Opinion ID: 1206085
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Heading Rank: 2

Heading: equitable estoppel against coos county

Text: The state next contends that the county should be estopped from asserting its ownership interests in Section 34 as a consequence of representations of state ownership allegedly made by the county over the past 40-plus years. The state relies upon the doctrine of equitable estoppel, also called estoppel by conduct or estoppel in pais.  This doctrine of equitable estoppel or estoppel in pais is that a person may be precluded by his act or conduct, or silence when it was his duty to speak, from asserting a right which he otherwise would have had. Marshall v. Wilson, 175 Or. 506, 518, 154 P.2d 547 (1944). The elements of equitable estoppel in Oregon were set out by this court in Oregon v. Portland Gen. Elec. Co., 52 Or. 502, 528, 95 P. 722 (1908): To constitute estoppel by conduct there must (1) be a false representation; (2) it must be made with knowledge of the facts; (3) the other party must have been ignorant of the truth; (4) it must have been made with the intention that it should be acted upon by the other party; (5) the other party must have been induced to act upon it: Bigelow, Estoppel (5 ed.), 569, 570. Courts generally have held that the misrepresentation must be one of existing material fact, and not of intention, nor may it be a conclusion from facts or a conclusion of law. Everest and Strode, The Law of Estoppel 251 (3d ed. 1923). The party seeking estoppel must demonstrate not only reliance, but a right to rely upon the representation of the estopped party. Marshall v. Wilson, supra . Reliance is not justified where a party has knowledge to the contrary of the fact or representation allegedly relied upon. Willis v. Stager, 257 Or. 608, 619, 481 P.2d 78 (1971). The facts creating an estoppel must be proved by a preponderance of the evidence. McKinney v. Hindman, 86 Or. 545, 551, 169 P. 93 (1917). We have recognized that an estoppel may be raised against government entities, subject to certain specific limitations. In Wiggins v. Barrett & Associates, Inc., 295 Or. 679, 692, 669 P.2d 1132 (1983), we noted: The modern trend is to apply the doctrines of apparent authority or estoppel, or both, to prevent unjust enrichment and to accord fairness to those who bargain with the agents of municipalities for the promises of the municipalities. (Citations omitted.) The state here contends that for over 40 years the county engaged in a continuing representation that the state owned Section 34, that the county did so with full knowledge (either actual or constructive) of the fact of its own tax lien foreclosure, and that the state, though also possessing both actual and constructive knowledge of the sheriff's deed to the county, was unaware of the truth of the county's assertion of superior title. In reliance upon these representations, the state incurred expenses in managing the property. Estoppel requires a representation to the person claiming detrimental reliance. Thoenes v. Tatro, 270 Or. 775, 789, 529 P.2d 912 (1974). Unless the county made some representation to the state, the county cannot be estopped from asserting its interest in Section 34. A representation can take the form of an affirmative statement or action, or, under some circumstances, of a misleading silence. For the reasons stated below, we hold that the county's affirmative acts allegedly relied upon by the state did not constitute a representation upon which the state was entitled to rely, and that the state was not entitled in this instance to rely upon the county's silence. Consequently, the county is not estopped from asserting against the state whatever interests it may have acquired as a result of the foreclosure of its tax lien on Section 34. The state does not contend that this is a case of estoppel by failure to disclose a claim of title. E.g., Willis v. Stager, 257 Or. 608, 481 P.2d 78 (1971). In addition to the constructive knowledge imputed to the state under ORS 93.710(1), the state admits to having had actual knowledge of the sheriff's deed as the result of an abstract of the title furnished to the state when it accepted the deed in lieu of foreclosure from the Richardses. Instead, the state maintains that for over 40 years the county has engaged in conduct constituting an affirmative representation of state ownership of Section 34. The acts that the state purports to have relied upon are the county's recordation over the past 40 years of various documents reflecting the state's transactions regarding Section 34 and the county's assessment and collection from the state of forest patrol levies on Section 34. The state asserts that these affirmative acts by the county, made by county employes within the scope of their statutory authority, are sufficient to bind the county. Combined with the county's acquiescence in the state's assertion of ownership since 1940, these acts create a representation of state ownership that the county cannot now be heard to deny. The trial court and the Court of Appeals agreed with the state. We disagree. The county clerk's acceptance and recordation of the sundry leases and grants of easements and rights of way that the state has entered into with respect to Section 34 represent nothing save the clerk's recognition of a statutorily imposed obligation to so accept and record. ORS 205.130(2)(a). Establishing the probable validity of documents presented