*1 88
Argued 27, 17, 1958, affirmed October modified December petition rehearing January petition 27, denied for 2d for rehearing denied—opinion February 25, modified petition April rehearing denied 1959
EMRICH v EMERY et al 2d 332 P. 1045
335 2d 604 2d P. 972 P. *2 argued appellants. Don Walker the cause for On the briefs were Portland. Crum, Walker & Buss, argued respondents.
A. the cause for S. Grant On brief Fuchs, were Rose Grant, Daron, Baker, & and Donart & Idaho. Donart, Weiser,
Before Perry, Chief and Justice, Warner, McAllis- and Justices. ter, Sloan O’Connell, SLOAN, J. Emery appeal
The defendants from a decree fore- closing mortgages real and chattel on two motels in prayed Baker and from the denial affirmative relief complaint in a cross filed defendants. There complaint, were other defendants named but appeal none of them involved in this with is the ex- ception Company, of the defendant Emrich Furniture corporation. a For convenience we will refer to de- Emery fendants-appellants as “defendants” and the corporate “company.” defendant as proceeding
Prior to this foreclosure the defendants were the owners of motels in Baker. the two The situate on the more valuable of two was outskirts city proceeding at the time was filed, of that and, was known as Motel. The other was known City and situate. For as the Center Motel was so complaint years prior filing to the several plaintiff, company had herein the defendants engaged in financial and trans- extensive testimony transcript of contains almost actions. The pages, plus numerous from which the exhibits, legal conflicting relationships parties seek to infer confusing tangle poorly and commitments from undertakings. kept We think it records and verbal many pages purpose fill useful to would serve no required attempt to describe these that would to be only in detail. The facts are interest events parties. these law involved well settled purpose dispute. for our not in It is sufficient during years plaintiff and, involved the state company, gave financial assistance to to an extent, *3 motels enable the latter to furnish the defendants to obligations in their construc- incurred refinance the the time this foreclosure indebtedness tion. At thereby in excess of Since the $52,000. created was property entered has been sold decree was all the provisions and there now thereof, accordance with the deficiency. a substantial remains attempted the to avoid foreclosure Dedendants asserting plaintiff guilty by had of conduct been to he defendants believe would induced payment accept than that and would other foreclose mortgages; estopped specified that he should be in the agree any with the trial court from foreclosure. We just no evidence to sustain this defense. there payment only necessary to mention that no It is upon mortgages any the fore kind had been made by The defendants also closed the decree herein.
91. plaintiff contended that is without clean There hands. party guilty is no merit to contention. Each was laxity failing pre- of carelessness and to make or any writing alleged agreements serve record or prove. apparently now to seek This was result of confidence and well as trust, affection, possessed during each for the other time most of the certainly involved. There is no evidence of deliberate misleading overreaching, any or nor of act or omission part plaintiff intentionally the de- lull indefinitely fendants into belief that would he over- continuing equities look their default. findWe evenly to be more balanced. True, defendants property acquired by lost substantial interests hard plaintiff work and extensive But also credit. has money sustained substantial loss on the advanced he to the defendants in the efforts made to avoid default on the antecedent indebtedness. The defendants’ brief attempts acquire property to show that will greater of much value than the amount of the in- debtedness mentioned. The record does not sustain this statement.
By complaint sought cross the defendants to trans- pose mortgage. property a deed into a The con- veyed by immediately adjacent deed was a lot City property directly Center Motel. was operated across street from the furniture store by company. City defendant lot This and the Center by acquired were at defendants the same time the same transaction.
The deed from defendants was absolute on its *4 good face and warranted title and free clear of liens grantee or encumbrances. The therein was the de- company. fendant This deed was dated and executed on November 18, 1952. September however,
In or October of de- pumice of a fendant had started construction building on It admitted this lot. that this block being provide building com- was to defendant built pany it and hand store with a warehouse second finding support a that evidence would desired. The previously company had the officers of defendant company’s building sought located close to such a manager, company, through its store. The defendant approximately the cost advanced toward $7,400 prior building. made to the advances were The first During previously this mentioned. date of deed heavily period were indebted of time defendants including mortgage a encumbrance and others, building question upon which the was on the lot in being built. to retain contend that were
Defendants
building
ownershop
and
and that the advances
of the lot
pay
a
for materials and
them were
loan
made to
building.
of the labor was
Most
other costs of
say
Emery personally. They
performed
the deed
given
accepted to secure these advances or
and
was
mortgage;
a
be declared
should, therefore,
loans
upon
monthly
agreed
that
rental was
this
upon the so-called loan until
was to be credited
rental
thereby
plus
satisfied. The
interest, was
loan,
company
possession
of the build
has been
defendant
plaintiff,
ing
is the
who
December of 1952.
since
company,
company,
president
and the
of defendant
Emery agreed
by manager,
to build
contend that
its
price
company
building
aat
contract
for the
upon
company
it was
the lot
and to sell
$7,500
and established, how
It is conceded
$1,000.
built for
paid
person
to the
to be
was
$1,000
ever,
mortgage
holding
lot as consideration
then
*5
partial
for a
release thereof to clear title to the
property.
accomplished.
