Court Opinion

ID: 9551083
Source: CourtListenerOpinion
Date Created: 2023-08-07 18:47:32.350598+00
Date Added: 2024-06-11T15:23:02.747822
License: Public Domain

ROSSMAN, J.,
dissenting.
The majority states: “The pivotal question is whether the instrument signed by the parties created a lease or a land sale contract.” I do not believe that that is the crucial question. It clearly is not the question which the plaintiff wishes answered. The pivotal question in my belief is this:
If a vendor does not care to foreclose a defaulted contract and wishes nothing but possession, does the law demand that he nevertheless foreclose the contract and not prosecute a forcible entry and detainer *573action? We add that in the present instance the contract does not bind the would-be buyer to purchase, but gives him possession for three months subject to his payment of rent in the amount of $200 monthly.
Let us make clear the following elements of the situation before us:
(1) all of the undertakings of the buyer, including the promise to pay rent, are in a state of default;
(2) the would-be buyer (Forbes), a lawyer, prepared the instrument and, therefore, ambiguities in it should be resolved against him;
(3) the instrument does not bind the buyer to purchase the property;
(4) the agreement requires the would-be buyer to pay rent in the amount of $200 a month for three months while he attempts to secure a mortgage loan and thereby finance the purchase of the property;
(5) the appellants (Forbes) did not pay the “down payment” of $3000 which the majority mention; Mr. Forbes conceded that that payment was made by the Rebensdorfs who are not appellants and who do not contest the plaintiff’s action; it is very doubtful whether the appellants (Forbes) have any financial interest whatever in this property.
Before moving on, it is well to take note of the fact that the agreement itself, which, as has been stated, was written by the appellant, an attorney, says “subject to the purchaser (Forbes) securing satisfactory loan”; in other words, the Forbes conditioned their undertaking to buy upon their ability to secure a satisfactory loan. The paper gave the would-be buyer three months in which to obtain the “satisfactory loan” but provided that they must pay $200 a month rent. It then said that if a satisfactory loan is found, the provisions for the payment of rent shall cease.
*574It is clear that the Forbes have defaulted in the payment of rent. It would seem equally clear that since their right to possession was conditioned upon their payment of rent the plaintiff is entitled to possession. If the Forbes have any interest in the property, they can establish that interest in another proceeding without holding possession of this property rent free in the meantime.
The earnest money receipt together with the supplemental agreement of July 1 did not create the status of vendor and purchaser between the parties. That relationship arises from the execution of a contract to sell real property. The agreement we have before us is conditional upon the “purchaser securing satisfactory loan.” As we said in Simms Company v. Wolverton, 232 Or 291, 375 P2d 87, in the words of 91 CJS, Vendor and Purchaser, § 110, if “the sale is conditioned on the vendee’s ability to obtain a specified loan on the premises, the contract does not become binding until he is able to procure the intended loan.” There is no mutuality of obligation; consequently, the agreement in issue does not rise to the status of a realty contract of sale. At the most, the agreement gave the defendants and the Eebensdorfs an option to purchase the premises which could be exercised in the event they were successful in securing the specified financing.
The supplemental agreement notes in its final paragraph:
“That this is not a final agreement and upon the compliance with the terms and conditions herein-above set forth a final agreement will be consumated providing for a warranty deed conveying a marketable title, title insurance and the adjustment between the parties of fire insurance, taxes and any other matters commonly set forth in final agreements for the purchase of real property.”
*575This paragraph clearly expresses what we have already observed in the terms of the agreement.
Possession of the premises is not a necessary incident of an option to purchase; neither is possession as a tenant inconsistent with the rights of an optionee. Many leases extend to the lessee an option to purchase the property, and it cannot be seriously urged that he thereby becomes a purchaser and loses his status as a tenant prior to the exercise of his option. The agreement of July 1, 1962, gave the defendants possession for a stated per month price during the period the option was to run. The $200 per month was solely for the right to use the premises and was not to be applied in any way to reduce the purchase price. The agreement specified that in the event the balance of the purchase price was paid, the portion of the $200 payment remaining unused by occupancy of the premises would be returned. In other words, when the possession of the premises as a tenant was terminated by payment of the purchase money the tenant would be compensated for his unexpired term of lease by a refund of the rent. In this situation the forcible entry and detainer action was proper.
Defendants-appellants next urge as a ground for their motion of nonsuit that “Since the supplemental agreement raises complicated questions of legal construction, an FED will not lie because it is a summary proceeding and not equipped to resolve these questions.” As we have noted, the status of the parties and their possessory rights can be determined by a reading of the two instruments. It remains after a reading of these documents simply to determine as a question of fact whether plaintiff has sustained his forcible entry and detainer plea. Any complicated issues of title and *576contract construction were created by defendants’ answer on counterclaim in equity.
Defendants argue in construing the agreements that the court must consider them in a light most favorable to the defendants who are the grantees. This rule of construction is applied when a reading of the instrument discloses an ambiguity that must of necessity be resolved. Again we must note the instruments in question disclose on their face the rights of the parties that are necessary of determination in an action cf this type. No ambiguity appears and no need exists for the invocation of the rule just mentioned.
The general rule in forcible entry and detainer actions is that equitable defenses may not be raised. This rule requires a defendant who would assert matters in equity to bring an original suit by which the forcible entry and detainer action is stayed while a final determination is made of the equitable rights. See Morris v. Davis, 334 Mo 411, 66 SW2d 883; Pefkaros v. Harmon, 20 Del Ch 238, 174 A 124.
In Oregon, however, the rule is different. Defendant is entitled to invoke the equity side of the court in an action that commenced as a forcible entry and detainer proceeding. But while Oregon allows the defenses to be raised, the rule is not without limitation. ORS 16.460 (2) provides:
“In an action at law where the defendant is entitled to relief, arising out of facts requiring the interposition of a court of equity, and material to his defense, he may set such matters up by answer, without the necessity of filing a complaint on the equity side of the court.”
This statute relating to equitable defenses is applicable to a summary proceeding of the nature of this ease. Friedenthal v. Thompson, 146 Or 640, 31 P2d 643.
*577Clearly, the statute requires the equitable issues must arise out of facts material to the defense of the law action. The facts defendants alleged in support of their equitable prayer are in no way material to a defense of the action of forcible entry and detainer. As a defense defendants alleged the relationship of vendor and purchaser was created and that, therefore, a forcible entry and detainer action would not lie. In support of the prayer for equitable relief it will be recalled defendants alleged that plaintiffs submitted a false title report which induced them to pay the down payment and expend money for repairs. Thus, the defendants do not seek the reformation of either of the two documents which would be equitable defenses but seek judgment against the plaintiffs upon charges of fraud. No facts requiring the interposition of equity are alleged. The equitable matters were properly excluded from the trial court’s consideration.
For the above reasons I dissent.
Perry, J., joins in this dissent.