Case Name: OREGON & WESTERN COLONIZATION CO. v. T. F. WILLOUGHBY et al.
Court: Oregon Supreme Court
Jurisdiction: Oregon
Decision Date: 1927-07-12
Citations: 122 Or. 170
Docket Number: 
Parties: OREGON & WESTERN COLONIZATION CO. v. T. F. WILLOUGHBY et al.
Judges: 
Reporter: Oregon Reports
Volume: 122
Pages: 170–178

Head Matter:
Argued at Pendleton May 2,
reversed July 12, 1927.
OREGON & WESTERN COLONIZATION CO. v. T. F. WILLOUGHBY et al.
(257 Pac. 812.)
For appellant there was a brief and oral argument by Mr. M. R. Elliott.
For respondents there was a brief and oral argument by Mr. Denton G. Burdick.

Opinion:
COSHOW, J.
The plaintiff is the owner of the note in due course. The defendants, Upton and Schee, admit in their answer that they assigned and indorsed the note for value to plaintiff immediately after it was delivered to them. Plaintiff has the right to enforce the note against the defendants: Or. L., § 7849, 7858, 7876.
The defendants base their motion for judgment on the pleadings on their allegation that the note had been canceled. The intentional cancellation of a negotiable note discharges the indorsers: Or. L., § 7911. The note sued upon became due April 18, 1924. The notice relied upon by defendants is dated June 4, 1921, nearly three years prior to the maturity of the note involved herein, and was given because of the delinquency of defendant Willoughby on his notes which became due April 18, 1920, and April 18, 1921. If the contract was actually canceled pursuant to the notice given by plaintiff June 4, 1921, then the note sued upon in this action was canceled according to the terms of the contract between defendants Upton and Schee and their codefendant, Willoughby. Plaintiff denies that this note or the contract was canceled or that any notes were canceled, except those which were paid. The necessary inference from the allegations in the answer to the effect that the contract and note were canceled and the denial in the reply of that allegation is that within the thirty days provided in the notice defendant Willoughby paid the two notes mentioned in the notice of cancellation of contract and thereby prevented the cancellation of the contract and notes. By the very terms of the contract and the notice given and relied upon by the defendants, Upton and Schee, defendant Willoughby had the right so to do. There was then an issue of fact presented by the pleadings which could not be determined rightfully on a motion for judgment on the pleadings: Pacific Mill Co. v. Inman, 50 Or. 22 (90 Pac. 1099); Willis v. Holmes, 28 Or. 265 (42 Pac. 989); Currie v. Southern Pac. Co., 23 Or. 400 (31 Pac. 964).
The notes were independent covenants to pay the purchase price of the land according to the terms of the contract: Walker v. Hewitt, 109 Or. 366 (220 Pac. 147, 35 A. L. R. 100).
The defendants urge that the notice not only includes the two notes which we must infer have been paid but also the provision requiring the payment of interest on the entire amount owing on the contract; that it appears from the complaint that no interest had been paid on the note sued upon, and therefore by the terms of the contract and the terms of the notice we must conclude that the contract and notes not due at the date of the notice were actually canceled because the language of the notice is that plaintiff "has elected and does hereby elect to cancel and terminate said contract." But the plaintiff had a right to waive that provision. Plaintiff could properly and without injury to defendants, Upton and Schee, waive strict compliance about the payment of the interest on the principal. Construing the complaint and reply together it is naturally inferable that plaintiff did waive strict performance of the contract. The reply is not as complete or as specific as it should have been but it was not attacked by motion or demurrer and will be construed liberally. We can draw no other conclusion from the allegations in the answer and denials in the reply than that defendant Willoughby paid the two notes mentioned in the notice and thereby prevented the cancellation of either the contract or the notes. At any rate an issue of fact is joined on that matter.
We think the expression in the reply "that any other note or notes were canceled except those paid in full prior to the date of said contract" is a clerical misprision. We think the pleader referred to the date of filing his complaint. No note was due prior to the date of the contract. The notice itself shows that the two notes which had matured at the date of the notice had not then been paid. Plaintiff should have specifically alleged the payment of the notes after the notice was given in addition to alleging that neither the contract nor notes had been canceled.
Defendants' affirmative answer is not a complete defense to the complaint. In order to make their defense complete it is necessary for them to have alleged that the notes referred to in the notice were not paid according to the terms of the notice, that is, within thirty days from the date thereof. The absence of such an allegation in itself was sufficient ground for denying the motion for judgment on the pleadings in favor of defendants.
It is error, therefore, for the court to grant the motion for judgment on the pleadings. The judgment is reversed and the cause remanded, with permission to the parties to apply for leave to file amended pleadings, and for further proceedings consistent with this opinion.
Reversed and Remanded With Directions.