Title: Blondell v. Beam

State: oregon

Issuer: Oregon Supreme Court

Document:

Reversed and remanded April 20, 1966.
*294 Donald S. Kelley, Roseburg, argued the cause for appellants. With him on the briefs were Kelley, Garrison & Lasswell, Roseburg.
Warren A. Woodruff, Roseburg, argued the cause for respondents. With him on the brief was George Luoma, Roseburg.
Before McALLISTER, Chief Justice, and PERRY, GOODWIN, DENECKE and SCHWAB, Justices.
REVERSED AND REMANDED.
SCHWAB, J. (Pro Tempore).
Plaintiffs brought suit to enforce the strict foreclosure clause of a land sale contract. They appeal from a decree denying foreclosure in any form and reinstating the contract upon payment by the vendees of past due taxes. The issue is whether a court of equity has the power to deny relief to a vendor in the face of proof of a material default not waived by vendor; or whether the court's power to do equity is restricted to the exercise of discretion in determining what form of relief shall be granted. We conclude that the rule in Oregon has been and should continue to be the latter.
*295 In December of 1961 plaintiffs (vendors) entered into a contract with the defendants (vendees) for the sale of certain real property. The purchase price was $25,000, payable $4,000 down and the balance in annual installments with interest on the unpaid balance at the rate of 4% per annum. Time was made the essence of the contract which provided that the vendees were to pay all taxes before they became past due. The contract included a provision giving the seller the right to strict foreclosure by suit in equity in the event of a default by purchasers.
When sellers discovered that real property taxes for the years 1961-64 in the amount of $927.38 were past due and unpaid they brought this suit in equity seeking strict foreclosure.
Before suit was brought the vendees by timely payments of principal and interest had reduced the balance due to $19,446.66. Prior to the commencement of the suit Douglas county took a portion of the land in order to widen a county road, paying $1,650 for the portion taken to the vendors who applied it against the principal. Thus when the complaint was filed the balance owing on the contract was $17,796.66.
After suit was filed the defendants tendered into court the amount of the past due taxes and filed an answer setting forth two affirmative defenses: (1) that the time essence clause was waived by the vendees' acceptance of annual payments after the default of the vendees; (2) that the proceeds from the eminent domain award should have been paid directly to the vendees rather than applied against the principal.
1, 2. The trial court properly found the affirmative defenses to be without merit. As to the first defense, there was no evidence of waiver by the vendors. As to *296 the second defense, the vendees waived any claim to the $1,650 Douglas county paid for the portion of land it took when they computed their 1963 and 1964 annual payments on the basis of the principal balance being reduced by the amount of the eminent domain award.
After making these findings of fact, the trial court decree provided:
3, 4. The transcript discloses that the trial judge, in reaching his decision, relied on Gulick v. Copeland, 186 Or 640, 648-649, 207 P2d 1042, most recently reaffirmed by this court in Leighton v. Hawkins, 236 Or 638, 389 P2d 460, where this court approved the language in Harrington v. Birdsall, 38 Neb 176, 186-87, 56 NW 961 (1893):
The Gulick and Leighton cases do not hold that if a strict foreclosure is inequitable the court may refuse to grant any relief. It has long been the rule in Oregon that,
In Temple Enterprises v. Combs, 164 Or 133, 158, 100 P2d 613, 128 ALR 856, this court, in decreeing specific performance, said:
The holding of the Temple Enterprises case is applicable here, for a suit to strictly foreclose a contract in accordance with its terms is an affirmance of the contract which the vendor is seeking to enforce. Atkochunas v. Gustafson, 156 Or 126, 66 P2d 1192. Where, as in the instant case, the contract provides for strict foreclosure in the event of a default by the vendees, the contract contains a time-essence clause, the default is material and has not been waived, the plaintiff is entitled to foreclosure in some form as a matter of right. The limit of discretion of a court of equity in such a case is in the determination of the form foreclosure shall take, i.e., strict foreclosure or foreclosure and judicial sale.
5. Insofar as it can be construed to hold that strict foreclosure is not often allowed, Harrington v. Birdsall, 38 Neb 176, supra, is misleading. In Oregon, a decree of strict foreclosure is not a decree which immediately, finally and completely cuts off the vendee's equitable interest in the property. In Higinbotham v. Frock, 48 Or 129, 132, 83 P 536, we said:
Miles v. Hemenway, 59 Or 318, 326, 111 P 696, 117 P 273, defines a decree of strict foreclosure as being
A number of Oregon decisions have characterized the "alternate order" as a decree of foreclosure with time "within which to redeem." Morrison v. Kandler, 215 Or 489, 334 P2d 459; Hodges v. Servine, 211 Or 428, 316 P2d 312.
The fact that the granting of strict foreclosure is the rule rather than the exception is well illustrated in the following quotation from Atkochunas v. Gustafson, 156 Or 126 at 130, 66 P2d 1192:
In their brief plaintiffs catalogue 36 Oregon cases in which vendors sought strict foreclosure. In three the decrees provided for foreclosure and sale. In the remaining 33 strict foreclosure was allowed with redemption times ranging from a minimum of fourteen *300 days to a maximum of one year. The rule governing strict foreclosure is well stated in Marquardt v. Fisher, 135 Or 256, 258, 295 P 499, 77 ALR 265:
6. There is nothing in the record from which we can determine whether the decree should grant strict foreclosure or foreclosure and sale; or, if strict foreclosure is granted, what would be a reasonable time in which to redeem.
Reversed and remanded for such further proceedings as may be necessary for the entry of an appropriate decree in accordance with this opinion.