Filed: February 17, 2011
IN THE SUPREME COURT OF THE STATE OF OREGON
ERIC MALAN,
as Personal Representative of the Estate of
James Harold Woodard,
Respondent on Review,
v.
LINDA TIPTON,
ART MILLS,
dba Credit Bureau of Klamath County;
and EUGENE V. ANDERSON,
Defendants,
and
LUCILLE JENNER,
as Personal Representative of the Estate of
Linda L. Tipton,
aka Linda Spears,
Petitioner on Review.
(CC 06-00801-CV; CA A136333; SC S058156)
On review from the Court of Appeals.*
Argued and submitted September 14, 2010.
Eugene V. Anderson, Medford, argued and submitted the brief for petitioner on review.
Andrew C. Brandsness, Klamath Falls, argued and submitted the brief for respondent on review.
Scott A. Shorr and Keil M. Mueller of Stoll Stoll Berne Lokting & Shlachter P.C., Portland, filed the briefs for amicus curiae Oregon Trial Lawyers Association.
Before De Muniz, Chief Justice, and Durham, Balmer, Kistler, Walters, and Linder, Justices.**
WALTERS, J.
The decision of the Court of Appeals is reversed. The judgment of the circuit court is affirmed.
*Appeal from Klamath County Circuit Court, Cameron F. Wogan, Judge. 232 Or App 464, 222 P3d 754 (2009).
**Gillette, J., retired December 31, 2010, and did not participate in the decision of this case. Landau, J., did not participate in the consideration or decision of this case.
WALTERS, J.
An Oregon statute provides that, when a debtor makes a written offer to pay a particular sum of money to a creditor and the creditor does not accept the offer, the offer is equivalent to the actual production of the money. ORS 81.010.(1) In this case, we apply that statute and decide that the trial court was correct in concluding that defendant, a debtor, made a valid written offer of payment under ORS 81.010; that plaintiff, a creditor, did not accept it; and that defendant's offer was equivalent to the actual production of the sum offered. As a result, the trial court also was correct in concluding that defendant was relieved from liability for the consequences of nonpayment other than liability for the debt itself -- in this case, from foreclosure of the trust deed on the home that secured the debt. We reverse the contrary decision of the Court of Appeals.
The relevant facts in this case are undisputed. On July 15, 2002, defendant borrowed $61,500 from James Woodard, executed a promissory note and trust deed agreeing to repay that sum, and secured that agreement with her residence.(2) Woodard died in March 2004, and plaintiff was appointed as the personal representative of Woodard's estate. Plaintiff hired an attorney, Henderson, to represent the estate.
After reviewing the estate's records, plaintiff concluded that defendant had failed to make timely payments on the note and commenced a nonjudicial foreclosure of the trust deed. Defendant contested the foreclosure and, in December 2004, hired an attorney, Anderson, to file an action in circuit court to halt it. While that proceeding was pending, defendant attempted to continue making the required monthly payments. Plaintiff instructed Henderson not to accept such payments, but defendant nevertheless sought to perform by slipping the checks under Henderson's office door or running in and dropping a check at his front desk. Eventually, defendant obtained a court order permitting defendant to make the monthly payments to the court.
Before the case could be tried, the parties entered into a settlement agreement, dated September 12, 2005, that permitted defendant to retain the home that constituted security for payment of the debt.(3) The agreement provided that the funds that defendant had paid into court would be released to plaintiff, and required that defendant set up a collection escrow account with a title company. The first payment to that account was due January 10, 2006.(4)
When defendant sought to set up the collection escrow account, the title company informed her that it could not do so without additional information from both parties. Defendant discussed the title company's request for information with plaintiff, but, when defendant took her payment to the title company in early January, the title company would not accept it, asserting that it still had been unable to establish the account.
On January 5, 2006, Anderson, defendant's attorney, mailed and faxed a letter to Henderson, plaintiff's attorney, stating the following:
"If the account is established before January 10, 2006[, defendant] will make the payment directly to [the title company]. In the event that the account is not established before January 10th, I have asked my client to mail me a payment (in the old amount) so that I can hold those funds as soon as the account is established, or pay them to your trust account. Alternatively I can instruct my client to tender the payment directly to you before January 10th. In any event, my client intends tendering the January 2006 payment on a timely basis in any way you deem appropriate. Please let me know how you would like to receive that payment, assuming your client is not able to review the collection account agreement, or deliver the note and trust deed on time."
