Court Opinion

ID: 9623956
Source: CourtListenerOpinion
Date Created: 2023-08-22 06:47:06.529217+00
Date Added: 2024-06-11T09:51:48.649249
License: Public Domain

On Behearing
TOOZE, J.
*176Respondents have filed a petition for rehearing based on the following grounds:
“I
“The court erred in holding that the taking of possession of the premises and the payment of rental is sufficient part performance to take a lease for more than one year outside the operation of the Statute of Frauds.
“II
‘ ‘ The court erred in holding that Everett H. McGee was the authorized agent of Donzella McGee for the purpose of entering into a lease, in the absence of proof of written authority as required by the Statute of Frauds.
“Ill
“The court erred in holding that the parties had agreed upon the terms of a lease.
“IV
“The court erred in holding that respondents McGee are estopped to deny the validity of the lease which is the subject matter hereof.”
Referring to respondents’ first ground above, it is stated in the accompanying brief that: “The present decision introduces an element of great uncertainty into the law relative to the application of the Statute of Frauds.” This claim is based on the language of the court (Young v. Neill, 50 Or. Adv. Sh. 957, 960, 220 P. (2d) 89) where it is stated:
“In Oregon a lease for more than one year is void unless it is in writing however, equity will relieve a party from the effects of such statute where the lease can be shown to be clear, certain and unambiguous in its terms and where there is part performance on the part of the lessee, such as taking possession of the premises and payment of rental under the lease. Wallace v. Scoggins, 18 *177Or. 502, 21 P. 558. The statute of frauds was never designed to shield against the perpetration of a fraud.”
In their brief, the respondents state:
“While there are a number of Oregon eases holding that taking possession and payment of part of the purchase price operates to take a contract for the sale of real property out of the Statute of Frauds, the Oregon cases relating to leases require more. The distinction is apparently based upon the fact that in a contract of sale, the taking of possession is notice to the world that the newcomer has an equity in the property, and his possession is adverse to the former ownership. No such distinction exists where one takes possession as a tenant.”
A careful examination of the Oregon decisions does not disclose that this eourt has directly made any distinction between sales and leases in the respects under discussion. Mr. Pomeroy makes no distinction. In Pomeroy, Specific Performance of Contracts (3d ed.) 283, § 115, it is stated:
“Possession alone of land, under a verbal contract, when delivered to the vendee or lessee, or taken by him with the consent of the vendor or lessor, or with the knowledge which implies such consent, is an act of part performance which takes the case out of the statute of frauds, even without the additional circumstances of the payment of consideration, or the making of improvements. This rule is settled by an overwhelming weight of authority in England and in this country * * =::\” (Italics ours.)
Mr. Story reaches the same conclusion. In 2 Story, Equity Jurisprudence (14th ed.) 430, § 1049, it is stated as follows:
“But if the possession be delivered and obtained solely under the contract, or if in case of a tenancy *178the nature of the holding he different from the original tenancy, as by the payment of a higher rent, or by other unequivocal circumstances referable solely and exclusively to the contract, there the possession may take the case out of the statute.”
The statements of both these authorities are commented upon with approval by the late Mr. Justice Rand in Dunis v. Director et al., 121 Or. 500, 255 P. 474.
The mere taking of possession of premises and the payment of rent may not in all cases be such part performance of an oral lease as to. take the case out from the operation of the Statute of Frauds and permit oral evidence to establish the agreement of the parties, nevertheless it is well established that such taking of possession and payment of rent in conjunction with other facts and circumstances may be sufficient. Each case must necessarily depend upon its own peculiar facts and circumstances, and it is, of course, impossible to lay down a rule that will fit all situations that may arise. In some cases, the placing of substantial improvements upon the premises by the lessee, or the making of repairs, in addition to possession and payment of rent, have been deemed sufficient part performance. Dunis v. Director et al., supra; Friberg v. Bjelland, 95 Or. 320, 186 P. 1113; West v. Washington Railway Co., 49 Or. 436, 90 P. 666; Wallace v. Scoggins, 18 Or. 502, 21 P. 558. But whether or not there has been such part performance does not depend solely upon whether or not improvements have been made.
