West v. Washington Railway Co.

90 P. 666, 49 Or. 436, 1907 Ore. LEXIS 143

• Court: Oregon Supreme Court
• Decided: June 25, 1907
• Status: Published

Opinion

Opinion by

Mr. Commissioner King.

1. On March 14, 1900, Joseph McCabe, as agent for defendant, entered into an oral agreement with plaintiff, to the effect that West should have a lease on the premises for a period of 10 years at an agreed rental of $100 per annum, the first year’s rent to be paid on the date of the agreement, and $50 semiannually thereafter. Plaintiff was to have the privilege of purchasing the property at any time during the period of the lease, and it was understood that a written lease should thereafter be drawn containing the terms agreed upon. It was agreed that plaintiff should have the right to take immediate possession, and accordingly paid $100, constituting the first year’s rent. With the knowledge and consent of defendant, plaintiff took possession of the property and inclosed the lots with a substantial fence. His possession continued until January 19, 1902, when he was ousted by defendant. On April 16, 1900, McCabe executed and forwarded to West what purported to be a written lease, being the instrument referred to in the answer, on receipt of which West, without affixing his signature thereto, placed it on record. Ten months later he returned the duplicate copy to McCabe, with his signature attached, with the words “for $1,500” inserted after the word “lots,” and preceding the clause “as soon as title is perfected”; and insisted that the understanding was to the effect that the inserted words were to lie included in the lease when executed, which defendant disputed. On receipt of the duplicate copy defendant delivered it to its attorney, Chas. Carter, and wrote to West as follows:

“Walla Walla, Wash., March 14, 1901.

Peter West, Esq.,

Pendleton—

Dear Sir: Yours received. Before accepting any further

rental from you for the ground, I desire that you see Mr. Carter and remove from the lease the addition which you made without our consent or authority. Unless this is done promptly, I shall cancel lease and return your remittance.

Yours truly,

J. P. McCabe,

Gr. M.”

Plaintiff refused to strike out the inserted words, and insisted upon the lease, with ojffion to purchase for $1,500, being retained, and refused possession to the defendant. West tendered the company a draft for $50 semiannually thereafter to be applied in payment of the rent agreed upon, all of which drafts were returned, except one, which it appears was returned to plaintiff during the trial.

The only question of fact bearing upon the issues upon which any conflict of testimony appears, and as to which there can be any doubt, is as to whether West was given the option to purchase for the price named. On this point plaintiff testified, in substance, that on the afternoon of March 14, 1900, McCabe, as agent for defendant, agreed to let him have the lots at a yearly rental of $100 for 10 years,, with the privilege of purchasing for $1,500, which agreement was made with him in the presence of Mrs. West; that the matter was discussed during the forenoon of that day, at the depot in Pendleton, in the presence of Walter Adams, the local agent of the company; that, the lots having previously been offered for sale, West had written to McCabe, offering to buy them, after which McCabe came to see him concerning them; that he told McCabe he would buy the lots, to which he replied that h'e asked $1,500 for them, stating there was a mortgage on the property which he would have released, but would lease the land to him for the term of 10 years, with the privilege of purchasing for $1,500, the rent to be $100 per annum, payable in advance for the first year, and $50 .semiannualty thereafter, and that on receipt of $1,500 defendant would execute a deed to him, and, on being asked how long he thought it would take to release the mortgage, McCabe stated it would be done within the year, but might be a little later; that they had more property for sale on that street, which they did not use, all of which could be released.in one instrument; that West accepted the terms proposed, paid the .$100 for the first 3rear, went into possession as agreed, and inclosed the same with a good and substantial fence at an expense of $50. All of this testimony is corroborated by Paulina West, wife of plaintiff, whom it is conceded ivas present when the agreement was consummated and the money paid.

