Opinion ID: 1143134
Heading Depth: 1
Heading Rank: 2

Heading: The contract provision permitting cash payment was inconsistent with the provision for a guaranteed cash flow for 10 years.

Text: Among other contentions, defendants say that the contract, as prepared by plaintiff, is not properly subject to specific performance because of a fatal inconsistency in two of its important and material provisions. Thus, defendants contend that the provision of the contract, as prepared by Mr. Midura, under which plaintiff may pay off the entire contract at any time, with no pre-payment penalties, is completely inconsistent with the provision under which defendants were to be paid a guaranteed cash flow with minimal taxation on long-term capital gains with payments to be made over a period of 10 years and with interest at 7.25 per cent, as intended and understood by them. [1] In response, plaintiff contends that these provisions are not so inconsistent as to make the contract unenforceable by specific performance; that defendants had no real preference as to the manner of payment, but wanted their price; that plaintiff would have preferred long term payments, but provided an alternative means of payment as is common in all contracts, giving the purchaser the option to prepay without penalty. Plaintiff also contends that: The intent of the parties at the time of the execution of the contract must govern. Given the intent, clear and unequivocal by the testimony, the contract provisions of § 2 and § 4 are not so inconsistent as to deny specific performance. (Emphasis theirs) and that: The trial judge had the opportunity to view and listen to the parties to determine their real intent.    (Emphasis theirs) Accordingly, plaintiff contends that even though the contract provisions for payments over a period of 10 years were not sufficiently definite for enforcement by specific performance, the trial court properly entered a decree granting specific performance of the contract as a cash sale under the authority of Phillips v. Johnson, 266 Or. 544, 514 P.2d 1337 (1973). We agree that in determining whether contract provisions are inconsistent it is important to seek the intent of the parties. In addition, as stated in Loomis v. MacFarlane, 50 Or. 129, 134-35, 91 P. 466, 468 (1907) (quoting from another authority):    Where the true import and meaning of a written instrument is doubtful, and the intention of the parties cannot be determined from its language, the right doctrine is that it should be construed most strongly against the person using the doubtful language,   '. Upon reviewing the record in this case as in a trial de novo on the appeal of a suit in equity, we find that it was intended by the parties at the time of the execution of this contract that defendants have a guaranteed cash flow over a period of 10 years, interest at 7.25 per cent and with minimal taxation on long-term capital gains. Mr. Midura himself testified as follows: Q (By Mr. Bauer:) You were aware of the Schroeders' desire to receive the payments for their property over an extended period of time, were you not? A It was one of the things that they mentioned they would like to have in it, yes. Q They said that was important to them, didn't they? A It was not as important to Mr. Schroeder as a sale price. Q But nevertheless important? A Yeah, on its own relative merits, I would assume it was. Q And you drafted, yourself, Plaintiff's Exhibit number 1 to try to accomplish that goal or wish, that the Schroeders had, regarding receiving the payments over an extended period of time, isn't that right? A If you are talking about October 11 agreement, yes, that's correct. Q And this is your language, `in order to assure the seller of a guaranteed cash flow, with minimal taxation on long term capital gains, ' etcetera, that is the language you used, isn't it? A Yes, sir. Q So that would spread out his income over a long period of time, isn't that right? A Yes sir, it would. Mr. Midura also testified that he explained to defendants the contract provision that plaintiff would have an option to pay off the balance of the purchase price at any time, but did not know whether they comprehended completely; that defendants primary concern was the sales price; and that he did not have an attorney prepare the contract because he was afraid that that would jeopardize his signing the documents   . It may be true that defendants' primary concern was the sales price. We believe, however, that both for tax purposes and other reasons the terms for payment were also important to defendants, as to most sellers of real property; that one of the important objectives which defendants intended to achieve by the terms of the contract was a guaranteed cash flow for 10 years, with minimal taxation, and with interest at 7.25 per cent, as provided by § 2 of the contract and that this was also understood by Mr. Midura. The accomplishment of that intended purpose would be defeated by the payment of the entire contract balance without penalty, as provided by § 4. It follows, in our opinion, that these two important and material contract provisions were inconsistent, when viewed in relation to the intent of the parties, with the result that the contract is not properly subject to enforcement by specific performance. As stated in Smith v. Vehrs, 194 Or. 492, 499, 242 P.2d 586, 589 (1952): It is a well-established rule of law in this state that equity will not decree specific performance unless the contract is definite, certain and complete. The court cannot make a contract for the parties, nor can it make clear that which is left in doubt and uncertainty. [Citing cases]