Jones v. Dickens, 9606

• Decision Date: 13 May 1968
• Docket Number: 9607.,No. 9606,9606
• Citation: 394 F.2d 233
• Parties: M. R. JONES and Carl Jones, Appellants, v. Jack W. DICKENS and Lucille B. Dickens, Appellees. M. R. JONES and Carl Jones, Appellants, v. THREE RIVERS RANCH, INC., Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

394 F.2d 233 (1968)

M. R. JONES and Carl Jones, Appellants, v. Jack W. DICKENS and Lucille B. Dickens, Appellees.

M. R. JONES and Carl Jones, Appellants, v. THREE RIVERS RANCH, INC., Appellee.

Nos. 9606, 9607.

United States Court of Appeals Tenth Circuit.

May 13, 1968.

David R. Gallagher, Albuquerque, N. M. (William C. Marchiondo, Albuquerque, N.M., on the brief), for appellants.

Wm. A. Clifford, Lubbock, Tex. (Hernandez, Atkinson & Kelsey and W. W. Atkinson, Albuquerque, N.M., and Blanchard, Clifford, Gilkerson & Smith, Lubbock, Tex., on the brief), for appellees.

Before BREITENSTEIN, SETH and HICKEY, Circuit Judges.

SETH, Circuit Judge.

Appellants appeal from judgments against them upon two promissory notes each in the amount of $50,000. The notes were executed by them as down payments on two ranches they were buying. Appellants contend the trial court erred in concluding that they waived defects in the title to one of the ranches, and in concluding that the notes were liquidated damages and not penalties.

Appellees Dickens entered into a written contract with the appellants to sell to them a ranch in Colorado, known as the North Park Hereford Ranch. The agreed purchase price was $500,000 to be paid: "The sum of * * * ($50,000.00) in hand paid and receipted for hereby, and the balance of the purchase price upon approval of title and tender of warranty deed, which said approval and tender shall be at the time of final closing * * *." This sale was conditioned upon the closing of the sale of an adjacent ranch also being sold to appellants by appellee in No. 9607, the Three Rivers Ranch, Inc. The concurrent sale of the Three Rivers Ranch was to be for a purchase price of $1,075,000 to be paid: "1. $50,000.00 down payment in hand paid, receipt of which is hereby acknowledged. 2. $1,025,000.00 cash or cash equivalent, to be paid at the closing." The sellers in the Three Rivers Ranch sale agreed to furnish merchantable title or an owner's title policy.

Title was not disputed as to the North Park Ranch, but the trial court found that the title to Three Rivers Ranch was not merchantable. The parties had agreed in the contract for the sale of the Three Rivers Ranch, Inc., that: "In the event title is not marketable, or title policy furnished, at the date of closing, the Purchasers may, at their option, either waive the said defect or defects, or declare this contract null and void and the $50,000.00 down payment shall be returned to the Purchasers."

Both contracts provided that in the event of a failure by the purchasers to pay the unpaid balance of the purchase price, the down payment would be forfeited and retained by the sellers as liquidated damages. At the time of the execution of the contracts, appellants executed and delivered to Dickens and to Three Rivers Ranch, Inc., promissory notes each in the amount of $50,000 for the down payments in lieu of cash.

An examination of the title to the Three Rivers Ranch had revealed some title defects, and on the initial closing date, the parties met to close the transactions, but the purchasers did not have the money then due. The next day the parties to both transactions signed an "addendum to agreement" extending the time to close the transactions and agreed to further extend the time if need be. A second addendum was executed to again extend the closing date to November 16th, and the purchasers then executed a second note for $50,000 to Dickens, and a second note to Three Rivers Ranch for $100,000. On November 16th the parties met again to close the sale, but failed to do so. Although the sellers indicate the failure was again due to the purchasers' lack of funds, there is other evidence that the funds were available but that the purchasers were objecting because they would not get an owner's title policy. The purchasers requested the sellers to escrow all closing papers with a bank in Fort Collins, Colorado, to ultimately complete the transaction in that manner, but the sellers refused to do so and this suit was brought to recover upon the four promissory notes given by the appellants.

The trial court, as indicated above, found that the title to the Three Rivers Ranch was not merchantable, but found also that the purchasers had waived the defects. The court found that the initial down payment notes were liquidated damages, and granted judgment against the purchasers on them. The court refused to enforce the second notes given as consideration for the extensions of the agreement on the ground that they represented unenforceable penalties. The trial court's findings are supported by the evidence.

On the question of waiver of title defects, appellants contend that any waiver must be in writing; otherwise it would be an oral modification of the contract for the sale of land contrary to the statute of frauds. We cannot agree as the contract expressly provided for an election on the part of the purchasers either to waive the defects or rescind the contract. Thus the waiver here found was not a modification of the written contract, but rather the selection of an alternative expressly provided for. It is thus part of the performance of the agreement.

The appellant-purchasers also assert that there was no waiver for the reason that they had not given their attorney authority to modify the contract. The trial court found, and its finding is supported by the record, that the attorney was hired to close the sale and all matters relevant thereto; that he acted within the scope of his authority for the purchasers, and that he knew the nature of the defects, and waived them.

Finally on the waiver issue, the purchasers contend that there is no evidence to support a finding that they waived the title defects. They contend that instead they made sufficient demands at the time they executed the addendum to the original instrument for a title policy to be provided at the date of closing. This position is not supported by the record nor is it supported by the case of Mitchell v. Evans, 150 Colo. 568, 375 P.2d...