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Frontgate Props., LLC v. Bennett

Court of Appeals of Oregon

March 26, 2014

FRONTGATE PROPERTIES, LLC, an Oregon limited liability company, Plaintiff-Respondent,
v.
JAMES L. BENNETT and JAMES L. BENNETT, Trustee of the Bennett Family Trust uad March 2, 1998, Defendants-Appellants, and WOOD RIVER FARMS, INC., an Oregon corporation and GREGORY A. WALKUP, Defendants

Argued and Submitted January 9, 2014.

Jackson County Circuit Court. 074633L2. G. Philip Arnold, Judge.

Clayton C. Patrick argued the cause and filed the briefs for appellants.

Kimberly S. T. Bolen argued the cause for respondent. With her on the brief was William H. Fowler.

Before Wollheim, Presiding Judge, and Lagesen, Judge, and Schuman, Senior Judge.

OPINION

Page 484

[261 Or.App. 812] LAGESEN, J.

The issue in this appeal is whether the trial court correctly concluded that the doctrine of merger did not bar plaintiff's request for specific performance of an agreement by defendants Gregory A. Walkup and James L. Bennett [1] to convey specified parcels of real property. Reviewing the trial court's factual findings to determine whether there is any evidence in the record to support them, and its ruling regarding the applicability of the doctrine of merger for legal error, we affirm.[2] See Dept. of Human Services v. N. P., 257 Or.App. 633, 637-40, 307 P.3d 444 (2013) (stating our standard of review when we decline to exercise our discretion to review de novo in an equitable case).

Defendants entered into a land-sale contract under which they agreed to transfer several contiguous parcels of land in Weed, California--including the parcels known as parcels 8 and 9--to Reginald Breeze in exchange for a purchase price of $1.3 million. Breeze assigned his interest under the contract to plaintiff Frontgate Properties, LLC, and plaintiff tendered the $1.3 million purchase

Page 485

price to defendants. Defendants, in turn, executed a grant deed to plaintiff, but did not include parcels 8 and 9 in that deed. Almost six years later, plaintiff discovered the omission and sued defendants for specific performance of their agreement to convey parcels 8 and 9. Following a bench trial, the trial court found that the parties' bargain included parcels 8 and [261 Or.App. 813] 9 and that the grant deed erroneously omitted parcels 8 and 9, either because of an error by the title company in preparing the deed or, possibly, misconduct by Walkup. Based on those factual findings, the court ordered defendants to convey parcels 8 and 9 to plaintiff, rejecting defendants' contention that the doctrine of merger barred plaintiffs request for specific performance.

The trial court's decision was correct. Under the doctrine of merger, " [a]ny inconsistencies between the terms of a contract of purchase of real estate and the terms of the deed are governed by the latter, into which the former are merged[.]" Winn v. Taylor, 98 Ore. 556, 576, 194 P 857 (1921). The doctrine does not apply " when[,] through fraud or relievable mistake[,] the grantee has been induced to accept something different from what the contract required[.]" City of Bend v. Title & Trust Co., 134 Ore. 119, 129, 289 P 1044 (1930). Thus, for example, in City of North Bend v. County of Coos, 259 Ore. 147, 152, 485 P.2d 1226 (1971), the Supreme Court held that when, because of a mutual mistake, a deed from a county to a city failed to include all of the property that the county had contractually agreed to convey, the doctrine of merger did not bar the city's suit to quiet title in the land that the county, because of the error in the deed, failed to convey.

Here, the trial court found that (a) the parties' land-sale contract included parcels 8 and 9; (b) the deed deviated from the land-sale contract because it left out parcels 8 and 9; (c) the discrepancy between the deed and the land-sale contract " was not because * * * plaintiff agreed to purchase something different" than what it agreed to purchase in the land-sale contract; and, thus, (d) the deed's failure to accurately reflect the parties' bargain necessarily resulted from a mistake by the title company in preparing the deed, if not from manipulative conduct by Walkup.[3] The court further found that, " [a]t some point, if not immediately after the sale, defendants Walkup and Bennett realized that the [261 Or.App. 814] error had been made and they operated in such a way as to take advantage of the error." Those factual findings are supported by the record.

In the light of those factual findings, the trial court correctly concluded that the doctrine of merger does not bar plaintiffs request for specific performance of defendants' agreement to convey parcels 8 and 9. The parties did not change the terms of their agreement as to what land was to be conveyed between the execution of the land-sale contract and the execution of the grant deed. Therefore, as the trial court inferred, the most benign explanation for the discrepancy between the land-sale contract and the deed is that the title company committed a scrivener's error in preparing the deed, and the parties mutually failed to notice that error. That is a species of mutual mistake. See, e.g., Kontz v. B.P. John Furniture Corp., 167 Ore. 187, 193, 205-06, 115 P.2d 319 (1941) (describing scrivener's error in contract as a type of " mutual error" ). The only alternative explanation consistent with the trial court's findings is that the discrepancy resulted from fraudulent conduct--either from Walkup's misconduct, or from defendants' failure to alert plaintiff that the deed did not conform to the parties' bargain, as they were obliged to do if they were aware of the discrepancy--although we reiterate that the trial court found that mistake was more likely than fraud.[4] In all events, under either

Page 486

scenario, the doctrine of merger does not apply. City of Bend, 134 Ore. at 129. For that reason, we affirm the judgment of the trial court.[5]

Affirmed.


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