James v. Ward , 96 Or. 667 ( 1920 )

BEAN, J.

1. Plaintiff assigns error of the trial court in assuming jurisdiction of this cause in equity and refusing to relegate the parties to the court of law in foreclosing the contract. Error is also predicated in the allowance of $800 as attorneys’ fees. It is first urged by counsel for plaintiff that, “as the plaintiff instituted her action at law first the court erred in compelling her to submit to the jurisdiction of a court of equity.”

Section 390, L. O. L., as amended by General Laws of Oregon, 1917, page 126, which enacted a radical change in equity practice in this state, provides among other things that—

“In an action at law where the defendant is entitled to relief, arising out of facts requiring the interposition of a court of equity, and material to his defense, he may set such matter up by answer, without the necessity of filing a complaint on the equity side of the court; and the plaintiff may, by reply, set up equitable matter, not inconsistent with the complaint and constituting a defense to new matter in the answer. Said reply may be filed to an answer containing either legal or equitable defenses. The parties shall have the same rights in such case as if an original bill embodying the defense or seeking the relief prayed for in such answer or reply had been filed. Equitable relief respecting .the subject matter of the suit may thus be obtained by answer, and equitable defenses to new matter contained in the answer may thus be asserted by reply. When such an equitable matter is interposed, the proceedings at law shall be stayed and the case shall thereafter proceed until the determination of the issues thus raised as a suit in equity by which the proceedings at law may be perpetually enjoined or allowed to proceed in accordance with the final decree; or such equitable relief as is proper may be given to either party. If, after determining the equities, as interposed by answer or reply, the case is allowed to proceed at law, the pleadings containing the equitable matter shall be considered withdrawn from the case, and the court shall allow such pleadings in the law action as are now provided for in actions of law. No cause shall be dismissed for having been brought on the wrong side of the court. The plaintiff shall have a right to amend his pleadings to obviate any objection on that account. Testimony taken before the amendment and relevant to the issue in the law actions shall stand with like effect as if the pleadings had been originally in the amended form.”

The defendant set up in his answer to the complaint in the action at law facts which entitled him to relief in equity and which were material to his defense. The suit is in the same condition as though under the old statute plaintiff had answered the complaint and filed a complaint in equity in the nature of a cross-bill.

The proceedings are in conformity with the statute as amended. The plaintiff had a right by her reply to set up equitable matters not inconsistant with her complaint constituting a defense to the new matter in the answer. The parties had the same rights. In this case as if an original bill seeking the relief prayed for in the answer had been filed. There was no error in the interposition of a court of equity.

2. The case on the merits centers upon the question of whether or not there was a mutual rescission of the contract. Plaintiff and her husband and their minor son testified to the purport that according to .their understanding there was an agreement for a mutual rescission of the contract in case defendant did not perfect his title and furnish an abstract of title on or before April 14, 1914.

There has been no offer on the part of plaintiff to make full payment. Indeed, there has been no tender of the amount due under the terms of the contract. Apparently the defendant, at the time the contract was executed, thought he had good title to the land. It is to be regretted that so important a matter as the abstract of title was omitted from the contract. Whatever the agreement or understanding was at the time of the contract, it seems the parties have gone beyond that. Reliance of plaintiff is placed upon a subsequent agreement. On April 14, 1914, plaintiff with knowledge of the condition of the title of Ward to the land and of the failure of Ward to furnish the abstract by that time and of the al-leged false representations of Ward, instead of rescinding the contract or attempting to rescind by a letter of that date which is in evidence called upon Ward to perfect the title. She had obtained an abstract and after calling Ward’s attention to the defects in the title used this language in the letter:

“I would therefore request that you take such steps as are necessary to put the title in marketable condition. * * With reference to the interest credits on the contract, I would thank you to give me the credits due on the contract, possibly the best way would be to notify Mr. Wells, your attorney, to make that notation on the contract for you. ’ ’

Afterward Ward instituted a suit to perfect his title and eliminate the objectionable features raised by the attorney who examined the abstract of title for Mrs. James, and acquired quitclaim deeds from various persons, and at the time of the trial of this cause it is conceded, as we understand, that Ward had a complete title to the land. The abstract of title and the various deeds are contained in the record as well as the record of the suit to quiet title.

Scrutinizing the testimony carefully, it would seem that Ward desired time to straighten up his title, and that there never was a meeting of the minds of the parties to the effect that, if the title was not completed by April 14,1914, that the contract should be rescinded. There has been no offer on the part of plaintiff to return the livestock and other personal property which was sold and delivered by defendant to plaintiff.

