Court Opinion

ID: 9628556
Source: CourtListenerOpinion
Date Created: 2023-08-22 09:24:18.310038+00
Date Added: 2024-06-11T18:07:07.438603
License: Public Domain

ROSSMAN, J.,
dissenting.
I disagree with the result reached by the majority for several reasons. Foremost among these is what I perceive to be an erroneous characterization of the parties’ conduct in this case. I believe an objective look at defendants’ conduct would show that their actions repudiated the contract and constituted an acquiescence in plaintiffs’ rescission.
The majority acknowledges that mutual rescission by acquiescence is a viable legal theory in Oregon. This concept has been referred to numerous times, but has never been raised in a case which presented the proper facts for its application. See Nygaard et ux v. Anderson, 229 Or 323, 330-31, 366 P2d 899 (1961); Morrison et al v. Kandler et ux, 215 Or 489, 499, 334 P2d 459 (1959). The general rule with respect to this theory is that:
“* * * If a purchaser repudiates the contract without cause, or attempts to do so after he has lost his right by undue delay, * * * a vendor, who has resumed possession and elected to sue for foreclosure, is given a reasonable latitude in operating the property pending the final determination of the suit.” Miller et ux v. Barker et ux, 233 Or 113, 122, 377 P2d 343 (1962).
If a seller stays within that latitude, the contract will remain in full effect; but, if he exceeds it, his conduct will actually effect a change in the legal rights of the parties. See Morrison et al v. Kandler et ux, supra. In other words, a party can acquiesce in even a wrongful recission and thereby effect a mutual rescission. 215 Or at 499.
The determining factor in cases of this type is whether the conduct of the seller evinces an intent to repudiate the contract. In Nygaard, the court framed the issue this way:
“* * + jf [the sellers] resumed possession for the purpose of revesting in themselves the full interest in the premises, forfeiting the equitable interest of the defendant, their conduct would, of course, be inconsistent with the theory of affirmance upon which the suit to foreclose is predicated. Moreover, such conduct would be wrongful because, as we have already observed, [the sellers,] in filing the suit to foreclose, waived their right to repossess the property under the forfeiture provision of the contract. If, however, [the *236sellers’] resumption of possession was not intended as a negation of defendant’s possessory and equitable interest in the property, there is no such inconsistency and [the sellers] would then be entitled to prevail. * * *” 229 Or at 331.
Although, as previously noted, I have been unable to discover any Oregon cases in which a seller has been held to have acquiesced in a mutual rescission by his conduct, there are cases in which a seller’s conduct has been held to be a repudiation of a contract giving the buyer a right to rescind. In Montgomery v. Heider, 147 Or 523, 34 P2d 657 (1934), a seller who had leased to a third party property that he had previously sold under contract to the plaintiffs was held to have repudiated the contract wrongfully. In Macomber v. Waxbom, 213 Or 412, 325 P2d 253 (1958), a seller’s actions in removing the buyer’s padlocks from cabins sold by contract and replacing them with his own also was deemed to have given the buyer the right to rescind. Admittedly, these cases were not decided on the basis of a mutual rescission. However, contrary to what the majority states, these cases are relevant to our resolution of the instant case, because they provide some indication of the type of conduct which constitutes a repudiation of a land sale contract when engaged in by a seller.
The majority has managed to avoid finding a mutual rescisión by concluding that defendants’ actions were proper in response to plaintiffs’ dereliction and carelessness. I beleive that an objective account of the facts necessitates a different result.
Plaintiffs unequivocally rescinded the contract, by letter, in April, 1981, shortly after learning that the ranch’s characteristics had been misrepresented by Blackburn and Campbell. Although plaintiffs could have abandoned the property at once, I see no reason, under the circumstances, why it was not also perfectly proper for them to remain in possession. Moreover, having intially decided to remain in possession did not in any way preclude them from later abandoning the property as was done in April, 1982.
Of even greater significance is defendants’ conduct. It was probably necessary for them to lease the ranch to Hoyt for an entire year. It was important that the ranch not be allowed to deteriorate, and it is unlikely that anyone would have been willing to operate it on a month-to-month basis. However, *237defendants dealt with the property as owners, indifferent to the rights of plaintiffs and with no apparent regard for the contract. The lease contained no provision making it subject to plaintiffs’ interest in the ranch or contingent on the outcome of this suit. Moreover, if defendants were actually intent on enforcing the contract, then they were required to account to plaintiffs for the reasonable rental value of the ranch and for any personal property disposed of by them. Morrison et al v. Kandler et ux, supra, 215 Or at 508. There is no evidence that defendants set aside for plaintiffs’ benefit the rental income received from Hoyt or that they had even considered doing so.
On these facts alone, the mutual rescission question is a very close one. At best, defendants’ conduct with respect to the lease evinced indifference to the sale contract and to the rights of plaintiffs. However, the question is not so close when we consider that defendants entered into an oral option agreement to sell the ranch to Hoyt. In his testimony, the only condition which Stephen Hoyt mentioned as potentially standing in the way of an eventual sale was financing. This strongly suggests that plaintiffs’ interest was not seen as a barrier to the deal with defendants. The fact that the oral option may have been unenforceable is irrelevant on the issue of mutual rescission. What is relevant is that the granting of an option to purchase, orally or otherwise, shows an intent on the part of defendants, that is inconsistent with the continued existence of the contract. Had defendants actually been sincere about enforcing the contract, they would not have been negotiating to sell the ranch to Hoyt.
Even after allowing for reasonable latitude in dealing with the ranch, it appears that defendants’ actions in this case were at least as inconsistent with the contract as were the actions of the respective sellers in the Montgomery and Macomber cases. In their transactions with Hoyt, defendants appear to have disregarded totally plaintiffs’ interest in the ranch. They cannot have it both ways, insisting in court and in their interactions with plaintiffs that the land sale contract is binding while simultaneously leasing the entire ranch to Hoyt for one full year, keeping the income it generated and preparing to consummate its sale. Accordingly, even assuming that plaintiffs’ repudiation of the contract and abandonment of the ranch were wrongful, I would hold that defendants’ actions *238exceeded the leeway to which they were entitled and, therefore, evinced an intent to repudiate the contract. Defendants joined in a mutual rescission. Therefore, I would reverse.