Jolley v. Idaho Securities, Inc.

• Decision Date: 23 March 1966
• Docket Number: No. 9685,9685
• Citation: 90 Idaho 373,414 P.2d 879
• Parties: Eldon W. JOLLEY and Edna Jolley, husband and wife, and E. Dale Jolley and Mildred Jolley, husband and wife, Plaintiffs and Appellants, v. IDAHO SECURITIES, INC., an Idaho corporation, Fred R. Jacobsen, President of Idaho Securities, Inc., and Mary Louise Jacobsen, Secretary of Idaho Securities, Inc., and Fred R. Jacobsen and Mary Louise Jacobsen, husband and wife, State of Idaho, and United States of America, Defendants and Respondents.
• Court: Idaho Supreme Court

Page 879

414 P.2d 879

90 Idaho 373

Eldon W. JOLLEY and Edna Jolley, husband and wife, and E. Dale Jolley and Mildred Jolley, husband and wife, Plaintiffs and Appellants, v. IDAHO SECURITIES, INC., an Idaho corporation, Fred R. Jacobsen, President of Idaho Securities, Inc., and Mary Louise Jacobsen, Secretary of Idaho Securities, Inc., and Fred R. Jacobsen and Mary Louise Jacobsen, husband and wife, State of Idaho, and United States of America, Defendants and Respondents.

No. 9685.

Supreme Court of Idaho.

March 23, 1966.

Rehearing Denied June 7, 1966.

Hugh C. Maguire, Jr., and Jones, Pomeroy & Jones, Pocatello, for appellant.

Charles Herndon, Salmon, for respondents.

Allan G. Shepard, Atty. Gen. for State of Idaho, Sylvan A. Jeppesen, U. S. Atty., and Jay F. Bates, Asst. U. S. Atty., Boise, for respondent United States of America.

McFADDEN, Chief Justice.

This action arises out of an agreement dated June 16, 1963, for the exchange of real and personal property executed by plaintiffs-appellants, Eldon W. Jolley and wife, and E. Dale Jolley and wife, and by the defendant-respondent Idaho Securities, Inc., a corporation, (herein referred to as the corporation.)

Prior to execution of this agreement, the Jolleys owned certain ranch land situate in Lemhi County, together with certain farming machinery. This ranch property was subject to a mortgage to Travelrs Insurance Company. Being desirous of exchanging this property for business income property, they contacted a real estate salesman, Theo Morgan, an employee of Dale Aravo, who did business as Western Realty Company.

Idaho Securities, Inc., was incorporated in March, 1961, by respondents Fred R. Jacobsen and his wife, who shortly thereafter conveyed to the corporation real and personal property in Caldwell, known as the Saratoga Hotel. At that time the real property was subject to a mortgage to R.L. Graves.

Early in March, 1963, Idaho Securities, Inc., listed the hotel property for sale with Harold Packer, real estate broker. The respective real estate men brought the principals together and extensive negotiations were entered into between the Jolleys and Mr. Jacobsen acting for his corporation, which negotiations culminated in the agreement of June 16, 1963. By this agreement, the corporation agreed to trade the Saratoga Hotel for appellants' Lemhi County ranch and machinery, and appellants agreed to the trade. The contract stated that Idaho Securities, Inc., 'does hereby covenant and agree that it does have good and marketable title to the real and personal property, (the Saratoga Hotel) that it was selling, subject only to a recorded first mortgage in favor of R. L. Graves.' The agreement further provided that the Jolleys 'do hereby covenant and agree that the real property is subject only to a mortgage in favor of the Travelers Insurance Company, which mortgage is dated December 9, 1954, and recorded in the records of Lemhi County, Idaho'. The agreement further provided that the corporation assume certain listed indebtedness on the farm machinery, and that each party pay all taxes and assessments on the real property transferred, for the year 1962 and all previous years; that taxes and assessments for 1963 and subsequent years were the obligation of the respective transferees; that each party agreed to deliver good and sufficient warranty deeds and bills of sale and affix requisite internal revenue stamps. The agreement further provided:

'Within a reasonable time after the execution of this agreement each of the parties hereto does agree, at the transferrors expense, that they will deliver to the transferee an abstract of title to the real property being transferred by the transferror, extended to date. The transferee shall have a period of thirty days in which to examine the said abstract and to point out any defects in title, in writing, delivered to the Western Realty in Mampa, Idaho. It is understood and agreed that the evidence of title shall show the title of the transferror to be good and marketable and free and clear of all encumbrances except those set forth herein. The transferror shall have the duty of correcting any defects of merit in title, within a reasonable time after notice of the same.'

