Cayce v. Carter Oil Co., 78-1526

• Decision Date: 26 March 1980
• Docket Number: No. 78-1526,78-1526
• Citation: 618 F.2d 669
• Parties: George L. CAYCE and Ana Jane Cayce, Plaintiffs-Appellants, v. CARTER OIL COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 669

618 F.2d 669

George L. CAYCE and Ana Jane Cayce, Plaintiffs-Appellants, v. CARTER OIL COMPANY, Defendant-Appellee.

No. 78-1526.

United States Court of Appeals Tenth Circuit.

Argued Jan. 21, 1980.

Decided March 26, 1980.

Charles C. Currier of Hunt & Shamas, Roswell, N. M., for plaintiffs-appellants.

J. Douglas Foster of Hinkle, Cox, Eaton, Coffield & Hensley, Roswell, N. M., for defendant-appellee.

Before McWILLIAMS, BARRETT and McKAY, Circuit Judges.

BARRETT, Circuit Judge.

This is an appeal from summary judgment granted to Carter Oil Company (Carter Oil), defendant below, in an action brought by George L. Cayce and Ana Jane Cayce, who are husband and wife, seeking damages for breach of contract, avoidance, and negligence. The sole issue on appeal is whether the District Court properly granted the motion.

Factual and Litigative Background

A contract for the sale of 640 acres of land situate in Campbell County, Wyoming, was entered into on March 29, 1974, by Ana Jane Cayce and George L. Cayce, her husband, as Grantor, and Carter Oil Company, as Grantee. At that time, the Cayces resided in Fort Worth, Texas. The agreement provided that, in consideration for a warranty deed concurrently executed by Grantor to Grantee conveying said real property, together with all coal and all other minerals with certain exceptions, Grantee was to pay a total sum of $320,000.00. The agreement provided: $64,000.00 was to be paid on the date of execution; the balance, or $256,000.00, was to be paid in twenty equal annual installments, with interest on the unpaid balance at the rate of 6% per annum, subject to an option in the Grantor (to be exercised by giving Grantee 30 days notice by certified mail prior to the scheduled time of any annual installment, January 10, 1975 and like date annually thereafter) to ". . . change the terms of years over which such installment payments are to be made, with corresponding change in the amount of the principal and interest to be paid in each annual installment . . . (and) . . . Grantor may also . . . (upon) . . . written notice . . . obtain the entire amount of remaining unpaid principal or any part greater than the scheduled installment, together with the accrued interest thereon."; no change in ownership of the unpaid balance was binding upon Grantee "until 45 days after Grantor . . . delivered . . . evidence of the change"; and Grantor waived and released all rights under the homestead exemption laws of the State of Wyoming. (R., Vol. I, pp. 10-14).

The instant suit was originally filed by the Cayces in the State District Court of the County of Bernalillo, New Mexico, on or about July 7, 1977. The Cayces were then residing there. The action was removed to federal district court by Carter Oil on the basis of diversity jurisdiction.

At the date of the Contract for Sale, the entire surface estate of the subject lands was titled in fee simple in Ana Jane Cayce, formerly Ana Jane Chambers. With the exception of those minerals previously reserved, the mineral estate was titled in Ana Jane Cayce. Thus, insofar as record title interest is concerned, George L. Cayce, husband of Ana, had no record title interest. Ana Cayce acquired the property from her father in 1946, four years prior to her marriage to George. George Cayce did not claim or have a homestead right in the property. Ana Cayce wrote Carter Oil three letters, on July 20, 1975, December, 1975, and January 14, 1976, requesting that the unpaid balance be distributed in specific amounts to her and her husband, and to other specified persons, who were her brothers and sisters, or their heirs. On January 7, 1976 Carter Oil, in response to Ana Cayce's written requests, paid the balance due in accordance with her instructions. The approximate unpaid balance of $250,000.00, principal and interest, was disbursed by Carter Oil. Of this amount, only $23,000.00 was paid to the account of G. L. Cayce and Ana Jane Cayce at Citizens Bank, Pagosa Springs, Colorado.

George Cayce's uncontroverted affidavit states that: Following his marriage to Ana in 1950 in Fort Worth, Texas, he contributed from his separate funds to enhance the value of the Wyoming property and to "pay off" mortgages and encumbrances against that property, in estimated amounts between $1,500.00 and $2,000.00; all taxes on the Wyoming property were paid following their marriage from money he earned; and he never consented or agreed to the acceleration of installments and change of ownership of the purchase proceeds. Ana Cayce's affidavit corroborates her husband's affirmations.