Neither Henderson nor plaintiff answered that letter. On January 6, 2006, Anderson and Henderson discussed the debt by telephone, but did not discuss where defendant should make payment. That same day, Anderson sent a letter to the title company and faxed a copy of that letter to Henderson stating the following:
"[Defendant] has deposited the January, 2006 payment in my trust account, in the amount of $579, which I will pay either to [the title company] as soon as the collection account is established, or to Mr. Henderson, if he would like to accept the payment into his trust account in the meantime.
"* * * * *
"I have faxed this letter and the enclosures[(5)] to Mr. Henderson for his comment. I would like to get his client's approval as soon as possible, so that we may open the account before the January payment is late."
Neither the title company nor Henderson responded to the letter or fax. On January 9, 2006, Anderson mailed and faxed a final letter to Henderson, enclosing a check drawn on Anderson's trust account and made out to Henderson's trust account, stating:
"Please find enclosed a check, made payable to 'Blair Henderson, Lawyer Trust Account', in the amount of $579.00 as [defendant's] payment for January 2006. Please let me know if there are any other issues with establishing the [escrow] collection account."
On January 12, 2006, two days after the January 10 due date, Henderson received the check at his office. The amount of the check was greater than the required monthly payment and Anderson's trust account had sufficient funds to cover the check. Nonetheless, Henderson did not cash the check. On February 23, 2006, plaintiff commenced this judicial foreclosure action, declaring, in the complaint, that defendant was in default and that payment was due in full.
The trial court conducted a bench trial, issued a letter opinion, dismissed the foreclosure action, and entered judgment for defendant. In its letter opinion, the trial court concluded that defendant had satisfied the requirements of ORS 81.010.
The trial court found that defendant had made a written offer to pay a sum greater than that due under the settlement agreement, that Anderson had sufficient funds in his trust account to make that payment, and that the estate had not responded to defendant's offer. The court concluded that defendant had made a valid written offer of payment and that plaintiff was not entitled to foreclose.
Plaintiff appealed, and the Court of Appeals reversed. Malan v. Tipton, 232 Or App 464, 222 P3d 754 (2009). First, the Court of Appeals concluded that the January 5 letter did not comply with ORS 81.010. The court reasoned that that letter
"does not inform plaintiff that the money for the payment is available in counsel's trust account or that it can be withdrawn on or before the date that it is due. Rather, the letter states that counsel has asked his client to mail the payment to him so that it can be held in his trust account."
Id. at 469. As a result, the court agreed with plaintiff that the letter was "at best only a naked offer to pay, unaccompanied by any readiness or ability to pay[.]" Id.
Second, the Court of Appeals concluded that even if the January 5 letter had "included the necessary statement of the availability of the money," plaintiff did not respond by stating that he would not accept a check from defendant. Id. at 470. Had plaintiff done so, the court reasoned, defendant's offer, in addition to plaintiff's rejection, would have relieved defendant of her duty to pay. However, in the absence of any response from plaintiff, defendant had a continuing duty to make timely payment and did not do so. Id. Defendant sought review of the decision of the Court of Appeals, which we allowed.
In this court, defendant claims that the Court of Appeals erred in two respects. First, defendant claims that the court erred in concluding that the January 5 letter did not constitute a valid written offer of payment. Defendant argues that the court incorrectly considered that letter in isolation and failed to note that the letter of January 6 clearly indicates that the money necessary for payment is available in counsel's trust account. Defendant also argues that although a debtor must demonstrate, at the time of trial, that the necessary funds were available at the time of the offer, ORS 81.010 does not require that the written offer contain an express statement to that effect.
Second, defendant claims that the Court of Appeals erred in concluding that plaintiff's failure to reply to defendant's written offer was insufficient to trigger the statute's application. Defendant argues that the import of plaintiff's failure to reply to that offer was that the offer was "not accepted" as that phrase is used in ORS 81.010. As a result, ORS 81.010 requires that the written offer be treated as "equivalent to the actual production" of the sum offered.
Both of defendant's claims of error require us to construe ORS 81.010. At the first level of our analysis we consider the statute's text and context, including pre-existing common law and prior relevant case law. State v. Gaines, 346 Or 160, 171, 206 P3d 1042 (2009); Ram Technical Services, Inc. v. Koresko, 346 Or 215, 232, 208 P3d 950 (2009); State v. Toevs, 327 Or 525, 532, 964 P2d 1007 (1998).
ORS 81.010 has not been amended since it was enacted in 1862. General Laws of Oregon, Civ Code, ch X, title I,