Stoddard v. Gookin , 203 Mont. 435 ( 1983 )

No. 82-144
I N THE SUPREME COURT O THE STATE O MONTANA
F F
1983
Johns. L W E C STODDARD,
A RNE
P l a i n t i f f and Respondent,
-vs-
IQRVIN H. GOOKIN and S A O G O O K I N ,
H R N
D e f e n d a n t s and A p p e l l a n t s .
Appeal from: D i s t r i c t Court of the S i x t e e n t h J u d i c i a l D i s t r i c t ,
I n and f o r t h e County o f F a l l o n , The Honorable
Nat A l l e n , Judge p r e s i d i n g .
Counsel of Record:
For A p p e l l a n t s :
S t e p h e n s & C o l e ; R o b e r t L. Stephens, B i l l i n g s ,
Montana
F o r Respondent :
Gene H u n t l e y , Baker, Montana
S u b m i t t e d on B r i e f s : November 2 4 , 1982
Decided: A p r i l 1 4 , 1983
Filed:
Mr. Justice Daniel J. Shea delivered the Opinion of the
Court.
The defendants, Marvin and Sharon Gookin, appea.1 a
judgment of the Fallon County District Court ordering
specific performance of a land sale contract. The order
requires that defendants execute a deed to plaintiff for the
ranch land and that defendants also assign to plaintiff
leases that defendants held for use of other land. In
return, plaintiff was ordered to pay $28,000 to defendants
with interest at 10 percent from date of judgment. This case
comes to us for a second time. In Stoddard v. Gookin (1-981),
- Mont. , 625 P.2d 529, 38 St.Rep. 326, we remanded the
case for further evidence, and for a determination of when
the first $15,000 payment of a total $30,000 payment was due,
and whether time was of the essence.
The evidence at the second trial established that the
first $15,000 payment was due on November 1, 1973 and the
second $15,000 payment was due after January 1, 1974.
Although plaintiff did not pay the first $15,000 on November
1, 1973, he paid $2,000 on November 2 and on later occasions,
before January 1, 1974, tendered the remaining payment. The
tria.3 court held time was not of the essence for this payment
and that plaintiff had properly tendered the $15,000. The
first point of appeal is whether time was of the essence for
the payment of the first $15,000, and whether plaintiff made
a timely tender assuming that time was of the essence. The
second point of appeal assumes that specific performance was
properly granted but questions the equities of the
adjudication of the rights of the parties. Defendants argue
that during the time the lawsuit was pending they had
possession of the land and paid off the underlying contract
for the purchase of the ranch. They argue that they should
be reimbursed for this amount plus the interest they paid
over the course of the contract. We affirm the grant of
specific performance but remand for the court to adjust the
rights of the parties.
The background facts are as follows. Defendants had a
five year lease for ranch lands in Fallon County from the
McGhees. This lease gave them an option to purchase the land
for $100,000 at any time during the five-year period, by
paying $10,000 down and agreeing to pay the remaining $90,000
at 7 1/2 percent interest. This option a-lso carried with it
an assignment of grazing leases held by the McGhees. During
the second year of the lease, defendants, although not
actually wanting the land for themselves, agreed to exercise
the option on behalf of the plaintiff--the plaintiff was to
become the ultimate owner.
Plaintiff was to provide the $10,000 downpayment, papers
would be executed naming the defendants and plaintiff as
undivided cotenants, and then when plaintiff paid $30,000 to
the defendants, defendants would deed their interest in the
property to plaintiff, and plaintiff would take over the
contract payments to the McGhees.
Plaintiff provided the $10,000, defendants exercised the
option and all the papers were properly prepared and
executed. The issues of this appeal on the merits of
specific performance focus on how and when plaintiff was to
make the first $15,000 payment of the total $30,000 payment
he was to make to defendants.
In deciding the first appeal we held that after the
option had been exercised, the plaintiff and defendants, at
defendants' request, agreed to an oral modification of the
terms for paying the $30,000. At first the $30,000 was to be
paid on November 1, 1973. However, defendants then asked
that $15,000 be paid in 1973 and that the second $15,000 be
paid after January 1, 1974. 625 P.2d at 532, 38 St.Rep. at
328. We then remanded the case for the trial court to
determine, as a question of fact, when the first $15,000 was
to be paid and whether time was of the essence. 625 P.2d at
536, 38 St.Rep. at 333.
