Bushnell Real Estate, Inc. v. Nielson, 18284

• Decision Date: 24 October 1983
• Docket Number: No. 18284,18284
• Citation: 672 P.2d 746
• Parties: BUSHNELL REAL ESTATE, INC., Plaintiff and Respondent, v. Robert S. NIELSON and Bradley J. Nielson, Defendants and Appellants.
• Court: Utah Supreme Court

Page 746

672 P.2d 746

BUSHNELL REAL ESTATE, INC., Plaintiff and Respondent, v. Robert S. NIELSON and Bradley J. Nielson, Defendants and Appellants.

No. 18284.

Supreme Court of Utah.

Oct. 24, 1983.

Marcus Taylor of Labrum & Taylor, Salt Lake City, for defendants and appellants.

Bruce Findlay, Richfield, for plaintiff and respondent.

DURHAM, Justice:

This is an appeal from a summary judgment granted to the plaintiff, Bushnell Real Estate, Inc., against the defendants, Robert S. and Bradley J. Nielson. The plaintiff sued to collect on a promissory note from the defendants for the unpaid portion of the plaintiff's broker's commission. The defendants admitted making and delivering the note, but denied liability on the grounds that the note was a "conditional contract" and that the condition was unfulfilled. At a hearing on the plaintiff's motion for summary judgment, the defendants moved for leave to amend their answer to allege that the note was the obligation of the corporation of which they were principals. The trial court denied the defendants' motion and granted summary judgment. We affirm.

The defendants, father and son, were officers and principal stockholders of N-Bar Corporation, which purchased the "Sandy Ranch" in 1976. In 1978, N-Bar Corporation listed the property for sale with the plaintiff, Bushnell Real Estate, Inc. The plaintiff found a buyer and in December of 1978 the parties met to close the transaction. The property was sold for $850,000, including the land, cattle and personal property. Under the listing agreement, the plaintiff was entitled to a 6% commission or $51,000. There is no evidence indicating a dispute over the amount of the commission due at the time of closing. Nevertheless, the plaintiff received only $15,000 at the time of closing. The Seller's Statement, signed by the defendants for N-Bar Corporation, lists the "realtor service fee" as $51,000 in the form of a $36,000 note and $15,000 paid at closing. Similarly, there is no dispute regarding the reason for this method of payment. The plaintiff agreed to take only $15,000 in cash from the $75,000 down payment because the defendants urgently needed most of the down payment to meet their contract obligation to the previous owners. The following testimony was given in the deposition of Robert S. Nielson:

Q. (plaintiff's counsel) Do you recall why it was that there wasn't enough in that [down payment] to pay the broker's fee?

A. (Mr. Nielson) Well, by the time that the escrow fee had got paid of $50,900.00 and some odd dollars to the [previous owner's] escrow that I was obligated to, it's just as plain as the nose on your face, it wasn't there.

The promissory note, signed by each of the defendants in his capacity as an individual, provided for a payment of $26,000 approximately one month later on January 20, 1979, and a payment of $10,000 on December 15, 1979.

At the closing, the defendants also signed a uniform real estate contract, designating the N-Bar Corporation as seller of the ranch. The contract specified a $50,000 payment at closing ($25,000 had already been received as earnest money and as payment for the cattle) with a $25,000 payment due January 20, 1979, approximately one month later and the following payment schedule: a payment of $65,436.13 on December 15, 1979; a payment of $65,436.13 on December 15, 1980; and eighteen subsequent payments of $68,686.13 each on December 15 annually until paid in full. The defendants signed the contract in their capacities as officers representing N-Bar Corporation. The defendants also signed an escrow agreement that showed N-Bar Corporation as the seller of the property. The escrow agreement provided for the delivery of the real estate contract, the warranty deed and the quitclaim deed to the buyer upon receipt of the total amount of the contract that was to be paid on the dates and in the amounts described in the contract. The agreement also authorized the escrow agent to distribute the first payment of $25,000 to Bushnell Real Estate, with $10,000 "plus accrued interest" to Bushnell Real Estate, presumably from the second payment. The defendants signed the escrow agreement without any designation of their status as officers of N-Bar Corporation.

