First Sec. Bank of Idaho, N.A. v. Hansen

• Decision Date: 08 November 1984
• Docket Number: 15202,Nos. 15188,s. 15188
• Citation: First Sec. Bank of Idaho, N.A. v. Hansen, 690 P.2d 927, 107 Idaho 472 (Idaho 1984)
• Parties: FIRST SECURITY BANK OF IDAHO, N.A., a corporation, Plaintiff/Respondent, v. Mark HANSEN and Janet Hansen, husband and wife, Defendants/Appellants/Cross-Respondents, and Flyer's, Inc., an Idaho corporation and Hansen Ranch, Inc., an Idaho corporation, Defendants/Respondents/Cross-Appellants. Mark HANSEN, and Mark Hansen as Personal Representative of the estate of Janet F. Hansen, deceased, Plaintiffs/Appellants/Cross-Respondents, v. FLYER'S, INC., an Idaho corporation; Hansen Ranch, Inc., an Idaho corporation; Earl C. Barnard and Kathryn Barnard, husband and wife; Peter Hodgkinson, individually; Floyd R. Caldwell; and Floyd R. Caldwell, Jr., Defendants/Respondents/Cross-Appellants.
• Court: Idaho Supreme Court

Page 927

690 P.2d 927

107 Idaho 472

FIRST SECURITY BANK OF IDAHO, N.A., a corporation, Plaintiff/Respondent, v. Mark HANSEN and Janet Hansen, husband and wife, Defendants/Appellants/Cross-Respondents and Flyer's, Inc., an Idaho corporation and Hansen Ranch, Inc., an Idaho corporation, Defendants/Respondents/Cross-Appellants Mark HANSEN, and Mark Hansen as Personal Representative of the estate of Janet F. Hansen, deceased, Plaintiffs/Appellants/Cross-Respondents, v. FLYER'S, INC., an Idaho corporation; Hansen Ranch, Inc., an Idaho corporation; Earl C. Barnard and Kathryn Barnard, husband and wife; Peter Hodgkinson, individually; Floyd R. Caldwell; and Floyd R. Caldwell, Jr., Defendants/Respondents/Cross-Appellants.

Nos. 15188, 15202.

Supreme Court of Idaho.

Nov. 8, 1984.

Henry F. McQuade (argued), and R.H. Young, Nampa, for defendants/appellants/cross-respondents.

Stanley W. Welsh, Boise, for defendants/respondents/cross-appellants Flyers, Inc., and Hansen Ranch, Inc.

No appearance by plaintiff/respondent First Security Bank.

BISTLINE, Justice.

HISTORY

In September, 1977, plaintiffs Hansens, in an attempt to retire, sold their ranch on contract to defendant Flyer's, Inc. The purchase price of $850,000 included all real property, improvements and most of the personal property, to be paid in annual installments. The principals of Flyer's, Inc. personally guaranteed the contract. At the signing of the contract, Hansens received $150,000, which, other than some payments made by defendants on existing mortgages, is the sole consideration received to date. Extended legal proceedings then took place. Sometime in 1983 Hansens regained possession of the ranch, which was in poor condition and without cattle herds or crops. Most of the machinery was missing, while some was present in a damaged condition. In addition, Hansen (his wife, Janet Hansen, has since died) is attempting in other lawsuits to quiet title and settle related matters between himself and various third parties.

Procedurally, as noted by the district court, this case "began in confusion and has progressed accordingly." After Flyer's failed to adhere to certain terms in the contract, Hansen sent them notice of default in February of 1979. In December of 1979, after changing attorneys, Hansen filed a complaint, seeking to rescind or reform the contract and to recover for the alleged conversion of some cattle and hay which he claims were not included in the sale. First Security Bank, the escrowholder, filed an interpleader action in March, 1980, as a disinterested stakeholder, requesting interpretation of the notice of default. On November 30, 1981, in response to a motion by plaintiffs, the action filed by First Security Bank was consolidated with the Hansen v. Flyer's case. In addition, District Judge Kramer at this time ordered that all checks held in escrow (amounting to $70,000) by First Security Bank be immediately cashed. On January 6, 1982, the Hansens filed a Motion to Compel Performance as, by that time, the checks had been presented for payment and had been dishonored and returned by the bank on which drawn. The Hansens requested the court to compel the defendants to pay $70,000 to the escrow holder or to be found in contempt of the earlier order.

On January 11, 1982, the parties appeared in court pursuant to the Motion to Compel Performance, and at that time the parties, through counsel, stated that the case had been settled, and that the original contract in the case was going to be rewritten. The parties then stipulated on the record as to most of the terms of the new agreement and were to return to court shortly after the new agreement was signed in order that the trial court could then dismiss the action. However, the parties were thereafter unable to agree upon all of the terms of the new contract: specifically, the parties disagreed as to whether the Hansens were to convey a particular 320-acre tract of land to the Buyers upon execution of the contract and payment of the $75,000, whether the execution of the contract by Mrs. Janet Hansen, in view of her mental incapacity, was to be by an officer of the court or one of the parties; and whether the new contract included a provision from the addendum of the old contract personally guaranteeing the purchase price by the individual members of Flyer's, Inc.

