Public Market Co. v. City of Portland , 171 Or. 522 ( 1942 )

The majority opinion holds that the plaintiff completely performed the contract and that the city of Portland has repudiated the contract in toto. With both of these conclusions I concur. Those facts being conceded, I cannot concur in holding that the plaintiff is not entitled to have the contract specifically enforced. For in no other way than by the payment of the sums stipulated in the contract can the plaintiff receive the full benefit of its contract.

The evidence shows that this written contract was entered into after negotiations had been pending between the city and the plaintiff for a long time. While so pending and until shortly before the contract was made, both parties contemplated that the city should raise the moneys it was to become obligated to pay by the issuance and sale of public market utility certificates to be secured by a mortgage on the property after the city had acquired title thereto. Had this intention been adhered to, it is only reasonable to suppose that the contract would have so provided. On the contrary, the contract expressly provides that:

"Upon the completion by the Company of its obligations under this agreement, and at the time of the tender by the Company to the City of proper conveyances of said property and assignments of its leases, contracts and insurance policies affecting said premises, the City shall accept said conveyances and said assignments and shall pay to the Company the sum of $1,244,790.66; and as of the date of said conveyances and assignments and of the making of said payment by the City to the Company, there shall be an accounting between the City and the Company, and the Company shall pay to the City all prepayments of rent and pro rata shares of premiums and deposits based upon the unexpired portion of existing leases and all repayments of other moneys under existing contracts which shall represent unearned income of the Company, and the City shall pay to the Company all prepaid expenses which the Company has at that time advanced under the terms of its existing contracts. In addition to the principal sum of $1,244,790.66 hereinabove mentioned, and at the time provided for the payment of said sum, the City shall also reimburse the Company in the full amount of the cash advanced and/or liability incurred by the Company in the purchase of the equipment, materials and supplies described in Exhibit ``B', and shall pay to the Company, in addition thereto, ten per cent (10%) of the purchase price of said equipment, materials and supplies to cover the services of the Company in making said purchases. Such purchases of materials, equipment and supplies shall be subject to the approval of the Council in all respects, including the price paid therefor. All payments due from the City to the Company hereunder, if unpaid to the Company when due, shall thereafter bear interest at the rate of six per cent (6%) per annum, payable quarter-annually."

This constituted a definite and specific promise by the city that, when the plaintiff had completely performed its contract, the city would pay the sums stipulated in the contract, without any reference whatever to the manner by which the city should raise the money. To now construe this contract as if it contained a provision that the stipulated sums should be obtained by the issuance and sale of public market utility certificates is to add new terms to the contract and violates the provisions of section 2-216, O.C.L.A., which provides:

"In the construction of a statute or instrument, the office of the judge is simply to ascertain and declare what is, in terms, or in substance, contained therein, not to insert what has been omitted, or to omit what has been inserted; and where there are several provisions or particulars, such construction is, if possible, to be adopted as will give effect to all."

The evidence shows, and I think conclusively, that, because of legal difficulties which rendered it impossible for the city to carry out its original plan of issuing and selling public market utility certificates, this plan was abandoned shortly before the contract was entered into, and that the city then decided to raise the money in a different manner from that first contemplated. In no other manner can the express promise of the city contained in the contract be explained.

Nor can I concur in holding that, in order to render this contract valid, it is necessary to construe this contract as if it contained a specific provision that the moneys should be obtained by the issuance and sale of public market utility certificates. Either this contract is valid and enforceable or it is invalid and void for all purposes. It is not logical to say that, so far as the granting of specific performance is concerned, the contract is invalid but, for the purposes of rendering the city liable to an action for damages for its breach, it is valid. If it is invalid for one purpose, it is necessarily invalid for all purposes. There is no analogy whatever between this contract and a contract entered into by a city for the improvement of a public street which improvement is to be paid for by assessments to be levied by the city upon the property affected by the improvement. In that case, the city becomes liable only for failure to levy the assessments and this failure, it is held, results from the negligence of the city officers in failing to make the levy. This, of course, like all other negligent actions is a tort. Here there was no tort. The breach of the contract by the city was not the result of any negligence upon the part of its officers but was a wilful and intentional act upon their part. Consequently, if this contract is void because entered into by the city in violation of some charter provision, it is void for all purposes and no action will lie against the city for a breach thereof.