This was not
trial court
The
prove
found
defendants had failed to
that
that
the
mortgage by preponderance
weight
a
deed was
clarity
required
of evidence
to sustain this con
Bennett,
tention.
v.
Sweek
133 Or
396
was in the alleged event the indebtedness was satisfied. We attempted pre- all detailed recite evidence sented on this issue. not be taken Its omission should any fully indication all the has not record been the evidence is conclusive that considered. However, any paid for lot amount. defendants were never accordingly trial court found the value of *6 was and the lot at the time the deed delivered was $3,500 judgment in amount. awarded defendants a that We finding portion and of concur that the likewise decree. lack a similar of evidence to
There is sustain plaintiff’s company’s the that and contention defend- building contracted to build this for The $7,500. ants agreement only testimony such an is evidence of the company. manager of defendant It of the the is not any way. manager’s explanation supported the and attendant circumstances transaction simply capable persuasion not of are or he relates admitted that the no $7,500 is would more belief. It pay if it would that. material, for the do It was than fixed the that would have entire cost established per square at about an foot, absurd $2 of construction building type mentioned. It even is for cost paid this would have conceded that defendant further Emery nothing manager’s explana- labor. The for his being told him that it was done aas tion that considering quite realistic the rather favor straits defendants at time. financial dire a rather left with anomolous therefore, situa- are,We enjoyed possession company has of a tion. The building paid for which have never lot peculiar only adequate This result can consideration. haphazard and explained unbusinesslike eon- be duct of these mentioned. The parties previously plain- tiff and should not be company permitted profit mutual by these mistakes. The trial court did award defendants an additional judgment $1,000 the court found to have been expended by defendants in the construction of the Prom what building. has been said it that this award appears does not fully compensate defendants for the reasonable value of labor expended nor full building value of materials used. The evidence is not sufficient to en- us to able find the value of such labor and materials. We are of the opinion the full determination of all equities parties requires this be done. The can pleadings be construed to permit introduction of evidence sufficient to make this finding.
It has previously been stated that
the com
seek foreclosure of real and
plaint
chattel mortgages.
It
also seeks
deficiency judgment. The defendants’ an
in addition to the
swer,
obligations previously men
contains
tioned,
averments
seeking
require plaintiff
to account for
company
amounts defendants allege
are due to them. This,
together with a
prayer
*7
is sufficient
general
to enable
court
relief,
to make
this determination. Monese v. Struve,
The defendants Complaint answer to this is obvious. foreclosure. The damages inadequacy awarded is also made of by damage trial court for windstorm to one buildings had become involved only keeping an The award was in with the insurer. The decree as entered relevant evidence submitted. af- modified this extent and otherwise will be party recover costs. firmed. Neither shall The decree is affirmed as modified.
ON REHEARING *8 for the Portland, petition. Walker, Don Justice, Chief McA Before Warner, Perry*, Justices. O’Connell, llister**, Sloan [**] [*] Chief Chief Justice when Justice when case was this decision argued. was rendered. *9 petition
Opinion modified denied. ; J. SLOAN, Emery rehearing petition
Defendants
petition
ask that if the
in
the
is
the
denied,
alternative,
applied
amounts-we
the
allowed as setoffs be
on
debt
by
mortgage
of
secured
the
foreclosed as of the date
filing
They
complaint
urge
the
of the
herein.
further
equals
if the
thereof
amount
or exceeds the amount
payment
of the default in
of the
that the fore
debt,
previously
This
closure be denied.
court has
held that
equity
may
an
court
allow a setoff in a suit to fore
mortgage
equities
parties
close a
of the
when
re
quire it. Pearson v.