McCabe, in his testimony, admits all these statements, except as to the option to purchase at a fixed price, and states he did not agree to sell to West at any price, as he had no authority to sell, and could not do so because it was mortgaged; that the lots had been offered for sale for some time,, having been placed in the hands of Jackson & Dickson Co.; that it was supposed that the property was in the hands of the trustee in fee simple, but discovered, after having negotiated and partially completed some sales, that the general mortgage had been given thereon subsequent to the deed to the trustee, and that they did not know that fact when they first started to sell the projiertj', but, as soon as this was learned, it was withdrawn from the market. It is.admitted that West wanted to purchase, to which application McCabe says he answered:

“The only way we could let you have these lots is on a lease. I can make a long term lease on it for the term of 10 years, which is the limit of my authority as to time. I proposed making him a 10-years5 lease to the property, and only (let him have) possession of it for $100 per annum, which was agreeable, and he took it on these terms. I saw him later in the afternoon of this date at his home and had some talk with him about it, and it was understood that I should prepare the lease at my leisure.55

AVitness further adds:

“I never told AVest at his house that he could purchase the property at any price.55

He explained the clause, “it being understood and agreed that the party of the second part shall have the privilege of buying the above listed lots as soon as title is perfected,55 as referring to the maturity of the mortgage or condition whereby it could be released by the mortgagee; that he did not tell AArest that he could have the mortgage released, but stated he had no reason to think that that could bé done, but that he might have told him he would make an effort to do so, and thought they had some conversation along that line. AYitness then states he had no authority to say what the property could be sold for, but that, as to the $100, he turned it over to the company, which it has retained; that AVest sent him $50 every six months, all of which was returned; that he notified AArest he had canceled the lease and' afterwards placed Mr. Schultz in possession of the property as tenant, subsequently securing a release from him, and started to erect a depot on the lots when he was enjoined by plaintiff. It is shown they had some conversation as to the terms of the agreement in the presence of Adams, who testified to the same effect and corroborated McCabe’s statements in reference to his refusal to sell. Adams5 statements agree with the testimony of West to the effect that plaintiff wanted to purchase from McCabe, and that McCabe answered to the effect that he would not sell, but would give him a lease for 10 years. This occurred in the forenoon, and during the latter part of the day McCabe went to plaintiff’s residence, at which time and place, and in the presence of Mrs. West, the deal was closed and the first year’s rent there paid. It will be observed that the only disputed point is concerning the sale and price to be paid. No dispute arose as to what ivas to be in the written lease, until the copy was returned to MbCabe in the following November.

The testimony of Adams had reference only to statements made in the forenoon of the day on which the transaction had occurred and prior to its consummation. Various circumstances connected with the dealings between the parties tend to corroborate the testimony of plaintiff’s witnesses.' It is admitted that the property had been offered for sale and that West wanted to buy; that the matter was 'discussed by them, and that something was said by McCabe about getting the mortgage released, and that he caused the privilege of purchasing the lands to be included in the lease offered. It is not to be presumed that when the statement to the effect that West should have the privilege of purchasing was made and then inserted in the contract, no price had been mentioned between them. It would not be in harmony with the usual dealings between men to assume they would be so careless as to agree to sell and buy without any, reference either to price or terms. Plaintiff retained the instrument for several months when 'he should have returned it, but this unfavorable circumstance is overcome by the statement in the lease to the effect that he could purchase the land if desired, as well as by the additional incident from which it appears that about the time he wrote plaintiff he would rescind the lease (10 months after the oral agreement) defendant had concluded -to erect a depot on the property, evidently deeming the property to be of much more value than on March 14 of the preceding year, all of which may have furnished the motive for rescinding the contract. It does not appear plausible that he would have taken the trouble to have written the provision in the lease regarding the sale if none had been intended.

We have the positive testimony' of plaintiff as to the facts sustained, not only to a large extent by defendant’s statements, but by the several events connected with the transaction. It is true plaintiff is an interested witness, but no less interested than the agents of defendant. Men holding positions such as general managers, local agents, etc., as a rule, are as much interested in retaining the good will and in elevating themselves in the estimation of their employers as are persons who may become interested in proceedings directly involving their own property rights. The difference lies in the nature of the expected results, not in the effect upon the testimony of the witness. Each wields the same influence, whether conscious or otherwise. While plaintiff was not entirely free from fault, which fault consisted in his neglect to return the written lease at as early a date as possible, his neglect in this respect presents a different aspect when it is remembered that the agreement was to be drawn and signed at their leisure. With that understanding, possession was given and the rent paid. No question was raised as to the lease being in full force, nor is sufficient reason either alleged or proven to establish defendant’s right to cancel the lease at its will, yet, notwithstanding it admits facts showing a full compliance with the terms of the lease as such, defendant assumed the right to, and did, revoke it. We think the parol agreement to lease, with option to purchase for $1,500, is clearly established by the evidence. The questions then left for us to consider are: (1) Had McCabe the authority to make the agreement to sell? (2) Can the oral lease and option be enforced in equity?