for recordation and ascertaining their effect upon the county's claims to real property are not duties within the scope of the clerk's responsibility or authority. The county's recordation of documents does not constitute a representation by the county concerning the condition of the county's title to real property. The forest patrol assessments charged to the state are of a somewhat different character. These assessments resulted from an apparent failure to enter the fact of the county's foreclosure of Section 34 on the county tax roll at the time the foreclosure occurred. Neither party presented evidence identifying the person responsible for this failure. It is, however, the assessor's obligation to ascertain, from the best information available, who owns each parcel of real property in the county for the purpose of assessing property taxes. ORS 308.215. The best information for determining ownership of land in a county is, generally speaking, the real property records of that county. While it is the assessor's duty to put the name of the record owner on the tax roll, Guthrie v. Haun, 159 Or. 50, 58, 76 P.2d 292 (1938), the statutes defining the assessor's duties do not expect him, so we believe, to display the skill and thoroughness employed by a competent title searcher, Knapp v. Josephine County, 192 Or. 327, 354, 235 P.2d 564 (1951). The legislature has recognized that the assessor will occasionally err in his or her determination of ownership of a piece of land. ORS 308.240(2) provides in part:    If the property is correctly described, no assessment shall be invalidated by    the entry of a name other than that of the true owner.   . According to the weight of authority, the erroneous levy and collection of taxes on property will not estop a government body from asserting title to the property assessed. 10 McQuillin, Municipal Corporations 186, § 28.56 (rev. 3d ed. 1981). E.g., Kunkel v. Griffith, 325 Mo. 392, 29 S.W.2d 64 (1930); City of Mount Vernon v. N.Y., N.H. & Hartford R.R. Co., 232 N.Y. 309, 133 N.E. 900 (1922). But see, e.g., Simplot v. Dubuque, 49 Iowa 630 (1878); Scotts Bluff County v. Hughes, 202 Neb. 551, 276 N.W.2d 206 (1979). The reason for the rule is that the officers charged with the duty of assessing property and collecting the taxes thereon are without authority to convey public property, and what they cannot do directly they cannot do by indirection. Middleton v. Commonwealth, 200 Ky. 237, 240-41, 254 S.W. 754 (1923). This court has adopted this rule as it pertains to estoppel of municipalities in street dedication cases. City of Clatskanie v. McDonald, 85 Or. 670, 674, 167 P. 560 (1917). This court considered the extent to which a tax assessment can operate to estop a county's assertion of an interest in real property in County of Lincoln v. Fischer, 216 Or. 421, 339 P.2d 1084 (1959). There the county had sold a parcel of tax-foreclosed realty to a private party under a land sale contract. The purchaser then sold his contract rights to a third party. None of the installment payments on the contract was made. Because of this delinquency, the county court issued an order that purported to cancel the contract. Service of this order was not executed as required by statute, however, and neither the original vendee nor the third party purchaser was made aware of the order for several years. In addition, the court failed to direct the assessor to change the tax roll to reflect the order, and taxes continued to be assessed to and paid by the third party purchaser. When the county later brought suit to quiet its title in the realty, defendants argued that the county should be estopped from asserting forfeiture of the contract. Among the acts allegedly relied upon by defendants were the continued assessment and collection of taxes. This court stated: In viewing the conduct of the county that enters into such an estoppel, the fact that some of the acts that must be considered were those of the tax collector constitutes no objection. A tax collector generally has no power to affect the title to land owned by the county. It is a familiar rule that a principal is bound by the acts of his agents acting within the scope of their authority; and it seems from Glen Cullen Realty Co. v. Multnomah County, [181 Or. 394, 182 P.2d 366 (1947)], and Feehely v. Rogers, [159 Or. 361, 76 P.2d 287, 80 P.2d 717 (1938)], that this rule applies to the county when acting in matters such as those now before us as well as it does to private parties. In addition, the county judge clearly has the power to convey land, and it was through his failure to direct the tax collector to remove Spaulding from the tax rolls that both Fischer and Spaulding were misled. Thus, not only the acceptance of the tax payments but also the lax treatment accorded Fischer in meeting his obligations may be attributed directly to the county officers who have the power to affect the title to the county's land. 216 Or. at 452-53, 339 P.2d 1084. The cases cited in the preceding passage addressed some of the consequences arising from a county's sale of land to a private party. In Feehely v. Rogers, supra , this court was asked to determine whether a county acted in its governmental capacity when negotiating a land sale contract, and whether it had the authority to include in such a contract provisions not specifically authorized by statute. This court held that when the county court sold the land to the plaintiff, negotiated the written contract, and supervised its performance, it was acting as the fiscal, financial or managing agent of the county, and that all contracts made by the county courts while acting in that capacity are to be interpreted the same as contracts of individuals. 