Beitelspacher v. Winther, s. 16388

• Decision Date: 18 October 1989
• Docket Number: 16389,Nos. 16388,s. 16388
• Parties: Reuben O. BEITELSPACHER and Ruth Beitelspacher, a/k/a Ruth Nelson Beitelspacher, Plaintiffs and Appellants, v. Elden L. WINTHER and Antoinette M. Winther, Defendants and Appellees.
• Court: South Dakota Supreme Court

Page 347

447 N.W.2d 347

Reuben O. BEITELSPACHER and Ruth Beitelspacher, a/k/a Ruth

Nelson Beitelspacher, Plaintiffs and Appellants, v. Elden L. WINTHER and Antoinette M. Winther, Defendants and Appellees.

Nos. 16388, 16389.

Supreme Court of South Dakota.

Argued May 23, 1989.

Decided Oct. 18, 1989.

Carlyle E. Richards, P.C., Aberdeen, for plaintiffs and appellants.

Mark A. Moreno of Schmidt, Schroyer, Colwill and Barnett, P.C., Pierre, for defendant and appellee, Antoinette M. Winther.

Thomas M. Tobin of Tonner, Tobin and King, Aberdeen, for defendant and appellee, Elden L. Winther.

HENDERSON, Justice.

CASE SUMMARY

We affirm the trial court's decision on a contract for deed foreclosure, with the exception of a double counting of improvements made by the Buyers which wrongly skews the balancing of equities. Thus, we affirm in part and reverse and remand in part.

PROCEDURAL HISTORY/ISSUES

Plaintiffs/appellants Reuben O. Beitelspacher and Ruth Beitelspacher (Sellers) initiated an action to foreclose on a 1977 contract for deed in the circuit court for Brown County after defendants/appellees Elden L. Winther and Antoinette Winther (Buyers) failed to make a final $123,585 balloon payment. After a non-jury trial, judgment was entered foreclosing Buyers' rights under the contract for deed, subject to Sellers' payment of $35,126.84 to Elden Winther. This sum represented an adjustment of the equities between the parties under SDCL 21-50-2 and per this Court's unanimous decision in Dow v. Noble, 380 N.W.2d 359 (S.D.1986).

Sellers contend, in their Notice of Appeal No. 16388, that the trial court erred in four regards:

1. The equitable adjustment formula of Dow v. Noble is inconsistent with SDCL Ch. 21-50;

2. Dow v. Noble should not be given retrospective application;

3. If the Dow v. Noble formula applies, the trial court did not properly implement it (Sellers created six separate sub-issues on this point which are treated below); and,

4. A default judgment initially entered against Antoinette Winther should not have been set aside under SDCL 15-6-60(b) (this is essentially a red herring, but, having been raised, it is treated below).

Buyers assert, by Notice of Review, No. 16389, that the trial court erred in four aspects concerning adjustment of the equities between these parties:

1. A WEB easement penalty was improperly assessed as a detriment to the property;

2. Excessive attorney's fees were awarded to Sellers, as the trial court failed to determine what portion of Seller's claimed fees were reasonable;

3. Interest on the value of the payments made to Sellers should have been considered in balancing the equities; and,

4. Increases in "ASCS crop bases" should have been included in the equitable balancing process as they were a benefit to the property.

FACTS

On September 30, 1977, Sellers and Buyers signed a contract for deed on Sellers' farm, which comprised 433 acres of pasture, 177 acres of cropland, and a 16-acre building site. The contract called for, inter alia, a total purchase price of $294,400, with $8,000 to be paid up front, and $77,376 due by October 16, 1977. These payments were made by Buyers. The remaining unpaid principal balance ($209,024) plus interest was to be paid in annual installments of $10,451.20 plus interest. A final balloon payment of $123,585.44 was due on November 1, 1987. The Buyers did not make their balloon payment, as Elden Winther, one of the Buyers, tried to secure financing, but failed.

The Buyers, who were married to each other at the time they entered the contract for deed, became embroiled in a divorce action. In 1987, Antoinette Winther sought a divorce in the Circuit Court for Brown County, and was granted a judgment and decree of divorce dated February 2, 1988. Interestingly, the Buyers' trial in the divorce action was held on October 27, 1987, only five days before the final balloon payment on the contract for deed was due. The divorce decree directed Antoinette to deed her interest in the real property, subject to the contract for deed, to Elden, who was to assume all indebtedness related to such property.

Meanwhile, on January 5, 1988, as Buyers had missed their balloon payment, the Sellers initiated this foreclosure action. Although Antoinette had signed the contract for deed, she was directed by the divorce decree to transfer her interest, via quit claim deed, to Elden. She was not served with a certificate of readiness for trial, which "must be served" under SDCL 15-6-40(b), although the statute also provides that "[a]ny or all of the requirements of this rule may be dispensed with in any given case by the judge assigned to it." Antoinette did not appear at the trial, and a default judgment was entered against her. Six days after she was served with notice of the default judgment, Antoinette filed a motion, with supporting affidavit, for relief from judgment under SDCL 15-6-60(b). ¹ Her motion was granted by the trial court.

