This could be a major deal, Note the word could. Oil is entering the air cleaner assy via the breather hose. Has the engine been using oil? What does the oil level look like now? Does the oil have a gas like smell or seem thinner to you?

The oil is right at full all the time. and yes the engine uses oil, alot of it. it seems to me it might be on the thin side

OK, is the fuel tank at a higher level than the carburetor (gravity fed fuel system)?
If so, what you are experiencing is likely gasoline leaking into the engine when the tractor is not in use.
This is due to a faulty needle valve in the carburetor that allows gas to seep into the carb, eventually overflowing the carb and running into the intake to finally end up in the crankcase.
Then, after the engine is started for use, and the engine warms up..............the gasoline in the lube oil begins to boil off.
The evaporating gasoline creates a positive pressure inside the crankcase and this pressure is vented out through the crankcase breather, which feeds into the air cleaner housing.
The boiling gas vapors rushing out through the crankcase breather carry a significant amount of oil mist with them as they go out and get fed to the engine intake manifold.
The very first thing you need to do is to install a manual, inline fuel shut off valve in the fuel hose, and then train yourself to keep the valve turned OFF EXCEPT WHEN THE ENGINE IS RUNNING. Put some kind of reminder note on the dash if necessary until you have made it a habit.
Locate the shut off valve in the fuel hose at a point between the tank and the fuel filter.
Next thing you must do is to change the engine oil and oil filter. Change the oil soaked air filter too.
I would not be all that concerned about fixing the leaky needle valve, the paltry volume of fuel leakage is not going to upset the air/fuel ratio being fed to the engine during operation. It's only when the engine is shut off that the leak has enough time to drown the engine.
Of course, repairing the leaky needle valve is definitely an OK thing to do, but even if you do repair it.............you still need to install a manual fuel shut off valve and USE IT CONSISTENTLY to guard against this ever happening again.
And I hope the engine has not already sustained damage by the compromised lube oil situation the engine has already gone through.

A 318 has a rear mounted tank, would have a fuel valve should you be inclined to use it. It is conceivable that the oil could be contaminated w/ fuel. On yours the carb is above the level of the tank, but excess fuel from carb overflow, fuel pump or just a plain poor running engine could be the case. You could start w/ a basic oil and filter (oil and air) change and monitor what is happening. Does the oil continue to then come through the hose and if you do nothing what does the level do. For an additional test, you could direct the breather hose into a can in a safe area and plug the area in lower filter housing to keep dirt out during the test. Is it then still pumping oil via the breather hose as it runs?

bought my 318 used and after using it for a while it started to blow oil out thru carb. checked oil level and it was showing full. I pulled some oil out until it shows low. Ran ok then.

later when I changed the oil and added the correct amount it barely touched the dip stick. Guessing it has the wrong dip stick for the oil. No more problems with correct amount of oil.