Gulden v. Sloan, 10004

• Decision Date: 28 October 1981
• Docket Number: No. 10004,10004
• Citation: 311 N.W.2d 568
• Parties: James GULDEN and Carol Gulden, Plaintiffs and Appellees, v. Gary D. SLOAN and Rebecca Sloan, Defendants and Appellants. Civ.
• Court: North Dakota Supreme Court

Page 568

311 N.W.2d 568

James GULDEN and Carol Gulden, Plaintiffs and Appellees, v. Gary D. SLOAN and Rebecca Sloan, Defendants and Appellants.

Civ. No. 10004.

Supreme Court of North Dakota.

Oct. 28, 1981.

Benjamin C. Pulkrabek, Mandan, for plaintiffs and appellees; argued by Benjamin C. Pulkrabek, Mandan.

Wheeler, Wolf, Peterson, Schmitz, McDonald & Johnson, Bismarck, for defendants and appellants; argued by Orell D. Schmitz, Bismarck.

ERICKSTAD, Chief Justice.

This is an appeal from a judgment against Gary D. Sloan and Rebecca Sloan (Sloans) in favor of James Gulden and Carol Gulden (Guldens) rendered in the District Court of Burleigh County. The judgment resulted from an action brought by Guldens to enforce an oral contract involving a house located in Imperial Valley, a subdivision of Bismarck. We affirm.

The Guldens leased the Imperial Valley house from Walter Krueger in February of 1979. Under the terms of the written lease agreement, Guldens were required to make a rental payment of $414 from February 10, 1979, to March 1, 1979, and then regular monthly payments of $622 until the lease expired on December 31, 1979. The provisions of the lease also gave the Guldens an option to purchase the property during the lease period. The purchase price was set at $62,400, and Guldens were to be credited for any loan equity which accrued during the tenancy. The payments of the principal were to be credited toward the purchase price if the option were exercised.

Guldens made regular monthly payments to Krueger until November of 1979 when, because of James Gulden's unemployment, they were unable to pay during November and December. Because of their financial difficulties, the Guldens talked to Krueger regarding their obligations under the lease. They testified that Krueger told them that if they could find a purchaser for the property, he would allow the property to be sold for the price agreed upon in the lease agreement and that they could keep whatever amount exceeded that purchase price because he considered the excess over $62,400 to be the equity acquired by Guldens during their tenancy.

The Guldens continued to occupy the residence in December, 1979. The Sloans, meanwhile, owned and lived in a mobile home. In the latter part of that month, James Gulden and Gary Sloan, who had known each other for 30 years, had a discussion in which Gulden advised Sloan that he was interested in selling the Imperial Valley house. Sloan told Gulden that he was looking for a home, and based on this conversation it was decided that the Sloans should go out to the Guldens' house to look at it.

The Sloans did visit Guldens' home in Imperial Valley and after some discussion Guldens offered to forgo their option if the Sloans would purchase the house. It is at this point that the two parties disagree. The Guldens contend that an oral agreement was reached that night under which the Sloans agreed to buy the Imperial Valley house. The sale price of the house according to the Guldens, was to be $68,400, the additional $6,000 above the option purchase price was to be the Guldens' equity acquired during their lease tenancy. The consideration between the parties was that the Guldens would abandon their option to purchase the house; and, in turn, Sloans would transfer title to their mobile home to the Guldens free of encumbrances. The Sloans would then purchase the Imperial Valley house from Krueger at a price of $62,400, which was the price set in the Guldens' option.

The Sloans, while agreeing that terms of a sales agreement were discussed, contend that no formal agreement was reached during their discussions with the Guldens. They contend that after the Guldens informed them that the owner of the Imperial Valley house was Walter Krueger, they dealt exclusively with Mr. Krueger.

An earnest money agreement was executed on December 31, 1979, between Krueger and Sloans in which the Sloans agreed to purchase the Imperial Valley house for a price of $61,556.62. Possession of the premises was to be delivered to the Sloans on or before February 1, 1980.

On about February 1, 1980, the Sloans moved into the house in Imperial Valley and Guldens moved into the mobile home formerly occupied by the Sloans. The couples helped each other move and exchanged keys. At the trial, Carol Gulden testified that she had talked to Gary Sloan by telephone after she and her husband had moved into the mobile home, and that Mr. Sloan informed her that he was going to pay off the mobile home with his income tax refund, at which time he would give Guldens the title to it. When Sloans did not give Guldens title to the mobile home, the Guldens commenced an action for specific performance, requesting an order requiring that title to the mobile home be transferred to them pursuant to the oral agreement. Before completion of the trial, the Sloans transferred the mobile home to others making specific performance impossible. The trial court ordered judgment in the amount of $6,000 to the Guldens.

