Anderson v. Onsager

• Decision Date: 06 June 1990
• Docket Number: No. 88-1812,88-1812
• Citation: 155 Wis.2d 504,455 N.W.2d 885
• Parties: Clarence ANDERSON d/b/a West-Land Company, Plaintiff-Appellant-Petitioner, v. Louis C. ONSAGER and Mary Onsager, his wife; Gerald Graf and Betty Graf, his wife; and First National Bank of Sturgeon Bay, a national banking corporation, Defendants-Respondents.
• Court: Wisconsin Supreme Court

Page 885

455 N.W.2d 885

155 Wis.2d 504

Clarence ANDERSON d/b/a West-Land Company, Plaintiff-Appellant-Petitioner, v. Louis C. ONSAGER and Mary Onsager, his wife; Gerald Graf and Betty Graf, his wife; and First National Bank

of Sturgeon Bay, a national banking

corporation, Defendants-Respondents.

No. 88-1812.

Supreme Court of Wisconsin.

Argued March 27, 1990.

Decided June 6, 1990.

Michael B. Apfeld, argued and Godfrey & Kahn, S.C., on briefs, Milwaukee and Philip L. Johnson and Johnson, Herlache, Johnson & Johnson, Sturgeon Bay, of counsel, for plaintiff-appellant-petitioner.

William P. Croke, argued, David M. Quale, Dorothy H. Dey and Quale, Feldbruegge, Calvelli, Thom & Croke, S.C., on brief, Milwaukee and D. Todd Ehlers and Pankratz Law Office, Sturgeon Bay, of counsel, for defendants-respondents.

HEFFERNAN, Chief Justice.

This is a review of an unpublished, per curiam decision of the court of appeals, filed May 2, 1989, which affirmed the judgment of the circuit court for Door county, James T. Bayorgeon, Circuit Judge for Outagamie county, presiding, which denied specific performance of a contract to purchase real estate, but awarded money damages to the plaintiff. 150 Wis.2d 947, 444 N.W.2d 66.

The issue presented is whether the trial court abused its discretion when it did not order specific performance of a contract to convey land. Because there were no legal or factual reasons why the court should not have exercised its power to order specific performance, we conclude that the circuit court should have granted specific performance as a matter of course. We reverse and remand with directions to the circuit court to order specific performance.

This case involves the sale of two parcels of agricultural real estate, owned by Louis C. and Mary Onsager, located in Door county, Wisconsin. Clarence Anderson, the plaintiff, was interested in purchasing this property and through his agent, Carlton Quam, and the Onsagers' agent, Gordon Schumacher, the parties made a series of offers and counteroffers. On January 3, 1986, the Onsagers accepted an offer from Anderson whereby the Onsagers would convey both parcels of property to Anderson for $120,000. Under the terms of the contract, a standard form farm offer to purchase, the Onsagers agreed to convey the property to Anderson free and clear of all liens and encumbrances. The contract also provided the Seller with reasonable time, not exceeding sixty days, within which to cure any title defects, and in that case additional time for closing. In addition, the contract provided the Buyer could waive defects in the title. Specifically, it provided:

Should seller be unable to carry out this agreement by reason of a valid legal defect in title which Buyer is unwilling to waive, all money paid hereunder shall be returned to Buyer forthwith, and this contract shall be void.

This real estate transaction was scheduled to close on or before March 31, 1986.

On March 27, 1986, a meeting was held with the parties' attorney, Robert Ross, who was then representing both the Onsagers and Anderson. At this time Anderson learned that the property was encumbered with two judgment liens in excess of the purchase price, and the First National Bank of Sturgeon Bay was unwilling to release its junior lien. The Onsagers owed approximately $106,000 to the Federal Land Bank, the senior lien holder. They owed approximately $90,000 to the First National Bank of Sturgeon Bay, which had a junior lien on one of the land parcels and on the Onsagers' farm machinery and personal property.

The parties disagree about what occurred at the meeting on March 27, 1986. Present at the meeting were: Attorney Ross, Anderson, Anderson's agent, Carlton Quam, and Onsager's listing agent, Gordon Schumacher. The Onsagers were not there. It was Quam's understanding that, as soon as the release of the liens could be obtained, the parties would close. Anderson testified that either Attorney Ross or Quam was to call him as soon as they were ready to close.

He also stated that Eugene Ackatz, President of First National Bank of Sturgeon Bay, informed Attorney Johnson, who also represented him, that the Bank would be willing to release its lien for $20,000 to $23,000. As soon as Anderson found out about the amount required to release the lien, he offered to pay that amount to discharge it, without recourse. Attorney Ross testified that there was no agreement, to his knowledge, to extend the closing past March 31, 1986.

