Carpenter v. Riley, 55643

Citation234 Kan. 758,675 P.2d 900
Decision Date13 January 1984
Docket NumberNo. 55643,55643
PartiesFrank T. CARPENTER, Jr., and Ila B. Carpenter, Appellees and Cross-Appellants, v. Richard C. RILEY, Appellant and Cross-Appellee.
CourtUnited States State Supreme Court of Kansas

Syllabus by the Court

1. Tender is an unconditional offer to perform a condition or obligation. The party making tender must have the ability for immediate performance. The tender must be absolute and unconditional to be effectual. Anderson v. Oil Co., 106 Kan. 483, 186 P. 198 (1920).

2. Equity does not insist on purposeless conduct and disregards mere formality. A tender or demand otherwise indispensable is no longer required when its futility is shown.

3. Promissory notes and mortgages are contracts between the parties, and the rules of construction applicable to contracts apply to them. A mortgage and a note secured by it are to be deemed parts of one transaction and construed together as such; the provisions of both should be given effect.

4. The general rule is that where a mortgage contains an acceleration clause relating to default of a required payment, the mortgagee is entitled because of such default to enforce the acceleration clause at once according to its terms. Insurance Co. v. Puckett, 97 Kan. 428, 155 P. 930 (1916).

5. The judgment of the trial court, if correct, is to be upheld, even though the court may have relied upon the wrong ground or assigned an erroneous reason for its decision. Kansas Sand & Concrete, Inc. v. Lewis, 8 Kan.App.2d 91, 97, 650 P.2d 718 (1982), citing Farmers State Bank v. Cooper, 227 Kan. 547, Syl. p 10, 608 P.2d 929 (1980).

Michael D. Pepoon, of the Law Office of Lynn E. Martin, Paola, argued the cause, and Lynn E. Martin, Paola, of the same firm, was with him on briefs, for appellant and cross-appellee.

Carl W. Hartley, of Rinehart, Bright Hartley & Casteel, Paola, argued the cause and was on brief, for appellees and cross-appellants.

LOCKETT, Justice:

Richard Riley, defendant, appeals from the trial court's judgment after trial granting foreclosure of a real estate mortgage for the plaintiffs, Frank and Ila Carpenter. The plaintiffs have filed a cross-appeal on the trial court's failure to grant them judgment on the pleadings.

Riley purchased pasture land located in Miami County from the Carpenters on July 25, 1977. The purchase price was $151,200.00, to be paid in 25 annual installments of $14,164.42 due each August 1, commencing in 1978. A promissory note and a mortgage were executed by the parties. The promissory note provided:

"In the event of default in the payment of interest or installment of principal due hereunder and such default remains uncured for a period of ten (10) days, the holder hereof may, at their option, without notice or demand, declare this note immediately due and payable.

"This note is secured by and subject to the terms and conditions of a certain real estate mortgage executed concurrently herewith by maker hereof covering the following described real estate situated in Miami County, Kansas, to-wit."

The accompanying mortgage provided:

"But if default be made in such payment, or any part thereof, or interest thereon, or the taxes, or if the insurance is not kept up thereon, then this conveyance shall become absolute, and the whole shall become due and payable, and it shall be lawful for the said parties of the second part or the survivor of them , at any time thereafter, to sell the premises hereby granted or any part thereof, in the manner prescribed by law, appraisement hereby waived or not, at the option of the parties of the second part, or the survivor of them ; and out of all the moneys arising from such sale, to retain the amount then due for principal and interest, together with the costs and charges of making such sale, and the overplus, if any there be, shall be paid by the parties making such sale, on demand, to the said party of the first part his heirs or assigns."

Riley paid the first installment on the note and taxes for the year 1978. The annual installments on the note for 1979 and 1980 were paid to the Carpenters by Riley. The 1979 and 1980 real estate taxes on the realty purchased were not paid by Riley. On February 19, 1981, Riley, who now lived in Brazil, wrote a letter to the Miami County Treasurer stating it had been some time since he had received a tax statement on his property. He requested the county treasurer to inform him of the status of the taxes due on the land. Frank Carpenter paid the 1979 and 1980 taxes totaling $844.35 on August 5, 1981.

