Barnett v. Oliver
| Decision Date | 20 August 1993 |
| Docket Number | 68808,Nos. 68468,s. 68468 |
| Citation | 858 P.2d 1228,18 Kan.App.2d 672 |
| Parties | Vernon BARNETT and Mildred Barnett, Plaintiffs-Appellees, v. James E. OLIVER and Molly J. Oliver, Defendants, and Matthew H. Hamill and Erma J. Hamill, Defendants-Appellants. |
| Court | Kansas Court of Appeals |
Gregory M. Dennis, of Perry & Hamill, Overland Park, for defendants-appellants.
Douglas C. Spencer, of Spencer & Spencer, P.A., Oakley, for plaintiffs-appellees.
Syllabus by the Court
1. An acceleration clause is a provision or clause in a mortgage, note, bond, deed of trust, or other credit agreement which allows a lender the opportunity to call monies due under the instrument. Such a clause operates where there has been a default such as nonpayment of principal, interest, or insurance premiums.
2. When the purchaser under a land installment sales contract has defaulted, the vendor has the right to be made whole--to be placed in the position that he or she would have been had the purchaser fully performed.
3. In the case of a bilateral contract for the sale of goods or land, or for the rendition of service, an anticipatory repudiation by the buyer or employer not only makes tender of performance by the seller or employee unnecessary, but also enables him or her to maintain an action at once. The fact that it is a duty to pay money in the future that the defendant has repudiated does not prevent his or her repudiation from being an anticipatory breach, for which an action lies at once.
4. In Kansas, an action to foreclose a land installment sales contract is an equitable proceeding.
5. The rule is well recognized that equity will give whatever relief the facts warrant. The distinguishing feature of equity jurisdiction is that it possesses full power to apply settled rules to unusual conditions and to mold its decree so as to do equity between the parties.
6. When a party bound by an executory contract repudiates his or her obligation before the time of performance, the promisee has an option to treat the contract as ended so far as further performance is concerned and to maintain an action at once for the damages occasioned by such anticipatory breach. The rule is the same whether the contract has been wholly or partially executed.
7. The general rule is that if one party to a contract declares in advance that he or she will not perform under a contract, the other party may bring an immediate action for total breach of the contract.
8. If a land installment sales contract is terminated by equitable foreclosure and the foreclosure sale produces an amount less than the amount of the obligation plus costs and expenses, the vendor is entitled to a deficiency judgment against the purchaser, which is the difference between the sale price and the total amount of the obligation, costs, and expenses. The purchaser may recover the residual value of the equity in the property only when a foreclosure sale results in a surplus.
9. Ordinarily, a purchaser in default on a land installment sales contract cannot recover the value of improvements placed on the land while the purchaser was in possession.
10. An "improvement" on real property is defined as that by which the value of anything is increased, its excellence enhanced, or the like, or an amelioration of the condition of property effected by the expenditure of labor or money for the purpose of rendering it useful for other purposes than those for which it was originally used or more useful for the same purposes. A building is normally considered to be an improvement upon the land of its situs.
11. A trial court may exercise its discretion to refuse to confirm a foreclosure sale if it finds the bid is substantially inadequate. However, mere inadequacy of the foreclosure sale price will not invalidate a sale, absent fraud, unfairness, or other irregularity. The burden of proof to show the sale should be set aside is on the complaining party.
Before LARSON, P.J., ROYSE, J., and HERBERT W. WALTON, District Judge Retired, assigned.
This case involves two consolidated appeals in an action to foreclose a land installment sales contract.
On October 29, 1985, Vernon and Mildred Barnett contracted to sell a lot and improvements in Colby, Kansas, to Matthew and Erma Hamill and James and Molly Oliver. The Olivers subsequently have been discharged in bankruptcy and are not parties to these appeals. All further references to the buyers will be made only to the Hamills.
The purchase price was $65,000. The Hamills paid a $1,000 earnest money deposit and an additional down payment of $5,500, leaving a balance due of $58,500. The remaining balance together with interest at the rate of 10% per annum was financed by the Barnetts. The Hamills were to pay monthly installments in the amount of $531.59 for 120 months, then a balloon payment of $49,999.95 on or before November 1, 1995.
The installment contract included the following provision, known as a forfeiture clause:
The deed was delivered to an escrow agent, who was to receive the payments under the contract and deliver the deed to the Hamills upon their full performance.
Between November of 1985 and March of 1991, the Hamills made 64 installment payments of $531.59 each. On April 7, 1991, the Hamills told the Barnetts of their intent to terminate the contract and return the property effective May 1, 1991.
The Hamills made no further payments, and in July of 1991 the Barnetts filed an action to foreclose the contract. The Barnetts requested an in personam judgment against the Hamills in the amount of $54,791.98 plus interest.
The Hamills counterclaimed for damages, alleging that at the time of sale the Barnetts had misrepresented the condition of a roof on the building located on the property. The Hamills argued that the term "improvements" used in the following contract disclaimer clause did not include the building situated on the real estate and did not operate to preclude their misrepresentation claim:
The Hamills further contended that because the Barnetts had elected to foreclose, the Hamills were entitled to a setoff for all monies paid under the contract and for the value of improvements they made to the property. They also claimed the contract did not provide for an acceleration of the entire indebtedness, limiting the judgment to only the installments not paid by the time of trial.
The court ruled at pretrial that the term "improvements" in the disclaimer clause included the building located on the real estate, barring the Hamills' misrepresentation claim.
Following trial, the trial court ordered an in personam judgment against the Hamills for $54,791.98 plus interest and an in rem judgment against the property. The trial court ordered the installment contract foreclosed as an equitable mortgage and ordered the property sold unless the judgment was paid within 10 days. The trial court's order provided for a six-month period in which the Hamills could redeem the property by paying the amount of the judgment, interest, and other expenses.
The property was subsequently sold at a foreclosure sale to the Barnetts, who bid $24,000. The Hamills objected to confirmation of the sale, contending that because the parties had stipulated prior to trial that the property was worth at least $30,000, the Barnetts' bid was inadequate.
The trial court examined the sale proceedings, found the sale was made for adequate consideration, determined the sale conformed to law in all respects, and confirmed the sale.
The Hamills timely appeal from the judgment foreclosing the contract and from the confirmation of the sale. They contend (1) the trial court erred by entering an in personam judgment against them for the entire balance due under the contract; (2) they were entitled to a setoff for payments of purchase money made under the contract and for the cost of improvements they made to the premises; (3) the term "improvements" in the disclaimer clause of the contract did not include a building located on the real estate; and (4) the trial court erred by confirming the sheriff's sale upon the bid of $24,000 by the Barnetts when the parties had previously stipulated the property was worth at least $30,000. We affirm.
Did the trial court err by entering an in personam judgment against the Hamills for the entire balance due under the contract?
The Barnetts rely on Nelson v. Robinson, 184 Kan. 340, 336 P.2d 415 (1959), as support for the trial court's decision to enter an in personam judgment against the Hamills for the entire balance due under the contract in the absence of an acceleration clause. The Barnetts argue the trial court properly exercised its equity powers, that time was...
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