2. It is admitted by the pleadings that the defendant, at the time of the agreement, held title to the premises, subject only to the mortgages thereon; that McCabe at that time was its vice-president and general manager; that the written lease was executed by him in that capacity; that he received $100 under the parol agreement, and placed plaintiff in possession of the lots. He also admits that he was its general manager, and, as such, offered to dispose of its realty. No attempt having been made to show that he was acting outside of 'his duties as such manager, it will be presumed that he was acting within the scope of his agency in the dealings had with plaintiff. When McCabe testified that he was general manager, he thereby gave evidence that he was agent for the company in all its dealings. In effect he became, in his dealings with the public, the corporation itself. He and Adams testified they had no authority to contract for the sale of land, but this evidently was only their opinion, which probably results from the fact that McCabe knew the land was mortgaged; but the other facts in the testimony show conclusively, as a matter of law, that he did have such authority, and so assumed and acted at the time of mailing the parol lease. When asked if he had been looking after the sale of the property, he stated: . “1 had authority to dispose of it, and placed it with a real estate firm/’ although on cross-examination he stated that he had no authority except through the trustee. Whatever conclusion may be deduced from these statements, it is unquestionably shown that he was the general manager and vice-president of the company, and acted as such in the handling of this particular land along with its other property. These circumstances, taken together with the conceded fact that the money was paid to him, by him turned over to and retained by the company, are sufficient to manifest at least a ratification of his acts, and inevitably leads to the conclusion that he had full authority to bind defendant: Kyle v. Rippey, 20 Or. 446, 454 (26 Pac. 308); Finnegan v. Pacific Vinegar Co. 26 Or. 153 (37 Pac. 457); Moore v. Crawford, 130 U. S. 131 (9 Sup. Ct. 447: 33 L. Ed. 878); Jacksonville, M. & P. Ry. & Nav. Co. v. Hooper, 160 H. S. 515 (16 Sup. Ct. 379: 40 L. Ed. 515); Union Stockyard & T. Co. v. Mallory S. & Z. Co. 157 Ill. 554 (41 N. E. 888: 43 Am. St. Rep. 341); Atlantic & Pac. Ry. Co. v. Reisner, 18 Kan. 458.

3. It is further urged that the minds of the parties never met, thereby rendering an agreement impossible. It is true both parties did not execute the written instrument, but it clearly appears that everything was fully understood between them at their last meeting at West's residence on the afternoon of March 14, 1900, and that plaintiff immediately thereafter, with defendant’s assent, entered upon the performance of his part of the contract. They are in the same position as if no writing had ever been drawn or tendered further than that such instrument was admissible in evidence as a circumstance tending to show an agreement to lease with option to purchase, as well as indicating the conceded portion of the parol contract. The parol agreement is shown to be certain and definite in its terms, and to be such as can be enforced.

4. We are not unmindful of the AveR-established and recognized rule that Aidien the testimony is taken in the presence of the court, as in this case, great weight should be given the findings of the loAver court on disputed questions óf fact; but evidently the learned court below assumed the rule to be, as stated by some text-writers, as well as held by the courts in some states, that the contract must not only be shown to be clear and definite, but must be established beyond a reasonable doubt. This court has heretofore, and we think Avisely, refused to accede to this doctrine. As stated in Sprague v. Jessup, 48 Or. 211 (83 Pac. 145: 4 L. R. A., N. S., 410) : “The certainty of such a contract must lie established by evidence sufficient to satisfy a court of equity of the truth of the allegations of the complaint”; but, “if the denial of a party against Avhom specific performance of an oral contract to convey real property is sought to be enforced is sufficient to defeat the right, it is quite probable that this equitable remedy would soon cease to be efficacious.”

5. The proof leading to the conclusion reached in that suit AAras not so strong as in the case at bar, but it is there held that possession taken under the contract to purchase with part payment Avas SAifficient to take the case out of the statute of frauds. Tn the case before us part payment and possession, as Avell as improvements made under the contract, are conceded, and we are fully convinced, after a careful examination of the testimony, that the option to purchase was included in the parol contract. It is immaterial that defendant may have subsequently disclaimed a part of the terms agreed upon and refused to place them in writing, for the result must be determined, as in Sprague v. Jessup, not upon the rejected written instrument, but upon the previously consummated oral agreement.