Three issues are presented on this appeal:

1. Was the trial court's finding of fact that the plaintiffs acquired $6,000 in equity during the lease of the house in Imperial Valley "clearly erroneous"?

2. Was the trial court's conclusion of law that the parties entered into an oral agreement for good and valuable consideration correct?

3. Was the trial court's finding of fact that the oral agreement had been partially performed "clearly erroneous"?

In reviewing the trial court's finding that the Guldens acquired $6,000 in equity, we apply the "clearly erroneous" rule of Rule 52(a) of the North Dakota Rules of Civil Procedure. That rule provides in relevant part:

"Findings of fact shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge of the credibility of the witnesses."

Recently, in Hoge v. Burleigh County Water Management District, 311 N.W.2d 23 (N.D.) (Civil No. 9948, filed October 9, 1981), we discussed the weight given to the trial court's findings of fact as follows:

"The trial court's findings are to be given the same weight as a jury verdict and, in reviewing those findings, the evidence must be viewed in a light most favorable to the findings. On appeal it is not the function of this court to substitute its judgment for that of the trial court. We must give due regard to the opportunity of the trial court to judge the credibility of witnesses, and, unless clearly erroneous, the findings of fact of the trial court, sitting without a jury, are binding upon appeal. Questions of fact decided by the trial court upon conflicting evidence are not subject to reexamination by this court. The mere fact that we might have viewed the facts differently if we had been the initial trier of the case does not entitle us to reverse the lower court." (Citations omitted.) Hoge v. Burleigh County Water Management District, 311 N.W.2d 23 at 28 (N.D.1981).

After examining the evidence, we conclude that the trial court's finding that Guldens acquired $6,000 in equity during their tenancy of the Imperial Valley house was not "clearly erroneous". That finding is supported by testimony by Krueger and the Guldens. That testimony indicates that Krueger promised Guldens they could arrange for the sale of the Imperial Valley house and that they could keep any money received in excess of $62,400. That excess, he said, would be considered their equity in the house. Although Guldens didn't make sufficient payments during their tenancy to acquire $6,000 in equity, we believe it is reasonable to conclude that the equity Krueger spoke of was the result of inflation.

As a result, James Gulden looked for a buyer. He found a buyer in December of 1979 when he talked to Gary Sloan. The Guldens testified that they agreed with Sloans to forgo their option to purchase the Imperial Valley house if Sloans would pay $68,400 for the house. That such an agreement was made is further supported by the testimony of Krueger's attorney, Russell Myhre. He testified that there was discussion regarding the figure of $68,400 at his office, in the presence of Krueger and Gary Sloan, at the time the earnest money contract was signed. That testimony, the testimony by Krueger and James Gulden regarding their agreement for selling the Imperial Valley house, and the testimony by Guldens about their agreement with Sloans supports the trial court's finding that the Guldens had acquired $6,000 in equity.

The Sloans next contend the district court's conclusion that the parties entered into an oral agreement for good and valuable consideration is error. Here, they make two arguments. They first argue that the evidence is insufficient to show the requisite consent for formation of a contract. Secondly, they argue that the oral agreement is unenforceable because the consideration was insufficient.

The consent of the parties is essential to the existence of a contract. § 9-01-02, N.D.C.C. The determination as to whether or not an agreement meets the criteria necessary to be declared a valid contract is a legal one made by the court and is thus fully reviewable. Gerhardt Const. Co. v. Wachter Real Estate Trust, 306 N.W.2d 223, 226 (N.D.1981); Kuhn v. Kuhn, 281 N.W.2d 230, 235 (N.D.1979); Hultberg v. City of Garrison, 79 N.D. 356, 56 N.W.2d 319, 321 (1953).

Although determining the issue of whether or not the required mutual consent existed results in a legal conclusion, determining the existence of mutual consent necessarily involves factual questions.

Section 9-03-01, N.D.C.C., provides that the consent of the parties to a contract must be free, mutual, and communicated by each to the other. In deciding whether or not the parties consented to entering into a contract we must look to the actions of the parties at the time, and after the agreement was made. To do so, we must rely on the evidence and the trial court's finding of fact. In reviewing the...