Young v. Neill, 190 Or. 161, 225 P.2d 66 (Or.
, 1950)
Page 66
225 P.2d 66
190 Or. 161
YOUNG
v.
NEILL et al.
Supreme Court of Oregon, En Banc.
Dec. 5, 1950.
[190 Or. 175] Otto J. Frohnmayer,
Medford (Heff, Frohnmayer & Lowry, of
Medford, on the brief), for appellant.
Frank J. Van Dyke, Medford (Van Dyke &
Lombard, of Medford, on the brief), for
respondent-cross appellant.
George M. Roberts, Medford (G. W.
Kellington and Edward Branchfield, of
Medford, on the brief), for respondents.
TOOZE, Justice.
On rehearing:
[190 Or. 176] Respondents have filed a
petition for rehearing based on the following
grounds:
'I
'The court erred in holding that the
taking of possession of the premises and the
payment of rental is sufficient part
performance to take a lease for more than one
year outside the operation of the Statute of
Frauds.
'II
'The court erred in holding that Everett
H. McGee was the authorized agent of
Donzella McGee for the purpose of entering
into a lease, in the absence of proof of written
authority as required by the Statute of Frauds.
'III
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'The court erred in holding that the
parties had agreed upon the terms of a lease.
'IV
'The court erred in holding that
respondents McGee are estopped to deny the
validity of the lease which is the subject
matter hereof.'
Referring to respondents' first ground
above, it is stated in the accompanying brief
that: 'The present decision introduces an
element of great uncertainty into the law
relative to the application of the Statute of
Frauds.' This claim is based on the language
of the court, Young v. Neill, Or., 220 P.2d 89,
91, where it is stated: 'In Oregon a lease for
more than one year is void unless it is in
writing; however, equity will relieve a party
from the effects of such statute where the
lease can be shown to be clear, certain and
unambiguous in its terms and where there is
part performance on the part of the lessee,
such as taking possession of the premises and
payments of rental under the lease. Wallace v.
Scoggins, 18 [190 Or. 177] Or. 502, 21 P. 558.
The statute of frauds was never designed to
shield against the perpetration of a fraud.'
In their brief, the respondents state:
'While there are a number of Oregon cases
holding that taking possession and payment
of part of the purchase price operates to
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take a contract for the sale of real property
out of the Statute of Frauds, the Oregon cases
relating to leases require more. The
distinction is apparently based upon the fact
that in a contract of sale, the taking of
possession is notice to the world that the
newcomer has an equity in the property, and
his possession is adverse to the former
ownership. No such distinction exists where
one takes possession as a tenant.'
 Young v. Neill, 190 Or. 161, 225 P.2d 66 (Or., 1950)
A careful examination of the Oregon
decisions does not disclose that this court has
directly made any distinction between sales
and leases in the respects under discussion.
Mr. Pomeroy makes no distinction. In
Pomeroy, Specific Performance of Contracts,
3d Ed., 283, 115, it is stated: 'Possession
alone of land, under a verbal contract, when
delivered to the vendee or lessee, or taken by
him with the consent of the vendor or lessor,
or with the knowledge which implies such
consent, is an act of part performance which
takes the case out of the statute of frauds,
even without the additional circumstances of
the payment of consideration, or the making
of improvements. This rule is settled by an
over-whelming weight of authority in
England and in this country * * *.' (Italics
ours.)
Mr. Story reaches the same conclusion.
In 2 Story, Equity Jurisprudence, 14th Ed.,
430, 1049, it is stated as follows: 'But if the
possession be delivered and obtained solely
under the contract, or if in case of a tenancy
[190 Or. 178] the nature of the holding be
different from the original tenancy, as by the
payment of a higher rent, or by other
unequivocal circumstances referable solely
and exclusively to the contract, there the
possession may take the case out of the
statute.'
The statements of both these authorities
are commented upon with approval by the
late Mr. Justice Rand in Dunis v. Director, 121
Or. 500, 255 P. 474.
The mere taking of possession of
premises and the payment of rent may not in
all cases be such part performance of an oral
lease as to take the case out from the
operation of the Statute of Frauds and permit
oral evidence to establish the agreement of
the parties, nevertheless it is well established
that such taking of possession and payment of
rent in conjunction with other facts and
circumstances may be sufficient. Each case
must necessarily depend upon its own
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peculiar facts and circumstances, and it is, of
course, impossible to lay down a rule that will
fit all situations that may arise. In some cases,
the placing of substantial improvements upon
the premises by the lessee, or the making of
repairs, in addition to possession and
payment of rent, have been deemed sufficient
part performance. Dunis v. Director, supra;
Friberg v. Bjelland, 95 Or. 320, 186 P. 1113;
West v. Washington Railway Co., 49 Or. 436,
90 P. 666; Wallace v. Scoggins, 18 Or. 502, 21
P. 558. But whether or not there has been
such part performance does not depend solely
upon whether or not improvements have
been made.
