Adair v. Bracken

• Decision Date: 24 November 1987
• Docket Number: No. 860116-CA,860116-CA
• Citation: 745 P.2d 849
• Parties: Gerry Leon ADAIR and Jane E. Adair, Plaintiffs and Appellants, v. Ronald W. BRACKEN, Reba A. Bracken, and John Does I through V, Defendants and Respondents.
• Court: Utah Court of Appeals

Page 849

745 P.2d 849

Gerry Leon ADAIR and Jane E. Adair, Plaintiffs and Appellants, v. Ronald W. BRACKEN, Reba A. Bracken, and John Does I through

V, Defendants and Respondents.

No. 860116-CA.

Court of Appeals of Utah.

Nov. 24, 1987.

Gary W. Pendleton, Pendleton & Terry, St. George, for plaintiffs and appellants.

Phillip L. Foremaster, St. George, for defendants and respondents.

Before JACKSON, ORME and BENCH, JJ.

JACKSON, Judge:

Appellants Gerry Leon Adair and Jane E. Adair seek reversal of a district court judgment that denied their request for specific performance and enforced the forfeiture clause of a uniform real estate contract in favor of respondents. They present two questions on appeal: (1) Was the finding that appellants intentionally abandoned their rights under the contract clearly erroneous? (2) Was the notice given by respondents insufficient as a matter of law to terminate appellants' rights under the contract? Because we answer both of these questions in the affirmative, we reverse the judgment below.

On September 15, 1974, the parties entered into a uniform real estate contract for the appellants' purchase of two undeveloped mountain lots located in Washington County, Utah. The purchase price was $3,397.27, payable at the rate of $70 per month beginning October 15, 1974, plus six percent annual interest. The agreement was conditioned upon appellants buying out $3,002.73 equity in the property held by a third party, which they did.

The Adairs made sporadic payments to respondents for 77 months. In March of 1981, when the principal had been reduced to $1,024.05, their payments ceased. On or about August 17, 1982, the escrow agent advised appellants by letter of the delinquency and requested remittance of the principal and accrued interest. No mention was made of the consequences of failure to remit or of the sellers' intentions to pursue any of their contractual remedies. Although appellants admitted receiving this letter, they did nothing.

Respondents also did nothing further until the escrow agent sent the Adairs a certified letter, dated January 17, 1983, stating:

Please be advised that the above Escrow Account is very seriously delinquent. The last payment received on this account was on March 18, 1981, and due to the serious and continual lateness of the account, it is the intent of the Seller under said Contract, SAMBRACO, a partnership consisting of Ron Bracken and Doyle Sampson, to demand that you immediately arrange to pay off the entire balance at this time.

Please contact either myself or Mr. Bracken or Mr. Sampson for the balance due to clear the contract. If you do not respond to this demand, then the Sellers will exercise option 16A under the Uniform Real Estate Contract, and this Escrow shall immediately terminate and all documents will be returned to the Sellers. You realize, I am sure, that under this option you will forfeit all monies paid into Escrow.

Please respond within five days of the above date.

This letter, mailed to appellants' correct address with sufficient postage, was returned to the escrow holder several weeks later marked "Unclaimed." In April, 1983, respondents gave a copy of it to Gerry Adair's sister, an owner of property adjacent to the lots being sold to Adairs, for forwarding by mail to appellants along with information from Brackens about a proposed water users' association.

Aside from several unsuccessful attempts by the escrow agent to contact the Adairs by telephone, the parties once again took no further action until May 23, 1984, when the appellants tendered to respondents the principal and interest owing, plus taxes the sellers had paid that were the Adairs' responsibility under the contract. This tender was refused by respondents on the basis that the Adairs' interests in the property had been forfeited.

The Adairs sued for specific performance of the contract; the Brackens counterclaimed, alternatively asserting that appellants had abandoned the contract and that

                their rights in it had been forfeited by respondents based on Adairs' default.  After a bench trial, the district court judge found both that the Adairs had intentionally abandoned their contractual interests in the property and that they had been served with "Notice of Forfeiture."   The court concluded that appellants were not entitled to a decree of specific performance and that the notice given by respondents was sufficient to declare a forfeiture of appellants' rights under the contract, resulting in forfeiture of their improvements and contract payments as liquidated damages.  Accordingly, title to the property was quieted in respondents
                

ABANDONMENT OF THE CONTRACT

We first examine the trial court's finding of fact that the Adairs had intentionally abandoned their interests in the property and the contract at some point prior to tendering full payment in May, 1984, thereby precluding their entitlement to specific performance. In doing so, we examine all the record evidence, giving "great weight to the findings made and the inferences drawn by the trial judge" and setting them aside under Utah R.Civ.P. 52(a) only if "clearly erroneous." State v. Walker, 743 P.2d 191, 193 (Utah 1987) (quoting Wright & Miller, Federal Practice and Procedure § 2585 (1971)). A finding is "clearly erroneous" if it is against the clear weight of the evidence or if we are otherwise firmly convinced that a mistake has been made. Id.

A purchaser of property can abandon all his or her rights and interests in a uniform real estate contract, see, e.g., Forsyth v. Pendleton, 617 P.2d 358 (Utah 1980), including the contractual right to notice adequate to result in forfeiture, discussed below. However, as the Utah Supreme Court has noted,

[t]he term "abandonment" in the sense involved here means the intentional relinquishment of one's rights in the contract; and in order to nullify such rights, there must be a clear and unequivocal showing of such abandonment. Where there is dispute as to whether this has occurred, it is usually a question of fact, to be determined from the circumstances of the particular case, which include not only nonperformance, but also expressions of intent and other actions of the parties.

Timpanogos Highlands, Inc. v. Harper, 544 P.2d 481, 484 (Utah 1975) (footnotes omitted). ¹ More recently, the Court has observed that the intent to abandon contract rights need not be shown by the positive testimony of the purchaser, but may be inferred from the acts and conduct of the purchaser that are "clearly inconsistent with an intention to continue the use of the property." Forsyth v. Pendleton, 617 P.2d at 361.

In the case before us, the evidence in the record that supports the court's finding of abandonment consists of appellants' undisputed failure to make any payments from March, 1981 until their attempted tender in May, 1984, as well as their admitted failure to contact respondents during the period from April, 1983 until tender in May, 1984 in order to work out new payment arrangements.

On the other hand, evidence that would support a finding that appellants did not intentionally abandon their contractual rights and interests is substantial. Jane Adair testified that they visited the land "many times" between March, 1981 and May, 1984. She provided several specific examples, including camping on the land during a family reunion in 1982, snowmobiling there two times one year and once the other two years, and spending a weekend or a week there each summer. The Adairs also gave his sister their proxy to These actions can only be regarded as unequivocal expressions of the Adairs' intent to use the property and not abandon their contractual interests in it. Furthermore, their intent after April, 1983 must be judged in light of the fact that respondents had consistently and repeatedly tolerated late payments, no payments, lack of communication, and long periods of default in the past (even after sending a notice of delinquency and a notice of default) and gave no firm indication after April, 1983 that this pattern was being changed.

vote as landowners at a June, 1983 organizational meeting to discuss a proposed water users' association. ²

We therefore conclude that the court's finding of abandonment is against the clear weight of the evidence and, as such, is clearly erroneous and must be set aside.

FORFEITURE UNDER THE CONTRACT

Because the evidence does not support the finding that the appellants abandoned their contractual interests, we must next determine if those rights were nonetheless terminated by the respondents in accordance with the terms of the parties' contract.

Paragraph 16 of their uniform real estate contract sets forth three alternative remedies available to the sellers, at their option, "[i]n the event of a failure to comply with the...