Schlegel v. Doran

HOLMAN, J.

This was an action to recover an amount equal to the real property taxes assessed on a Washington county car washing business. The business had been sold by plaintiffs to defendant and was later retaken by plaintiffs. The taxes in question accrued during the period defendant was in possession of the business. Defendant filed a counterclaim, contending the parties had mutually rescinded the contract of sale and seeking recovery of payments made on the contract less reasonable rent during the period of defendant’s occupancy.

After a trial without a jury, the court entered a judgment for plaintiffs for the amount of the taxes and denied defendant’s counterclaim.

The purchase price of the car washing business sold by plaintiffs to defendant was $90,000. Defendant paid a little over $33,000 on the principal, plus interest. He failed to make the February, 1968, payment. Thereafter, he remained one month in arrears until September 24, 1968, when plaintiffs’ attorney wrote him a letter, advising him it would be necessary that the payments be immediately made current and that future payments must be made at the time provided by the contract. Defendant’s lawyer responded on September 30, stating that the business had not earned sufficient income to make the double payment required, and asked for consideration.

Thereafter, the litigants conferred without the aid of their lawyers and, on October 12, defendant’s lawyer wrote to plaintiffs’ lawyer, as follows:

“Richard Doran has talked to Mr. Schlegel and has offered to return the Car Wash to Schlegel provided that Mr. Doran has no further liability.

“Would yon prepare the appropriate papers?”

Defendant did not make the monthly payment due October 1. On October 14, the parties, together with plaintiffs’ attorney and accountant, met at the place of business, and defendant turned over the keys to the business to plaintiffs. Thereafter, plaintiffs’ attorney sent certain documents to defendant’s attorney for defendant’s execution. Defendant did not execute these documents, but returned to plaintiffs a quitclaim deed containing the following:

“This conveyance is made by grantor to grantees in lieu of foreclosure by grantees of that certain contract of sale dated May 20, 1965, and it is the intent of grantor to reconvey to grantees all of grantor’s right, title and interest of every kind and nature arising from said contract of sale.

“The consideration for this conveyance, in terms of dollars, is none insofar as the total consideration is the forebear anee [sic] by grantees to foreclose the contract mentioned above.”

Subsequently, plaintiffs discovered that the taxes accruing during defendant’s possession had not been paid by defendant and plaintiffs commenced this action to recover the amount of such taxes, claiming that defendant had orally agreed to pay all outstanding taxes of the business as of October 14, the date defendant turned the business back to plaintiffs. Defendant denied any such agreement and counterclaimed for the amount of the payments he had made upon the business less reasonable rent, contending the parties had mutually agreed to rescind the contract.

Two issues were raised by the pleadings: 1) whether there was a redelivery of the business in lieu of foreclosure or whether the parties had “mutually agreed to rescind the contract,” and 2) whether the parties had agreed, upon redelivery, that defendant would pay the taxes for the period of time he occupied the business.

Defendant’s first assignment of error is the failure of the trial court to give defendant a jury trial. He wrote the trial judge, requesting a jury trial and giving him authorities to the effect that defendant’s counterclaim was an action at law and not a suit in equity. At the commencement of the trial, he stated:

“* * * [I] t is the defendant’s position, as far as procedure that we did want a Jury trial on our counterclaim of money had and received * *

It is clear that defendant was entitled to a jury trial on his counterclaim. The essence of the counterclaim is that defendant is entitled to the amount prayed for as a consequence of an agreement mutually rescinding the contract for the purchase and sale of the car wash. Accordingly, it would appear that this case is controlled by Share v. Williams et ux, 204 Or 664, 277 P2d 775, 285 P2d 523 (1955), wherein this court stated:

“Since the time of the case of Frink v. Thomas, 20 Or 265, 25 P 717, it has been the rule of this jurisdiction ‘that when the parties voluntarily agree to rescind a contract, there being no express stipulation with reference to payment or payments already made thereunder, the law will imply a promise on the part of the vendor to refund such payment or payments to the purchaser, and the latter may maintain an action to recover back the same.’ * * 204 Or at 675.

The court went on to characterize this action as one for money had and received. Share, supra, at 676. Such an action, although governed by equitable principles, is an action at law. Hogan v. Alum. Lock Shingle Corp., 214 Or 218, 225, 329 P2d 271 (1958). Thus, the parties have a right to a trial by jury. Since defendant did not waive this right, the court erred in denying his request for a jury trial.

Defendant was not prejudiced, however, as a result of the court’s failure to give him a jury trial. We hold that the state of the evidence is such that defendant did not make out a case on his counterclaim sufficient to submit to a jury. The deed which was drawn by defendant’s lawyer clearly sets out that the transfer was in lieu of foreclosure and therefore could not have been the result of an agreement for a mutual rescission.

