Booras v. Uyeda

• Decision Date: 12 April 1982
• Docket Number: No. A7803-04031,A7803-04031
• Citation: 56 Or.App. 834,643 P.2d 413
• Parties: George BOORAS, Appellant, v. Tokiko UYEDA and Constance L. Fenwick, Respondents. ; CA 18375.
• Court: Oregon Court of Appeals

Page 413

643 P.2d 413

56 Or.App. 834

George BOORAS, Appellant, v. Tokiko UYEDA and Constance L. Fenwick, Respondents.

No. A7803-04031; CA 18375.

Court of Appeals of Oregon.

Argued and Submitted July 29, 1981.

Decided April 12, 1982.

R. Bruce Dusterhoff, Portland, argued the cause for appellant. With him on the briefs was Case & Dusterhoff, Portland.

Gerald R. Pullen, Portland, argued the cause and filed the brief for respondent Tokiko Uyeda.

Larry A. Dawson, Portland, argued the cause and filed the brief for respondent Constance Fenwick.

Before BUTTLER, P. J., JOSEPH, C. J., and WARDEN, J.

WARDEN, Judge.

This is a suit for specific performance of an earnest money contract for the purchase of an apartment complex. The trial court found that the earnest money contract was a "valid and legally enforceable contract" and that plaintiff had performed all conditions precedent required to be performed by him, but it denied specific performance on the ground that it would be "impractical, difficult and time-consuming" to enforce the contract. As an alternative to specific performance, plaintiff was awarded $20,000 equitable compensation to be paid by defendant seller; his request for prejudgment interest on the award was denied. Plaintiff appeals, assigning as error the denial of specific performance and, in the alternative, the denial of prejudgment interest. He suggests that specific performance be ordered, conditional on his tender of the full purchase price. Defendants do not cross-appeal.

In July, 1976, defendant Uyeda and her husband, now deceased, listed an apartment complex for sale with a realtor. On August 23, 1976, plaintiff ¹ made an offer by a standard form "Official Earnest Money Contract" and an attached addendum. On September 7, 1976, after some negotiation, the Uyedas signed the earnest money contract and addendum. ² In the months that followed, plaintiff obtained a first mortgage financial commitment, furnished appraisals on security property and in other respects complied with obligations of the contract.

On January 21, 1977, without prior notice to plaintiff, the Uyedas re-listed the property with another realtor. On February 16, 1977, defendant Fenwick, also a realtor prepared an earnest money agreement on her own behalf for the purchase of the re-listed property for the same amount of money as provided in plaintiff's contract, payable in monthly installments and secured by a trust deed. Defendant Fenwick's offer was expressly conditioned on the Uyedas' obtaining a release of plaintiff's contract. The Uyedas accepted defendant Fenwick's offer on February 23, 1977, and entered into a land sale contract with her on April 8, 1977, without first obtaining a release from plaintiff. Shortly thereafter, defendant Fenwick took possession of the property, started receiving the rentals from the tenants and has been in possession since that time. In March, 1978, plaintiff brought this suit against Uyeda and Fenwick seeking specific performance of the earnest money contract.

Although they filed no cross-appeal, defendants contend that the trial court erred in concluding that the contract was specifically enforceable, because plaintiff failed to prove a legally enforceable contract. Plaintiff argues that defendants cannot challenge that finding without cross-appealing. We agree. It is well settled that, although this court reviews a case in equity de novo, a respondent who has not cross-appealed cannot obtain here a judgment more favorable to him and less favorable to the appellant than the judgment entered below. Gas-Ice Corporation v. Newbern, 263 Or. 227, 234, 501 P.2d 1288 (1972); Hofer v. Hofer, 244 Or. 88, 92, 415 P.2d 753 (1966); Graf v. Don Rasmussen Co., 39 Or.App. 311, 315, 592 P.2d 250 (1979).

The main issue in this case is whether plaintiff is entitled to specific performance of the earnest money contract.

The granting of specific performance is a matter of sound judicial discretion "governed by the established principles and rules which constitute the body of equity jurisprudence." Wittick v. Miles, 274 Or. 1, 6, 545 P.2d 121 (1976). One of those rules is that " '(e)quity may * * * award damages in lieu of a decree of specific performance when the plaintiff has made out an equitable case for intervention but performance has become impossible or impracticable, * * * ' " Walker v. Mackey et al., 197 Or. 197, 209, 251 P.2d 118, 253 P.2d 280 (1953) (citing 49 Am.Jur., Specific Performance, 198 § 174).

In the present case, the trial court concluded that specific performance would be impractical, primarily because (1) plaintiff had disposed of some of the property pledged to secure his performance of the contract and (2) defendant Fenwick had managed the apartment complex since 1977, and had invested in improvements on the property. We will consider these factors in order.

Plaintiff's failure to retain pledged security property is relevant only to the protection of defendant Uyeda's interest under the land sale contract. If plaintiff were to pay defendant Uyeda the full purchase price in cash, the security problem would disappear. In Phillips v. Johnson, 266 Or. 544, 557, 514 P.2d 1337 (1973), the Supreme Court approved such a cash sale where uncertainties in the earnest money receipt would have defeated specific performance. There, the agreement specified that the balance was to be paid on or before July 30, 1972. The court concluded that by these terms the plaintiffs were given an election to pay the entire balance in cash, and the defendants were required to accept that payment. In the present case, the contract provides for payments on a land sale contract at not less than $625 per month. As in Phillips, this provision gives plaintiff the right to pay the entire contract balance in cash. See Mathers v. Eddy, 267 Or. 191, 515 P.2d 912 (1973). Payment in cash would remove plaintiff's obligation to provide security property and would allow the granting of specific performance upon a determination of defendant Fenwick's interest.

The trial court concluded that it would be too difficult to sort out the problems associated with settling the equities between defendants Uyeda and Fenwick. However, because Fenwick took possession of the property with actual knowledge of plaintiff's prior interest, the fact that Fenwick subsequently improved the property should not be a bar to specific performance. The judgment of the trial court denying specific performance and awarding equitable compensation is reversed.

Defendant Fenwick should be required to provide an accounting of all funds received and all sums expended for the down payment, monthly payments, operational expenses and capital improvements. In addition, she should be credited reasonable compensation for her management services. If she has received greater rental income than the amount she has expended, after an allowance for her services, she is required to return the remainder to defendant Uyeda. On the other hand, if her expenditures and services exceed the rental income, defendant Uyeda shall pay her the difference out of the purchase price paid by plaintiff....