159 Or. at 371, 76 P.2d 287. In Glen Cullen Realty, supra, this court held that a county was not acting in its governmental capacity when it negotiated a land sale contract with a private party, and so might be estopped to deny the authority of a particular county official to execute such a contract where the county had clothed him with apparent authority to do so. 181 Or. at 405, 182 P.2d 366. We conclude from County of Lincoln v. Fischer and the cases cited therein that, in Oregon, an erroneous tax assessment on real property will contribute to the estoppel of a county to assert an interest in that property where (1) the party seeking the estoppel acquired the land from the county or is in privity with one who did, and (2) responsibility for the assessment can be ascribed to an officer possessing authority to affect the county's title to land. This rule reflects the modern trend, noted in Wiggins v. Barrett & Associates, Inc., supra , toward permitting the use of estoppel to accord fairness to those who bargain with public entities, and it recognizes that representations made by county officers with the requisite authority to estop the county may be manifested to the representee only in the form of a tax assessment. The state has not alleged nor has it shown that it has directly dealt with any county official regarding Section 34, or that any county officer with the necessary authority to convey title to county land either contributed to the failure to record the county's interest on the tax roll, or performed any other act or omission upon which the state was entitled to rely. Cf. County of Lincoln v. Fischer, supra . Consequently, the county is not estopped by its erroneous collection of forest patrol assessments. We must next determine whether the county's inaction constituted a misrepresentation justifying an estoppel in this instance. This court has held that a government body's tacit acquiescence to an assertion of dominion over public lands by a private party will not estop the government body from later asserting its interest in those lands. City of Molalla v. Coover, 192 Or. 233, 235 P.2d 142 (1951). The state argues that the Coover rule is inapplicable in a dispute between government bodies. The state reasons that because the policy underlying the courts' reluctance to find an estoppel against a public body is a desire to protect the public interest, and that because, in a dispute between two government entities, both represent this interest, limitations upon the applicability of estoppel against public bodies should not apply in such a case. Regardless of the merit of this reasoning, the attempt to apply it to this case misapprehends the rationale behind Coover. Coover reconsiders the line of cases that began with Schooling v. Harrisburg, 42 Or. 494, 71 P. 605 (1903). In Schooling, the owners of a tract of land adjoining the city of Harrisburg had the land surveyed into blocks, lots, alleys and streets and in 1871 recorded a plat of the land as an addition to the city. They then conveyed lots in the addition with reference to the recorded plat, though the Harrisburg city council had failed to accept the dedication. In 1876, one of the owners conveyed to the Schoolings portions of adjoining blocks in the addition along with, by quitclaim, that part of the platted street separating those blocks. The Schoolings proceeded to cultivate and fence the platted streets, and to set out grape vines and fruit trees. They built a barn that extended across a platted alley. In 1901, the Harrisburg city council sought to open the addition. The Schoolings argued that the city should be equitably estopped from opening the streets. This court agreed, stating:    the officers of the defendant knew that the streets and alley in question were inclosed, and must also have known that plaintiff, for more than twenty-five years, had been making valuable improvements thereon, and, these officers having permitted him to use the property without objection in a manner inconsistent with the assertion of any right thereto on the part of the city, such tacit permission and use evidence an abandonment of the highway by the municipality, which operates to estop it from asserting the right now insisted upon   . 42 Or. at 500, 71 P. 605. This court cited Schooling v. Harrisburg with approval in a number of subsequent street dedication cases, though it does not appear that the doctrine of estoppel by acquiescence was determinative in any of those cases. See City of Molalla v. Coover, 192 Or. at 243-48, 235 P.2d 142. Some 48 years after Schooling v. Harrisburg , this court reconsidered the doctrine of estoppel by acquiescence in Coover. An addition to the city of Molalla had been platted and recorded in 1913. The county court vacated a portion of the plat south of Seventh Street in 1930. Defendants in 1931 purchased some of the land thus vacated that lay immediately south of an unvacated street. In 1937 they purchased a lot on the other side of the unimproved and unopened part of the street. In 1940 they built a barn in the street. Nine years later the Molalla city council ordered the street opened. Defendants raised the defense of equitable estoppel. The court noted: There were no