Baker v. Tucker

• Decision Date: 19 January 1980
• Docket Number: No. 50137,50137
• Citation: 227 Kan. 86,605 P.2d 114
• Parties: David W. BAKER and Patricia K. Baker, Appellants, v. David L. TUCKER and Tucker Enterprises, a Kansas Corporation, Appellees.
• Court: Kansas Supreme Court

Page 114

605 P.2d 114

227 Kan. 86

David W. BAKER and Patricia K. Baker, Appellants, v. David L. TUCKER and Tucker Enterprises, a Kansas Corporation, Appellees.

No. 50137.

Supreme Court of Kansas.

Jan. 19, 1980.

Syllabus by the Court

In an appeal by the plaintiffs in an action for a rescission of a contract for the purchase of real property and the construction of a home thereon in which the trial court sustained defendants' motion to dismiss at the end of plaintiffs' evidence, the record is examined and it is Held : Based upon the unusual facts in this proceeding the trial court erred in dismissing the action and the case is remanded for further proceedings as more fully set forth in the opinion.

B. L. Pringle, Topeka, argued the cause and was on the brief for appellants.

Leonard W. McAnarney, Lyndon, argued the cause and was on the brief for appellees.

MILLER, Justice:

This is an appeal by plaintiffs, David W. Baker and Patricia K. Baker, from an order of the trial court which sustained the motion of the defendants, David L. Tucker and Tucker Enterprises, a corporation, to dismiss at the conclusion of plaintiffs' evidence. Plaintiffs also appeal from an earlier order of the court denying the parties a jury trial. There is some dispute whether David L. Tucker was a proper party defendant but that issue having never been reached by the trial court is not an issue before this court. We will refer to the appellees as defendants, or collectively as Tucker.

On August 1, 1976, plaintiffs entered into a contract with Tucker for the purchase from Tucker of certain lots in Carbondale and for Tucker to construct a dwelling house upon the lots. The construction contract provided, among other things, that plaintiffs could request changes in the plans and specifications as construction progressed, plaintiffs would provide certain fixtures and furnishings for the house and plaintiffs would do their own interior painting and decorating. The contract further provided time was of the essence and the completion and closing dates were January 1, 1977. Construction began and in December, 1976, it became apparent the construction would not be completed by January 1st. The parties then entered into a written modification of the contract whereby the date of completion was extended to January 12, 1977, and the date of possession and closing to February 20, 1977. The modification agreement also provided for liquidated penalty damages of $100.00 per day for each day the house remained uncompleted after January 12, 1977. On January 15, 1977, plaintiffs informed defendants of items not completed. Again on February 21, 1977, plaintiffs advised defendants of items not completed. On March 2, 1977, plaintiffs filed suit praying for rescission of the contract, damages and penalty money. Tucker answered alleging the delay, if any, was caused by acts of the plaintiffs; the delay, if any, was caused by conditions beyond the control of Tucker, and that Tucker had performed under the terms of the contract. Tucker counterclaimed seeking $55,000.00 damages plus future damages which might accrue. While it is not clear from the proceedings, it also appears from the answer and counterclaim that defendants originally sought specific performance of the contract with plaintiffs. Plaintiffs filed an answer to the counterclaim and subsequently filed an amended petition in which they sought rescission, special damages of $6,385.70, damages under the penalty clause of the contract modification in the amount of $4,700.00 and $7,000.00 additional damages as the increased cost, due to inflation, of purchasing a comparable house. No answer was ever filed to the first amended petition.

The trial court file next discloses that a pretrial order was filed April 11, 1978, referring to a pretrial conference apparently held July 11, 1977. The order was signed by counsel for the plaintiffs and the judge but not by counsel for defendants. On the same date, April 11, 1978, counsel for defendants filed an objection to the proposed pretrial order. On April 15, 1978, an order was filed which purports to cover a pretrial conference held April 11, 1978. This order was not signed by anyone. Defendants' original answer and counterclaim demanded a trial by jury, and plaintiffs assert that at the first pretrial conference they also requested a jury trial.

In December, 1977, the defendants sold the house and lots, which were the center of controversy, to third parties for a sum which plaintiffs assert was greater than the original amount contracted for by the parties. At the time of trial and at the time of filing the various pretrial orders, the court as well as the parties knew the property had been sold. With the record and pleadings in this rather confused state, the matter finally came before the court for trial on April 17, 1978. Defendants insisted plaintiffs must elect whether they were seeking rescission or damages and asserted they could not recover both. Plaintiffs indicated they were proceeding upon rescission but that if rescission was not granted, they wanted their damages. The court, after extensive argument and discussion of the various pleadings and pretrial proceedings, determined that the action was one for rescission; that it would not allow a jury; and that it would bifurcate the trial and proceed to hear evidence only on the grounds for rescission. If rescission was granted, it would then take up the evidence relating to the restoration of the status quo.

Plaintiffs asserted three principal breaches by defendants which they contend were material and substantial enough to warrant rescission: (1) the living room bay window did not run all the way to the floor as required by the plans; (2) the upstairs hallway was 3 inches too narrow; and (3) the general delay in completion of construction. Testimony revealed plaintiffs had been aware of the defects in the bay window and upstairs hall since early in the construction phase and testified on cross-examination that their real complaint was the delay in getting the house finished. Plaintiffs attempted to introduce the testimony of the new owners of the subject property to show the property had been sold by the defendants on December 6, 1977, for a sum in excess of the amount in the contract between plaintiffs and defendants. Counsel for Tucker stipulated the property had been sold and objected to any further evidence about the sale. The objection was sustained. At the close of plaintiffs' evidence, the defendants moved for a dismissal. The court granted the motion and dismissed plaintiffs' action for the reason they had not proved a material breach by defendants which would justify rescission. Defendants then dismissed their counterclaim without prejudice. Plaintiffs appeal.

In its ruling the trial court found there had been substantial compliance with the terms of the contract by defendants; there was no material breach of the contract by defendants; defendants were ready, willing and able to complete the construction in February, 1977; plaintiffs, by the modification of the contract, had an adequate remedy at law for the delay in finishing construction; and plaintiffs failed to present evidence warranting rescission. No comments, findings or conclusions were made respecting the sale of the property by the defendants during litigation.

In the recent case of Whiteley v. O'Dell, 219 Kan. 314, 548 P.2d 798 (1976), the late Justice Owsley set forth some basic principles which are relevant to actions for rescission of building contracts.

"It is not every breach which gives rise to the right to rescind a contract. In order to warrant rescission of a contract the breach must be material and the failure to perform so substantial as to defeat the object of the parties in making the agreement." p. 316, 548 P.2d p. 801. "(In an action based upon equitable principles) it was within the inherent equitable power of the court to grant relief which would achieve justice and equity." p. 318, 548 P.2d p. 802.

"Rescission operates to extinguish the contract so that for all intents and purposes it never existed. It is generally held that a lawful rescission of a contract prevents recovery of damages for the breach." pp. 318-319, 548 P.2d p. 802.

"As a general rule, upon rescission of a contract the parties must be placed in substantially the same condition as when the contract was executed." p. 319, 548 P.2d p. 802.

Before proceeding further we pause to note that the cases and authorities have frequently confused the terms rescission, repudiation and restitution and many times have used them interchangeably. See Williston on Contracts, Third Edition Section 1454A, Et seq. We do not deem it necessary nor advisable to attempt to clarify this confusion in this opinion.

We will now turn to the specific points asserted by plaintiffs in this appeal.

Plaintiffs' first point on appeal is that the trial court committed error in refusing to grant the parties a jury trial. All parties appear to...