Bakken v. Price

• Decision Date: 11 July 1980
• Docket Number: Nos. 5201,5202,s. 5201
• Citation: 613 P.2d 1222
• Parties: Oliver BAKKEN and Geneva Bakken, Appellants (Defendants), v. Donald G. PRICE and G. Roger Sedam, d/b/a the One Eighty-five Development Company, a Joint Venture, Appellees (Plaintiffs). Donald G. PRICE and G. Roger Sedam, d/b/a the One Eighty-five Development Company, a Joint Venture, Appellants (Plaintiffs), v. Oliver BAKKEN and Geneva Bakken, Appellees (Defendants).
• Court: Wyoming Supreme Court

Page 1222

613 P.2d 1222

Oliver BAKKEN and Geneva Bakken, Appellants (Defendants), v. Donald G. PRICE and G. Roger Sedam, d/b/a the One Eighty-five Development Company, a Joint Venture, Appellees (Plaintiffs).

Donald G. PRICE and G. Roger Sedam, d/b/a the One Eighty-five Development Company, a Joint Venture, Appellants (Plaintiffs), v. Oliver BAKKEN and Geneva Bakken, Appellees (Defendants).

Nos. 5201, 5202.

Supreme Court of Wyoming.

July 11, 1980.

John O. Housel, Housel & Housel, Cody, for appellants in No. 5201 and appellees in No. 5202.

L. B. Cozzens, Simpson, Kepler & Cozzens, Cody, for appellees in No. 5201 and appellants in No. 5202.

Before RAPER, C. J., and McCLINTOCK, THOMAS, ROSE and ROONEY, JJ.

ROSE, Justice.

These consolidated appeals have as their origin an action brought by Donald G. Price and G. Roger Sedam, buyers, against Oliver and Geneva Bakken, sellers, to rescind a contract of sale and recover the down payment for the purchase of real property in Park County. Sellers counterclaimed seeking either to recover on a promissory note for the balance of the purchase price and to foreclose a mortgage given as security therefor, or to regain title to the property and retain the down payment as liquidated damages. Both parties moved for summary judgment and, consistent with the prayer of the purchasers, the summary judgment rescinded the contract and awarded the buyers the $6,000.00 paid on the purchase price, with interest from and after July 1, 1977 the date of delivery of the deed, note and mortgage and payment of $5,000.00 of the aforesaid purchase-price money. Allowance of costs, including attorney fees incurred in the litigation, was denied. Sellers appeal from the money judgment against them and the refusal of the court to enforce the note and mortgage. Buyers cross-appeal from the denial of the costs.

We will reverse and remand.

THE ISSUE

The main question raised by these appeals has to do with the rights of the buyers, after they had received a warranty deed to the property and had delivered their note and mortgage to the sellers, to rescind the contract because a title insurance policy, although bargained for, could not be issued showing title in them since the recording of the deed was refused by the county clerk.

FACTS

With the execution of a document entitled "Purchase Agreement Acceptance and Receipt" (sometimes referred to herein as the contract for sale), the purchasers agreed to buy and the sellers agreed to sell land in Park County, Wyoming, for $66,000.00. $1,000.00 was to be and was paid upon the execution of the agreement on May 31, 1977, and $5,000.00 was paid on July 1, 1977. A note and mortgage served as evidence of and security for the balance.

On this last-mentioned day, the promissory note and the mortgage were delivered to the sellers, and a warranty deed showing sellers as grantors and purchasers as grantees was delivered to the buyers. Delivery of these three instruments was made after the time called for in the contract for issuing a title policy showing merchantable fee title in the sellers and the issuing of a title insurance commitment to provide a policy of title insurance insuring title in the buyers. In June of 1978, buyers attempted but were unable to record the warranty deed.

On August 23, 1978, the Park County Clerk informed buyers that the warranty deed could not be recorded until the land was subdivided and a plat recorded according to the requirements of the Park County Assessor. The reason for this refusal was that the land "had already been subdivided the maximum number of times." (Affidavit of County Clerk Phyllis Smith Saggoner, attached to plaintiff's motion for summary judgment.)

Purchase Agreement Acceptance and Receipt

Relevant provisions of the Purchase Agreement Acceptance and Receipt, i. e., the contract for sale, entered into by the parties hereto on the 31st day of May, 1977, are the following:

1. Paragraph 8 of the aforesaid agreement provides in relevant part:

"Promptly after SELLER'S acceptance of this offer, SELLER shall, at SELLER'S expense, . . . furnish BUYER a Title Insurance Policy in the full amount of the purchase price of the real property in a Title Insurance Company authorized to do business in the State of Wyoming, reflecting merchantable fee title in SELLER, . . . subject only to . . . (e) zoning or building laws or ordinances if any. . . ." (Emphasis supplied.)