It is elementary that a city, like all other municipalities, in the exercise of its corporate powers may enter into any contract or do any act not expressly or by necessary implication forbidden by the constitution or statute of the state, or by some provision of its charter. Neither the constitution nor the statute of this state prohibited the city from entering into this contract, while, by section 151 of the city charter, the city was expressly authorized to enter into the contract. That section provides:

"The City of Portland shall have the power to construct, condemn, purchase, add to, acquire, maintain, operate and own all or any part of any public utility or any plant or enterprise, for the purpose of serving the city and the people thereof for uses public and private. Such power may be exercised in any lawful manner and shall include the power to purchase, condemn or otherwise acquire any franchise heretofore granted to operate a public utility."

The only limitation upon the exercise of the power thus conferred is that contained in section 160 of the charter, which, so far as material here, provides:

"No indebtedness shall be incurred for the acquisition of any public utility under the provisions of this Charter which, together with the existing bonded indebtedness of the city, shall exceed at any one time seven per centum of the assessed value of all real and personal property in the city, etc."

It is not even contended that the making of this contract violated section 160, by incurring an indebtedness in excess of said limitation. Hence, it is wholly immaterial, so far as the validity of this contract is concerned, whether the indebtedness thereby incurred was a general obligation of the city or was one payable out of a special, self-liquidating fund.

It is contended, however, that this contract is void because it incurs liability in violation of section 193 of the charter which, among other things, provides:

"No money shall be expended or payment made from any fund of the City, except assessment funds until a specific appropriation shall be made therefor * * *

"Any liability or liabilities incurred by the Council to be paid in any fiscal year, which singly or in the aggregate shall be in excess of the revenues for such year shall be null and void. * * *

"The City shall issue no warrants or other evidences of indebtedness, except upon special assessment funds, and the payment of judgments against the City, unless there is money in the treasury duly appropriated and applicable to the payment of the same on presentation, and all evidences of indebtedness issued contrary to this provision shall be null and void. Any member of the Council voting to incur any liability or to create any debt in excess of the amount limited and authorized by law, shall be deemed guilty of malfeasance in office, and for such malfeasance such member may be removed from office."

The fiscal year of the city, as defined by section 189 of the charter, commences on the first day of December and ends on the last day of November of the succeeding year. Under this contract, which was entered into during the fiscal year ending on the last day of November 1931, no moneys did or could become payable until July 15, 1932, which was the fiscal year next succeeding the making of the contract. That section applies only to liabilities incurred and payable during one and the same fiscal year and, hence, this contract was not void upon that ground.

No provision for the expenditure of the moneys falling due under the contract was itemized or included in the city budget, either for the year 1932 or for any succeeding year. Under section 187 of the charter, it is made the duty of the council, on or before the third Monday of November of each year, to make a complete budget of the revenues and expenditures for the ensuing fiscal year. This provision of the charter is mandatory and imposes a duty which the council is bound to fulfill. Should the council fail to perform that duty and make no provision in the city budget for the payment of any valid obligation of the city falling due in any fiscal year, such failure upon the part of the council would not affect the validity of the city's obligation to make such payment, for it is elementary that the binding effect of a valid contract cannot be destroyed or the obligation thereof impaired by any act, declaration or failure to act by one party to a contract unless assented to by the other. Moreover, under section 193 of the charter, where the council fails to itemize in the city budget a sufficient sum of money with which to pay a valid claim against the city, the person to whom the same is payable is entitled, upon obtaining a judgment against the city, to have a warrant issued by the city for the amount of his judgment, and the city has authority to issue such warrant. Hence, it is wholly immaterial, so far as plaintiff's rights under the contract are concerned, whether the sums payable under the contract were or were not included in the city budget for any of said years.

