Cliff & Co., Ltd. v. Anderson

• Decision Date: 11 July 1989
• Docket Number: No. 88-255,88-255
• Citation: 777 P.2d 595
• Parties: CLIFF & CO., LTD., a Wyoming Corporation; and Sam Ratcliff, Appellants (Defendants), v. Andrew W. ANDERSON; Norman C. Moore; Coulter Enterprises, a Wyoming Partnership; FDIC, formerly Stockmens Bank & Trust Company, a Wyoming Banking Corporation; and Dorr Investments, a Wyoming Partnership, Appellees (Plaintiffs).
• Court: Wyoming Supreme Court

Page 595

777 P.2d 595

CLIFF & CO., LTD., a Wyoming Corporation; and Sam Ratcliff, Appellants (Defendants), v. Andrew W. ANDERSON; Norman C. Moore; Coulter Enterprises, a Wyoming Partnership; FDIC, formerly Stockmens Bank & Trust Company, a Wyoming Banking Corporation; and Dorr Investments, a Wyoming Partnership, Appellees (Plaintiffs).

No. 88-255.

Supreme Court of Wyoming.

July 11, 1989.

Michael A. Maycock, Gillette, for appellants.

J. John Sampson, Sheridan, for appellees.

Before CARDINE, C.J., and THOMAS, URBIGKIT, MACY and GOLDEN, JJ.

MACY, Justice.

Appellants Cliff & Co., Ltd. and Sam Ratcliff appeal from an order of the district court confirming the foreclosure sale of a hotel and bar and granting a deficiency judgment to appellees Andrew W. Anderson, Norman C. Moore, Coulter Enterprises, FDIC, and Dorr Investments. Appellants more particularly contest the district court's prior order in this action which granted appellees a partial summary judgment and a decree of foreclosure upon the finding that appellees were entitled to foreclose their mortgage on the subject premises and to obtain a judgment for any deficiency.

We affirm.

Appellants present the following issues for our consideration:

A. WHETHER THE COURT BELOW ERRED IN GRANTING A DEFICIENCY JUDGMENT BASED UPON A SUMMARY JUDGMENT IMPROPERLY RENDERED WHEN THERE WAS A GENUINE ISSUE OF MATERIAL FACT IN EXISTENCE.

B. WHETHER THE COURT BELOW ERRED BY RELYING UPON FACTS WHICH ARE NOT CONTAINED IN THE RECORD.

The genesis of this controversy was a real estate transaction occurring near the end of the energy boom in Campbell County, Wyoming, in the early part of this decade. In June 1981 appellees, as sellers, entered into an agreement with appellant Cliff & Co., Ltd., as buyer, and with appellant Ratcliff, Abner Castleberry, and Edward Young, as individual guarantors, ¹ for the sale of the Montgomery Bar and Hotel in Gillette, Wyoming. Appellees owned all of the stock in Montgomery Bar and Hotel, Inc., a Wyoming corporation (hereinafter "the corporation"), which in turn owned all the assets of the hotel and bar, including the land, building, inventory, and liquor license. The transaction was accomplished on June 16, 1981, by the execution of a series of documents, the nature and effect of which are at the center of the dispute in this case.

The documents include a purchase agreement by which appellant Cliff & Co., Ltd. agreed to purchase all the stock of the corporation for a total sum of $476,054.41, with a down payment of $126,054.41 and the $350,000 balance to be evidenced by a promissory note and to be paid in monthly installments into an escrow account at Stockmens Bank & Trust Company. ² Concurrently, appellant Cliff & Co., Ltd. executed a promissory note to appellees for the balance of the purchase price. The promissory note similarly provided for monthly installments of principal and interest to be paid into the escrow account. The purchase agreement and promissory note were personally guaranteed by Castleberry, Young, and appellant Ratcliff. Additionally, in accordance with the purchase agreement, appellant Cliff & Co., Ltd. and the corporation (the stock of which had been conveyed to Cliff & Co., Ltd.) executed a mortgage (designated as "Mortgage Deed") granting appellees a mortgage interest in the subject property as security for the indebtedness. The mortgage was recorded on July 13, 1981. Appellant Cliff & Co., Ltd. and the corporation also executed a security agreement granting appellees a security interest in various collateral of the corporation, primarily consisting of the furniture and equipment of the business. A corresponding financing statement was filed. At the same time, and as further security for the indebtedness, appellant Cliff & Co., Ltd. executed an assignment back to appellees of the stock of the corporation. Finally, appellant Cliff & Co., Ltd. and appellees signed escrow instructions to Stockmens Bank & Trust Company providing for payments on the promissory note to be made to the escrow account and for disbursements to be made to appellees as directed.

