Estreen v. Bluhm, 75-167
| Decision Date | 01 July 1977 |
| Docket Number | No. 75-167,75-167 |
| Citation | 79 Wis.2d 142,255 N.W.2d 473 |
| Parties | Dan J. ESTREEN, Plaintiff-Respondent, v. Frank BLUHM and Lillian Bluhm, Defendants-Appellants. |
| Court | Wisconsin Supreme Court |
This is an action for specific performance of land contracts. The case involves a transaction for the sale by the defendants-appellants, Frank and Lillian Bluhm, to the plaintiff-respondent, Dan Estreen, of two adjacent parcels of commercial real estate in Wausau, Wisconsin. To consummate the sale, the parties entered into two land contracts, but because a dispute arose concerning the money amounts due under those contracts, a compromise agreement was executed. A dispute over the provisions of the compromise agreement resulted in this action by the vendee, Estreen, for specific performance of the compromise agreement.
On October 13, 1967, the parties entered into the first land contract for the sale of a parcel at the total purchase price of $40,000, with a down payment of $1,000. An additional payment of $9,000 was to be made by Estreen on or before November 5, 1967, but this date was changed to December 5, 1968 by a subsequent modification of this first land contract. The remaining balance of $30,000 was to be paid on or before November 5, 1970. The unpaid balance bore interest at the rate of 53/4 percent per year. Real estate taxes on this first parcel for the year 1967 were prorated as of November 5, 1967. Payments of interest and taxes were originally to be made monthly by the vendee, Estreen, but according to the subsequent modification of this land contract, Estreen was obligated to make such payments only semi-annually beginning on July 5, 1968.
The second land contract entered into by the parties was executed on December 29, 1967. Under this contract Estreen agreed to purchase and the Bluhms agreed to sell a parcel which consisted of some apartments and a theater building for a price of $80,000. Estreen agreed to pay $1,000 down, an additional $4,000 on January 5, 1968, three installments of $5,000 on specified later dates, and the balance of $60,000 on or before December 29, 1972. The outstanding principle balance was subject to interest at the annual rate of 53/4 percent. Under the terms of this second land contract, the Bluhms, the vendors, agreed to assume the 1967 real estate taxes. The land contract further provided that, commencing January 1, 1968, Estreen would be entitled to all rents from this second parcel, but these rents would be paid over to Bluhms as follows:
"(S)uch rents shall be made payable to said second party (Estreen), but shall be paid over, either directly or indirectly, to the first parties (Bluhms) as agents for second party; that out of such rents, first parties shall pay all, or/and credit all, interest, real and personal property taxes, insurance premiums and all operating expenses, including repairs, pertaining to said premises and apply the balance or balances remaining after such applications and payments to principal for the benefit of the second party; . . ."
The record shows that the parties operated under the land contracts without difficulty until 1971. In March of 1971, Estreen wrote a letter to the Bluhms expressing his desire to complete the purchase of the parcel under the first land contract. Estreen testified that Mr. Bluhm told him he did not want to complete the sale at that time because he did not want to incur a large capital gains tax. In December of 1971, Estreen stopped making payments on either contract, and the Bluhms ceased collection of rents as agents for Estreen. The Bluhms paid the 1971 real estate taxes as required under the second land contract.
Estreen testified that, after a period of time, Mr. Bluhm telephoned him, and stated he wished to settle the transactions. Bluhm told Estreen that $91,000 was due under the contract. Estreen stated he determined $72,000 remained outstanding. It was agreed that Bluhm would complete the transactions if Estreen paid $85,000 plus an additional $1,750 to Marathon County Savings & Loan Association (hereinafter savings & loan), which held a mortgage, received from the Bluhms in 1954, upon both parcels of land. What the amount $1,750 represented is not clear and appears to be in dispute.
On July 27, 1973, the parties entered an agreement, drafted by Estreen, which stated their compromise. They then went to the savings & loan, which, in addition to holding Bluhms' mortgage, was ready to finance Estreen's purchase. At the suggestion of the savings & loan, a more formal compromise agreement was executed by the parties. This agreement provides:
On the same day, July 27, 1973, after the signing of the above compromise agreement, the Bluhms executed warranty deeds for the parcels of land and delivered them in escrow to the savings & loan. Bluhms were told that the final closing would not be held until the abstracts were extended and title opinions rendered.
The title opinion rendered on August 6, 1973, showed that, in addition to the Bluhms' mortgage of $35,000 to the savings & loan and the two land contracts, the two parcels of land were encumbered by accrued 1973 real estate taxes and delinquent real estate taxes for the year 1972 in the amount of $3,650.43. The two parcels were also subject to a lien arising from a March 28, 1973 judgment against Estreen in favor of Davel & Kohlbeck Engineering Co. On September 29, 1973, in preparation for closing the transaction, the savings & loan mailed an approximate closing statement which included as an expense to be borne by the Bluhms delinquent real estate taxes for 1972 in the amount of $3,650.43 plus interest thereon in the amount of $292.03.
The closing conference was scheduled for October 23, 1973 at the savings & loan. At the conference, Mr. Bluhm objected to the inclusion as a seller's expense the delinquent real estate taxes for 1972 and refused to close the deal. Mr. Bluhm contended that Estreen was responsible for real estate taxes after the execution of the land contracts, while Estreen contended that since, pursuant to the compromise agreement, the Bluhms were obligated to convey title free of all liens and encumbrances, they were liable for the delinquent 1972 taxes. The closing conference then terminated.
On December 18, 1973, in order to prevent a foreclosure by the savings & loan upon the Bluhms' mortgage on the subject parcels, Estreen paid the savings & loan $39,187.82 and received an assignment of its interest under the mortgage. Soon thereafter, Estreen sued Bluhms for specific performance.
Trial was held before the court on October 17, 1974. The trial court, in its decision dated December 4, 1974, determined that under the compromise agreement of July 27, 1973, the Bluhms were obligated to convey the subject parcels free and clear of all liens and encumbrances upon the payment of $86,750 by Estreen. Consequently, the trial court held the Bluhms were responsible for:
1. 1972 real estate taxes, plus interest, totalling $4,292.91;
2. 1973 real estate taxes, plus interest, totalling $3,710.93;
3. Accrued 1974 real estate taxes to October 31, 1974, in the amount of $1,863.30; and
4. The payout on the Bluhms' mortgage assigned to Estreen in the amount of $39,187.82 plus interest thereon to October 31, 1974, in the amount of $3,143.36.
The trial court concluded that upon the payment by Estreen of $33,551.68, which is the difference between the compromise purchase price, $86,750, and the sum of the encumbrances, $53,198.32, the Bluhms would be obligated to convey title to the parcels to Estreen. Judgment was accordingly entered on January 6, 1975 for specific performance of the land contracts upon the payment of the above amount by Estreen.
On February 5, 1975, the Bluhms moved the trial court to vacate its judgment and reconsider its decision. The court amended its decision, reducing the liabilities of the Bluhms under the contract. The trial court excluded the real estate taxes for 1973 and 1974 from the responsibility of the Bluhms. The trial court further reduced the interest assessed against the Bluhms upon the payout of their mortgage to the sum of $2,331.68. The trial court thus calculated the amount Estreen owed the Bluhms as follows:
Compromise price $86,750.00
Mortgage paid off by Estreen $39,187.82
Interest on mortgage from
December 18, 1973 to
October 17, 1974 $ 2,331.68
1972 real estate taxes
and interest $ 4,292.91
----------
$45,812.41 $45,812.41
----------
Amount due from Estreen
to Bluhms as of date
of trial, October
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