If, under the provisions of section 193, it could be maintained that all contracts entered into by the city which were not to be performed or become payable until the next fiscal year were illegal, then the city could enter into no contract for the payment of money unless it was payable during the fiscal year when made and then only if a specific appropriation for its payment had been made. Obviously, such was not the intention of the charter and, if given that construction, would seriously hamper the city in the exercise of its corporate powers. Decisions from other states construing dissimilar provisions limiting the powers of municipalities ought not to be followed in construing the provisions of section 193, unless the language or meaning of such provisions are identical with those involved here.

From the language employed in section 193 of the charter, it seems obvious that the limitation thus imposed was intended to apply only where the making of the contract and the time of payment under the contract were both to occur during one and the same fiscal year and has no application to this contract. If this is wrong, then the contract is unenforceable and void unless the city is estopped to make the defense. That the city is estopped to deny the validity of this contract, I think is clearly established by the evidence.

In order for plaintiff to obtain the money necessary for the performance of the contract, it borrowed from the Reconstruction Finance Corporation the sum of $775,000, and, to secure the payment thereof, issued and delivered to the Reconstruction Finance Corporation bonds aggregating said sum and, to secure the payment of said bonds, executed and delivered to the Security Savings and Trust Company, the predecessor in interest of the First National Bank of Portland, as trustee, a deed of trust mortgaging to said trustee the real premises described in the contract, together with all improvements to be made thereon and all materials, supplies and equipment to be placed therein. No payments have been made on said bonds with the exception of $500, and there is now due and owing to the Reconstruction Finance Corporation the principal sum of $774,500 with interest thereon at the rate of six per cent per annum, payable semi-annually, as provided in said bonds.

To induce the Reconstruction Finance Corporation to loan said moneys to the plaintiff, the city council adopted two resolutions, the first on October 6, 1932, and the last on April 13, 1933, both of which, with the exception of a correction in the description of the real property mentioned in the contract between the plaintiff and the city, were substantially identical in terms. The resolution last adopted is Resolution No. 20649, which reads as follows:

"The Council finds that under and pursuant to authority given under the terms of Ordinance No. 61566, passed by the Council October 10, 1931, and under authority of Resolution No. 20291, adopted by the Council October 28, 1931, an agreement was entered into on the 28th day of October, 1931, by and between the Public Market Company of Portland, an Oregon corporation, and the City of Portland, a municipal corporation of Multnomah County, Oregon, wherein and whereby Public Market Company of Portland agreed to sell and the City of Portland agreed to buy certain real property therein described in paragraph (3) of the contract, together with the building and improvements thereon and all equipment, material and supplies therein, upon the terms and for the price set out in the contract, for more particular description of said property and terms and conditions of the contract particular reference being hereby made to Contract No. 3214, filed in the office of the Auditor of the City of Portland, October 28, 1931, and the Council further finds that the Board of Directors of Reconstruction Finance Corporation have authorized the purchase of not exceeding $775,000 aggregate principal amount of the first mortgage, six per cent Series Gold Bonds of the Public Market Company of Portland, subject to certain conditions, among which is a condition that such bonds be issued and secured by a first mortgage upon the property described in the contract, dated October 28, 1931, above referred to, and a condition that the City of Portland subordinate all rights in such contract to the rights of the Trustee under the mortgage, securing such bonds, and to the rights of the holders of such bonds and consent to the assignment by Public Market Company of Portland of such contract to the trustee under such mortgage to be held by the Trustee as further security for the bonds, and also finds that on October 6, 1932, by Resolution No. 20557 a resolution was adopted by the Council subordinating the rights of the City under said contract to a mortgage to be made by the Reconstruction Finance Corporation, and at that time it was understood that said mortgage was to be taken in the name of Reconstruction Finance Corporation, and the resolution so read, and the Council finds that an error was made in setting out the description of the real property, in the contract between the Public Market Company of Portland and the City, in this: that the third word in the fifth line from the bottom of the description reads ``easterly' instead of ``westerly', NOW THEREFORE,

BE IT RESOLVED by the Council that to induce the Reconstruction Finance Corporation to make said above described loan to the Public Market Company of Portland, the City of Portland, through its Council, does hereby subordinate all rights in the contract dated October 28, 1931, being No. 3214 in the Auditor's office of the City of Portland, to the rights of Security Savings and Trust Company as Trustee under the mortgage securing the bonds above referred to, and to the rights of the holders of such bonds in a sum not to exceed $775,000, and hereby consents to the assignment of said contract between the Public Market Company of Portland and Security Savings and Trust Company, Trustee, as security for said bonds.