6. It is contended that, this agreement being oral, specific performance cannot be enforced. This position overlooks the fact that possession was taken under the. lease, permanent improvements made thereon, and one year’s rent advanced and retained by the company. It'is well settled in this state that pare performance of a parol contract under such circumstances takes the case out of the statute of frauds: Wallace v. Scoggins, 18 Or. 502 (21 Pac. 558: 17 Am. St. Rep. 749); Souse v. Jackson, 24 Or. 89 (32 Pac. 1027); McMahan v. Whelan, 44 Or. 402 (75 Pae. 715); Sprague v. Jessup, 48 Or. 211 (4 L. R. A., N. S., 410: 83 Pac. 145); Dechenback v. Rima, 45 Or. 500, 502 (77 Pac. 391, 78 Pac. 666). In Wallace v. Scoggins plaintiff brought suit for specific performance of a parol lease on certain alleged premises. It appears she had leased by oral agreement certain property for two years at an agreed rental of $40 per month, entered into possession, paid the rent regularly, and fitted up the property at considerable expense. The court below held the lease to be valid for only one year, and that, as plaintiff had a remedy by action for unlawful detainer, dismissed the suit. On this point Mr. Justice Strahan, after mentioning the facts, said:' “Do these acts, as part performance of this lease, on the part of both parties to it, entitle the plaintiff to have the same specifically enforced? I think they do. They are substantial on both sides, and go to the substance of the contract, and it would hardly be possible to restore the plaintiff to the condition she was in before the acts were performed. Relying upon the terms of the parol agreement, she incurred expenses and' changed her eirciimstances and condition to such an extent that a refusal on the part of the defendant to perform operates as a fraud on the rights of the plaintiff. As I understand the riile, this is such a part performance of the parol agreement as takes the case out of the operation of the statute of frauds.” There can be no question that, to entitle a person to specific performance of a contract, there must have been at the time of entering into the agreement a mutuality both as to the obligation and the remedy; and the party not bound cannot enforce the contract. But, as stated by Mr. Justice Moore, in Souse v. Jackson, 24 Or. 89 (32 Pac. 1027), “this general rule, like most others, has its apparent exceptions”; and, after quoting from Waterman, Spec. Perf. § 200, on this point, observed: “Such exception is less real than apparent; for, when the option is accepted, the minds of the parties have met and agreed upon the terms of the contract, and it thus becomes mutual, and is enforceable by either party.” It was there held that under an agreement to lease, with an option to purchase, the contract to pay rent was sufficient consideration to support the option.

7. It is immaterial under the testimony as to the form in which the tender of rent may have been made, as defendant notified plaintiff that no payments of any kind would be accepted, thereby making a tender unnecessary as a condition precedent to his right to specific performance: Guillaume v. K. S. D. Fruit Land Co. 48 Or. 400 (86 Pac. 883).

8. It appears from .the decision of the lower court contained in the transcript that one of the points upon which its conclusion is based is that, as the written lease contained the phrase “as soon as title is perfected” after the purchasing clause, this provision constitutes a condition attached to the privilege of purchasing, whether for the sum mentioned or at any price, and is “a limitation” which “the evidence does not show was ever, removed.” This overlooks the admissions in the pleadings, as well as the point that the defendant claims the title to be affected only to the extent of the lien created by the mortgage on- the property. The complaint alleges that at the time of entering into the oral agreement “defendant was the owner in fee, and in possession,” of the property. The answer not only admits this allegation to he true, but alleges that during all the times referred to in the complaint “defendant has been and still is the owner of lots 1, 7 and 8, in block 74,” etc., alleging that this property was covered by the real mortgage thereby described. The only way defendant attempts to show that the title is. affected is by the mortgage lien. When used in this manner, the word “owner” has a definite meaning, and is one who has dominion over a thing, which he may use as he pleases, except as restrained by law or by agreement: Johnson v. Crookshanks, 21 Or. 339 (28 Pac. 78); Garver v. Hawkeye Ins. Co. 69 Iowa, 202 (28 N. E. 555); Bowen v. John, 201 Ill. 293 (66 N. E. 357). Defendant then is restrained, if at all, only by the agreement contained in the mortgage. There is nothing to prevent it executing a deed subject to the mortgage on the property. The use of the words “as soon as title is perfected,” when construed in the most favorable light to the defendant, indicates at least an agreement to permit plaintiff to purchase as soon as the mortgage is released.