The trial court, after hearing more evidence, ruled that
payment of the first $15,000 was to be on November 1, 1973,
and although it was not paid on November 1, time was not of
the essence on the contract and the plaintiff timely tendered
the $15,000 before he was given notice of forfeiture. We
affirm the trial court on this issue.
Time of the essence was not made an express condition of
the agreement between plaintiff and the defendants. Although
the evidence establishes that the first $15,000 payment was
not made on November 1, 1973, as agreed, defendants continued
to act as though the agreement was still in effect.
Plaintiff made a $2,000 payment on November 2, 1973, and
defendants accepted it as part payment. Further, the
defendants did not give plaintiff notice that he had a time
limit in which to tender the balance of the $15,000, or
forfeit his interest in the ranch.
When plaintiff paid the $2,000 to defendants on November
2, 1973, he indicated he would have the balance within a few
days, and defendants agreed. During the next several weeks
defendants did, however, ask for payment on several
occasions, without success. On each of these occasions
plaintiff either said he would have the money in a few days
or within a short time. Although it is clear that plaintiff
knew defendants needed the money, he was never notified that
his interest would be forfeited on a date certain if he
failed to pay the balance of the first $15,000 payment.
Further, before plaintiff filed his suit for specific
performance on December 12, 1973, he had tendered payment to
defendants at ,-east three times. On one occasion, after
being called by a lawyer at defendants' request, he tendered
the payment to the lawyer, but the lawyer told him either to
take the money to the bank or to the defendants. In
addition, on two more occasions payment was tendered directly
to the defendants, but it was refused.
In not setting a date certain on which plaintiff was to
make the remaining payment of the first $15,000 payment,
defendants could not forfeit plaintiff's interest in the
contract. Because there were no forfeiture provisions in the
contract, and because the defendants had granted several
extensions to plaintiff, they could not forfeit the
plaintiff's interest without first giving him notice of their
intent. Collins v. Collins (1957), 348 Mich. 320, 83 N.W.2d
213, 68 A.L.R. 2d 575. In granting the numerous extensions
beyond the November 1 payment date, the defendants
effectively waived strict compliance with any contract terms.
Because time was not made the essence of the contract,
and because defendants did not give plaintiff a date certain
on which to pay the balance of the first $15,000 payment, the
trial court did not abuse its discretion in determining that
plaintiff did not forfeit his interest in the ranch and in
granting specific performance.
We next consider the question of whether the terms of
the order granting specific performance are equitable. The
order was a simple one. The trial court ordered the
defendants to execute a warranty deed to the plaintiff for
the land and. to execute assignments of leases which went with
the land. The plaintiff was ordered to pay $28,000 to the
defendants with interest at 10 percent per year from the date
of judgment.
The defendants were in possession of the land before the
contract dispute when they leased the land from the McGhees,
and they have been in possession of the land ever since.
Within a year or so after plaintiff filed suit, he moved to
California and has lived there ever since. Defendants have
been in possession of the property and they have made all the
contract payments for the land to the McGhees--an amount
which, including interest, exceeds $107,000. In addition,
they paid the property taxes, kept up insurance, made
improvements on the 1-and, and made the pa.yments on grazing
leases they had with Burlington Northern, Inc.
It appears that the ranch operations were unable to
sustain defendants' family. During this time both defendants
were employed. Sharon Gookin had a secretarial job and
Marvin Gookin, by using his own truck, regularly took jobs as
a hauling contractor.
The effect of the trial court's judgment is that by
paying $30,000, plaintiff is getting property which he
contracted to pay $130,000 for. In addition the land
undoubtedly has appreciated in va.lue over the years and is
worth much more than $130,000. On the other hand, the
defendants have had the use of the land now for almost ten
years. The question, of course, is whether the court's
judgment, under these circumstances, is fair. Unfortunately,
the record is rather barren on the relative equities of the
parties.
