Opinion
Argued at Pendleton May 6, 1929
Reversed July 23, 1929 Rehearing denied September 17, 1929
From Gilliam: DAVID R. PARKER, Judge.
For appellant there was a brief and oral argument by Mr. T.A. Weinke.
For respondent there was a brief over the names of Messrs. Angell, Fisher Sabin, with oral arguments by Mr. J.D. Weed and Mr. H.D. Angell.
Suit for cancellation of written contract. Defendant had decree and plaintiff appeals. Reversed. Rehearing denied.
This is a suit in which the plaintiff prays for the cancellation of a written contract under which the defendant claims the right to the possession of a wheat ranch and a quantity of personal property. November 23, 1927, the plaintiff was the owner of all the property just mentioned consisting of 1,360 acres of land in Gilliam County, together with some farming implements and livestock. Upon that day he and the defendant entered into a contract, whereby the former agreed to sell to the latter the above real and personal property for the sum of $40,000. The contract acknowledged the receipt of $100, and provided for the payment of $200 upon the execution of the instrument and a further payment of $1,500 on or
See 4 R.C.L. 513. before August 31, 1928; the balance of the purchase price was to be discharged by the delivery to the plaintiff, each year, of one half of the crop. This provision, and others with which this suit is concerned, is thus stated in the contract:
"It is further agreed that the buyer will deliver in the warehouse to be named by the seller, free and clear of all charges or liens, a one-half of the crop raised in the years 1929, 1930, 1931 and 1932, and in addition thereto will during the said years, and before the same shall become delinquent, pay the taxes on all of the property, both personal and real, set out and named therein, and that the buyer will further pay annually 6% interest on the amount still due and unpaid upon the purchase price named herein."
The contract provides that if at the end of five years the defendant had paid one half of the purchase price, the plaintiff would convey title to him, and accept four promissory notes for the balance of the debt, their payment to be secured by a mortgage upon the real property. This provision of the contract made no mention of interest. The contract also provided:
"It is further agreed that the buyer shall go into possession of the said property upon the execution of this contract, but it is understood and agreed that he acquires no title thereto, nor to any part thereof, either in the personal property or the real estate, and in case he should fail, refuse or neglect to carry into effect the terms and conditions as set out herein, time being the essence of this contract, that he will surrender and deliver up the said property and premises to the seller herein in as good condition as they now are, wear, tear, fire and other unavoidable casualties excepted."
The contract requires that the defendant should farm the ranch in a husbandlike manner.
The breaches alleged are (a) failure to pay interest November 23, 1928, and (b) failure to cultivate the land and operate the ranch in the agreed manner. The defenses are (1) a denial that any interest was payable November 23, 1928, (2) a denial of a failure to operate the farm in the required manner, (3) an allegation that if any such neglect occurred it was waived by the plaintiff's act in accepting the payment of $1,500 August 31, 1928, and the half crop raised that year, and (4) a cross-complaint alleging defendant's investment in the farm; that the plaintiff, by filing the aforementioned suit in Multnomah County, and by various other acts of harassment, undertook to force the defendant to breach the contract and thereby afford the plaintiff a basis for recovering the ranch, and obtaining the defendant's investment in the same. Based upon these allegations the defendant alleged that it has become impossible for him
"* * to obtain the financial backing necessary to perform the covenants and conditions under said contract and that the Judge of this Court should make full and complete settlement of this contract between the parties at this time and avoid further litigation in connection with the same and that defendant is entitled to the return of the money paid on the purchase price under said contract and that the plaintiff is entitled to a lease or share of the crops raised on said premises and that this is to be deducted from damages which defendant has sustained in the sum of $5,000 and that defendant should be entitled to hold and harvest the 375 acres of land now seeded or to receive the value thereof in money and in addition thereto to receive compensation for 75 acres of disked summerfallow which is now on said premises and for such other and further relief and orders as to the court might seem just and equitable."
November 7, 1928, the plaintiff notified the defendant that he would insist upon the prompt payment of interest November 23, 1928. November 24, 1928, he demanded possession; it was refused. The contract was recorded in the deed records of Gilliam County. No motion or demurrer was filed to the complaint. When the defendant went into possession the value of the feed, seed and summer-fallow upon the place was approximately of the value of all the cash he would pay the plaintiff, $1,701. A crop is now maturing upon 375 acres from seed planted by the defendant, but the present summer-fallow was plowed by a receiver at the plaintiff's expense.
The decree was in favor of the defendant; the plaintiff appealed. REVERSED.
