Graves v. Stanton

• Decision Date: 01 September 1981
• Docket Number: No. 31911,31911
• Citation: 621 S.W.2d 524
• Parties: Gary GRAVES, Appellant, v. Rick STANTON, Respondent.
• Court: Missouri Court of Appeals

Page 524

621 S.W.2d 524

Gary GRAVES, Appellant, v. Rick STANTON, Respondent.

No. 31911.

Missouri Court of Appeals, Western District.

Sept. 1, 1981.

Glen A. Dietrich, Maryville, for appellant.

Roger M. Prokes, Maryville, for respondent.

Before KENNEDY, P. J., Wasserstrom, C. J., and Shangler, J.

KENNEDY, Presiding Judge.

The contest in the present case is between the lessor-seller of a mobile home (the appellant Graves) and the lessee-buyer (the respondent Stanton) under a "lease agreement with option to buy", over the insurance proceeds when the mobile home was destroyed by fire.

The trial court after a non-jury trial in a declaratory judgment case held that the respondent, Rick Stanton, was entitled thereto. The lessor-seller appealed.

The facts are as follows:

Appellant Gary Graves, along with his wife (who is a party to the case, although we refer to appellant in the singular), owned a 1969 Detroiter mobile home. They entered into a contract with respondent Rick Stanton, dated December 21, 1978, entitled "Lease Agreement with Option to Buy". The contract purported to lease the mobile home to respondent Stanton for $100 per month rent. Within one year Stanton would have the option to purchase the mobile home for $4,000, less any amount theretofore paid as rent. The contract provided that the lessee was to "provide lessor with proof of full insurance coverage immediately". The contract, which was written in longhand by Mrs. Graves, is set out in full in the margin. ¹

Respondent Stanton took possession of the trailer. It was located at Maryville, Missouri, when the contract was entered into, but was moved at respondent's expense to Pickering, Missouri. Respondent secured a policy of insurance with the Farmers Mutual Insurance Company of Nodaway County, insuring the mobile home for $7,000, and the household and personal effects for $3,000. Respondent Stanton paid the premium for one year, in the sum of $80. The named insured was Rickie Stanton, while Gary Graves was named as mortgagee. The policy was mailed to Graves. Graves complained to Stanton of Stanton's being the insured while he was described as mortgagee, but did not pursue the complaint and it remained as it was. The designation of the parties on the insurance policy is not important in the case.

Respondent Stanton occupied the mobile home as his residence until November 5, 1979. He was in the process of moving out when the mobile home caught fire and burned. It was a "total loss", and the insurance company issued a check for $6,800 for the mobile home loss. The figure was arrived at by deducting from the $7,000 the sum of $100 deductible by the terms of the policy, and $100 for the frame and running gears of the mobile home which the insurance company claimed as salvage and sold back to Stanton. (Stanton used them to build a home-made trailer which he sold for $500.) The insurance proceeds check for $6,800, plus another $1,381 for the contents destroyed by the fire, were included in a single draft for $8,181, made payable to "Rickie Stanton and Gary Graves". The draft was dated November 16, 1979, and it was delivered to respondent Rickie Stanton.

Stanton shortly before the fire had indicated to Graves his desire to exercise the option and had discussed Graves's carrying the unpaid balance as a purchase money lien. That arrangement was still under consideration at the time of the fire. We take it from the evidence that Stanton's moving was no indication of any purpose to abandon the contract, and such a contention is not made here.

On December 3, 1979, Stanton wrote Graves a letter, advising him that he was exercising the option to purchase. The letter contained the following: "In exercising this option I will deliver to you a check in the amount of $2,800, a copy of which is attached hereto, on the condition that you deliver ... to my order any insurance proceeds that you might have received or have an interest in from the insurance that was to be maintained on this mobile home.

"Upon your transferring to me the title to this mobile home and insurance for the damage this mobile home has sustained, I will immediately deliver to you the check referred to above in the amount of $2,800."

A photocopy of a check was attached to the letter, dated December 1, 1979, in the amount of $2,800, payable to the order of Gary Graves and signed by Rickie Stanton. It was not disputed that Stanton had paid $1,200 in rental payments and that the $2,800 represented the balance owing on the $4,000 purchase price. Neither is there any dispute that the attempted exercise of the option came within the one-year option period provided in the agreement between the parties. The parties do not explain how the $100 cleaning deposit has been treated by them.

Appellant Graves made no response to the letter, but on December 21, 1979, at the expiration of the option period, filed the present declaratory judgment action in which he claimed the proceeds of the mobile home insurance.

The trial court held and adjudged that respondent's attempted exercise of the option was effective, and that he was entitled to all of the insurance proceeds except the $2,800 still owing to Graves as the balance of the purchase price, and ordered the insurance proceeds so distributed.

Appellant Graves argues that the destruction of the mobile home voided the contract between himself and respondent under the doctrine of impossibility of performance or the doctrine of commercial frustration. Enlarging upon that argument, he says that the fire made it impossible for them to perform their contract, and therefore the contract was nullified. Says the appellant in his brief: "Accordingly, the doctrine of commercial frustration or the doctrine of impossibility of performance would operate to excuse any further performance by the parties once the fire occurred. Such application of the law would operate to avoid the Lease Agreement with Option to Buy between the parties, thus ending the lessor-lessee relationship, and the option to purchase of the Respondent lessee." Appellant cites the cases of Howard v. Nicholson, 556 S.W.2d 477 (Mo.App.1977); Ellis Gray Milling Company v. Sheppard, 359 Mo. 505, 222 S.W.2d 742 (1949); Missouri Public Service Company v. Peabody Coal Company, 583 S.W.2d 721 (Mo.App.1979); and Semo Grain Company v. Oliver Farms, Inc., 530 S.W.2d 256 (Mo.App.1975). The court in Howard v. Nicholson, supra at 481-482 says: "Under the doctrine (of commercial frustration), if the happening of an event not foreseen by the parties and not caused by or under the control of either party has destroyed or nearly destroyed either the value of the performance or the object or purpose of the contract, then the parties are excused from further performance. The doctrine of commercial frustration is close to but distinct from the doctrine of impossibility of performance. Both concern the effect of supervening circumstances upon the rights and duties of the parties but in cases of commercial frustration, '(p)erformance remains possible but the expected value of performance to the party seeking to be excused has been destroyed by a fortuitous event, which supervenes to cause an actual but not literal failure of consideration' (citation omitted)."

In addition to the common law doctrine enunciated by the above cases, appellant also points us to § 400.2-613(a), RSMo 1978, wherein the Uniform Commercial Code provides: "Where the contract requires for its performance goods identified when the contract is made, and the goods suffer casualty without fault of either party before the risk of...