While Anderson, assuming that the closing would occur at a later date, waited for the Onsagers to make arrangements to clear the title, the Onsagers sold the property to a third party. On March 31, 1986, Gerald and Betty Graf offered to purchase the two parcels for $140,000. The Onsagers accepted this offer on April 4, 1986, and the transaction was scheduled to close on April 24, 1986. On the contract form, the Grafs wrote: "Buyer knows that there is an offer ahead of theirs."

Anderson testified that, on or about April 13, 1986, he offered to purchase the property for $140,000, so the Onsagers would have the $20,000 they needed to release the Bank's lien. On April 21, 1986, Anderson filed a complaint, naming only the Onsagers as defendants, and seeking that the court order the Onsagers to specifically perform the contract by conveying the property. On April 22, 1986, Anderson filed a lis pendens pursuant to sec. 840.10, Stats.

The transaction between the Onsagers and the Grafs did not close as scheduled on April 24, 1986. On April 26, 1986, Anderson submitted an amended written offer to purchase the Onsager farm for $120,000 plus $20,000 without recourse, to secure the release of First National Bank's judgment lien on the property.

On April 30, 1986, the Grafs made another offer to purchase the property, this time for $160,000. This transaction closed on May 2, 1986, and the property was conveyed to the Grafs. The Federal Land Bank received a pay-out of $106,249.93 for its judgment on the property. The First National Bank of Sturgeon Bay received $20,264.27 for its judgment. In addition, $20,000 was placed in escrow for the First National Bank, pending the outcome of the action commenced by Anderson.

On November 19, 1986, Anderson amended his complaint against the Onsagers by adding the Grafs and First National Bank of Sturgeon Bay as defendants. On March 2, 1987, trial to the court was held in Door county, James T. Bayorgeon, Circuit Judge for Outagamie county, presiding. Judge Bayorgeon found that Anderson was at all times ready, willing, and able to comply with his obligation to pay the purchase money. Because the lis pendens was filed, the court found that the Grafs could not be considered "innocent purchaser[s] or good faith purchaser[s] with respect to the rights of Mr. Anderson."

Judge Bayorgeon issued a written decision on August 18, 1987, which denied plaintiff's request for specific performance. He concluded that there was a valid contract between the Onsagers and Anderson and that the Onsagers breached that contract by failing to deliver clear title. The court concluded, however, that specific performance would be inappropriate because money damages were adequate and because of the inequity to the Grafs and to the First National Bank of Sturgeon Bay. Viewing the transaction from the time of the breach, on March 27, 1986, the court concluded that the Onsagers could not deliver clear title to Anderson, and, therefore, it was impossible for them to convey the property. Furthermore, the court concluded that it did not have the authority to require the First National Bank of Sturgeon Bay or the Federal Land Bank to in any manner compromise their loans. The court concluded that, although the Grafs knew that there was a contract for the sale of the property between Anderson and the Onsagers, they also knew that Anderson's offer was insufficient to effect a release of the First National Bank of Sturgeon Bay's judgment liens. Therefore, the court concluded that the Grafs were not in any way attempting to subvert Anderson's rights. The court concluded that a total of $160,000 was the required amount to release the liens, and that amount was offered only by the Grafs. From this the court concluded that this resulted in a pecuniary loss to Anderson of $40,000 ($160,000 - $120,000 = $40,000). The court concluded that "[e]quity will not decree the impossible." Judgment was entered on August 16, 1988, ordering the Onsagers to pay Anderson $40,000. Anderson appealed.

In its unpublished, per curiam decision, the court of appeals affirmed the trial court's decision. The court stated that specific performance is an equitable remedy, addressed to the sound and exclusive discretion of the trial court. Kimball v. Swanson, 47 Wis.2d 472, 481, 177 N.W.2d 375 (1970). The court of appeals concluded that the trial court did not abuse its discretion in determining not to grant specific performance in this case. The court cited James L. Callan, Inc. v. Estfred Corp., 21 Wis.2d 1, 7, 123 N.W.2d 446, 449 (1963), for the proposition that specific performance will not be granted against a seller whose failure to acquire the title he agreed to convey makes his performance impossible. The court of appeals agreed with the trial court that it would have been impossible for the Onsagers to deliver clear title under the terms of Anderson's offer of $120,000 because the Bank would not release its lien under those terms. The court rejected Anderson's argument that his subsequent offer to pay the Bank $20,000 cured the impossibility, because that offer was never accepted by the Onsagers and therefore did not ripen into an enforceable contract. Anderson petitioned this court for review of the court of appeals decision.

The first issue before the court is to determine the scope of a trial court's discretion in awarding specific performance of a contract for the sale of real estate. Anderson asserts that,...