BE IT FURTHER RESOLVED by the Council that the third word in the fifth line from the bottom of the description in the said contract shall be changed from ``easterly' to ``westerly'.

Adopted by the Council April 13, 1933."

Because of their refusal to join as plaintiffs in the suit, the Reconstruction Finance Corporation and the First National Bank of Portland were made defendants. They have each filed an answer in the nature of a cross-complaint, setting up the foregoing facts and alleging that, by reason thereof, the city is estopped to deny either the validity of the contract or its obligation to pay plaintiff the sums stipulated in the contract, and praying that the contract be specifically enforced according to its terms and that, if that remedy is denied, the city then be required to pay to the Reconstruction Finance Corporation the amount due and unpaid upon said bonds and, upon said payment being made, they offered to transfer and assign to the city said mortgage and bonds and to discharge and release all claims and demands upon their part as against the city or the property described in the contract.

At the close of the trial, the court entered a decree not only denying any relief to the plaintiff but also denying to each of the cross-complainants the relief prayed for in their cross-complaints, and further providing that plaintiff's suit and the cross-complaints be dismissed with prejudice. Each of said cross-complainants as well as the plaintiff has appealed from said decree.

It is well settled that a municipal corporation, like a natural person, may be concluded by an estoppel in pais, and that resolutions of the council of a city, when they are authorized to adopt such resolutions, stating the existence or performance of conditions precedent, are conclusive upon the municipality and estop it to show the contrary. See Amazeen v. New Castle,76 N.H. 250, 81 A. 1079; Gilbert v. Manchester, 55 N.H. 298;Colorado Springs v. Colorado City, 42 Colo. 75, 88, 94 P. 316; 2 McQuillin, Mun. Corp., 2 ed., sec. 534; 6 McQuillin, Mun. Corp., 2 ed., sec. 2471, and authorities there cited.

It will be seen from the recitals contained in the foregoing resolution that, to induce the Reconstruction Finance Corporation to make said loan, the council represented to the Reconstruction Finance Corporation that the contract entered into between the city and the plaintiff on October 28, 1931, "wherein and whereby Public Market Company of Portland agreed to sell and the City of Portland agreed to buy certain real property therein described in paragraph (3) of the contract, together with the building and improvements thereon and all equipment, material and supplies therein, upon the terms and for the price set out in the contract", was entered into under and pursuant to the authority conferred by an ordinance of the city and a resolution adopted by the council.

The resolution further recites that "the City of Portland subordinate all rights in such contract to the rights of the Trustee under the mortgage, securing such bonds, and to the rights of the holders of such bonds and consent to the assignment by Public Market Company of Portland of such contract to the Trustee under such mortgage to be held by the Trustee as further security for the bonds". The representation thus expressly made that the city "consent to the assignment * * * of such contract * * * as further security forthe bonds" which were to be issued by the plaintiff and to be purchased by the Reconstruction Finance Corporation conclusively sets at rest the contention that the Reconstruction Finance Corporation, in making said loan, was relying only upon its mortgage and was not relying upon the liability of the city under the contract to pay the purchase price, for otherwise the resolution would not have stated that the assignment of the contract by the city was made "as further security for thebonds". (Italics ours.)

These were representations which the council had authority to make in order to induce the making of said loan and, upon these representations, the Reconstruction Finance Corporation, in making said loan, had a right to rely and, as shown by the evidence, it did rely. It seems clear, therefore, that the city is and of right should be estopped to deny the truth of these representations or to assert, as against the Reconstruction Finance Corporation, that the contract is not a valid and subsisting obligation of the city to the extent at least of paying the Reconstruction Finance Corporation the amount due under its loan.