It appears that the court's judgment was based on a
notice of election filed by plaintiff sometime during the
trial proceedings. In the event that the court granted
specific performance, plaintiff asserted a right to waive any
claim he may have for rents and profits or reasonable rental
value for the period. in which the defendants were in
possession of the land. In exchange for this waiver he
claimed he could not be compelled to pay any "interest on the
balance of the purchase money due under the contract with the
defendants to convey, $28,000."
In granting specific performance the trial court
adopted, verbatim, the proposed findings and conclusions of
the plaintiff. In conclusion of law no. 15, the court
declared the rights of the parties resulting from plaintiff's
election. It states:
"The plaintiff had the right to elect whether to
claim the rents and profits or reasonable rental
value of the property or, in the alternative, keep
the interest on the purchase price which he owed to
the defendants for the property. The plaintiff has
elected to keep the interest on the purchase price
by formal election introduced into evidence in this
cause. "
Plaintiff ' s notice of election and the trial court's
conclusion of law concerning this election, are clearly
confined to a waiver of rents and profits in exchange for not
paying interest on the $28,000 still owed to defendants as a
result of the 1973 agreement. By its terms, the notice of
election did not extend to a claim of right not to have to
pay the defendants the principal and interest which they pa-id
pursuant to the contract for deed with the McGhees. In
entering its final judgment, despite the defendants seeking
to amend the findings and judgment, the trial court ignored
this vital fact.
We further note that the right to an election such as
claimed by the plaintiff here, is not absolute. 7 A.L.R. 2d
1204, § 7, 1218. The purchaser seeking specific performance
is entitled to such an election only if he is without blame
and if the vendor has wrongfully deprived the purchaser of
possession. Cotton v. Butterfield (1905), 14 N.D. 465, 105
N.W. 236, 7 A.L.R. 2d 1204, S 7, 1220. Although we do not
disturb the trial court's conclusion that the plaintiff here
was entitled to specific performance, he was not without
fault, and the defendants undoubtedly were in good faith in
defendinq the suit for specific performance. The plaintiff
failed to make the payment when promised, and on several
times thereafter he failed to make the payment when it was
requested. In addition, by plaintiff failing to make the
payment when due, the defendants lost a deposit on a trailer
home they had purchased in anticipation of turning the ranch
over to the plaintiff.
Beyond the fact of virtually paying off the contract
with the McGhees (which, together with principal and interest
amounted to at least $107,000), the defendants, over the past
decade, made numerous improvements on the property as well as
paid taxes, etc. Nor is there any indication that the
plaintiff wanted the ranch on which to personally reside. A
short time after this dispute started, the defendant moved to
California, and has resided there ever since. Here the
defendants refused to convey only because of a
misunderstanding. A misunderstanding at least in part caused
by the plaintiff's failure to pay the first $15,000 when he
was supposed to. Where a misunderstanding exists, the
purchaser cannot avoid an accounting by the expedient of
electing to waive rents and profits. See Annotation 7
A.IJ.R.~~
1204, 7, 1220. Here the equities clearly
predominate in favor of an accounting.
Equity can only be accomplished by requiring a full
consideration of the relative expenditures made by the
parties in maintaining the status quo during the pendency of
this litigation. Defendants must account for the rents and
profits if any, or a reasonable rent for the ranch, during
the years of their occupancy. Against these duties must be
balanced what defendants were compelled to do over the years
of occupancy in order to maintain possession of the property.
They paid off, or almost paid off the contract to the
McGhees; they paid interest on the unpaid balance; they paid
the property taxes during the years of occupancy; they kept
the place insured; and they made improvements. Equity cannot
be accomplished in this case unless all these factors are
considered in determining how much plaintiff should
ultimately pay. The order stating plaintiff must pay only
$28,000, strikes us as being more than a little unjust to the
defendants.
The judgment of the District Court ordering specific
performance is affirmed but this cause is remanded for a full
hearing and full consideration of the payments of the parties
during the period of occupancy of the land involved. Only
then can a proper money judgment be entered.
The judgment of the District Court is affirmed in part,
and vacated in part, and remanded for further proceedings.
lile Concur:
?
A wcatq
Chief Justice
f Justices