Hansen v. Chapin

• Decision Date: 29 August 1975
• Docket Number: No. 56979,56979
• Citation: 232 N.W.2d 506
• Parties: Harold HANSEN and Judy Hansen, Appellants, v. Stanley Raymond CHAPIN and Dorothy J. Chapin, husband and wife, Appellees.
• Court: Iowa Supreme Court

Page 506

232 N.W.2d 506

Harold HANSEN and Judy Hansen, Appellants, v. Stanley Raymond CHAPIN and Dorothy J. Chapin, husband and wife, Appellees.

No. 56979.

Supreme Court of Iowa.

Aug. 29, 1975.

J. R. Sokol of Sokol & Sokol, Maquoketa, and Donald G. Senneff of Shaff, Farwell & Senneff, Clinton, for appellants.

Howard M. Remley of Remley, Heiserman & Story, Anamosa, for appellees.

Heard before MOORE, C.J., and MASON, RAWLINGS, LeGRAND and McCORMICK, JJ.

MASON, Justice.

Harold Hansen, as vendee in an installment contract for the sale and purchase of real estate in Jackson County, and his wife Judy brought an action in equity against the vendors, Stanley Raymond Chapin and his wife Dorothy J., seeking specific performance of the contract or, in the alternative, return of all monies paid under the contract and money damages. Plaintiffs appeal from judgment dismissing their petition as amended in its entirety including all claims thereunder and the assessment of costs.

May 1, 1967, Stanley and Dorothy Chapin entered into a 'contract for conveyance of real estate' with Harold Hansen, then unmarried, for the sum of $14,000 payable $500 at the time of signing of the contract, $3500 January 2, 1968, and the balance in annual installments of $1000 commencing January 2, 1969, with interest on the unpaid balance at the rate of six and one-half percent per annum.

The contract was recorded June 9, 1967. It contained a forfeiture clause as well as a provision forbidding the purchaser from selling, assigning or renting the real estate without prior Written consent from the vendors.

Harold Hansen made the $500 required down payment on signing the contract and entered possession of the house and yards. He also made the payment of $3500 due January 2, 1968 and possession of the farmlands and outbuildings was delivered at that time in accordance with the terms of the contract. Hansen made a further partial payment of $500 January 7, 1971.

Meanwhile plaintiff Harold Hansen married Judy July 27, 1967, at which time the couple set up housekeeping on the farm, remaining there until their 'eviction' at the end of May 1971.

In an apparent effort to resolve any problems with ownership of the farm should Judy have died (she was previously married), Harold executed a written instrument entitled 'Assignment and Conveyance' which assigned his entire interest in the farm to himself and Judy as joint tenants with full right of survivorship and not as tenants in common. This instrument was signed and notarized October 23, 1968, but was never recorded. No written consent of the vendors to this assignment was ever obtained. The testimony is in conflict whether Chapin or his wife had knowledge of this assignment. Harold testified he informed Mr. Chapin of his intent to so assign to which Chapin voiced no objection. Chapin, on the other hand, admitted knowledge of the Hansen marriage but denied he was ever told about or knew of the unrecorded assignment.

In any event, the Hansens for reasons undisclosed, failed to tender the 1968 or 1969 installments. As a consequence, the Chapins, who had by this time moved to Ohio, caused to be served upon Harold 'Notice of Forfeiture of Real Estate Contract' January 21, according to the sheriff's return of service. The notice provided the land sale contract would stand forfeited unless the 'parties in default', within 30 days, performed the contract terms and conditions in default together with payment of the reasonable cost of serving the notice.

The notice of forfeiture named only Harold; it did not include Judy. It was Judy, nevertheless, who answered the sheriff's knock at the door and summoned her husband. She also stated she read the notice (as well as all other mail she and her husband received).

The notice prompted the Hansens to inaugurate attempts to achieve outside financing to pay off the amount owed the Chapins. And in that regard they contracted Chapins' attorney, LaVerne Roberg, who at this point was handling the situation between Chapins and Hansens. This meeting occurred sometime in January or February 1971. Harold testified Roberg informed him of the amount of money which would have to be paid to avoid forfeiture. Harold stated the agreement was that $100 was to be paid every 30 days, which amount would be held in escrow. If the Hansens obtained financing, such payments would be applied to the contract. If not, the sums would be forfeited.

Attorney Roberg, however, testified these payments were not related to 30 day intervals. On the contrary, the first $100 payment stopped forfeiture only to the point a Federal Housing Administration loan fell through. The agreement to withhold forfeiture 'naturally' stopped when this loan was not obtained. When the F.H.A. loan was not forthcoming, Hansens informed Roberg of their application for a Veterans Administration loan. The above agreement was then brought back to life pending the outcome of that application. Two more $100 payments were likewise made to keep the agreement open.

Defendants' exhibit 13, a letter dated March 17, 1971, to Chapin from Roberg, a copy of which was sent to the Hansens, reads in pertinent part:

'Mr. and Mrs. Hansen will proceed with their application for the VA loan and will make $100.00 payments to this office, the first by Friday, March 19, and the second on or before April 15. They understand that these payments will be applied on their indebtedness to you should they pay the contract in full, and if they are not able to pay the contract balance, these $100.00 payments will be forfeited by them.'

By May 3 the VA loan had not as yet been approved, so on that date Roberg wrote the Hansens another $100.00 payment was expected by May 7 if they wished to remain on the premises. The letter suggested the Hansens do what they could to expedite the VA loan. The Hansens paid this amount May 7.

Unfortunately, the VA loan was denied and defendants recorded an 'Affidavit in Support of Forfeiture of Real Estate Contract' May 13. On May 17 notice to surrender possession was given plaintiffs, who immediately asserted their right to occupancy for a period of 30 days following the May 7 payment. Defendants agreed to allow the Hansens to remain in possession until June 1.

Meanwhile, the Chapins had entered into negotiations for the resale of the farm to Dennis Dean Appelhans and Kathleen K. Appelhans. Negotiations began May 15 and ended with the signing of a warranty deed May 28. At the approximate same time, the Hansens were able to attain financing from Mr. Charles Biddle. In effect, this 'loan' was really a purchase of the farm by Biddle.

In relation to the Biddle transaction, Chapin received a telephone call May 16 from Biddle offering more money if the Chapins would 'throw over' the then oral agreement with the Appelhanses. Chapin refused. In any event, the Hansens tendered Biddle's cashier's check to the Chapins, who returned it to Roberg. Roberg wrote Hansens' attorney June 8 the Chapins refused this tender because the amount was insufficient. This letter also contained a denial the notice of forfeiture was extended to June 7.

Plaintiffs then filed their petition asking the trial court (1) to hold the forfeiture null and void; (2) to specifically enforce the original land sale contract; or (3) in the alternative, if title were found unmerchantable, to cancel the contract and order the Chapins to return all sums paid with interest and damages in total sum of $9,000. Finally, plaintiff prayed Dennis and Kathleen Appelhans (listed as defendants...