We shall first consider the controversy in regard to interest. The plaintiff contends that the contract requires the payment of interest annually beginning November 23, 1928. The defendant finds no provision for interest except upon overdue payments; he suggests that possibly the contract might be construed as exacting the payment of interest beginning in 1929; but, insists that none was payable before that year. He calls attention to the fact that the contract stipulates for interest on the amount "still due and unpaid," and that the paragraph, which provides for the execution of notes when half of the $40,000 has been paid, makes no mention of interest. We have carefully reviewed the contract; its only mention of interest is in the requirement that it shall be paid upon the portion of the purchase price which is "still due and unpaid." The word "due," lexicographically denotes an amount that has matured; however, it is frequently employed in a broader sense to include sums which have not yet matured: Words Phrases, 3d Series, p. 44. Since the parties, in the expression of their agreement, employed a word, which is capable of a dual meaning, and have left a doubt as to which meaning should be applied, we feel justified in relying upon the general context and apparent purpose of their contract to a greater degree than the precise meaning of the word "due." Both parties have interpreted the contract as one which binds the plaintiff to sell, and the defendant to purchase the property upon deferred payments of the purchase price. Such a contract would create a debt until the entire purchase money was paid. Since interest is generally payable upon debts, this circumstance argues strongly in favor of the plaintiff's contention in regard to interest. It is true that the clause, which makes provision for the acceptance by the plaintiff of purchase money notes when half of the property's price has been paid, makes no mention of interest, but we believe that the exaction of interest upon the portion of the principal "still due and unpaid" refers to the unpaid principal, even after the notes have been executed; in other words it is our opinion the notes would bear the stipulated interest of 6 per cent. Having placed this construction upon the contract the foundation for much of the defendant's argument is removed. It is a general rule that if the terms of a contract render its meaning in regard to the payment of interest doubtful, it should be construed most strongly against the party who contracts to pay it: 33 C.J., Interest, § 42. The foregoing circumstances and the rule of construction just mentioned persuades us that the contract provides for the payment of interest upon deferred installments of the principal. We find no merit in the suggestion that interest was not payable until the year 1929; the interest clause provides for its payment annually, and although it is a portion of the paragraph which mentions the years 1929, 1930, 1931 and 1932 we believe that is sufficiently clear that its payment was not deferred until 1929. The foregoing being our conclusions, it follows that interest was payable November 23, 1928, and since the defendant admits that he made no payment upon that occasion, his contract was thereby breached. Further, this conclusion renders it unnecessary for us to state our consideration of the alleged breach concerning the cultivation of the soil.
We come now to the contention of the defendant that the complaint does not disclose any controversy requiring the attention of a court of equity. It is to be observed that the defendant interposed no such objection to the complaint. It is true, that when the first witness was called he objected on the ground that the suit was not of an equitable nature, but his answer, filed prior to that time, sought equitable relief. This court has held that a defendant waives his right to object to the jurisdiction of the court, when without interposing the objection, he answers and claims affirmative equitable relief, provided, however, that the case is not entirely lacking of such cognizance: Bowsman v. Anderson, 62 Or. 431 ( 123 P. 1092, 125 P. 270), Gantenbein v. Bowles, 103 Or. 279 ( 203 P. 614), Hume v. Burns, 50 Or. 124 ( 90 P. 1009), and Security Co. v. Baker County, 33 Or. 338 ( 54 P. 174). The objection that the plaintiff was out of possession, and yet sought the removal of a cloud from the title of his land was waived by the answer, which makes no mention of the nonpossession, and seeks equitable relief: O'Hara v. Parker, 27 Or. 156 ( 39 P. 1004); 9 C.J., Cancellation of Instruments, § 57.
But, there is no need of endeavoring to buttress the jurisdiction of equity in this suit by examining the answer. The parties had entered into a contract concerning real and personal property of great value; the defendant was in possession by virtue of a contract which had been recorded. He denied the breach and sought a decree which would have yielded to him an interest or estate in the property. The cancellation of the contract was a remedy which equity alone was adapted to afford, and the law courts provided none as complete: Tillamook Co. v. Wilson River Road Co., 49 Or. 309 ( 89 P. 958); State v. Warner Valley Co., 56 Or. 283 ( 106 P. 780, 108 P. 861). From 9 C.J., Cancellation of Instruments, Section 56, we quote:
"Equity has jurisdiction to cancel, when the instrument is a deed or other document concerning real estate, which, although inoperative if suffered to remain uncanceled, would throw a cloud upon plaintiff's title to the lands which it embraces, or to which it refers. This is part of the well known and firmly settled jurisdiction of equity the remedy at law being considered inadequate. And the relief of cancellation may be granted even if a technical forfeiture of the estate which constitutes the encumbrance follows, where it appears that all rights under it have been lost by the willful and prolonged neglect of the party who otherwise might have preserved and enforced his title."