Defendant claims that plaintiffs had waived the “time is of the essence” provision of the contract by the acceptance of late payments and that they wrongfully declared a forfeiture without giving defendant adequate notice and opportunity to become current in his payments. He contends he was entitled to treat the forfeiture as a repudiation of the contract and that he so elected and gave the business back to plaintiffs. His position is not well taken. In the first place, he alleges in his counterclaim only that the parties mutually agreed to rescind; and, in the second place, despite his testimony that there was no such agreement, the deed transferring the business back to plaintiffs specifies the transfer was in lieu of foreclosure, and defendant has shown no reason why he should not be bound thereby.

A transfer “in lieu of foreclosure” can mean only that the parties contemplated their respective positions after the transfer would be the same as if the foreclosure had been had. This intention is further bolstered, if necessary, by the recital that the consideration for the retransfer of the property is the forbearance to foreclose.

Our present holding, that defendant is not now entitled to a jury trial because he did not make out a case when he was forced to submit the matter to the court, is contrary to a holding of this court in Lang v. Hill, 226 Or 371, 378-79, 360 P2d 316 (1961). We believe that efficient judicial administration requires the matter not be sent back for a jury trial when defendant did not make out a case justifying the relief he requested.

Defendant apparently submitted the controversy to the court without objection concerning whether there was an agreement by defendant to pay the delinquent taxes, although it clearly was an action brought on an alleged oral contract. His attorney’s letter to the judge and the statement of defendant’s lawyer to,the court can be construed only as requesting a jury trial on defendant’s counterclaim. The provisions of OES 17.035 provide as follows:

“Trial by jury may be waived by the several parties to an issue of fact, in actions on contract, and with the assent of the conrt in other actions, in the manner following:

“(1) By failing to appear at the trial.

“(2) By written consent, in person or by attorney, filed with the clerk.

“(3) By oral consent in open court, entered in the minutes.”

The following cases have adjudicated the statute to be exclusive: In Re McCormick’s Estate, 72 Or 608, 611, 623, 143 P 915, 144 P 425 (1914); Puffer v. American Insurance Co., 48 Or 475, 478, 87 P 523 (1906); Wilkes v. Cornelius, 21 Or 341, 345, 23 P 473 (1890). However, we have subsequently held in numerous cases that where a matter of equitable cognizance is pleaded but there is a failure of proof establishing an equitable right, and the parties thereafter submit the legal issues to the court without objection, a jury is waived. Olson v. Roop, 255 Or 368, 370-71, 467 P2d 437 (1970); Winkleman v. Ore. Wash. Plywood Co., 240 Or 1, 10, 399 P2d 402 (1965). The same rule has also been applied where plaintiff’s complaint has been amended during plaintiff’s ease in chief to state a legal issue rather than an equitable one. Trans. Equip. Rent v. Ore. Auto. Ins., 257 Or 288, 478 P2d 620 (1970).

In Argonaut Insurance Co. v. Ketchen, 243 Or 376, 380-81, 413 P2d 613, 19 ALR3d 1386 (1966), after setting out the statute and the cases above cited for the proposition that the statutory provisions were the exclusive ways in which a jury trial could be waived, we stated as follows:

“While we are not prepared to say that in a proper case we would not want to re-examine the rule laid down by these eases, there is no necessity for it here. No factual issues had been presented to the trial court prior to plaintiff’s request for a jury. No inconvenience or disability would have been incurred had a jury been empaneled at the commencement of the second court session when it became apparent that it would be necessary to decide the factual question of Mrs. Reed’s status.” 243 Or at 381.

We believe that a party should not be able to insist upon a jury trial after a law case has been submitted to the court without objection and the court has decided it adversely. There is no legitimate reason for giving a party two bites at the apple. One is enough. The protection of the constitutional right of trial by jury does not necessitate a different rule, and we believe that the statute was not intended to cover situations where a case is submitted to the court without objection and a decision is made. A party should be estopped by such conduct from asserting on appeal Ms statutory and constitutional rigMs. See Kearney v. Case, 79 US (12 Wall.) 275, 284, 20 L Ed 395 (1870) for a similar construction of a statute requiring the filing of a written stipulation waiving a jury.

5. Defendant also claims the evidence was insufficient to prove the oral contract requiring him to pay the taxes during the period of time he was in possession of the business. One of the plaintiffs testified that defendant so promised, and tMs was sufficient evidence to take that part of the ease to the trier of the facts. In fact, defendant admitted he agreed to pay all outstanding debts against the business as of October 14, when he returned the business to plaintiffs. There was unquestionably sufficient evidence to pose a question of fact.

The judgment of the trial court is affirmed.