Title: Powell v. Sheets
Citation: 196 Or. 682, 251 P.2d 108
Docket Number: N/A
State: Oregon
Issuer: Oregon Supreme Court
Date: December 3, 1952

Reversed December 3, 1952.
*683 George P. Winslow, of Tillamook, argued the cause and filed a brief for appellants.
Robert Y. Thornton, of Tillamook, argued the cause and filed a brief for respondents.
Before BRAND, Chief Justice, and LATOURETTE, WARNER and TOOZE, Justices.
REVERSED.
*684 TOOZE, J.
This is a suit brought by Floyd Powell and Wesley Powell, as plaintiffs, against Robert A. Sheets and Frances J. Sheets, his wife, and Harold Guthert, as defendants, to reform a written contract for the sale of timber, and for injunctive relief. The case, a suit in equity, was tried to the court without the intervention of a jury. Judgment in favor of plaintiffs and against defendants Robert A. Sheets and Frances J. Sheets in the sum of $2,421.28 was entered. The suit was dismissed against defendant Harold Guthert with prejudice. Defendants Robert A. Sheets and Frances J. Sheets appeal from the judgment against them.
Defendants are the owners of the northeast quarter and the southeast quarter of the northwest quarter of section 12, township 3 south, range 10 west of the Willamette meridian, in Tillamook county, Oregon. Hereafter we shall refer to the northeast quarter of the northwest quarter as the "north forty", and to the southeast quarter of the northwest quarter as the "south forty", that being the designations given the two tracts of land by the parties to this litigation.
Upon each of the forty-acre tracts there was a stand of merchantable timber, consisting of hemlock, old-growth fir, and some second-growth fir. The stand on the south forty was more extensive and was composed of better timber from the standpoint of being merchantable.
On November 8, 1949, plaintiffs and defendants entered into a written agreement for the sale of the timber on the north forty. The provisions of that agreement so far as material to our discussion are:
In their complaint filed in this cause on May 20, 1950, plaintiffs allege the making of the aforesaid contract and then charge as follows:
Plaintiffs pray a decree enjoining the sale and removal of the timber during the pendency of the suit; that the contract be reformed in accordance with the actual intention of the parties; that the agreement as reformed be specifically performed; and for an accounting for profits on any logs removed prior to the filing of the complaint.
*687 Defendants' answer consists of a general denial.
On the day of trial (January 4, 1951), plaintiffs were permitted to file a supplemental complaint. In this pleading plaintiffs alleged that since the commencement of the suit, the logs on the south forty had been sold and removed by defendants; that in selling said timber defendants had received the benefit of plaintiffs' expenditures for felling and bucking, which expenditures were alleged to aggregate the sum of $1,828.15. Plaintiffs further alleged as follows:
Plaintiffs then repeated their prayer for reformation of the contract and prayed that defendants be required to account for the felling and bucking expenditures, for the reasonable profits that would have accrued to them on logging and marketing the timber, and for further damages in the sum of $1,000.
*688 It was stipulated between the parties that the allegations of the supplemental complaint should be deemed denied by defendants.
Upon conclusion of the trial, the trial court in a memorandum opinion found that the evidence was insufficient to authorize the court to reform the contract as prayed for in plaintiffs' original and supplemental complaints. The court then said:
The court then found that plaintiffs were entitled to recover $1,471.21 on account of their expenditures for felling and bucking, and the further sum of $950.61, as one-half the profits realized upon the sale of the logs.
Thereupon, plaintiffs presented a proposed decree in accordance with the court's memorandum opinion. Defendants immediately filed written objections thereto, accompanying their objections with a proposed decree in keeping with their theory of the case. The material portions of the objections are:
The principal contention of defendants on this appeal is that the trial court, sitting as a court in equity, erred in retaining jurisdiction and entering a money judgment against defendants after it had determined, as a matter of fact, that plaintiffs had failed to prove their allegations upon which equitable jurisdiction was predicated, and that, upon defendants' request, it should have dismissed the cause or transferred it to the law side of the court where jury trial might be had.
