Blackmore v. Honnas, 2

• Decision Date: 10 February 1984
• Docket Number: CA-CIV,No. 2,2
• Citation: 141 Ariz. 354,687 P.2d 362
• Parties: James C. BLACKMORE, Plaintiff/Appellant, v. Cecil HONNAS and Lottie L. Honnas, husband and wife; Lottie L. Honnas, as Personal Representative of the Estate of Cecil Honnas, deceased, Defendants/Appellees. 4911.
• Court: Arizona Court of Appeals

Page 362

687 P.2d 362

141 Ariz. 354

James C. BLACKMORE, Plaintiff/Appellant, v. Cecil HONNAS and Lottie L. Honnas, husband and wife; Lottie L. Honnas, as Personal Representative of the Estate of Cecil Honnas, deceased, Defendants/Appellees.

No. 2 CA-CIV 4911.

Court of Appeals of Arizona,

Division 2.

Feb. 10, 1984.

Rehearing Denied May 9, 1984.

Review Denied Sept. 20, 1984.

Michael J. Vingelli, Tucson, for plaintiff/appellant.

Robert C. Stubbs & Associates, P.C. by G. Lawrence Schubart and Trudy Kapley, Tucson, for defendants/appellees.

OPINION

HOWARD, Judge.

This is an action for specific performance and is another case involving a form deposit and receipt agreement that is being used by real estate brokers in the Tucson area. As in O'Hare v. Griesmer, 132 Ariz. 30, 643 P.2d 733 (App.1982) this case demonstrates the lack of awareness on the part of some escrows, real estate brokers and lawyers as to the content and implications of this agreement. But first, the facts.

Appellees listed two parcels of land for sale with Strout Realty, Inc., on two separate listing agreements. The purchase price for the first parcel was $105,000 with a 29% downpayment, payable over ten years at 10% interest per annum. The selling price on the other parcel was $111,000 payable upon the same terms as the first parcel. Both listing agreements contained language which appellant knew meant there could not be any pre-payments of principal or interest.

Appellant offered, by means of two deposit and receipt agreements, to buy both parcels according to the terms of the listing. Appellees accepted the offers and an escrow was opened.

Both deposit and receipt agreements contained the O'Hare provision for cancellation of the agreement:

"... If either party elects to cancel this agreement because of the failure of the other party to comply with all the terms and conditions of this agreement, the party so electing shall, after expiration of the time periods as provided in A.R.S. § 33-741, from date provided herein for closing, instruct escrow agent to cause to be delivered to the other party a written demand for compliance within ten days from time of receipt of said demand or ten days from the date said demand was deposited in United States mail.... However, this agreement may be enforced by specific performance or other appropriate remedy."

The agreement had a "time is of the essence" clause and provided that the closing was to be as soon as possible, but not later than July 30, 1979.

On May 15, 1979, the escrow sent a letter to appellees notifying them that appellant was in a position to close the escrow and requested appellees to call and make an appointment for a May 18, 1979, closing. After getting no response from appellees, the escrow sent a letter to appellees' attorney stating that appellant was ready, willing and able to close and demanded an immediate closing. The attorney did not respond to the escrow.

On July 27 the escrow sent a letter to appellees and their attorney stating that the closing date was July 30, 1979, and requested that an appointment be made for signing the closing papers. Also enclosed with this letter was a copy of a letter sent to the escrow by the real estate broker who apparently prepared the document involved in this transaction. The letter stated:

" * * *

This letter is to advise and confirm with you that the buyers have done, performed and signed all documents necessary to close the subject transaction. You have advised us that the sellers have ignored your requests for them to close; and, been advised verbally by their attorney that they are not willing and do not plan on closing. For this reason the buyers have not placed their funds into the escrow account as it would just cause a loss of interest earnings to have their funds just sitting idly in the escrow account.

However, the buyers are advising that they stand ready to deliver all of the funds into your escrow within 24 hours notice to them that the sellers have signed all of the documents and closed.

Please advise the sellers of the above facts. Thank You."

Appellees did not go to the closing which resulted in the broker sending, on July 31, 1979, the following letter:

" * * *

I am advising you that in accordance with instruction to me from the buyers in the subject escrow, that they, the buyers, hereby make demand that the sellers close the purchase/sale transaction immediately, in accordance with the terms and conditions of that certain Deposit Receipt and Agreement dated January 30th, 1979.

Also, to advise the sellers that since the sellers did not close the sale/purchase as scheduled and agreed; then, the buyers hereby declare the sellers in default. Under Arizona Law (ARS-33-741) there is allowed a thirty (30) day grace period, after which the buyers may declare a forfeiture of the Contract, and pursue all remedies allowed under the law, which may include court order 'strict performance' as well as 'damages'.

The buyers hereby reinstate 'time is of the Essence'. Thank You."

Although appellant signed all the documents necessary for closing the sale, the promissory notes that he signed for the balance of the purchase price on both parcels were not in accordance with the deposit and receipt agreements because the notes signed would have allowed appellant to pre-pay any installments of principal and interest. Appellees discussed the closing documents with their lawyer some time around the first...