9. Any provision made relative to the release of the mortgage was for the protection of the mortgagor, and therefore one which the lessee can waive. Saving brought suit for the specific performance, defendant waives the incumbrance on the property until after the execution of the deed, and on the payment of the $1,500 agreed upon is entitled to a conveyance, after which defendant is entitled to a reasonable time, not to exceed the period for which the lease and option was given, in which to procure a release of the mortgage thereon. It is well established that suits in equity may be maintained for specific performance, even where the vendor' at the time of filing the complaint is incapable of giving a complete title to the property agreed- to be sold.. To hold otherwise would be to permit the vendor to take advantage of his wrong. Courts of equity, therefore, allow the purchaser to proceed with the purchase or abandon it, as may be desired: 26 Am. & Eng. Enc. Law (2 ed.), 83; Story, Equity, § 779; Thompson v. Hawley, 16 Or. 251 (19 Pac. 84); Brown v. Ward, 110 Iowa, 123 (81 N. W. 247); Young v. Paul, 10 N. J. Eq. 401 (64 Am. Dec. 456); Graft v. Loucks, 138 Pa. 460 (21 Atl. 203).

10. A parol agreement, clear and certain in its terms, having been satisfactorily established by the testimony, plaintiff is entitled to be reinstated and to be placed in possession of the property under his lease, with the option of purchasing for the price agreed upon. On tender of $1,500, plaintiff is entitled to such deed as defendant can execute. As to whether plaintiff exercises his option or retains the property as lessee during the time prescribed in the contract is a matter entirely within his discretion.

11. A court of equity in the exercise of its discretion, where the payment of mortgages, or other liens, becomes necessary to perfect the title, may enter judgment for sufficient sum to cancel such lien, if any (Thompson v. Hawley, 16 Or. 251, 19 Pac. 84; Waterman, Spec. Perf. §§ 503, 505) ; but each ease should be and is governed by its own circumstances: Section 504. In the case before us it is evident from the record that defendant can procure ilie release of the mortgage to the particular tracts involved at any time, if desired, and, its solvency not being questioned, we deem such' judgment unnecessary. The question, therefore, of release of the mortgage liens upon the property, if any, remaining after execution of a conveyance to plaintiff, should, in this instance, be left for such determination as may be deemed proper in the event the option should be exercised.

A court of equity, after acquiring jurisdiction, as incidental to the remedy, may assess such damages as appear to have been sustained prior to the filing of the complaint: Waterman, Spec. Perf. § 5; Fleischner v. Citizens’ Invest Co. 25 Or. 119, 131 (35 Pac. 174); Bishop v. Baisley, 28 Or. 119, 138 (41 Pac. 936); Case v. Minot, 158 Mass. 577 (33 N. E. 700); Rugg v. Rohrbach, 110 Ill. App. 532. Plaintiff insists that he has been damaged $500, which amount he states could have been realized from the property up to the time of the trial, and for which sum judgment is asked. Defendant admits the rental value of the property to have been at least $120 per annum, and is uncertain as to whether it was rented to Schultz for that amount or for $130, while plaintiff testifies positively that the rental value was at least $130. We think it safe to assume that plaintiff has been injured to the extent of the difference between the rent agreed upon and the rental value, or $30 per annum, from the date of being dispossessed to the time of filing the complaint. As to whether plaintiff has been damaged since the commencement of the suit cannot be determined under the issues here. It is shown that plaintiff has expended $50 in improvements on the property, w'hieh, without reimbursement have been removed by defendant. After deducting the unpaid rent to date of filing the suit, we find plaintiff’s damage, including loss of improvements, is approximately $50. Plaintiff is entitled to a decree placing him in possession of the premises described in the complaint on payment of rent at $100 per annum since date of suit, and to an injunction inhibiting defendant from interfering in any manner with his possession thereof during the period of his lease, with the privilege of purchasing 'and receiving a deed therefor from defendant at any time during the ten-year period upon tendering to it the sum of $1,500, and is entitled to damages in the sum of $50.

12. Plaintiff will be allowed his costs and disbursements on appeal.

The decree of the circuit court should he reversed, and one entered in conformity with this opinion. Reversed.