In Dunis v. Director et al., supra, at page 507, this court said:
“It is settled law in this state that where one, in reliance upon the terms of a parol agreement, has entered into possession of real property as *179lessee with the acquiescence of his lessor and has incurred expenses and changed his circumstances and condition to such an extent that refusal on the part of the lessor to perform would operate as a fraud on the rights of the lessee, such acts constitute part performance of the parol agreement and take the case out of the operation of the statute of frauds.”
Where one party in addition to taking possession of the premises and paying the rent, performs other acts pursuant to the terms of the oral lease and directly referable thereto, such as materially changing his position to his disadvantage, incurring substantial expenses, making substantial improvements or repairs to the premises, or otherwise doing something which he would not have done but for the agreement and which would result in substantial injury to himself if the other party were permitted to hide behind the statute of frauds and disavow the same, and when the other party has received and enjoyed the benefits of the oral lease, equity will step in and compel specific performance, the other party being estopped to set up the statute as a defense.
The foundation of this doctrine is fraud; not necessarily an antecedent or positive fraud, but a fraud inhering in the consequence of this setting up the statute. It applies where to permit the defense would be inequitable and unconscionable. Seymour v. Oelrichs, 156 Cal. 782, 106 P. 88, 134 Am. St. Rep. 154, and note; Pomeroy, Specific Performance of Contracts (2d ed.), §§ 104, 107; Pomeroy, Specific Performance of Contracts (3d ed.), § 96; Story, Equity Jurisprudence (3d ed.), § 1409, et seq.; 49 Am. Jur., Statute of Frauds, §§ 578, 580.
It must be remembered in the case at bar that these *180parties were not dealing at arm’s length. There was a very close relationship existing between them, with resulting trust and confidence in each other. As so often happens — and, unfortunately, in too many instances — the parties, relying upon such mutual trust and confidence, neglected to give attention to strict legal and business requirements which they otherwise would have done had they been dealing with strangers. Obviously, it would be grossly inequitable and unconscionable to permit one who has received benefits from such trust to betray the same to the serious disadvantage of the other.
In this case, the sale and purchase of the stock of merchandise, the payment of a substantial consideration for the goodwill of a going business, which included the transfer of the assumed name, the leasing of the premises for a term of five years with an option of renewal, the borrowing of the money at the bank with which to complete the purchase, the use of the entire marital savings of the purchasers in making the purchase, the severance of employment by one of the purchasers in order to conduct the business purchased, were all integral parts of a single transaction, each part dependent upon the others.
In taking possession of the stock of merchandise and conducting the business, in the occupancy of the premises, in the manner and time of paying rental, in taldng care of the expenses of the utilities, water and lights, in the redecorating of the store itself — in fact, in everything done, the parties performed in strict accordance with the terms of the unsigned lease prepared by respondents’ attorney, Mr. Briggs, at the instance and under the direction of the respondent Everett McGee. The respondent McGee so admitted.
*181Everything done by the parties was directly in pursuance of and referable to the oral lease.
When we speak of acts of part performance as being done in pursuance of and directly referable to an oral lease, we do not wish to be understood as meaning acts referable to any oral lease, but to such acts only as are directly referable to an oral lease for a term of more than one year.
By operating under this form of lease for approximately fifteen months without objection, accepting its benefits and obligations, respondents must be deemed to have acquiesced in and ratified the same as a true expression of their actual agreement, and by their silence when it was their duty to speak if they were not satisfied, they are estopped now to take a position inconsistent with their conduct, for to permit them to do so, would result in gross injustice and be wholly inequitable and unconscionable.
We have given consideration to the other points raised in the petition for rehearing but do not deem it necessary to further discuss them inasmuch as we adhere to what was said in the original opinion.
We adhere to our former decision.