3. The trial court had the opportunity of seeing the witnesses, and hearing them testify, and its opinion on this disputed question of fact is entitled to great weight. We are constrained to note that there is more conflict in the way in which the parties understood the arrangements, or conversations subsequent to the contract than there is in regard to what was said and done. That Ward was to furnish an abstract of title is not disputed. As to when he was to furnish it according to the subsequent arrangement there is a great chance for a misunderstanding on the part of Mrs. James.

4. One of the parties may waive any terms of the contract which are intended for his benefit, and this, if agreed to or acquiesced in by the other modifies the contract accordingly. Parties to a contract of any kind, whether written or verbal, may at any time rescind or terminate it by their mutual consent or agreement, and either restore each other to the status quo or fix their respective rights and liabilities upon such abrogation of the contract. They may release themselves from a contract in the same manner that they may bind themselves by a contract: Black on Rescission and Cancellation, § 521. It is stated in Section 523 of that work that:

“So long as a contract remains executory, a mutual agreement of the parties to rescind it requires no new or independent consideration, for the release of each of the parties from his duties and obligations under the existing contract is sufficient consideration for his agreement to release the other.”

Authority to the contrary is there noted. If Mrs. James ever had the right to demand of Ward an abstract of title showing a marketable title to the Lane County land prior to the time she requested that he complete his title, she waived that right and acquiesced in Ward taking reasonable time to perfect the record of his title.

5. Plaintiff also seeks to rescind the contract on the ground that Ward falsely represented that he had a good.title to the land. The plaintiff and'those claiming under her, the Rickmans, remained in possession of the premises and enjoyed the benefits thereof from about the time of the execution of the contract until March 20, 1915, and never during the period after she discovered the alleged defects in the title, which appears to have been prior to April 14, 1914, did she attempt in any way to rescind the contract upon, any grounds until she filed an amended answer in the former suit on March 8, 1915, in which they sought to rescind the contract by reason of a defective title.

The general rule is laid down in 39 Cyc., page 1432, subdivision h, as follows:

“Any action on the part of the purchaser treating the contract as in force, when done with a knowledge of facts creating a right to rescind, amounts to a waiver of the right to réscind because of the existence of such facts.”

It is stated in the opinion in the ease of Scott v. Walton, 32 Or. 460, at page 464 (52 Pac. 180, at page 181), thus:

“A party who has been induced to enter into a contract by fraud, has, upon its discovery, an election of remedies. He may either affirm the contract, and sue for damages, or disaffirm it, and be reinstated in the position in which he was before it was consummated. These remedies, however, are not concurrent, but wholly inconsistent. The adoption of one is the exclusion of the other. If he desires to rescind, he must act promptly, and return or offer to return what he has received under the contract. He cannot retain the fruits of the contract awaiting future developments to determine whether it will be more profitable for him to affirm or disaffirm it. Any delay on his part, and especially his remaining in possession of the property received by him under the contract, and dealing with it as his own, will be evidence of his intention to abide by the contract.”

This is the established rule. Several material questions bearing upon this case were thoroughly discussed by Mr. Justice McCamant in the former case, 84 Or. 382 (164 Pac. 370).

6. It is fairly shown in the record that the taking of possession of the property by Ward on March 20, 1915, when it was abandened by the Rickmans, did not constitute a rescission of the contract. Ward took possession in order that the party against whom he was prosecuting a suit to quiet title would not gain an advantage by entering into possession of the premises and in order to protect the buildings, which had been left with the doors open, and prevent dilapidation of the premises.

Plaintiff has failed to prove an agreement between herself and defendant to restore each other to the status guo, or mutually rescind the contract.

7, 8. Plaintiff claims error on account of allowance of attorneys’ fees. Defendant claims that as she has signified an intention not to pay the amount found due upon the contract, the amount of attorneys’ fees is immaterial; there not being a personal judgment against plaintiff. Conditions may be changed and plaintiff may yet desire to reinstate the contract. It seems the attorneys’ fees were estimated upon the balance of the contract, $11,000 and interest. The court decreed that the plaintiff might reinstate the cofitract by paying $3,954.12 together with attorneys’ fees, which we think from the testimony should be 10 per cent of $3,954.12 of the amount found due. Plaintiff should be allowed six months from the time of entering the mandate in this cause in the lower court to pay the amount found due upon the contract by the trial court tog-ether with 10 per cent attorneys’ fees, with interest on the amount of the decree, excepting- the attorneys’ fees, at the rate of 6 per cent per annum from January 13, 1919, the date of the original decree. Neither party should recover costs upon this appeal.

The decree of the lower court, modified as suggested, is affirmed. Modified.

Harris, Johns and Bennett, JJ., concur.