When the parties prepared their contract they evidently anticipated such a situation as now confronts them and made provision as to how the controversy should be disposed of; that is, the defendant should "surrender and deliver up the said property and premises to the seller." They are agreed that this court has held that when a contract prescribes a remedy for a breach that remedy is generally exclusive and will be enforced. The following adjudications justify their conclusions: Lea v. Blockland, 122 Or. 230 ( 257 P. 801); Kemmerer v. Title Trust Co., 90 Or. 137 ( 175 P. 865); Moffitt v. Oregon Cal. R. Co., 46 Or. 443 ( 80 P. 489). The defendant employs the foregoing circumstances as the basis for an argument that, therefore, actions of ejectment and of replevin would have sufficed. If the defendant had quit possession the moment the breach occurred, and had expunged from the records his contract, the plaintiff upon repossession, could have asked for no more. But as we have observed before, after the breach the defendant insisted upon continued possession, asserted that his contract was still subsisting, and through lack of attention to the cultivation of the soil brought about a condition where a receiver was necessary unless the following year's crop was to be foregone. Under such circumstances a court of equity alone was adequate to provide the required remedy. A cancellation of the contract and a restitution of possession will therefore be decreed.
The answer alleges that the plaintiff, through officious intermeddling and the institution of an unwarranted suit sought to force the defendant to breach his contract. The defendant avers damages through those circumstances, and contends that the portion of the purchase price paid should be returned to him, and that he should be permitted to harvest the present crop growing upon 375 acres. He does not ask for a privilege of discharging overdue payments, and of thereby reinstating his contracts, but prays for "a full and complete settlement of this contract." While the evidence indicates that the plaintiff was diligent in the protection of his interests, we find none which would support a finding of any harassment. The defendant has paid the plaintiff $1,700 in cash and delivered to him one half of the 1928 crop of the value of $2,170; but received $1,600 worth of seed, feed and summer-fallow. In addition the defendant has had possession of a valuable farm, its machinery, livestock and other equipment for approximately two years' time. Interest at the agreed rate of 6 per cent upon $40,000 is $2,400 per year. Hence it is apparent that the venture has brought the plaintiff no profit. These being the circumstances a return of any portion of the paid purchase price would be unwarranted. But, to oust the defendant at the very moment when the crop is ready for harvesting would be harsh, if a means can be found whereby he can work out his interest without sacrificing the plaintiff's rights. The plowing of the land and the seeding was done before this suit was instituted; those acts of husbandry have conferred a value upon the land. In a suit by a vendor for rescission the court may decree an allowance for the value of any permanent and valuable improvement placed upon the land by the vendee: 9 C.J., Cancellation of Instruments, p. 1267, § 227; 4 R.C.L., p. 512. In other words the plaintiff should not be entitled to derive any unconscionable advantage from the cancellation. The plaintiff offered much testimony to the effect that the defendant committed waste, and thereby damaged the former's estate. He apparently relies upon the effect of this evidence to offset the value of the present crop. But, the ranch was in a very poor condition through neglect and lack of occupancy when the defendant went into possession; after careful consideration of all this evidence we conclude that the defendant did not injure the plaintiff's reversion.
Since both parties pray for a rescission and cancellation of the contract, the decree should grant such relief forthwith. If the plaintiff so desires, the decree may contain a judgment in his favor for interest upon the unpaid portion of the purchase price up to the time this suit was filed. Should the defendant still desire to harvest the present crop, the decree should provide that he may retain possession for such reasonable time as is necessary for those operations, not extending beyond October 1, 1929. At the conclusion of the harvest the decree will require his prompt quitting of possession. If he signifies no intention of harvesting this crop he should withdraw from the premises at once. By way of reimbursing the plaintiff for the use of his property, while the present crop was growing, the decree should provide for delivery to the plaintiff of such portion of the grain harvested as constitutes the market rental value of the ranch. If the parties cannot agree upon that item the court may determine it by receiving evidence.
The cause will be remanded to the Circuit Court, with instructions to enter a decree in harmony with the foregoing. Costs will be allowed to neither party.
REVERSED AND REMANDED, WITH DIRECTIONS. REHEARING DENIED.
BEAN, McBRIDE and RAND, JJ., concur.