On August 5, 1981, the Carpenters filed an action against Riley. The Carpenters claimed Riley's failure to pay the real estate taxes for the years 1979 and 1980 was a default, triggering the acceleration clause of the promissory note, making the entire amount of the note due and payable. If the balance due on the accelerated note was not paid, the Carpenters requested the mortgage be foreclosed. At this point Riley still had until August 10, to make his 1981 payment on the installment and taxes. The Carpenters did not allege in their petition that Riley was in default for nonpayment of the 1981 installment on the note and taxes.

On August 7, 1981, Riley deposited two checks with the Clerk of the Miami County District Court. Both checks were made payable to the Carpenters. One check was payment for the delinquent 1979 and 1980 real estate taxes. The second check was the 1981 note installment. The court returned the checks to Riley stating: "As we are not the payee of this check, we cannot accept the same." Riley then deposited two checks for the same amounts with the clerk on August 10, 1981. This time the checks were made payable to the clerk. Riley's attorney mailed a letter to the plaintiffs' attorney on August 10. This statement appeared in the letter:

"If your client is willing to accept these payments and continue with the contract, we will be willing to continue the payments as provided by the contract and mortgage."

The Carpenters did not respond to the letter.

The Carpenters moved for judgment on the pleadings pursuant to K.S.A. 60-212(c ) on November 6, 1981. On November 19, 1981, Riley moved to have his check for the real estate taxes returned by the clerk. The Carpenters filed an amended petition in the action on January 5, 1982. Count I was almost identical to the claim contained in the original petition. Count II sought reformation of the promissory note and mortgage. Count III claimed that the instruments involved were ambiguous and the court should examine the facts and circumstances surrounding the execution of the instruments, determine the intention of the parties and give effect to that intention.

On January 6, 1982, the court denied the Carpenters' motion for judgment on the pleadings on the basis of the case of Noble v. Greer, 48 Kan. 41, 28 P. 1004 (1892). The court granted Riley's November 19 motion to have his tax check returned.

Riley filed a motion on January 12, 1982, requesting that his installment check be returned because the Carpenters had refused his proffered tender. On January 22, 1982, the court permitted the Carpenters to amend their petition and permitted the return of Riley's installment check.

On September 22, 1982, the Carpenters filed a fourth count to their amended petition. In Count IV, the Carpenters alleged Riley had failed to pay the August 1, 1982, installment payment and taxes, thereby defaulting on the promissory note.

A trial on the merits was conducted on September 24, 1982. The trial court issued its findings of fact and conclusions of law on December 8, 1982. The court found the 1981 payment of principal, interest and taxes into the court was not a tender but rather an offer for settlement. The court concluded Riley was in default for failure to pay the 1982 installment and taxes when due. The court determined there was no legal excuse why the 1982 payment of principal, interest and taxes should not have been paid and the Carpenters were entitled to judgment on Count IV of their petition in the amount of $156,043.91 on the note, plus $844.35 for the real estate taxes, and appropriate interest thereon. The court ordered a sheriff's sale was to be held if the judgment was not paid. Riley's motion to modify was denied. This appeal and cross-appeal followed. Subsequently the Carpenters have purchased the realty at a sheriff's sale, Riley's six-month redemption period has expired, and the Carpenters have been issued a sheriff's deed for the property.

Riley does not dispute nonpayment of the 1982 installment payment and taxes, but seeks to excuse his failure to pay. He contends that tender of the 1982 installment and payment of the 1982 taxes was not necessary; that the Carpenters' refusal to accept Riley's tender of the 1981 installment payment and taxes paid into the court, after the Carpenters filed suit, made further payments under the note and mortgage by Riley unnecessary. We agree.

Tender is an unconditional offer to perform a condition or obligation. The party making tender must have the ability for immediate performance. The tender must be absolute and unconditional to be effectual. Anderson v. Oil Co., 106 Kan. 483, 186 P. 198 (1920). Riley's tender of payment into court was an effort to perform as far as he was able after his default in the payment of the 1979 and 1980 taxes. The purpose of the tender by Riley was to obtain an unconditional acceptance by the Carpenters of past due payments of the 1979 and 1980 taxes and the 1981 installment payment, and obtain a waiver of the Carpenters' right to exercise the option of acceleration under the note and mortgage.

Having received Riley's tender to reimburse for the payments of the 1979 and 1980 taxes and payment of the 1981 installment payment, the Carpenters were entitled to a reasonable time to accept or reject the tender by Riley. The Carpenters rejected the offer of tender by Riley by not accepting within a...

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