Although not otherwise indicated in the record, the complaint and amended complaint of appellees indicate that, by warranty deed dated December 21, 1981, the corporation deeded the subject property to appellant Cliff & Co., Ltd. and that such deed was recorded on February 25, 1982. In their answer to the amended complaint, appellants admitted to that averment. ³

Debt payments pursuant to this rather cumbersome transaction were made as agreed until 1986 when the buyer and guarantors (appellants, et al.) fell into default. As a result, the parties entered into a "Modification Agreement" wherein appellees agreed to reduced monthly installment payments for the year 1987 in consideration for which appellant Cliff & Co., Ltd. executed an assignment of the premises' liquor license to appellees. The liquor license assignment was placed in the original escrow account for receipt by appellees in the event of further default. The modification agreement provided that, except as therein modified, the original purchase documents were to remain in full effect.

By early 1987 appellants (and Castleberry and Young) were unable to make the payments as modified. After notices demanding payment, appellees filed suit on May 22, 1987, seeking judgment on the promissory note, foreclosure on both the mortgage and the lien created by the security agreement, and a deficiency judgment. By amended complaint appellees added claims seeking delivery of the assigned and escrowed liquor license and for an award of the income from the property. The defendants answered, asserting as an affirmative defense that appellees' only remedy upon default was enforcement of the forfeiture provision contained in the purchase agreement.

Appellees then moved for summary judgment. Affidavits and the transaction documents were submitted by the parties in support of and in opposition to the motion. After a hearing, the district court entered a partial summary judgment and decree of foreclosure in favor of appellees. There was a factual dispute as to the amount due and owing on the obligation; however, the parties subsequently stipulated to that amount and to appellees' reasonable attorney's fees and costs. In the meantime, the district court had appointed a receiver to manage the property.

Appellees, as highest bidders, purchased the property for $100,000 at the foreclosure sale held May 20, 1988. ⁴ Upon appellees' motion, the district court entered an order confirming the foreclosure sale and granting a deficiency judgment for $190,233.01. This appeal followed.

Appellants' primary contention, as we understand it, is to the following effect: The purchase agreement is in the form of an installment land contract; ⁵ the forfeiture provision contained therein is consistent with an installment land contract but is inconsistent with the remedy provisions contained in the note and mortgage; thus, there is an ambiguity in the documents which required the presentation of extrinsic evidence on the question of the parties' intent and precluded the entry of summary judgment authorizing foreclosure. Appellants, understandably, seek a construction of the agreement (or at least a factual issue as to its construction) whereby the forfeiture provision would be considered the exclusive remedy upon default and which would accordingly relieve them from the deficiency judgment. ⁶ Although we sympathize with appellants' plight, we are unable to interpret the agreement in the manner urged by them.

This is essentially a contract case and, in order to evaluate appellants' contentions, we must apply our established rules of contract interpretation. The primary purpose in interpreting or construing a contract is to determine the intent of the parties. True Oil Company v. Sinclair Oil Corporation, 771 P.2d 781 (Wyo.1989); Farr v. Link, 746 P.2d 431 (Wyo.1987). The interpretation and construction of a contract are done by the court as a matter of law. Id.; Amoco Production Company v. Stauffer Chemical Company of Wyoming, 612 P.2d 463 (Wyo.1980). Where an agreement is in writing and the language is clear and unambiguous, the intent of the parties is to be secured from the words of the contract. True Oil Company, 771 P.2d 781; Amoco Production Company, 612 P.2d 463. The contract as a whole should be considered, taking into consideration the relationship between the various parts. True Oil Company, 771 P.2d 781; Kost v. First National Bank of Greybull, 684 P.2d 819 (Wyo.1984).

A written agreement may consist of several documents, and reference in a contract to extraneous writings renders them part of the agreement. Hensley v. Williams, 726 P.2d 90 (Wyo.1986); Williams v. Waugh, 593 P.2d 583 (Wyo.1979). Sales transaction documents concurrently executed should be considered together. Marple v. Wyoming Production Credit Association, 750 P.2d 1315 (Wyo.1988); Hensley, 726 P.2d 90.

If a contract is ambiguous, the determination of the parties' intent may be made by resort to extrinsic evidence. True Oil Company, 771 P.2d 781; Rouse v. Munroe, 658 P.2d 74 (Wyo.1983). A contract is ambiguous if it is obscure in its meaning because of indefiniteness of expression or because of a double meaning being present. Farr, 746 P.2d 431; E & E Mining, Inc. v. Flying "D" Group, Inc., 718 P.2d 58 (Wyo.1986). Whether or not a contract is ambiguous is a question of law for the court. Farr, 746 P.2d 431; Hensley, 726 P.2d 90. An ambiguity justifying extrinsic evidence is not generated by the subsequent disagreement of the parties concerning the contract's meaning. Amoco Production Company, 612 P.2d at 465.

With the foregoing principles in mind, we turn to the terms of the parties' agreement and particularly to the terms regarding the sellers' remedies upon default. The purchase agreement is the primary transaction document. It provides for the buyer's...