Anderson v. Armstrong

• Decision Date: 31 January 1978
• Docket Number: No. 2-60122,2-60122
• Citation: 264 N.W.2d 619
• Parties: Herbert W. ANDERSON, as Receiver of United America Insurors and United America Development Corporation, Appellant, v. J. D. ARMSTRONG, Appellee.
• Court: Iowa Court of Appeals

Page 619

264 N.W.2d 619

Herbert W. ANDERSON, as Receiver of United America Insurors and United America Development Corporation, Appellant, v. J. D. ARMSTRONG, Appellee.

No. 2-60122.

Court of Appeals of Iowa.

Jan. 31, 1978.

E. Eugene Davis and Wendell B. Gibson, of Davis, Scott & Grace, Des Moines, for appellant.

C. A. Pasley, of Pasley, Singer, Pasley & Holm, Ames, for appellee.

Submitted to ALLBEE, C. J., and DONIELSON, SNELL, OXBERGER and CARTER, JJ.

CARTER, Judge.

This is an action in equity seeking specific performance of an alleged contract for the sale of the vendee's interest in three real estate contracts. The plaintiff is the Insurance Commissioner, acting as receiver of an insolvent insurance company which owned the interest in real estate with which we are concerned. ¹ The defendant is an individual who submitted a written offer to the receiver to purchase the vendee's interest in these land contracts for the sum of $14,875. The trial court dismissed the action as a result of a finding that, prior to any acceptance of defendant's offer, the receiver had rejected it thus rendering it inoperative as a matter of law. This appeal involves our de novo review of the evidence supporting that finding as well as other factual and legal issues which we must decide in order to adjudicate the controversy.

I. In this equity action we give weight to the findings of the trial court but are not bound thereby and cannot abdicate our responsibility to determine the facts de novo. Rule 4, Rules of Appellate Procedure; White v. Board of Review of Polk County, 244 N.W.2d 765, 772 (Iowa 1976). Upon our review of the entire record we differ with the result reached in the court below.

II. Defendant denies the formation of the contract upon which plaintiff's claim rests. We perceive the issues going toward the making of the contract, if any, to be as follows:

(a) Whether defendant's written offer to purchase this interest in real estate was rejected by the receiver prior to any acceptance thereof. If this is answered in the affirmative we must affirm the trial court as this would render the pending offer inoperative under established law ² and there is no evidence that defendant made a new offer subsequent to the time he claimed plaintiff rejected his first and only offer;

(b) if issue (a) above is answered in the negative, we must then determine on the evidence presented whether it has been established that plaintiff or his authorized representatives accepted defendant's offer to purchase said interest in real estate prior to the time it was withdrawn by defendant.

A. Was the offer rejected by plaintiff prior to its acceptance by defendant? This issue presents a difficult question as to which party bears the burden of proof thereupon under the established rules for determining such burden. Rule 14(f)(5), R.App.P. recognizes that ordinarily the burden of proof on an issue is upon the party who would suffer loss if the issue were not established. In the present controversy, however, this depends upon how several other factual issues in the case are resolved. While the issue is not free from doubt, we prefer to place the burden of proof upon the plaintiff. Considering the entire record in this light we conclude that the evidence preponderates against the claim that plaintiff rejected defendant's offer prior to accepting it.

Defendant contends that such rejection was voiced to him on March 11, 1975, during a telephone conversation with F. M. Wonderlin, a deputy receiver appointed by the court. Considering all of the evidence as to what was said during this conversation, the status of Mr. Wonderlin as an officer of the court, his authority to act or the lack thereof, and other circumstances surrounding the transaction we find that while Mr. Wonderlin expressed surprise that the written offer to buy was for a lesser sum than discussed in earlier oral discussions, he nevertheless did not reject such offer. He instead sought during this telephone conversation to obtain defendant's reasons for the reduced offer so he could take the matter up with his counsel and the court. Such finding dictates that we cannot decide the case adversely to plaintiff on the ground relied upon by the trial court.