1. An examination of the record discloses that plaintiff had no cause of suit for reformation of the contract. It is not a question of mere insufficiency of the evidence to warrant such relief; there is a total lack of evidence to support such a claim. All additional relief prayed for by plaintiffs in their original complaint is based entirely upon a reformed contract. In other words, if the contract is not reformed, there *690 is no basis whatever for the additional relief in equity as prayed for.
To illustrate the total lack of evidence to support a claim for reformation of the contract, we quote briefly from the testimony of plaintiff Wesley Powell. Upon direct examination, he testified as follows:
On cross-examination, the witness further testified:
The testimony of plaintiff Floyd Powell did not add anything to that of his brother quoted above.
It thus appears from plaintiffs' own testimony that at no time prior to the actual signing of the contract did the parties come to any understanding as to what was to be sold and purchased, as to the price to be paid, nor as to any other details of an agreement except possibly the mention of a bridge. According to this testimony, the first and only understanding or agreement between the parties, oral or written, was that contained in the writing executed on November 8. This was the contract prepared by plaintiffs themselves and submitted to defendants for their signatures. If in the negotiations prior to the execution of this contract an oral understanding had been reached between the parties as to the terms of the contract to be formally executed, and in the preparation and execution of such written agreement a term agreed upon had been mistakenly omitted or misstated, there might have been some ground for a reformation of the contract to conform to the actual agreement of the parties. But that is not the situation in this case.
We now quote briefly from the direct testimony of the defendant Robert A. Sheets:
The testimony of defendant Frances J. Sheets corroborated that of her husband.
It appears from the testimony of the timber fallers employed by plaintiffs that they commenced felling the timber on the south forty on November 4, or some four days prior to the execution of the written contract. They also testified that plaintiffs had directed them to fell that timber first and then proceed to fell the timber on the north forty.
It also appears from the testimony of Floyd Foland, who is engaged in the logging business and resides at Tillamook, that in June, 1949, he offered defendants a lump sum of $3,000 cash for the timber on the south *696 forty, which offer defendants rejected. It is significant that had defendants agreed to sell the timber on the south forty on a stumpage basis as provided in the contract respecting the timber on the north forty, the total price they would have received therefor would have been substantially less than $2,000. It is highly improbable that defendants would have entered into a contract covering the timber on the south forty as claimed by plaintiffs, when to do so it would have meant an unnecessary sacrifice of more than $1,000 from the cash sum offered by Foland. The overwhelming weight of the evidence and all the circumstances of the case support the position of defendants. It is obvious that if the sale of the timber on the south forty was to be for cash, no written contract as to that tract was necessary; whereas, it was advisable, at least, to have a written contract setting forth the terms of sale on a stumpage basis as to the timber on the north forty.
2. It is a general rule of equitable jurisprudence that, where the court has assumed jurisdiction for one purpose, it will retain it for all purposes, legal and equitable, connected with the pincipal controversy; but the rule is permissive rather than peremptory and will not be applied so as to defeat the fundamental rights of litigants or to violate the basic doctrines of pleading; and it may not be invoked where no ground of equitable jurisdiction has first been asserted and established. Friedenthal v. Thompson, 146 Or 640, 647, 31 P2d 643; Sandy Holding Co. v. Ferro, 144 Or 466, 471, 25 P2d 561; Union Central Life Ins. Co. v. Kerron, 128 Or 70, 75, 264 P 453; Everson et al. v. Haun et al., 106 Or 612, 624, 213 P 135; Templeton v. Bockler, 73 Or 494, 509, 144 P 405; 30 CJS, Equity, 414, § 67.
Equity jurisdiction will not be retained to grant *697 legal relief where no right to equitable relief is established. To grant legal relief as an incident to equitable jurisdiction, it is necessary not only that the complaint state a cause of suit in equity, but also that the proof establish a matter of equitable cognizance.
