Collins v. Keller, 97-1012
| Decision Date | 14 May 1998 |
| Docket Number | No. 97-1012,97-1012 |
| Citation | 333 Ark. 238,969 S.W.2d 621 |
| Parties | Aaron COLLINS and Diane Collins, Appellants, v. Burl KELLER, Carol Keller, and Jeremy's Investments, Inc., Appellees. |
| Court | Arkansas Supreme Court |
Philip J. Taylor, Fort Smith, for appellants.
Thurman Ragar, Jr., Van Buren, for appellees.
Appellants Aaron and Diane Collins bring this appeal from the Crawford County Chancery Court's finding that they had breached their contract to purchase two unimproved lots from appellees, Burl and Carol Keller and Jeremy Investments, partners who own a subdivision named Butterfield Trail Properties. This court's jurisdiction was invoked because this case involves issues concerning the interpretation and application of the Truth-in-Lending Act, 15 U.S.C. § 1601 et seq., and the Interstate Land Sales Act, 15 U.S.C. § 1701 et seq.
On May 2, 1992, appellees sold the two disputed lots to the appellants by a contract for deed. The purchase price was for $15,000.00 at 8.5% in 239 amortized monthly payments of $128.90. Appellants' first payment was due on June 1, 1992, and subsequent payments were to be made each month thereafter. The parties agreed that, if appellants failed to make a payment within fifteen days after a monthly payment was due, or after twenty days' notice appellants failed to pay the taxes, appellees could declare the entire balance of the purchase price due, or could rescind and declare the entire contract forfeited. In addition, if appellees duly declared a forfeiture, they could further demand immediate possession of the property, and retain previous payments as liquidated damages, whereupon appellants would become tenants and pay monthly rental payments in the amount of $128.90.
Appellants defaulted commencing on their first payment, and thereafter, never came into compliance with the terms of the parties' contract. At one stage, appellants did reach some agreement with appellees to pay on the arrearages, along with continuing their $128.90 monthly payments, but because appellant Aaron Collins sustained a back injury and could not work, appellants were unable to make their payments and therefore, continued in default.
On October 27, 1995, appellees brought suit against appellants for breach of contract and unlawful detainer, and appellants later filed a motion to dismiss, an answer asserting affirmative defenses, and a counterclaim. 1
In their counterclaim, appellants alleged the appellees had violated the Truth-in-Lending Act by failing to make certain required material disclosures. Additionally, appellants, in their counterclaim, tendered the subject property to appellees, requested rescission of the parties' contract, and asked for damages provided under the Truth-in-Lending Act.
At a hearing on May 12, 1997, appellants admitted they were in default of the parties' May 2, 1992 contract, and conceded they had made only seventeen payments in fifty-nine months. Nonetheless, appellants asserted that they were entitled to relief in the form of rescission under the Truth-in-Lending Act, and added that they had a similar right to relief for appellees' having violated the federal Interstate Land Sales Act. Appellants also argued that appellees' finance charge under the May 2 contract was usurious, and additionally claimed damages for conversion, alleging appellees had wrongfully removed shale from the property while appellants owned and were in possession of the lots.
On June 3, 1997, the trial court entered its order finding the appellants had breached the parties' May 2, 1992 contract by failing to make timely payments and concluded the contract had been effectively terminated on October 27, 1995, when appellees filed this suit. Because appellants continued to hold possession of the property after defaulting, the trial court determined appellees were entitled to rent from appellants in the sum of $4,640.50. Also, because appellants were in default, the trial court denied their conversion claim, holding they had no equitable or legal title in the lots or the shale at the time it was removed. Regarding the appellants' Truth-in-Lending Act claims, the trial court held they were barred from asserting those claims because of the doctrines of laches and estoppel. Finally, the trial court ordered appellants to vacate the two lots, and if they failed to do so, directed a writ of assistance would be issued to oust them.
Appellants raise five points for reversal, but their points one, two, and four are basically grounded in rescission rights they assert they are entitled to under either the federal Truth-in-Lending Act or the Interstate Land Sales Act or both. We hold the appellants are not availed entitlement to those federal laws or the rescission rights provided in these acts. In their first argument, appellants urge the trial court erred in denying them rescission because the appellees failed to provide material disclosure forms required by the Truth-in-Lending Act and its regulations, and appellees made misstatements and material omissions of facts that violated both the Truth-in-Lending Act and the Interstate Land Sales Act.
First, we note that appellants never specified the Interstate Land Sales Act as an affirmative defense, nor did they mention the Act in their counterclaim. Appellants did submit the Interstate Land Sales Act to the trial court to support their request for rescission, but the trial court never addressed or ruled on that Act's applicability to the parties' contract. It is well settled that an issue must be raised and ruled on before we consider it on appeal. Hercules, Inc. v. Pledger, 319 Ark. 702, 894 S.W.2d 576 (1995).
While other reasons may be suggested that would support the trial court's decision denying appellants' request for rescission under the federal laws, the court was correct in refusing such relief because appellants' request was untimely. Specifically, § 1635(a) of the Truth-in-Lending Act limits an obligor (as appellants purport to be under the Act) the right to rescind a consumer credit transaction until midnight of the third business day following the consummation of the transaction or the delivery of the information and rescission form required under § 1635. Section 1635(f) further provides that an obligor's right of rescission shall expire three years after the date of consummation of the transaction or upon the sale of the property, whichever occurs first, notwithstanding the fact that the information and forms required under the section or any other disclosure required under this provision have not been delivered to the obligor.
The Interstate Land Sales Act, likewise, has provisions that limit when a purchaser of property can seek rescission for the seller's violation of the Act. Section 1703(b), for instance, provides in relevant part, that any contract for the sale of a lot not exempt under the Act may be revoked at the option of the purchaser until midnight of the seventh day following the signing of such contract or until such later time as may be required by state laws. Also, any such contract for the sale of a lot not exempted under the Act may be revoked at the option of the purchaser for two years from the date of the signing of such contract. See § 1703(d). 2
Here, appellants failed to act timely under the provisions of both the Truth-in-Lending and Interstate Land Sales Acts. In fact, appellants waited to assert their rescission rights only after appellees brought...
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