In George Cayce's affidavit, he states that during his marriage to Ana, both considered the Wyoming property subject to this suit to belong equally to "both of us" (R., Vol. I, p. 71), but in his deposition, he acknowledges that grazing lease rentals and bonus and rental payments from oil and gas and coal leases relating to the Wyoming property (which said leases he executed), although payable to the two of them, were in fact retained entirely by Ana, and that sometime in the "sixties" he "hit the ceiling" when he discovered some canceled checks signed by Ana showing that she had "given" or distributed the money to others. (R., Vol. II, pp. 4-7). Furthermore, George Cayce's affidavit states that "Neither my wife nor I drafted the contract which is the subject of this suit and to the best of my knowledge and belief it was prepared by an agent of Defendant" (R., Vol. I, p. 73), while his deposition contains his statement that he participated in the negotiations for the sale of the property with Carter Oil with his wife's permission and that he specifically negotiated for the inclusion of the provision for the twenty installment payments. (R., Vol. II, pp. 7-8).

It is undisputed that Carter Oil did not at any time advise Ana Cayce that she should obtain George Cayce's consent to the accelerated payments. It is also undisputed that Carter Oil followed a "standing policy" at the time the contract was executed of requiring the signatures of both spouses on all contracts to purchase real property in order to avoid any subsequent problem concerning a possible homestead right existing in either spouse.

The District Court granted summary judgment dismissing the complaint with prejudice, based upon all of the pleadings, memoranda filed, together with the affidavits, depositions, exhibits and the entire file. The District Court ruled that, as a matter of law, Carter Oil's payments, as directed by Ana Cayce as one of the joint obligees under the agreement, discharged the obligor. The District Court relied upon North American Uranium v. Johnston, 77 Wyo. 332, 316 P.2d 325 (1957); Restatement of the Law, Contracts, § 130; 4 Corbin on Contracts, § 941, and 70 C.J.S. Payment § 4.

Contentions on Appeal

On appeal, the Cayces contend that the District Court erred in granting summary judgment in that: (1) there is a question of fact as to whether the proceeds of the contract were community property; (2) there is a question of fact as to the competency of Ana Cayce; (3) there remain questions of fact relating to the issue of the negligence of Carter Oil and its breach of the contract; and (4) there is a question of fact as to whether Carter Oil knew or should have known that the alienation of the contract proceeds was fraud upon the rights of George Cayce.

Disposition on Appeal

Upon review, the appellate court must be guided by the principle that summary judgment cannot be granted unless the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law". Fed.Rules Civ.Proc., rule 56(c), 28 U.S.C.A.; St. Louis Baptist Temple v. F. D. I. C., 605 F.2d 1169 (10th Cir. 1979); Ando v. Great Western Sugar Company, 475 F.2d 531 (10th Cir. 1973). Further, the court must liberally construe all of the non-movant's allegations and the movant must clearly demonstrate his entitlement to summary judgment. Mustang Fuel Corporation v. Youngstown Sheet & Tube Co., 516 F.2d 33 (10th Cir. 1975).

I.

The Cayces contend that the District Court erred in granting summary judgment in that there remains a question of fact as to whether or not the proceeds of the contract were community property.

Carter Oil argues that George Cayce had no interest in the proceeds of the subject contract inasmuch as the title to the real property was held in fee simple solely in the name of Ana Jane Cayce. Thus, Carter Oil contends that it was not necessary to obtain George Cayce's consent or joinder to alter the terms (annual installment payment schedule) of the contract. Even so, Carter Oil anchors the ultimate disposition of this controversy to the rule applied by the trial court in granting summary judgment: That because, under the contract, payment was to be made to Mr. and Mrs. Cayce jointly, this rendered them joint obligees ; and, the general rule is that each joint obligee has the power to discharge the obligor without any participation therein by the other obligees. Carter Oil cites and relies on North American Uranium v. Johnston, supra; Restatement of the Law, Contracts, § 130 (1932); 4 Corbin on Contracts, §§ 939, 941 (1951); and 2 Williston on Contracts, § 343 (Rev.Ed.1936). Further, Carter Oil contends that this principle applies to all types of contractual obligations, quoting Hill v. Breeden, 53 Wyo. 125, 79 P.2d 482, 486 (1938) for the proposition that "when a contract is payable to two or more parties jointly, payment may be made to either of them". In addition, Carter Oil cites Lasky v. Lissik, 140 Misc. 826, 251 N.Y.S. 753 (N.Y.S.Ct.1931) for the principle that the general rule is not altered by the fact that the joint obligees are husband and wife, and Cober v. Connolly, 20 Cal.2d 741, 128 P.2d 519 (1942) for the rule that the same principle...