That the city received and accepted the benefits resulting from the making of this loan appears from a letter written by a subsequent mayor, which is an exhibit in the case. That letter reads as follows:

CITY OF PORTLAND OREGON

"MAYOR'S OFFICE JOSEPH K. CARSON, Jr. MAYOR

April 7, 1934

Reconstruction Finance Corporation, Washington, D.C. Gentlemen:

I wish to express the appreciation of myself and others of this community for the material aid given by your organization in making possible the wonderful new market just completed by the Public Market Company of Portland.

The funds provided by your agency have been of tremendous benefit to this community through employment of labor and purchase of materials, and in bringing to fruition a project conceived eleven years ago.

This splendid edifice marks the first step in the rehabilitation of the seawall and Front Avenue area, which we sincerely hope may go forward with your guidance and financial assistance.

Yours very truly, Joseph K. Carson, Jr. Mayor."

It is also a familiar rule of law that a party cannot accept the benefits of a contract and, when called upon to perform his duties under it, repudiate the contract and assert that it is invalid unless the contract is actually in violation of law or wholly void. Also, it seems clear that the contract not being wholly void or in violation of law and having been fully performed by the plaintiff, and the city having received the benefits stated in the letter, it likewise should now be estopped to deny the validity of the contract as a justification for its own failure to perform.

"This estoppel arises when one by his acts, representations, or admissions, or by his silence when he ought to speak out, intentionally or through culpable negligence induces another to believe certain facts to exist and such other rightfully relies and act on such belief, so that he will be prejudiced if the former is permitted to deny the existence of such facts."

31 C.J.S., p. 237.

Equitable estoppel or estoppel in pais is defined in 19 Am.Jur., p. 634, as follows:

"* * * Equitable estoppel or estoppel in pais is the principal by which a party who knows or should know the truth is absolutely precluded, both at law and in equity, from denying, or asserting the contrary of, any material fact which, by his words or conduct, affirmative or negative, intentionally or through culpable negligence, he has induced another, who was excusably ignorant of the true facts and who had a right to rely upon such words or conduct, to believe and act upon them thereby, as a consequence reasonably to be anticipated, changing his position in such a way that he would suffer injury if such denial or contrary assertion were allowed."

See also Mitchell v. Hughes, 80 Or. 574, 157 P. 965;Security S. T. Co. v. Portland F.M. Co., 124 Or. 276,261 P. 432, and authorities there cited.

From these authorities, it seems necessarily to follow that the city is estopped to assert that the failure of the council to make a complete budget of the revenues and expenditures for the fiscal year beginning on December 1, 1931, and for subsequent years, as, by the charter, the council was required to do on or before the third Monday of November of each of said years, renders this contract invalid. It also seems clear that, since such failure upon its part was known to the council on April 13, 1933, when the last of said resolutions was adopted for the purpose of inducing the Reconstruction Finance Corporation to make said loan, the city should be estopped to assert or claim that, because of this failure, this contract was not payable as a direct obligation of the city and in the manner and at the time stated in the contract.

During the trial and over plaintiff's objection, the city was permitted to introduce the oral testimony of several of the former members of the city council, who testified that it was not their intention, when entering into this contract, to create a general obligation upon the part of the city but to create a special self-liquidating fund to be derived from the issuance and sale by the city of public market utility certificates secured by a mortgage on the property. This was in direct contradiction of the express terms of the contract and, for that reason, was inadmissible.

"When parties have deliberately put their engagements into writing, in such terms as import a legal obligation, without any uncertainty as to the object or extent of such engagement, it is conclusively presumed that the whole engagement of the parties, and the extent and manner of their undertaking, was reduced to writing; and all oral testimony of a previous colloquium between the parties, or of conversation or declarations at the time when it was completed, or afterwards, as it would tend in many instances to substitute a new and different contract for the one which was really agreed upon, to the prejudice, possibly, of one of the parties, is rejected. In other words, as the rule is now more briefly expressed, ``parol contemporaneous evidence is inadmissible to contradict or vary the terms of a valid written instrument'."

1 Greenleaf on Evidence, 16 ed., sec. 275.

In 1 Williston on Contracts, rev. ed., section 94, Professor Williston says:

"* * * It follows that the test of the true interpretation of an offer or acceptance is not what the party making it thought it meant or intended it to mean, but what a reasonable person in the position of the parties would have thought it meant.