affirmative representations made to the defendants concerning the existence or location of [the street] or the erection or maintenance of the barn on which the defendants could have relied or did rely. The defendants' case rests upon the claim that the city is estopped by reason of its long-continued tacit acquiescence in the occupation and fencing of the street and the erection and maintenance since 1940 of the barn. 192 Or. at 238-39, 235 P.2d 142. The court acknowledged that a city has a duty to prevent the erection or maintenance of unauthorized permanent and valuable obstructions in dedicated streets, of which obstructions they may have notice. Id. at 240, 235 P.2d 142. After extensively reviewing the cases in which estoppel by acquiescence had been used or approved, the court noted: On the other hand, when a city which had constructed an unauthorized sewer on the plaintiff's land claimed that he should be estopped by his passive acquiescence, this Court said: `   Mere silence, or, in the language of previous judicial opinions, passive acquiescence, does not by itself create an irrevocable license or produce an estoppel:   .' Fraser v. Portland, 81 Or 92, 158 P 514. It would seem that a governmental body should be, in general, as immune from estoppel as a private litigant. 192 Or. at 248-49, 235 P.2d 142. Because estoppel by acquiescence would not be available against a private litigant, and because the courts historically have recognized limitations on the use of estoppel against public bodies to prevent public forfeiture, the court determined that estoppel by acquiescence should not be available for use against a municipality where the party seeking to invoke it possessed knowledge of the city's interest in the land, or where that interest was easily ascertainable. The doctrine of Schooling v. Harrisburg is a product of the pioneer era. It is ill-adapted to the needs of progressive and growing cities. In so far as that case and the dicta which have approved it stand for the proposition that a city will be estopped to open a street by reason of its tacit acquiescence in the construction therein of permanent and valuable improvements by persons who knew or should have known that the erections were within the lines of dedicated though unopened streets, it and they are overruled. The plaintiff in the Schooling case knew that his improvements were in the street. The fact that he took a quitclaim deed to property which his grantor could not convey might have given color of title but did not give color of equity. 192 Or. 252-53, 235 P.2d 142. Coover does not impose a special limitation upon the use of equitable estoppel against the government. It reflects instead this court's recognition that the pre- Coover cases approving estoppel by tacit acquiescence rendered government bodies more susceptible than private parties to estoppel. The court sought to conform the rules regarding the availability of estoppel against a public body to those defining its availability against private parties. Coover did not hold that a county's silence could never form the basis of an estoppel, but that silence could not estop a county where it would not estop a private party. [4] This court has held that silence will create an estoppel only where there is a legal duty to speak. Waterway Terminals v. P.S. Lord, 242 Or. 1, 24, 406 P.2d 556 (1965). Regarding land, such a duty is most frequently found to arise where the owner stands by while an innocent party is persuaded to make some expenditure with respect to the land. It is as true in law as consonant with reason, that he who remains silent when he should have spoken, and permits his property to be dealt with by a stranger as his own, is estopped from asserting that right to the damage of another, when the latter, from his silence, might fairly infer that he had no interest in the thing. Fahie v. Pressey, 2 Or. 23, 27 (1861). Here, no such duty arose. The state was not innocent of knowledge concerning the county's claim to Section 34. The county's interest was a matter of public record. The state had notice, both constructive and actual, of that interest. It is the duty of the representee to use some manner of protection and precaution to safeguard his interests. Bradford v. Western Oldsmobile, 222 Or. 440, 444, 353 P.2d 232 (1960). This notice imposed at the very least a duty upon the state to inquire. See generally City of Newberg v. Kienle, 60 Or. 486, 493, 120 P. 3 (1912). If, at the time when he acted, such party had knowledge of the truth, or had the means by which with reasonable diligence he could acquire the knowledge so that it would be negligence on his part to remain ignorant by not using those means, he cannot claim to have been misled by relying upon the representation or concealment. Pomeroy, 3 Pomeroy's Equity Jurisprudence 219, § 810 (5th ed. 1941). See also City of Molalla v. Coover, supra, 192 Or. at 253, 235 P.2d 142. The county is under no obligation periodically to reaffirm its record ownership of realty, nor is it duty-bound to patrol its lands and eject interlopers with notice of the county's interest on pain of surrendering title. [5] Had the county elected to speak, it could have done little more than direct the state's attention to the sheriff's deed of which the state was already aware. The state and the county had equal knowledge of the facts. [6] The county's silence in this instance could not, or should not, have misled the state. No estoppel arose.