On February 11, 1982, the Buyers filed a Motion to Compel the Hansens to sign the contract and to deed the 320 acres to them for the $75,000. At that hearing it became known to the court that Janet Hansen was mentally incompetent and presently residing in a care center in Salt Lake City, Utah.

On March 18, 1982, the trial judge issued a Memorandum Opinion determining the effect of the stipulation of January 11, 1982. In its opinion, the trial court stated that, by their stipulation, it was clear that the parties intended that the addendum to the original contract would remain intact as to its provision that the contract would be guaranteed personally by the officers and stockholders of the defendant corporations. In addition, the trial court stated that the deed to the 320-acre parcel would be held in escrow as per the original agreement. And finally, the trial court stated that, because parties are bound by the stipulations of counsel and, at the time such stipulations were made, nothing was indicated in the record concerning the alleged incompetence of Janet Hansen, Mark Hansen would be ordered by the court to sign the agreement on behalf of both himself and his wife. The terms of the stipulation resulted in a June 29, 1982, judgment interpreting the stipulated settlement. Flyer's made no payments under the reformed agreement, and Hansen sent to Flyer's another notice of default.

On October 4, 1982, the Hansens moved for a Temporary Restraining Order and preliminary injunction restraining Flyer's from removing machinery from the ranch and ordering a return of all personal property. On November 1, 1982, the trial court granted the temporary restraining order and set a hearing on the preliminary injunction. At the hearing, Flyer's argued that it was the owner of the machinery, introducing as evidence a bill of sale executed September 2, 1977. Following the hearing, the trial court issued an injunctive order on November 13, 1982, restraining defendants from removing certain personal property and requiring the return of other personalty; it declared void the September 2, 1977, bill of sale. Later it ordered the First Security Bank to return to Mark Hansen certain documents held in escrow.

Thereafter, pursuant to the trial court's earlier orders the Hansens moved for an Order to Compel Performance or have judgment for reasonable value of the property not returned. In turn, Flyer's Inc., and Hansen Ranch, Inc., ¹ filed a motion to have the trial court declare those orders void. The trial court subsequently heard argument on these motions, as well as a new motion by plaintiffs to hold defendants in contempt. Apparently Hansen had regained possession of the ranch by this time, although the record does not state when or how it was accomplished. Flyer's argued that the temporary restraining order and the preliminary injunction were void for lack of jurisdiction and procedural defects. Then, Hansen moved to amend his complaint to allege conversion of additional cattle and a horse, and to seek cancellation of the contract, and general and punitive damages.

On August 1, 1983, the district court issued its Final Memorandum Opinion and Order which is the subject of this appeal. Hansen's motion to amend the complaint was denied. Damages for the failure of Flyer's to return the machinery was denied based on a finding that there was no proof of value. The court also denied Flyer's motion to void the temporary restraining order and the preliminary injunction, ruling that Flyer's had waived any defects in jurisdiction or procedure by ignoring the injunction and by failing to object until seven months later. The court further held Flyer's in contempt and assessed a $500 fine. The court held that any additional relief sought by Hansen for damages would have to be brought in an independent action for breach of the reformed contract. Both parties have appealed.

I.

The Hansens' first contention, that an automatic forfeiture of the first contract occurred following uncured notice of default, does not withstand scrutiny. The contract terms specifically gave the Hansens the right to declare a default, true, but here the Hansens did not so avail themselves, but thereafter, indulging in the default and the failure to comply with a 60-day notice, and after changing attorneys, brought suit to rescind or reform the contract. The filing of the lawsuit resulted in an open-court stipulation to enter into a reformed contract which we have noted above was enforced by the trial court. Clearly, the Hansens elected not to stand on their right to declare a forfeiture, and at the filing of their complaint recognized the continuing existence of the contract.

II.

Appellants next contend that the trial court erred in ordering Mark Hansen to sign the amended contract for his wife, Janet Hansen. Appellants argue that, because Janet Hansen was allegedly incompetent at the time the revised contract was signed, and was not represented by a guardian ad litem or conservator of her estate, the agreement was invalid and should be declared void ab initio. The district court, however, refused to void the agreement on this basis, stating the following:

"The Court is concerned with the fact that Mrs. Hansen 'is not in physical or mental condition to execute any deeds or agreements.' Parties are bound by the stipulations of counsel. Nothing in the record indicates that Mrs. Hansen was mentally incapacitated at the time of the employment of Mr. Jack Murphy who acted as counsel for the Hansens at the time of the stipulation in open court. Therefore, since Mrs. Hansen cannot...