"The sound view has been well expressed by L. Hand, J.: ``A contract has, strictly speaking, nothing to do with the personal, or individual, intent of the parties. A contract is an obligation attached by the mere force of law to certain acts of the parties, usually words, which ordinarily accompany and represent a known intent. If, however, it were proved by twenty bishops that either party, when he used the words, intended something else than the usual meaning which the law imposes upon them, he would still be held, unless there were some mutual mistake, or something else of the sort. Of course, if it appear by other words or acts of the parties, that they attribute a peculiar meaning to such words as they use in the contract, that meaning will prevail, but only by virtue of the other words, and not because of their unexpressed intent'."

In 4 Page on Contracts, section 2021, the rule is stated as follows:

"* * * It is not the actual secret intention of the parties to the contract, which the court is to ascertain, but it is the intention which the law attaches to the words which they have used, when read in connection with the surrounding facts and circumstances."

The evidence also shows that, from April to October, 1931, negotiations leading up to the making of this contract were carried on between the city and plaintiff and that during said time many declarations and conversations were made and had between them in respect to the making of this contract. There was much evidence offered by the city in proof of these declarations and conversations and much of this is set forth in the majority opinion to justify the conclusion there reached.

Section 2-214, O.C.L.A., provides:

"When the terms of an agreement have been reduced to writing by the parties, it is to be considered as containing all those terms, and therefore there can be, between the parties and their representatives or successors in interest, no evidence of the terms of the agreement, other than the contents of the writing, except in the following cases:

(1) Where a mistake or imperfection of the writing is put in issue by the pleadings;

(2) Where the validity of the agreement is the fact in dispute. But this section does not exclude other evidence of the circumstances under which the agreement was made, or to which it relates, as defined in section 2-218, or to explain an ambiguity, intrinsic or extrinsic, or to establish illegality or fraud. The term ``agreement' includes deeds and wills as well as contracts between parties."

There was no mistake or imperfection of the contract put in issue by the pleadings, nor, as we will later show, was there any ambiguity in any of the language used in the contract. The ambiguity referred to in our former opinion (Public MarketCompany v. Portland, 160 Or. 155, 83 P.2d 440) arose from words used in the title and body of Ordinance No. 61566 and had no reference whatever to the specific promise of the city to pay the stipulated sum when due under the terms of the contract. Nor was it alleged by the city that it had been fraudulently induced to enter into the contract or that there was any fraud in the execution of the contract or leading up to the making of the same.

Section 2-218 O.C.L.A. provides:

"For the proper construction of an instrument, the circumstances under which it was made, including the situation of the subject of the instrument, and of the parties to it, may also be shown, so that the judge be placed in the position of those whose language he is to interpret."

In Christensen v. Pacific Coast Borax Co., 26 Or. 302, 305,38 P. 127, it was held that, notwithstanding the language of the section last quoted, the language of the contract must determine to what the parties have bound themselves, notwithstanding the right of the court to take into consideration the situation of the parties, the object they must have had in view and the circumstances. This parol evidence now referred to had no reference whatever to the circumstances under which the contract was made, or to the purpose for which it was made, but was merely evidence of prior negotiations which, under well settled rules of law, were merged in the contract. It is, of course, a fundamental rule of law that the situation of the parties when the contract was made, its subject-matter and the purpose of its execution are material to determine the intention of the parties and the meaning of the terms they use. However, this evidence was not given for that purpose, nor was it explanatory of any of said matters. Hence, so far as this evidence tended to vary or contradict the terms of the contract, or add a new term to the contract, it was inadmissible under the rule that when a contract in writing is clear and explicit, without latent ambiguities, parol evidence is not admissible either to contradict, add to or detract from or vary its terms. See Edgar v. Golden, 36 Or. 448, 48 P. 1118; Hilgar v.Miller, 42 Or. 552, 72 P. 319; Sutherlin v. Bloomer, 50 Or. 398,406, 93 P. 135; and Sund Co. v. Flagg Standifer Co.,86 Or. 289, 168 P. 300. Page states the rule applicable to this question in section 2147 (4 Page on Contracts), as follows:

"Extrinsic evidence of prior or contemporaneous oral agreements between parties is inadmissible to vary the terms of the written contract which they have entered into, and this is true of prior written negotiations."