At the trial itself, evidence regarding the fair rental value of the property was contradictory. Although the Sellers, by their notice of appeal, allege that the trial court erred in finding that a fair rental value of the property was $20 per acre, Reuben Beitelspacher testified that such value, for cropland and pasture, was in a $20-$25 range.

The trial court determined that the total benefit to the Sellers was $308,764.16 and Seller's total detriment was $273,637.32. The trial court made an equitable adjustment for the difference in these figures, $35,126.84, which Sellers were to pay to Buyers.

Mathematically, the trial court's equitable adjustment breaks down as follows:

Sellers' Detriment

                 1.  Rent:                                     $ 99,162.11
                 2.  Easement Payment to Buyers:                  $ 300.00
                 3.  Loss of Land Value:                       $147,044.00
                 4.                 Expense of Original Sale:   $ 5,838.00
                 5.  Miscellaneous Expenses in Land Recovery:  $ 21,293.21
                                             TOTAL DETRIMENT:  $273,637.32
                Sellers' Benefits
                 1.  Principal Paid:                           $179,336.80
                 2.  Interest Paid:                            $114,179.36
                 3.  Improvements Made by Buyers:              $ 15,248.00
                                               TOTAL BENEFIT:  $308,764.16
                

Thus, the trial court's finding under the equity adjustment formula of Dow v. Noble was reached by subtracting $273,637.32 from $308,764.16, yielding $35,126.84.

DECISION

A. Seller's Notice of Appeal (No. 16388)

I. Applying Dow v. Noble and SDCL Ch. 21-50 to the facts.

Sellers first argue that rules of statutory construction render Dow v. Noble, 380 N.W.2d 359 (S.D.1986) inconsistent with provisions of SDCL Ch. 21-50. Two particular statutes, SDCL 21-50-2, 21-50-3 are relied upon in Sellers' argument. SDCL 21-50-2 provides, in pertinent part: "The court in such actions shall have the power to equitably adjust the rights of all the parties thereto ..." while SDCL 21-50-3 provides:

Upon the trial of an action under this chapter the court shall have power to and by its judgment shall fix the time within which the party of parties in default must comply with the terms of such contract on his or their part, which time shall be not less than ten days from the rendition of such judgment, and unless the parties against whom such judgment is rendered shall fully comply therewith within the time specified, such judgment shall be and become final without further order of the court, and all rights asserted under the contract shall thereupon be forever barred and foreclosed.

Sellers argue that SDCL 21-50-2 is a general statute, whereas SDCL 21-50-3 is a specific statute which limits the court's authority under SDCL 21-50-2 to fixing the time in which a defaulting party may comply with the terms of the contract. We disagree. SDCL 21-50-2 refers to "rights" which may be adjusted. SDCL 21-50-3 has a narrower reach because it deals with, particularly, only one aspect of the parties' rights--the time to cure default. The law must be so construed as to give effect to all of its provisions, if possible. State v. Heisinger, 252 N.W.2d 899 (S.D.1977); State ex rel. Kriebs v. Halladay, 52 S.D. 497, 501, 219 N.W. 125, 127 (S.D.1928). Sellers' interpretation would reduce SDCL 21-50-2 to a nullity.

Sellers' constricted interpretation of SDCL 21-50-2 is unsound, as reflected in Severson v. Eide, 52 S.D. 20, 25, 216 N.W. 581, 583 (1927), where this Court, interpreting R.C.1919, Sec. 2915, ² the predecessor of SDCL 21-50-2, wrote:

If the situation were reversed and the rents amounted to more than the interest and taxes, we think there can be no doubt that defendants could be relieved from an apparent default by an application of the rents in payment of such interest and taxes, or as the situation is if defendants desired to hold their contract that they could reduce the amount to be paid in redemption by compelling plaintiff to account for and apply such rents to a reduction of the amount due. We can see no reason why plaintiff may not have the same right of set-off in his favor.

It is apparent that, even in 1927, the trial court's authority to adjust equities under Sec. 2915 extended beyond the narrow confines projected by Sellers. R.C.1919 Sec. 2914, the predecessor of SDCL 21-50-3, was not perceived by the Severson court as the outer limit of equitable adjustment.

This Court, in Dow, Heikkila v. Carver, 378 N.W.2d 214 (S.D.1985), and Prentice v. Classen, 355 N.W.2d 352 (S.D.1984), recognized that foreclosure of land contracts can involve unjust enrichment through forfeiture. Earlier cases rejected such arguments by generally holding that there was no forfeiture because the Seller, in such a case, was merely enforcing the contract as agreed. Severson, 52 S.D., at 24, 216 N.W., at 583; Hickman v. Long, 34 S.D. 639, 150 N.W. 298 (1914). This rule was criticized as inequitable by Professor Corbin in 1931, see, Corbin, The Right of a Defaulting Buyer to...