Opinion ID: 1191499
Heading Depth: 1
Heading Rank: 2

Heading: Ownership of the mortgaged property.

Text: As to the question of ownership, Luebke, the original mortgagor, retained legal title when he sold the property on contract to the Corrigans. Under the doctrine of equitable conversion, however, equitable ownership passed to the contract purchasers and, at the time of this suit, was held by Rathbone. The question is whether the legislature intended the term owns to apply to one who enters into a contract to sell the subject property while retaining legal title as security for the purchase price. The original versions of ORS 88.110 and 88.120 were enacted in 1913 and 1917, respectively. [1] No legislative history survives to explain what the legislature meant by the term owns. We therefore do not know whether the legislature considered the situation in which the original vendor sold the mortgaged property on contract but retained legal title. The proper inquiry in such a case is to determine how the legislature would have intended its statute to be applied if it had considered the problem. See State v. Tippie, 269 Or. 661, 665, 525 P.2d 1315 (1974); see also Frohnmayer, Of Legislative Intent, the Perils of Legislative Abdication, and the Growth of Administrative and Judicial Power, 22 Willamette L.Rev. 219, 226 (1986). The doctrine of equitable conversion was firmly entrenched in Oregon law when ORS 88.120 was enacted. See, e.g., Walker v. Goldsmith, 14 Or. 125, 137, 12 P. 537 (1886). Under it, the bundle of rights known as ownership is divided between the parties to an executory land sale contract. The purchaser is regarded as the owner and generally has the right to full possession and enjoyment of the property. Senior Estates v. Bauman Homes, 272 Or. 577, 583-84, 539 P.2d 142 (1975); Bembridge v. Miller, 235 Or. 396, 408-409, 385 P.2d 172 (1963). The vendor's position is analogous to that of a mortgagee who retains legal title as security for the purchase price. Sievers v. Brown, 34 Or. 454, 457-58, 56 P. 171 (1899); 3 American Law of Property § 11.22, 62 (Casner ed. 1974). However, the equitable conversion doctrine traditionally was not employed in a way that would defeat Luebke's continuing ownership under the circumstances presently before us. Although courts uniformly applied the equitable conversion doctrine to the vendor-purchaser relationship, for example, in determining right to possession, see, e.g., Senior Estates v. Bauman Homes, supra 272 Or. at 583-84, 539 P.2d 142, the doctrine did not necessarily carry over into cases involving third party creditors. [N]either this court nor other courts actually apply the doctrine of equitable conversion automatically. Equitable conversion is not invoked unless it appears necessary to invoke it in a particular case in order to accomplish equity according to established rules of equity jurisprudence.    It seems, therefore, not inappropriate to conclude    that equitable conversion is not a condition of property for all purposes, but is only a name given to a situation resulting from the application of equitable doctrines to special states of facts.    This does not mean, however, that the whim of the chancellor will determine when an equitable conversion takes place. Cases of the same general class ordinarily will be treated alike. Thus, in cases involving the devolution of interests under a specifically enforceable contract of sale of real property, equity courts have almost uniformly seen fit to apply the doctrine of equitable conversion.     The reasons which persuade equity to hold that equitable conversion applies in devolution cases, or (in a majority of states) in risk-of-loss cases, do not necessarily carry over to cases involving the rights of third-party creditors having judgment liens upon real property. Therefore, although it is settled in Oregon that in equity a purchaser is regarded as the owner of the real property for some purposes, it has been held (in other than vendor-purchaser cases) that the judgment lien [against the purchaser] does not attach to such purchaser's equitable interest in the land. Smith v. Ingles, 2 Or 43, 45 (1862)   . Equally consistent with the view that an equitable conversion does not take place in every situation where there is a contract to purchase land are the cases which hold that where the vendor is the judgment debtor the judgment lien will attach to the vendor's interest to the extent of the unpaid purchase price. See, e.g., May v. Emerson, 52 Or 262, [96 P. 454, 96 P. 1065 (1908)]   . Heider v. Dietz, 234 Or. 105, 112-15, 380 P.2d 619 (1963) (emphasis added). As noted, the predecessors to ORS 88.110 and 88.120 were enacted in 1913 and 1917, respectively. Or. Laws 1913, ch. 304; Or. Laws 1917, ch. 32. In other than vendor-purchaser cases, the equitable conversion doctrine was not automatically applie[d] in every instance of a land-sale contract. Id. at 115, 380 P.2d 619. See also 3 American Law of Property, supra, 82-85, § 11.22. Specifically, the state of the law in 1917 was that a subsequent purchaser was not regarded as the owner for all purposes; a judgment lien against the purchaser did not attach to the purchaser's equitable interest and a judgment creditor of the vendor had a lien on the land to the extent of the unpaid purchase price. This is consistent with the self-evident rule that equitable remedies are only granted in a particular case in order to accomplish equity according to established rules of equity jurisprudence. Heider v. Deitz, supra, 234 Or. at 112, 380 P.2d 619. For the reasons discussed above, we hold that use of the equitable conversion doctrine to determine ownership under ORS 88.120 is inappropriate. For the purpose of ORS 88.120, Luebke still owns the mortgaged property. The second requirement of ORS 88.120 has been met.