2. Paragraph 10 of the agreement provides:

"If a Title Insurance Policy is furnished by the SELLER, the SELLER shall also within 15 days after acceptance of this offer, furnish the BUYER with a written Commitment from the Title Insurance Company evidencing its willingness to issue the required Title Insurance Policy upon completion of sale, . . ." (Emphasis supplied.)

3. The parties further agreed in Paragraph 11:

"SELLER agrees to execute and deliver all necessary instruments and transfer title by General Warranty Deed." The Title Insurance Commitment

The Purchase Agreement Acceptance and Receipt having been entered into on the 31st of May, 1977, the record shows that a title insurance policy commitment, dated May 23, 1977, had been previously ordered. This commitment (delivered to buyers shortly after they delivered their note and mortgage to sellers on July 1, 1977, according to Sedam's deposition), obligated the title insurance company to insure the property in fee title in Donald G. Price and G. Roger Sedam under certain conditions. The commitment was predicated upon these essential propositions:

The commitment's Paragraph 2 provided:

"The estate or interest in the land described or referred to in this commitment and covered herein is fee simple."

Paragraph 3 said:

"Title to said estate or interest in said land is at the effective date hereof vested in Oliver Bakken and Geneva Bakken."

One of the "requirements" defined by the commitment as necessary to create a fee simple estate in the property in the proposed insureds, Donald G. Price and G. Roger Sedam, was the following:

"Instruments necessary to create the estate or interest to the insured must be properly executed, delivered and duly filed for record." (Emphasis supplied.)

In plain English these various provisions contained in the contract of sale and the title insurance commitment impose the following rights, duties and obligations upon the parties:

The Bakkens' Obligations:

When the Bakkens signed the Purchase Agreement Acceptance and Receipt on May 31, 1977 (thereby accepting Price's and Sedam's offer to buy the land for $66,000.00), it became their obligation to:

1. Deliver to Price and Sedam a warranty deed showing Bakkens as grantors and Price and Sedam as grantees. This was done on July 1, 1977.

2. Provide buyers, Price and Sedam, with a title insurance policy showing "merchantable fee title" in Bakkens, the sellers, subject to ". . . zoning and building laws, if any. . . ." This obligation was to be discharged "promptly after sellers' acceptance of this offer." (Contract language). The "acceptance" date was May 31, 1977. The sellers did not furnish the buyers such a policy by May 31, 1977, or at any subsequent time.

3. Since title insurance was utilized (as opposed to an abstract), the Bakkens were also obliged, in addition to their duty to furnish buyers a policy showing "merchantable fee title in the sellers," to furnish Price and Sedam with a commitment from the title company within 15 days after signing the Purchase Agreement Acceptance and Receipt. ¹ This commitment was to provide that the title insurance company would agree to issue a title policy which would insure title in fee simple in Price and Sedam when the sale was completed. ² One of the commitment provisions was that the instrument necessary to create a fee simple estate in the buyers (a warranty deed) would be filed of record.

The commitment, which predated the contract for sale, but which was delivered July 1, 1977, was issued by the title company, but its provisions with respect to issuing a policy showing title in Price and Sedam was incapable of fulfillment because of the non-recordability of the deed. That is to say when the deed was presented, the county clerk refused to record it. Therefore, the contract provisions requiring Bakkens to furnish a title insurance policy showing "merchantable title in SELLER," as well as the provision requiring the Bakkens to furnish a commitment evidencing the title insurance company's willingness to issue its policy showing title in the buyers, Price and Sedam, was incapable of fulfillment by the Bakkens because the deed could not be recorded.

Price's and Sedam's Obligations:

It was under the agreement to buy and sell the purchasers', Price's and Sedam's, obligation to deliver the note and mortgage and to thereafter make the payments. The note and mortgage were delivered on July 1, 1977, but the payments provided for therein were never made because Price and Sedam undertook a rescission of the contract when they found the warranty deed could not be recorded.

In essence, then, the sellers are forced into the position of contending that the executory contract of sale did not obligate them to deliver a recordable deed only a warranty deed warranting the title in the grantors and, as between grantors and grantees, conveying fee title to the grantees. This obligation say the sellers was fulfilled.

The purchasers on the other hand urge that it was the sellers' obligation to furnish not just a warranty deed but also a title insurance policy showing merchantable title in the sellers, subject only to contract exceptions. Purchasers also contend that the sellers were to furnish a title insurance commitment to later issue a policy showing fee title in the buyers. These obligations contend the buyers were not discharged by the sellers and therefore the contract should be rescinded and their moneys returned. The buyers were successful in urging this position before the...