In 30 CJS, Equity, 427, § 73, the rule is stated thus:
In Oregon-Wash. R. &amp; N. Co. v. Reed, 87 Or 398, 412, 169 P 342, 170 P 300, this court said:
Also see Oregon Growers' Co-op. Assn. v. Riddle, 116 Or 562, 569, 241 P 1011.
The latest expression of this court upon this matter is to be found in Ward v. Town Tavern et al., 191 Or 1,
38, 228 P2d 216, where Mr. Justice ROSSMAN stated the rule as follows:
And in the instant litigation plaintiffs alleged a basis for equity jurisdiction, but wholly failed to prove it.
3-6. Unless the contract was reformed, the only sum of money plaintiffs would be entitled to recover from defendants would be the amount of their expenditures for felling and bucking the timber. Their claim to the profits realized from the sale of the logs is based solely upon the written contract and could not exist *699 unless the contract was reformed as prayed for by them in their original and supplemental complaints. The trial court found that plaintiffs had expended $1,471.21 in felling and bucking. The record discloses that defendants offered to pay plaintiffs for those expenditures and continued such offer upon the oral argument in this court. In no view of the case, as established by the evidence, were plaintiffs entitled to recover profits. Therefore, there was no basis in fact for an accounting as to profits. Whatever claim plaintiffs may have had against defendants for reimbursement for the expenditures incurred by them in felling and bucking the timber was purely legal.
Plaintiffs argued in their brief that the facts alleged in their original and supplemental complaints entitled them, on the theory of unjust enrichment, to the relief awarded by the decree of the trial court. They cite the following authorities: 46 Am Jur, Restitution and Unjust Enrichment, 99; 12 Am Jur, Contracts, 502, § 6.
There might be cases in which relief against unjust enrichment would be of equitable cognizance, but such is not the case here. The basis of a recovery of money upon the theory of unjust enrichment is the existence of a quasi contract, or a contract implied by law. The rule is stated in 12 Am Jur, Contracts, 503, § 6, as follows:
It is elementary that an action solely for money, based upon a contract, express or implied, is an action *700 at law. To recover for the expenditures made by plaintiffs in bucking and felling the timber, an action at law for money had and received is a proper remedy.
In 58 CJS, Money Received, 906, § 1, it is stated:
While the general rule is that an action for money had and received lies only where money has been received by defendant, the action may nevertheless be sustained where no money has actually passed, but something has been received as money or has been really or presumptively converted into money before action is brought. 58 CJS, Money Received, 911, § 2.
7-9. Plaintiffs' original complaint fails to state facts sufficient to constitute a cause of action for money had and received, or any other cause of action at law. We must look to the supplemental complaint, if permitted to do so, to find any statement of facts that might have warranted the entry of a judgment against defendants upon the theory of unjust enrichment.
In Clark v. Morrison, 80 Or 240, 245, 156 P 429, this court said:
A supplemental complaint is a complaint filed by the plaintiff after the filing of the original complaint to bring forward facts that have transpired since the institution of the suit, which may tend to strengthen or reenforce the cause of action. Title &amp; Trust Co. v. U.S. Fid. &amp; Guar. Co., 138 Or 467, 502, 1 P2d 1100, 7 P2d 805.
In 71 CJS, Pleading, 728, § 330b, the following rule is stated:
Manifestly, the allegations of the supplemental complaint in this case are not in aid of, nor do they tend to develop, the original cause of suit. Upon the question of whether or not the contract was subject to reformation, the facts set forth in the supplemental complaint are wholly irrelevant. They become relevant *702 and material only if and when the contract is reformed as prayed for in the original complaint. When the original cause of suit failed, the supplemental complaint became wholly ineffective for any purpose.
Under the circumstances of this case, when the evidence wholly failed to establish a right in plaintiffs to have the contract reformed, the equity court lost jurisdiction to proceed further, and the suit should have been dismissed. There was nothing left to be transferred to the law side of the court. The trial court erred in retaining equitable jurisdiction and in entering judgment against defendants.
The decree is reversed, and this cause is remanded with directions to dismiss the suit. Neither party to recover costs.