Blinzler v. Andrews, 10591

• Citation: 94 Idaho 215,485 P.2d 957
• Decision Date: 23 April 1971
• Docket Number: No. 10591,10591
• Parties: Andrew J. BLINZLER and Mary E. Blinzler, husband and wife, Plaintiffs-Respondents, Cross-Appellants, v. James R. ANDREWS, Milton D. Andrews and Janice Andrews, husband and wife, Defendants-Appellants, Cross-Respondents.
• Court: United States State Supreme Court of Idaho

Page 957

485 P.2d 957

94 Idaho 215

Andrew J. BLINZLER and Mary E. Blinzler, husband and wife, Plaintiffs-Respondents, Cross-Appellants, v. James R. ANDREWS, Milton D. Andrews and Janice Andrews, husband and wife, Defendants-Appellants, Cross-Respondents.

No. 10591.

Supreme Court of Idaho.

April 23, 1971.

Rehearing Denied June 21, 1971.

Scott W. Reed, Coeur d'Alene, for appellant and cross-respondent James R. Andrews.

Peter B. Wilson, of Wilson & Walter, Bonners Ferry, for appellants and cross-respondents Milton D. Andrews and Janice Andrews.

Stephen Bistline, Sandpoint, for respondents and cross-Appellants.

SPEAR, Justice.

This appeal concerns two land sale contracts, both of which are quite similar in content, concerning two farms located near each other in Boundary County. The Blinzlers (plaintiffs-respondents) negotiated for the simultaneous purchase of both farms from two brothers, James R. Andrews and Milton D. Andrews, and wife (defendants-appellants). Both contracts were signed by the Blinzlers November 25, 1959, and signed by the Andrews December 7, 1959.

The James R. Andrews contract provided for a purchase price on the farm of $52,500.00, with $9,000 down and $3,500 due December 1, 1960 and each December 1 thereafter until the principal was paid. The Milton D. Andrews contract stated a price of $40,000 with $7,000 down and $2,750 due December 1, 1960 and each succeeding December 1. Each contract provided for 5% interest on the deferred payments with the accumulated interest deducted from the annual payment and the balance applied to the principal. In both contracts, the relevant obligations of the Blinzlers were: to pay all taxes and assessments, to insure the annual crop, and to pay all the Andrews' reasonable attorney fees for any suit arising out of the agreements. The James R. Andrews contract also provided that the Blinzlers were to insure the buildings on the farm.

Both contracts provided that the Andrews would obtain for the benefit of the Blinzlers an easement between the two farms and that the Andrews would provide within a reasonable time a title insurance policy to the extent of the purchase price showing marketable title in the Andrews.

As relevant to the case, both contracts also contained these general provisions: the First National Bank of Bonners Ferry, Idaho was appointed escrow holder of the contracts, warranty deeds, and title insurance policies. The performance by the Blinzlers of all the terms of the contract was a condition precedent to the performance of the agreements by the Andrews. In the event of breach of any of the terms of the contracts, on 60 days notice, the Andrews were entitled to immediate possession, the Blinzlers forfeited all rights under the contract, and the Andrews were entitled to retain all moneys paid by the Blinzlers toward the purchase of the farms as rent and liquidated damages for the use and occupancy of the premises. Both contracts stated that time was of the essence.

The James R. Andrews contract provided that he was to have been afforded a reasonable time to probate his wife's estate and perfect title to the farm. The Milton D. Andrews contract provided that if the title search revealed an error in the legal description, the error not being material to the contract, the legal description should be corrected to eliminate such error.

The Blinzlers took possession of the two farms and made the payments due December 1, 1960 and 1961. When the 1962 payments were delivered to the escrow agent, the Blinzlers directed that the escrow agent should not transfer the money to the Andrews until the title insurance policies were delivered in 'accordance with the terms of the contract.' The escrow agent notified the Andrews of the Blinzlers' instruction to withhold the 1962 installments and, after protest made by Milton Andrews, released the payments with notice to the Blinzlers.

The record is vague regarding what demands the Blinzlers made for title insurance. Mr. Blinzler testified that he was 'pretty sure' that he had requested title insurance in 1960. He also testified that he did not recall having requested title insurance after February 1962. Except for one exhibit, there is no evidence that the Blinzlers requested title insurance after December 1962.