'* * *

'In connection with the Saratoga Hotel property, the Buyers (the Jolleys) all do understand and agree that there are back taxes in the amount of $10,230, back payments on the Graves mortgage of both principal and interest in the amount of $3,100.00, and a balance on the ice machine of $285, all of which the Buyers do agree that they will pay as soon as reasonably possible. All other liens or obligations or encumbrances of any type or kind against the premises and property sold are to be paid by the Seller as soon as reasonable possible, including, but not limited to the Federal and State tax liens, except as hereinafter set forth.

'In connection with Lemhi County property, it is understood and agreed that there is a mortgage against the same in favor of The Travelers Insurance Company, in the amount of $38,500.00. The Seller has assumed the same and does agree that it does take over and assume and agree to pay in full, promptly and before any delinquency, all payments of principal and interest that are now due or that may become due. Likewise, the Buyers do agree to make all subsequent payments on the Graves mortgage, promptly and before any delinquency.

'It is understood and agreed that this entire transaction is conditional upon the Buyers (The Jolleys) being able to increase the Travelers Insurance Company loan on the Lemhi County property in the additional amount of $10,000.00, as a minimum. This is to be done in the Buyers name, and the Seller (Idaho Securities, Inc.) is to assume and pay in full this additional obligation, promptly and before any delinquency. Any such refinancing costs are to be promptly paid by the Seller. The gross proceeds of this loan are to be disbursed as follows: $10,000.00 to the Buyers, which sum the Buyers are to use to pay the back real estate taxes on the Saratoga Hotel property, and any gross sum over $10,000.00, to the Seller * * *'.

The agreement recited that the Jolleys had been in possession of the Saratoga Hotel since May 1, 1963, and Idaho Securities Inc., in possession of the Lemhi County ranch since May 1, 1963.

After the agreement and warranty deeds were prepared, and still unsigned, they were given to Mr. Morgan, appellants' real estate agent, who submitted the instruments to the Jolleys for signature. After the agreement and deed to the Lemhi County property were signed by the Jolleys, Morgan took the instruments to Salmon, Idaho, where the agreement and deed to the Saratoga Hotel was signed by the officers of the corporation. Morgan then gave the respective parties copies of the agreement. He then delivered the corporation's deed on the Saratoga Hotel to the Jolleys on June 20, 1963; Mr. Eldson W. Jolley recorded this deed July 2, 1963, in the Canyon county recorder's office. June 28, 1963, Morgan delivered the Jolleys' deed on the Lemhi county property to Mr. Arave, of Western Realty Company. Mr. Arave in turn forwarded the deed to the corporation, which caused the deed to be filed for record July 22, 1963, in the Lemhi county recorder's office.

The Jolleys sought to secure the abstract of title to the Saratoga Hotel, but such abstract was never delivered. They did not make payments on the Graves mortgage. Suit was instituted to foreclose this mortgage, and a receiver was appointed, who took possession of the property about January 1, 1964.

In October, 1963, the Jolleys instituted this action. In their complaint they alleged breach by the corporation of conditions precedent to the transfer and exchange of real property set forth in the June 16, 1963, agreement. They also alleged that they were induced to enter into the agreement by false representations that the property was free and clear of encumbrances except those mentioned, but that the property was subject to numerous liens and judgments, and further that there were outstanding bills against the property not disclosed in a certain bulk sales affidavit; that it was represented that the corporation had marketable title to the property, when in fact it did not.

An amended complaint set forth additional causes of action claiming impossibility of performance by the corporation and the Jacobsens; failure of consideration; and that the corporation and Mr. and Mrs. Jacobsen are identical entities. In the amended complaint, the Jolleys sought to have the agreement and deed cancelled, to have title to the Lemhi County property quieted in them, and for damages.

The corporation and the Jacobsens in their answer presented counterclaims and crossclaims on the theorty that they had fully complied with all terms and conditions of the agreement, but that the Jolleys had maliciously failed to secure the increase in the loan on the Lemhi county property; that certain articles of farm machinery were in need of repair, and other pieces of equipment and titles to jeeps, and one truck were not delivered; that the Jolleys instituted the present action for malicious purposes, to deprive the corporation of the opportunity to secure a loan from another insurance company on the Lemhi county property; lastly, that the Jolleys had made damaging and derogatory statements concerning Fred R. Jacobsen; these parties then prayed for dismissal of the complaint, for attorneys fees, and special and punitive damages.

The United States of America, filed issues asserting entitlement to certain tax liens on the Saratoga Hotel.

On the issues framed by the pleadings, the cause was tried to the court. Whereupon the trial court after rendition of its memorandum decision, entered findings of fact, conclusions of law, and judgment and decree. In substance, the trial court found that the parties to the agreement investigated the respective properties, made several...