Deed heretofore given and recorded in the Douglas County Records, Instrument No. 246939, Vol. 275, Page 380, and which extension shall continue to and include ten (10) years from the 7th day of April, 1968, terminating at Midnight on April 6, 1978.
"DATED this 29th day of March, 1968.”

The plaintiff relied upon a theory of constructive fraud in seeking to set aside the extension.

The term "constructive fraud” appears to be derived from the findings of the Honorable Lawrence T. Harris, the trial judge in Sherman v. Glick, 71 Or 451, 456, 142 P 606 (1914), who said:

" '* * * That the disparity in value between the premises sold by plaintiff to the defendants Glick, and the property and money received by the plaintiff from such defendants, is so great that, taken together with the facts that plaintiff believed the statement made to her * * *, it renders said transaction unconscionable and constructively fraudulent, and it would be a species of robbery under the sanction of law to permit the transaction to stand.’ ” (Emphasis supplied.)

In Black v. Irvin, 76 Or 561, 570, 149 P 540 (1915), [695]*695the court reviewed the facts of Sherman v. Glick, supra, and said:

"* * * This was held to be a constructive fraud.

This marks the first and, as far as we can determine, the last time that the term constructive fraud has been used by this court.

In the present case in addition to the first count based on constructive fraud the plaintiff pled a second count additionally alleging "that the consideration cited in the 'Extension to Timber Deed’ was not paid; and that the consideration therein named was grossly inadequate.”

The second count appears to be a restatement of the constructive fraud theory derived from Kerr on Fraud as quoted in Sherman v. Glick, supra, 71 Or at 459:

"In Kerr on Fraud (4 ed.), pages 184,185, the author says:
" '* * * But inadequacy of consideration, if it be of so gross a nature as to amount in itself to evidence of fraud, is a ground for canceling a transaction. In such cases, the relief is granted, not on the ground of inadequacy of consideration, but on fraud as evidenced thereby. if: * »

Fraud is the essence of both counts of plaintiff’s complaint.

We have reviewed the evidence and agree with the trial court that fraud was not proved.1 The Woolleys and the Knights were longtime residents and friends in the Smith River area. Each had lived on the other’s property and at the time of the trial the Knights had been living on Harold Woolley’s property since 1965.

The plaintiff claimed there was a confidential [696]*696relationship between the plaintiff and Harold Wool-ley.

In Ingersoll v. Ingersoll, 263 Or 376, 379, 502 P2d 598 (1972), the court said:

"* * * As explained in the Restatement (Second) of Trusts, § 2, Comment b, p. 7 (1959):
" '* * * A confidential relationship exists between two persons when one has gained the confidence of the other and purports to act or advise with the other’s interest in mind.’

The comment goes on to say that

" '* * * If one person is in a confidential, but not in a fiduciary relation to another, a transaction between them will not be set aside at the instance of one of them unless in fact he placed confidence in the other and the other, by fraud or undue influence or otherwise abused the confidence placed in him.’ ”

The association between the two families was informal and neighborly, but did not rise to the level of a confidential relationship.

The plaintiff’s version of the signing of the extension is as follows:

"A. My husband called me and said Harold was there and wanted to see me, and so I came down.

"Q. When you came down in 1968 and on that day, what were your feelings towards Mr. Woolley?

"A. Just like always.

"Q. And that was?

"A. Good friend come to visit.

"Q. You trusted him and confide in him?

"A. Of course.

"Q. Now, can you tell us what conversation you had with Mr. Woolley on that day?

"A. No, I couldn’t.

"Q. Do you recall that there was a discussion?

"A. No, there wasn’t any discussion.

"Q. What happened? I guess I should ask you that.

"A.

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Cite This Page — Counsel Stack

Bluebook (online)
565 P.2d 748, 278 Or. 691, 1977 Ore. LEXIS 1018, Counsel Stack Legal Research, https://law.counselstack.com/opinion/knight-v-woolley-logging-co-or-1977.