The record also reveals that respondent worked both farms during 1963 and in October 1963 requested modifications in both contracts. The requested modifications were presented as a plea for help due to a bad crop year. Both James and Milton Andrews assented to the modification which deferred the principal payment due December 1, 1963 with the Blinzlers paying only the interest.

Both title insurance policies were meanwhile being prepared. The Milton Andrews title policy was forwarded to the escrow agent on February 19, 1964 and a copy of the transmittal letter was sent to Andrew Blinzler. The title policy was issued on the James Andrews farm March 23, 1964.

When the December, 1963 payments came due, the Blinzlers had not been furnished with title insurance on either farm and the 1963 payment was not made to either James or Milton Andrews. On approximately December 28, 1963, James Andrews and Milton Andrews gave notice of default to the Blinzlers and of their intent to cancel the contract within 60 days and retain all sums paid by the Blinzlers pursuant to the forfeiture clause of the contract.

On or about February 17, 1964, the Blinzlers gave notice to the Andrews that the respective notices of default were breaches of the contract, since the Andrews had not performed their covenants in the contract by providing title insurance within a reasonable time, entitling them to rescission of the contract.

The district judge found that the delay of four years in obtaining title insurance was for more than a reasonable time and since there was no explanation for the delay, the Andrews had materially breached the contract and the Blinzlers were entitled to rescission. In computing the sum which the defendant James Andrews was to repay to the Blinzlers, the district judge allowed James Andrews credits for the reasonable rental value of the farm (approximately equal to the amount of the annual payment), rental for the buildings on the farm, damage done to the property, and amount of the contract price minus the fair market value in April 1964. The Blinzlers were allowed to recover the sum they had paid on the James Andrews farm minus the credit to James Andrews. In addition, the Blinzlers were allowed to recover the amount of taxes and insurance they had paid on the farm while they were in possession. James Andrews as a result was found to be indebted to Andrew Blinzler in the amount of $5,714.50.

The amount in which Milton Andrews was found indebted to the Blinzlers was derived similarly with additional credits due Milton Andrews for the value of crops in the ground when the Blinzlers went into possession. A credit was allowed the Blinzlers for improvements they made on the farm. Milton Andrews was found to owe Andrew Blinzler $1,637.23.

Although the Andrews allege numerous assignments of error, they can all be disposed of by considering these issues: (1) Whether the Blinzlers were entitled to rescission, and (2) whether the Blinzlers waived their right to rescind.

The district court concluded that the Blinzlers were entiled to rescission on two grounds. The first is that the Blinzlers were entitled to rescission because the Andrews sent notices of forfeiture when they, the Andrews, were in default. Let us point out initially that these notices, one entitled 'Notice of Forfeiture' and the other 'Notice of Default,' are actually notices of default, describing the nature of the Blinzlers' default and giving them 60 days to cure. These notices were given according to the terms of the contract and did not ipso facto give the Blinzlers the right of rescission. If the Blinzlers were not in fact in default, and if they had a right to withhold the 1963 payment, then the notice of default was perhaps improper. The propriety of these notices then turns on the resolution of the second ground for rescission stated by the district court, that the title insurance was not provided within a reasonable time.

Rescission is an equitable remedy that totally abrogates the contract and seeks to restore the parties to their original positions. It is normally granted only in those circumstances in which one of the parties has committed a breach so material that it destroys or vitiates the entire purpose for entering into contract. In re Estate of Johnson, 202 Kan. 684, 203 Kan. 262, 452 P.2d 286 (1969); Bollenback v. Continental Casualty Co., 243 Or. 498, 414 P.2d 802 (1966); Krause v. Mariotto, 66 Wash.2d 919, 406 P.2d 16 (1965); Mohr v. Lear, 239 Or. 41, 395 P.2d 117 (1964); Huggins v. Green Top Dairy Farms, Inc., 75 Idaho 436, 273 P.2d 399 (1954). While title insurance was an important part of this transaction, it was however only one aspect of the exchange. The Blinzlers were given possession of the two farms and the right to till them. Further, the Andrews rendered, in good faith, other acts that were required of them such as procuring easements and probating the estate of James Andrews' wife.

While it might be validly decided that a lapse of four years before...