The buyer made the payment due the following January, which the escrow agent distributed to the plaintiff. However, the buyer failed to make any subsequent payments and filed for bankruptcy. The defendants failed to pay the $1,000 due on the promissory note (over and above the amount which was distributed through the escrow) and failed to pay the $10,000 due on December 15, 1979. As stated above, the defendants admit making the note but argue first that the note was conditional and second that they signed as representatives of the N-Bar Corporation, not as personal guarantors of the corporation's debt to the plaintiff.

This Court has often stated the standard of review for summary judgments.

In reviewing a summary judgment, we must evaluate all the evidence and all reasonable inferences fairly drawn from the evidence in a light most favorable to the party opposing summary judgment to determine whether there is a material issue of fact to be tried. The movant is entitled to summary judgment only if he is "entitled to a judgment as a matter of law" on the undisputed facts. Utah R.Civ.P. 56(c).

Horgan v. Industrial Design Corp., Utah, 657 P.2d 751, 752 (1982) (citations omitted). In a recent case, we emphasized that "[s]ummary judgment is proper only if the pleadings, depositions, affidavits and admissions show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." Lockhart Co. v. Equitable Realty Co., Utah, 657 P.2d 1333, 1335 (1983) (quoting Bowen v. Riverton City, Utah, 656 P.2d 434 (1982)).

The plaintiff brought suit to collect on the unpaid promissory note. U.C.A., 1953, § 70A-3-307(2) (1980 edition) provides that "[w]hen signatures are admitted or established, production of the instrument entitles a holder to recover on it unless the defendant establishes a defense." In their answer the defendants admitted signing the note and admitted that $11,000 of the underlying obligation for which the note was given remains unpaid. Therefore, it was necessary for the defendants to raise a material issue of fact with regard to their asserted defenses in order to avoid summary judgment against them. The defendants argue that the note was "conditional" but they have failed to show any evidence of a condition that would negate the plain intent of the note that the defendants pay the amounts indicated. There is no condition on the face of the note or any reference to another document setting out such a condition. Of the other documents signed at the closing, only the Seller's Statement refers to the note. The "realtor service fee" is listed on that statement as "$51,000--note $36,000" and $15,000 cash paid at the time of closing. There is no indication of any condition or dispute regarding the amount of the commission due at that time. To the contrary, defendant Robert S. Nielson testified:

Q. (plaintiff's counsel) Yes, okeh, did anybody tell you on behalf of Bushnell that if [the buyer] didn't make his payments, that you'd be released from the note?

A. (Mr. Nielson) No.

The defendants contend that the escrow agreement providing for the distribution of $35,000 to the plaintiff from the buyer's payments shows an agreement that the plaintiff would not look beyond the escrow agreement for payment. Neither the escrow agreement, to which the plaintiff was not a party, nor the promissory note reveal such an intent. In his affidavit, defendant Bradley J. Nielson stated that he and "Robert S. Nielson intended that Plaintiff realize its full commission from payments to be made by [the buyer]." However, the defendants do not assert that this subjective intent was ever communicated to the plaintiff. This unexpressed intent does not bind the plaintiff and its mere recital now does not raise a material issue of fact in the face of the defendants' acknowledgment of the note. See, e.g., Seale v. Nichols, Texas, 505 S.W.2d 251 (1974). Furthermore, the defendants' contention that the plaintiff look only to the buyer's payments into escrow for its commission would render the note meaningless and ignore the undisputed benefit received by the defendants from the plaintiff's agreement to defer part of the commission due at closing. On its face, the escrow agreement merely provides for a method of distribution of the payments made by the buyer. The defendants have failed to raise any material issues of fact that counter this construction of the documents.

The defendants allege that the trial court erred in ruling that parol evidence was inadmissible to show any special conditions attending the signing or delivery of the note. The defendants cite Bullfrog Marina, Inc. v. Lentz, 28 Utah 2d 261, 266, 501 P.2d 266, 270 (1972) for the proposition that "[p]arol testimony is admissible to show the circumstances under which the agreement was made and the purpose for which the instrument was executed." The defendants also quote from a later case in which this Court stated:

[The parol evidence rule] does not preclude proof of agreements as to collateral matters relating to the contract or its performance, so long as they are not inconsistent with nor in repudiation of the terms of the written agreement. Nor does it prevent proof that a party did not perform an obligation which it was understood and agreed by the parties was a condition precedent to the contract becoming effective.... Whether there was such a separate agreement, not in contradiction of the...