In Sutherlin v. Bloomer, supra, it was held that:

"* * * where the statement in the written instrument as to the consideration is of a contractual nature, as where the consideration consists of a specific and direct promise by one of the parties to perform certain acts, it cannot be changed or modified by parol or extrinsic evidence."

The evidence shows that this contract was drawn by Mr. Frank Grant, the city attorney, and that it was read over and considered by the council before the mayor and the city auditor were directed by the council to execute it on behalf of the city. The language of the contract is clear and explicit and no one understanding the English language could be mistaken as to the meaning and legal effect of the terms used.

As said in 1 Story's Equity Jurisprudence, 14th ed., section 172:

"A mistake by a party as to his antecedent existing legal right, as distinguished from a mistake as to the legal import of the act done, is one which should be and is recognized as a ground for equitable relief from the consequences of such mistake, where the mistake can be rectified without injury to others."

The defense now sought to be interposed by the city is not a mistake of the council as to the existing legal rights of the city but a mistake as to the legal import of the acts done. This would not entitle the city to equitable relief, even though it had been pleaded as a defense.

It is not reasonable to hold that, because one of the drafts of the contract which was drawn but not executed contained both an express promise to pay the purchase price and also a recital that the making of the promised payment constituted a direct obligation upon the part of the city and that, since the contract, as executed, did not contain the latter recital, it must be given a different construction from that which would have been given to it had it contained such recital. Certainly a specific written promise to pay a definite sum of money for a valuable consideration is not strengthened by a further recital that the promise made is a direct obligation of the promisor and such words, if inserted, would constitute a mere surplusage and add nothing to the promise as made. Yet this seems to be one of the main grounds for holding that this contract is to be given a different interpretation than would be given to it had that recital been inserted in the contract.

It is contended that the parol evidence above referred to was admissible because of a supposed ambiguity in the language of the contract. The contract is not ambiguous and this court has never held it to be ambiguous. In our former opinion, we referred to ambiguous language contained in the title to Ordinance No. 61566, passed by the council on October 10, 1931. That title reads as follows:

"An Ordinance selecting and designing certain real property for use as a public market and authorizing the purchase of said real property and a building to be constructed thereon and equipment to be installed in said building upon the terms and conditions required by Ordinance No. 61192, passed August 5, 1931, and upon such other terms and conditions as shall hereafter be determined by the Council, and authorizing preparation, approval and execution of a contract with the Public Market Company of Portland, and declaring an emergency."

In our former opinion, we said:

"* * * What did the council mean when it authorized the contract to be executed ``upon such other terms and conditions as shall hereafter be determined by the Council'?"

Following this, in the opinion, is a statement showing what construction the council itself placed upon said language, after which this court said:

"* * * The council having put that construction upon the authority conferred by the last ordinance and having acted upon it, we think, it is conclusive upon the question of what construction should be placed upon the ambiguous terms before referred to, for clearly it cannot be assumed that the council or the city attorney intended or believed that they were violating any of the terms of the ordinance under which they were acting when they entered into this contract."

This clearly has no reference whatever to any ambiguity in the contract or to any of the terms or conditions contained in it and only referred to the authority under which the council was acting when it entered into the contract.

This is a contract for the sale and purchase of land and this is true although the consideration to be paid by the city was largely for the construction of a public market building. As said in Hale v. Wilkinson, 21 Gratt. (Va.) 75:

"Land always has, in the eye of the law, a peculiar value, and a contract for the sale and purchase of it, if unobjectionable, will, therefore, be specifically executed. In no other way can parties receive the full benefit of their contract. And no court, having jurisdiction of the subject, and being properly applied to for such relief, can withhold it but by an act of arbitrary power."

