Jack B. Parson Companies v. Nield, 19910

• Decision Date: 07 March 1988
• Docket Number: No. 19910,19910
• Citation: 751 P.2d 1131
• Parties: JACK B. PARSON COMPANIES, formerly known as Parson Asphalt Products, Inc., Plaintiff and Respondent, v. Layle H. NIELD and Mrs. Layle H. Nield, Defendants, Third-Party Plaintiffs, and Appellants, v. FINANCIAL HOLDING CORPORATION, Utah Northern Development Corporation, Keith Biesinger and Karl Smith, Third-Party Defendants and Respondents.
• Court: Utah Supreme Court

Page 1131

751 P.2d 1131

JACK B. PARSON COMPANIES, formerly known as Parson Asphalt

Products, Inc., Plaintiff and Respondent, v. Layle H. NIELD and Mrs. Layle H. Nield, Defendants, Third-Party Plaintiffs, and Appellants, v. FINANCIAL HOLDING CORPORATION, Utah Northern Development

Corporation, Keith Biesinger and Karl Smith,

Third-Party Defendants and Respondents.

No. 19910.

Supreme Court of Utah.

March 7, 1988.

George W. Preston, Logan, for Nields.

LaVar E. Stark, Ogden, for Parson Companies.

Harold R. Stephens, Salt Lake City, for Utah Northern Development Corp.

DURHAM, Justice:

Defendants Mr. & Mrs. Layle H. Nield (Nield) appeal from the trial judge's ruling granting Jack B. Parson Companies (Parson) title and damages in a quiet title action. Nield argues that damages were inappropriate and that the trial court misconstrued the real estate contract. Nield also appeals from the assessment of $1.00 in nominal damages against third-party defendant Biesinger.

Parson sold a parcel of commercial real estate to Utah Northern Development Corporation (UND), using a standard form uniform real estate sales contract. The parcel was subject to a trust deed in favor of the Bank of Utah securing a $300,000 loan. The terms of the contract included a purchase price of $409,000, with a down payment of $40,900, the balance to be paid in semi-annual installments and quarterly interest payments. The contract provided the seller with three alternative courses of action in the event of a default: a release from his obligations to convey the property and the right to keep all installments paid by buyer, the right to bring an action to recover delinquent installments, and the right to declare the entire amount due and payable. The $40,900 down payment was financed with money loaned to UND by Nield at an annual interest rate of 50 percent. Biesinger, a lawyer and an officer of UND, negotiated the terms of the loan with Nield. After the down payment was made, UND assigned its contract rights to Nield as security for the loan.

The assignment was recorded in Box Elder County on December 18, 1981. UND failed to make the quarterly interest payments to Parson, and as a result, Parson negotiated with Biesinger an addendum to the original sales contract and an escrow agreement. The addendum provided UND with extensions of time for the delinquent payments, and in consideration for the extensions, UND delivered into escrow a quitclaim deed in favor of Parson. Nield was not informed of this default, the addendum, or the accompanying quitclaim deed. UND again failed to make required payments, and Parson duly recorded the quitclaim deed on April 22, 1982. On August 4, 1982, Parson discovered the assignment of the original contract from UND to Nield. Parson notified Nield of the delinquency in payments and offered him the opportunity to bring the contract payments current. Nield refused to make payments or to release the record of assignment. At this time, because the value of the land had declined and the trust deed to the Bank of Utah was already in place, any interest Nield might have held was essentially worthless. On April 20, 1983, Nield delivered to Parson a quitclaim deed and release of assignment, reserving by stipulation all rights he may have had as a result of the contested transactions.

At trial, Parson was awarded clear title and $8,920.83 in damages from Nield for wrongfully refusing to release his assignment of interest from August 5, 1982, to April 20, 1983. The damages were determined by estimating the amount of interest that had accrued on the trust deed note to the Bank of Utah while the cloud on the title existed. Nield was awarded one dollar in nominal damages from third-party defendant Biesinger for committing a "technical wrong" by failing to protect Nield's interest.

Nield argues on appeal that the award of damages against him was unjustified, that the trial court incorrectly permitted forfeitures under the original contract, that third-party defendant Biesinger committed more than a technical breach of fiduciary duty, and that the trial court incorrectly admitted opinion evidence at trial.

We examine first the nature of Nield's interest. Nield received an assignment of UND's interest in the real estate contract between UND and Parson. An assignment of an interest in a contract gives the assignee the same rights as the assignor and nothing more. See Tanner v. Lawler, 6 Utah 2d 84, 88-89, 305 P.2d 882, 885, partially modified on reh'g, 6 Utah 2d 268, 311 P.2d 791 (1957); Wiscombe v. Lockhart Co., 608 P.2d 236, 238 (Utah 1980). The assignment made by UND to Nield was for security purposes only, was not an "out and out transfer," and had no "significance whatever once the loan was paid." Jeffs v. Citizens Fin. Co., 7 Utah 2d 106, 107, 319 P.2d 858, 858 (1958). The interest of an assignee under such circumstances has been compared to and treated as a mortgage. Lockhart Co. v. Anderson, 646 P.2d 678, 679-80 (Utah 1982). However, it is the responsibility of such an assignee to ascertain the status of the assignor's rights and duties under the contract, see Jeffs, 7 Utah 2d at 107, 319 P.2d at 858; Wiscombe, 608 P.2d at 238, and when a real estate contract is voluntarily terminated in good faith by the vendor and the assignor, the interest of a judgment creditor of the vendee is also terminated. Cf. Butler v. Wilkinson, 740 P.2d 1244, 1257-58 (Utah 1987); Davis v. Rede Realty, Inc., 41 Wash.App. 527, 529, 704 P.2d 1250, 1251 (Ct.App.1985). In fact, because it had no actual notice of the assignment to Nield, Parson was under no legal obligation to inform Nield that UND had agreed, through the addendum and by placing a quitclaim deed into escrow, to terminate the contract and extinguish its interest. See Jeffs, 7 Utah 2d at 108, 319 P.2d at 859; Davis, 41 Wash.App. at 529, 704 P.2d at 1251. This is true even though Nield had recorded his assignment prior to the negotiation of the addendum and the quitclaim from UND to Parson. Wiscombe, 608 P.2d at 238. Nonetheless, Parson offered Nield the opportunity, as provided for in the contract, to fulfill UND's obligations and take title to the property.

Nield declined to do so, presumably because the low value of the land at that time made the expense of assuming the contract greater than the value of the land itself. Indeed, as the creditor second in line to the Bank of Utah, Nield had no actual financial interest on which to foreclose. Nield did not agree, however, to release his recorded assignment.

The trial court awarded damages against Nield for refusing to "cleanse" title. The damages were based upon the amount of interest Parson paid on its loan from Bank of Utah while the title was held up. There is no basis in law for this award. Quiet title actions are statutory in nature, Holland v. Wilson, 8 Utah 2d 11, 327 P.2d 250 (1958), and Utah Code Ann. §§ 78-40-1 through -13 (1987), authorizing quiet title actions, does not include any remedies for refusing to release title. Although Utah Code Ann. § 57-3-8 (1986) allows damages when a mortgagee fails to discharge or release a mortgage after it has been fully satisfied, Utah case law renders that statute inapplicable to this factual situation.

Both the applicability of section 57-3-8 and the availability of damages for a refusal to "cleanse" title are controlled by the holding in Draper v. J.B. & R.E. Walker, Inc., 115 Utah 368,...