106
As mentioned were mortgages plaintiff attempting was two mortgage foreclose. The suit to foreclose on the property identified as the Motel was denied. payments plain reason that was for the made to This by of that tiff a lessee credited on mortgage payment were excess of the amount of Consequently, due. when the trial then court deter mines the amount defendants are entitled to mortgage foreclosed credited on the the excess of these payments likewise be credited should on the amount mortgage. plain on the foreclosed due apply payments not be entitled to tiff should all the mortgage under these the one on circumstances. As of filing complaint date herein these equivalent payments would be the excess an over- of the total payment amount of the indebtedness due. In that event the defendants would be entitled to re- cover any overpayment an action at appropriate law. In this it therefore, instance, only equitable the defendants are entitled to have this excess applied defaulted indebtedness. on Jones et Mortgages, 627 seq., 1899. § We come now to the question interest. It should be borne in mind that the relief principal sought by defendants was a determination that a deed to real absolute on property, its face, was, fact, mortgage. sustained We trial finding court that defend *10 ants were not entitled to this relief. we did However, allow defendants to recover the reasonable value of labor and materials used in the construction of a build on ing for which question, plaintiff had never reason paid. By for prayer general equitable relief a court of equity will exercise the to award power interest when, “under all the circum stances of the case, [it] seems equitable and just * * 47 14, CJS Interest §3; Ruth v. Hickman, 214 330 P2d 490, Or 722. If, this case, we had held the deed in controversy was a mortgage then, in that event, defendants would have been entitled to reasonable rental for the occupancy of the premises. We have held that defendants do not own the building and are not entitled to compensation for its use. How we have ever, held that plaintiff and defendant furni ture company have not full paid consideration for building thereby have had the effect of the use and benefit of defendants’ money the period of time occupied building. We believe that with to this item regard particular we should exercise our discretion and equitable allow interest on the sum trial court finds is still due defendants from the
100
date of the defendant furniture company’s occupancy Damages (9th on building. Sedgwick ed) 625, rule should to the item of apply $3,500 315. same § lot building allowed as the value upon was built. amount for the failure of
As to the allowed and the resultant wind damage by to insure date shall run from the of the trial storm, interest item we court’s decree. Interest on this believe Holcomb, v. 181 P2d 603, 185 Or governed by Calcagno and similar cases. to the Motel As excess payments we on from mortgage believe interest this should date the date the excess were made. This sum payments was unknown determined readily but computation. Public Market Co. v. Portland, 522, 625, Or P2d P2d 624, 138 916.
The former is thus modified and the opinion peti- tion for denied. rehearing
ON REHEARING *12 108 and Grant, & Donart, Weiser, Idaho, Fuchs,
Donart petition. for Baker, Rose and Daron, and McAll Justice, Before Chief Warner, Perry,* Sloan Justices. O’Connell, ister,** PER CURIAM.
Plaintiff-respondent petitions rehearing now for hy made in reason of certain of modifications our previous petition original opinion upon appellant’s Emery, rehearing. petition for Emrich v. on rehear- ing.
By petition support his and brief in thereof principally complains required plaintiff we because mortgage payments upon credited excess on one to be mortgage due another as of the date of the balance on filing complaint of foreclosure. Plaintiff upset this the decree of foreclosure en indicates will by subsequent and the sale of trial court tered by thereof. This does foreclosed reason likely mortgage appear to be a result. us clearly long prior in to the mentioned was default last complaint; filing had time exercising right fully justified his accelera been of the date of the the debt due and, therefore, tion of payable filing complaint the entire sum due mortgage was the amount in de and secured Perhaps precise made find we should fault. unnecessary. opinion ing it our former but deemed [**] [*] Chief Chief Justice when this decision was Justice when case was argued. rendered. The amounts we allowed to on in- be credited debtedness could not avoid that default. Wiltsie, Mortgage seq. § Foreclosure 54 et *13 parties
Both the to our endeavored call at transpired subsequent to tention events which have appeal to the of decree the trial herein and court to this court. We have no record before us which of Consequently, we can of take notice such events. we obliged require were to the trial to find court Emery amounts for which the defendants en were apply titled to to credit and them to the over-due in mortgage debtedness on the foreclosed. We could not redemption tell if such sums were sufficient to effect mortgage certainly of that but these defendants were upon entitled to credited be therewith and the defi ciency judgment agree plaintiff, entered. We with surplus payments Emery that however, mortgage applied City should have been to the Center mortgage payments as date such were made. part designated assignment
As a of his brief, plaintiff complains No. also that the offsets which we Emery against,the allowed defendants Emrich Furni against ture be an Co. should not allowed offset due the indebtedness Emrich. As indicated original opinion, in our the transactions and accounts parties hopelessly of these three were so interwoven impossible disentangle it was the web had woven for A themselves. further review pleadings original and evidence our confirms belief distinguish plain that there little between the as an tiff Emrich individual and the defendant Emrich ego, separate entity. Co., his alter as a Furniture For our belief, this reason it was and still is, the in due defendants from debtedness the Emrich 104= applied found be on the amounts
Furniture Co. should plaintiff. defendants to due from these assignment, plaintiff claims that we For his third allowing the amount the interest on were error damage for the allowed for windstorm trial court against applied that reason that the trial court amount mortgage. due the foreclosed the amount found on actually Obviously, were when such amounts credited, equivalent payment and no further in- it was the Inasmuch as amount was terest would accrue. at in the trial court credited decree interest have accrued. time of no would sale, denied. Petition