Mund v. English
684 P.2d 1248 (1984)
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Rule of Law:
An oral license to use land becomes irrevocable by operation of law when the licensee, in reasonable reliance on the licensor's representations, makes valuable and permanent improvements to their own property.
Facts:
- In 1977, plaintiffs (son and daughter-in-law) and defendant (mother) purchased adjoining one-acre parcels of property.
- A water well was drilled on defendant’s property that same year to serve both parcels.
- Plaintiffs and defendant shared the installation costs of the well and water system, and plaintiff Mr. Mund worked with defendant's husband to install it.
- The parties have continued to share the operating expenses for the well since its installation.
- Relying on access to the well water, plaintiffs secured a $40,000 commercial loan and constructed a residence on their property.
- There is no other source of domestic water for the plaintiffs' property.
- Within a year of the well's installation, the parties began to dispute their respective rights to the well and water.
Procedural Posture:
- Plaintiffs sued defendant in an Oregon trial court, seeking a declaratory judgment and specific performance to establish a permanent interest in a well on defendant's property.
- The trial court found in favor of the defendant.
- After the trial but before a final decree was entered, plaintiffs moved to amend their pleadings to add a claim for an irrevocable license.
- The trial court denied the plaintiffs' motion to amend.
- Plaintiffs, as appellants, appealed the trial court's decision to the Court of Appeals of Oregon.
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Issue:
Does an oral license to use a well on another's property become irrevocable when the licensee, in reliance on the license, incurs significant expense and makes valuable improvements to their own property for which the well is the only source of water?
Opinions:
Majority - Rossman, J.
Yes. An oral license to use a well on another's property becomes an irrevocable license where the licensee has made valuable improvements in reliance on the licensor's promise. The court reasoned that although the parties' testimony about the intended permanency of the arrangement was in direct conflict, the surrounding circumstances established an irrevocable license. The court emphasized that an irrevocable license does not depend on proving the terms of an agreement to avoid the Statute of Frauds, but rather arises by operation of law to prevent an injustice. Here, plaintiffs' reliance was demonstrated by sharing installation and maintenance costs and, most significantly, by constructing a residence that was dependent on the well as its only water source. The court found it would be inequitable and unjust to permit the defendant to revoke the license after plaintiffs made such substantial improvements in reliance on the arrangement.
Analysis:
This case solidifies the Oregon doctrine that an irrevocable license is an equitable remedy based on estoppel, distinct from an easement created by part performance of an oral contract. The decision clarifies that the court's focus is not on proving the existence and terms of an oral agreement, but on whether the licensee's substantial, foreseeable reliance on the licensor's promise would make a subsequent revocation unjust. This provides a crucial protective measure for individuals who make significant investments based on informal, oral land-use agreements. The ruling also underscores the liberality of procedural rules allowing for pleadings to be amended to conform to the evidence, so long as the opposing party is not prejudiced.