In Johnston v. Wadsworth, 24 Or. 494, 34 P. 13, Mr. Chief Justice LORD, speaking for the court, said:

"* * * While it is said that specific performance is not a matter of absolute right in a party, but of sound discretion in the court, yet the rule has come to be established, if a contract respecting real property is in writing and is certain, fair in all its parts, for an adequate consideration, and capable of being performed, it is as much a matter of course for courts of equity to decree specific performance of it as it is for a court of law to give damages for the breach: 2 Beach, Equity Jurisprudence, § 636; Tiedeman, Equity Jurisprudence, § 493."

Applying the principle thus stated to the facts of this case, this contract was in writing, is definite, certain and specific in its terms, is fair in all its parts, is for an adequate consideration, and is capable of being performed, and this court has no discretion to refuse to award to plaintiff the equitable relief of specific performance.

In Larrabee v. Bjorkman, 79 Or. 467, 155 P. 974, this court, speaking through Mr. Justice BURNETT, said:

"Where land or any estate or interest in land is the subject matter of the agreement, the jurisdiction to enforce specific performance is undisputed, and does not depend upon the inadequacy of the legal remedy in the particular case. It is as much a matter of course for courts of equity to decree a specific performance of a contract for the conveyance of real estate which is in its nature unobjectionable as it is for courts of law to give damages for its breach. Equity adopts this principle, not because the land is fertile, or rich in minerals, but because it is land, a favorite and favored subject in England and every country of Anglo-Saxon origin. Land is assumed to have a peculiar value, so as to give an equity for specific performance, without reference to its quality or quantity."

To the same effect see Slattery v. Gross, 96 Or. 554,187 P. 300, 190 P. 577; Spencer v. Bales, 108 Or. 339, 216 P. 746, andPublic Market Co. v. Portland, supra, and cases there cited.

The contention that this court can, by the exercise of a proper discretion in this case and under the facts involved, refuse to grant plaintiff specific performance is, in my opinion, wholly unfounded. In treating of the discretionary power of a court of equity to grant or refuse to grant specific performance in a proper case, Professor Pomeroy says:

"* * * It is abundantly settled, at the outset, that the remedy is not ``discretionary' in the usual acceptation of the term; it is not given or withheld at the mere will and good pleasure of the judge; nor does it depend upon his own individual opinion, as to its propriety and feasibility; much less is it a matter of favor. * * * The decisions agree, with some variation in their language, but with none in the meaning, that the discretion is a judicial one, controlled and governed by the principles and rules of equity."

Pomeroy's Specific Performance of Contracts, 3 ed., § 36, p. 114.

"* * * within the domain of equity jurisdiction remedies are not, in any true sense, discretionary, but are governed by the established principles and rules which constitute the body of equity jurisprudence."

Id., § 37, p. 116.

"* * * the contract must be certain, unambiguous, mutual, and upon a valuable consideration; it must be perfectly fair in all its parts; free from any misrepresentation or misapprehension, fraud or mistake, imposition or surprise; not an unconscionable or hard bargain; and its performance not oppressive upon the defendant; finally, it must be capable of specific execution through a decree of the court. An examination of these particulars will show, that, so far as they differ from the requisites to legal relief, they are merely a statement in part of the general principles which lie at the foundation of all equitable remedies."

Id., § 38, p. 117.

Again, Pomeroy says in section 46, p. 128:

"* * * The language which describes the remedy of specific performance as depending upon an exercise of discretion — even of judicial discretion — unless taken with certain limitations and interpreted in a particular manner, is misleading; it is a misconception which represents the granting of this relief as in any sense a matter of grace, or depending upon the favor of the court. Courts of equity do not sit, any more than courts of law, to distribute favors or acts of grace to their suitors; their judicial function consists in the protection of rights and the enforcement of duties by means of the remedies which they administer. The right to this particular remedy, being equitable, involves a variety of circumstances, incident, and relations which may promote, modify, impede, or prevent its use, and one of the most important of those circumstances consists in the fact that a denial of the relief does not, in general, leave a party without his legal remedy. Where all the proper conditions are present, the remedial right is as perfect, certain, and absolute as the nature of the remedy itself will permit."

While I concur in holding that error was committed by the trial court and that the case must be reversed, I cannot concur in holding that the plaintiff is not entitled to have the contract specifically enforced, and therefore dissent.

Mr. Chief Justice KELLY joins in this dissent.