In Dunis v. Director, supra, 121 Or. at
page 507, 255 P. at page 476, this court said:
'It is settled law in this state that where one,
in reliance upon the terms of a parol
agreement, has entered into possession of
real property as [190 Or. 179] lessee with the
acquiescence of his lessor, and has incurred
expenses and changed his circumstances and
condition to such an extent that a refusal on
the part of the lessor to perform would
operate as a fraud on the rights of the lessee,
such acts constitute part performance of the
parol agreement and take the case out of the
operation of the statute of frauds.'
Where one party in addition to taking
possession of the premises and paying the
rent, performs other acts pursuant to the
terms of the oral lease and directly referable
thereto, such as materially changing his
position to his disadvantage, incurring
substantial expenses, making substantial
improvements or repairs to the premises, or
otherwise doing something which he would
not have done but for the agreement and
which would result in substantial injury to
himself if the other party were permitted to
hide behind the statute of frauds and disavow
the same, and when the other party has
received and enjoyed the benefits of the oral
lease, equity will step in
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 Young v. Neill, 190 Or. 161, 225 P.2d 66 (Or., 1950)
and compel specific performance, the other
party being estopped to set up the statute as a
defense.
The foundation of this doctrine is fraud;
not necessarily an antecedent or positive
fraud, but a fraud inhering in the
consequence of this setting up the statute. It
applies where to permit the defense would be
inequitable and unconscionable. Seymour v.
Oelrichs, 156 Cal. 782, 106 P. 88, 134
Am.St.Rep. 154, and note; Pomeroy, Specific
Performance of Contracts, 2d Ed., 104,
107; Pomeroy, Specific Performance of
Contracts, 3d Ed., 96; Story, Equity
Jurisprudence, 3d Ed., 1409, et seq.: 49
Am.Jur., Statute of Frauds, 578, 580.
It must be remembered in the case at bar
that these [190 Or. 180] parties were not
dealing at arms length. There was a very close
relationship existing between them, with
resulting trust and confidence in each other.
As so often happens--and, unfortunately, in
too many instances--the parties, relying upon
such mutual trust and confidence, neglected
to give attention to strict legal and business
requirements which they otherwise would
have done had they been dealing with
strangers. Obviously, it would be grossly
inequitable and unconscionable to permit one
who has received benefits from such trust to
betray the same to the serious disadvantage of
the other.
In this case, the sale and purchase of the
stock of merchandise, the payment of a
substantial consideration for the good will of
a going business, which included the transfer
of the assumed name, the leasing of the
premises for a term of five years with an
option of renewal, the borrowing of the
money at the bank with which to complete the
purchase, the use of the entire marital savings
of the purchasers in making the purchase, the
severance of employment by one of the
purchasers in order to conduct the business
purchased, were all integral parts of a single
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transaction, each part dependent upon the
others.
In taking possession of the stock of
merchandise and conducting the business, in
the occupancy of the premises, in the manner
and time of paying rental, in taking care of the
expenses of the utilities, water and lights, in
the redecorating of the store itself--in fact, in
everything done, the parties performed in
strict accordance with the terms of the
unsigned lease prepared by respondents'
attorney, Mr. Briggs, at the instance and
under the direction of the respondent Everett
McGee. The respondent McGee so admitted.
[190 Or. 181] Everything done by the
parties was directly in pursuance of and
referable to the oral lease.
When we speak of acts of part
performance as being done in pursuance of
and directly referable to an oral lease, we do
not wish to be understood as meaning acts
referable to any oral lease, but to such acts
only as are directly referable to an oral lease
for a term of more than one year.
By operating under this form of lease for
approximately fifteen months without
objection, accepting its benefits and
obligations, respondents must be deemed to
have acquiesced in and ratified the same as a
true expression of their actual agreement, and
by their silence when it was their duty to
speak if they were not satisfied, they are
estopped now to take a position inconsistent
with their conduct, for to permit them to do
so, would result in gross injustice and be
wholly inequitable and unconscionable.
We have given consideration to the other
points raised in the petition for rehearing but
do not deem it necessary to further discuss
them inasmuch as we adhere to what was said
in the original opinion.
We adhere to our former decision.
Young v. Neill, 190 Or. 161, 225 P.2d 66 (Or., 1950)

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