B. Was it established that plaintiff's authorized representatives accepted defendant's offer to purchase the interest in real estate before said offer was withdrawn? Plaintiff bears the burden of proof on this issue also and we conclude he has satisfied said burden by clear, satisfactory and convincing evidence. It is well established that although a party making an offer may specify how it shall be accepted, failing this anything that amounts to a manifestation of the determination to accept is sufficient, including an oral response. ³ We find that an oral acceptance of defendant's offer was timely communicated to him by Mr. Wonderlin by telephone on March 11, 1975, and that Mr. Gibson, attorney for the receiver, confirmed this in a subsequent telephone call to defendant seeking information as to the desired form of conveyance. We further find that based upon these conversations a meeting to close the transaction was scheduled for March 13, 1975, at 11:00 a. m.

Defendant failed to show up for this meeting. Mr. Wonderlin then telephoned him at 11:45 a. m. and when he asked defendant why he was not present for the closing, defendant stated he was not going to complete the transaction. Upon our review of the evidence we find that defendant had not communicated a withdrawal of his written offer to plaintiff's representatives prior to their acceptance thereof as found by this court. The only evidence that the offer was withdrawn is defendant's testimony that this was the substance of his first telephone call with Mr. Wonderlin on March 11, 1975. But based upon all of the evidence, including our finding as to the scheduled closing, ⁴ we find that the offer was not withdrawn at any time prior to the 11:45 a. m. telephone conversation on March 13, 1975. This of course was subsequent to the time the offer had been accepted by the receiver's representatives.

While the foregoing findings would ordinarily establish a valid contract for purpose of plaintiff's claim without further discussion, defendant raises one additional point which we must consider. This is the contention that court authorization on behalf of the receiver to accept defendant's offer was not obtained until 11:04 a. m. on March 15, 1975 and that any action of the plaintiff or his representatives in accepting the offer prior to this time was ultra vires. We believe the better rule to be that where a receiver sells or contracts prior to receiving court authorization, a subsequent ratification of the receiver's action makes it as legal and binding as if it had been authorized in advance. ⁵ We apply this rule in the present case and hold that defendant cannot avoid an otherwise proper agreement on the ground it was ultra vires.

III. We next consider defendant's contention that we cannot order specific performance of the agreement because the receiver is unable to perform. This contention is based upon the assertion that the receiver is presently unable to convey the interest in real estate contracted for because of forfeiture actions undertaken by the vendors of these contracts subsequent to the March 13, 1975, closing date. We find this contention to be without merit. The record clearly reveals that to the extent forfeiture of the vendee's interest in these contracts has been attempted it is based upon failure in payment of the March 15, 1975, principal and interest payments owed on the contracts. In defendant's written offer, which we hold forms the contract between the parties, such payment clearly became defendant's obligation. Accordingly, the receiver's obligation under said agreement was to convey only his right, title and interest in the property subject to the vendor's rights and interest. He is as able to do this now as he was on March 13, 1975. ⁶

We accordingly hold that upon remand, plaintiff is entitled to a decree of specific performance of the obligation of defendant to make payment under the written offer of March 7, 1975 (plaintiff's exhibit 4) in the sum of $14,875, plus interest on said sum at the legal rate subsequent to March 13, 1975, in exchange for delivery of the receiver's conveyance of the subject property as provided in plaintiff's exhibit 5.

IV. In so holding we also reject defendant's contention that plaintiff holds an adequate remedy at law as contrary to the established law relating to the specific performance of real estate contracts. See e. g. Dee v. Collins, 235 Iowa 22, 24, 15 N.W.2d 883 (1944).

Reversed and remanded.

DONIELSON, J., dissents.

DONIELSON, Judge (dissenting).

I disagree with the result reached by the majority because I would answer the question posed by II. A. of the majority opinion in the affirmative. Although the majority correctly states that the plaintiff has the burden of proof on this issue, rule...