Title: Gilbert v. Calif.-Ore. Power Co.

State: oregon

Issuer: Oregon Supreme Court

Document:

Reversed and remanded July 6, 1960.
*3 Thomas E. Brownhill, Eugene, argued the cause for appellants. On the brief was Frank E. Bocci, Eugene.
Geo. M. Roberts, Medford, argued the cause for the respondent. On the brief were Roberts, Kellington & Branchfield, Medford.
Before WARNER, presiding Justice, and PERRY, SLOAN and DUNCAN, Justices.
REVERSED AND REMANDED WITH INSTRUCTIONS.
PERRY, J.
The plaintiffs brought this suit to reform a contract entered into between the plaintiff Gilbert and defendant, and for damages for breach of the contract as reformed. The defendant denied the allegations of the plaintiffs' complaint and by cross-complaint demanded judgment for the unpaid balance due from plaintiffs to defendant on the purchase of a sawmill.
The trial court denied reformation, found that the plaintiffs were in default of the contract of purchase of a sawmill and entered judgment against the plaintiffs and in favor of the defendant for the sum of $10,849.35. From this decree plaintiffs appeal.
Insofar as the issues involved herein are concerned, Lloyd A. Gilbert and the Toketee Lumber Corporation are one and the same and for convenience in this opinion the plaintiffs will be referred to as "Gilbert" and the defendant as "Copco."
Before trial the parties stipulated that all issues presented should be tried as a suit in equity.
The material portions of the contract sought to be reformed are as follows:
The agreement was entered into on May 11, 1955. No difficulty arose between the parties until in July of 1956 when Copco cancelled its order for the milling and planing of timber and Gilbert was required to remove the mill from its then location.
It appears from the record, and the trial court found, that Gilbert was permitted to and did saw 5,633,483 board feet of lumber and planed 3,392,851 board feet for Copco; that Copco withheld $4.50 per 1000 board feet from the lumber sawed to apply on Gilbert's purchase of the mill; that after deducting the amount withheld by Copco, there remained due and owing upon the named purchase price the sum of $10,849.35.
As a basis for reformation, Gilbert contended that in the prior negotiations between the parties it was agreed Copco would order sawed at the mill for its use not less than 8,700,000 board feet of lumber and 4,000,000 board feet of planed lumber; that through mutual mistake of the parties the written agreement failed to express this absolute requirement on the part of Copco.
The facts clearly disclose that Copco erected and for a time operated a sawmill for the sole purpose of meeting its lumber requirements in the construction of its two flumes, Lemolo #1 and Lemolo #2; that Copco had procured a stumpage for the lumber it believed it required; that Copco was having difficulty in operating the mill to a capacity that would meet the lumber requirements of its flume project; that Gilbert approached Copco for the purpose of cutting timber *10 at his mill for Copco and was advised that perhaps it could be arranged for him to produce the lumber requirements for Copco if Gilbert would purchase the mill from Copco and improve it through the expenditure of $5,000.
A letter relative to the discussions had at this time was written April 12, 1955, by Copco to Gilbert as follows:
A few days later Mr. Humphreys, Copco's production superintendent, called on Gilbert. Mr. Gilbert testified of this occasion as follows:
Concerning this conversation, Gilbert wrote Copco on April 19, 1955, as follows:
After Copco received the foregoing letter from Gilbert, Copco wrote its attorneys asking that they prepare a contract for the sale of its lumber mill and purchase of lumber requirements from Gilbert, the material portion of the letter being as follows:
A glance at the contract will show that it was drafted by Copco's attorneys in exact accord with Copco's instructions as set forth in the letter and the prior discussions of the parties.
1. "Reformation is an extreme remedy and will only be granted on proof that is clear, cogent and convincing." Teachers' Fund Ass'n v. Pirie, 147 Or 629, 636, 34 P2d 660. See also Kontz v. B.P. John Furniture Corp., 167 Or 187, 115 P2d 319.
2. It appears quite clear that the parties were at all times discussing the transactions in the light of the estimated lumber requirements of Copco. They were *15 both anticipating what would be required, but not agreeing that any certain amount would be ordered sawed by Copco. In other words, there was no meeting of the minds as to any certain amount of lumber to be milled. Gilbert's contentions, therefore, that Copco agreed to purchase 8,700,000 board feet of sawed lumber, or agreed that it would give Gilbert an absolute order to plane 4,000,000 board feet for Copco's use cannot be sustained.
Nevertheless, the negotiations of the parties, and the contract itself, disclose that the parties agreed that payment for the mill would be made from a fund created with Copco by withholding $4.50 per thousand board feet from the price to be paid by Copco for lumber sawed by Gilbert.
3. Where the parties contract that payment is to be made in a particular manner and from a particular source, the terms of the agreement are binding upon them. Keller v. Cohen, 224 Pa 434, 73 A 918; Harmer v. Tracey, 115 W Va 349, 176 SE 238.
4. It would, therefore, seem quite clear that Copco, having prevented the creation of a fund from which it was to receive payment, cannot now insist upon its right to payment under the contract.
The trial court found that Gilbert was in default in paying the full monetary consideration for the purchase of the sawmill to the defendant Copco and entered judgment against Gilbert for the sum of $10,849.35.
5. The failure and refusal of Copco to permit the plaintiffs to saw timber to create a fund out of which the payment for the mill could be made as provided in the contract was a violation of its terms which prevented Gilbert from completing payment.
6. It is a well-established rule of law that a party *16 who prevents another from performing a duty under the terms of a contract cannot avail himself of the other's failure to perform. Public Market Co. v. Portland, 171 Or 522, 130 P2d 624, 138 P2d 916; Winklebleck v. City of Portland, 147 Or 226, 31 P2d 637.
7. Since the parties stipulated, in effect, that although the jurisdiction of a court of equity should fail that court should determine the issues between them, we have done so.
This cause is reversed and remanded with instructions to enter a decree that neither the plaintiffs nor the defendant shall recover from the other, save and except plaintiffs shall be entitled to a judgment for the sum of $1,237.70, which amount defendant admits is due plaintiffs.
Neither party shall recover costs in this court.