Kosbau v. Dress

• Citation: 400 N.W.2d 106
• Decision Date: 27 January 1987
• Docket Number: No. C9-86-480,C9-86-480
• Parties: Franklin KOSBAU, et al., Respondents, v. George DRESS, et al., Appellants.
• Court: Minnesota Court of Appeals

Page 106

400 N.W.2d 106

Franklin KOSBAU, et al., Respondents, v. George DRESS, et al., Appellants.

No. C9-86-480.

Court of Appeals of Minnesota.

Jan. 27, 1987.

Syllabus by the Court

Appellants are not precluded from rescinding their notice of cancellation of contract for deed under either Minn. Stat. Sec. 559.21 or the election of remedies doctrine.

Richard L. Diamond, Estes, Parsinen & Levy, Minneapolis, for respondents.

David L. Graven, Holmes & Graven, Chartered, Minneapolis, for appellants.

Heard, considered and decided by HUSPENI, P.J., and SEDGWICK and LANSING, JJ.

OPINION

SEDGWICK, Judge.

In this declaratory judgment action, the trial court granted partial summary judgment for respondents, ruling that appellants' attempted revocation of their notice of cancellation of the parties' contract for deed was ineffective, and that the contract had been canceled. We reverse and remand.

FACTS

In December 1983, appellants, as sellers, and respondents, as buyers, entered into a contract for deed for the sale of approximately 5000 acres of undeveloped farmland in Aitkin County. In August 1984, respondents requested that appellants release acreage to them so they could obtain financing. Appellants refused.

Respondents failed to make a payment due under the contract on December 1, 1984. On January 22, 1985, appellants served them with a 60-day notice of cancellation under Minn.Stat. Sec. 559.21 (1984). Respondents then sued appellants, in an action prior to this one, alleging that their downpayment entitled them to a release of acreage under the contract. Pursuant to Minn.Stat. Sec. 559.211, subd. 1 (1984), respondents obtained a temporary restraining order and then a temporary injunction against further proceedings pursuant to the notice of cancellation.

In a judgment entered May 23, 1985, the court held for appellants and terminated the temporary restraining order and preliminary injunction. The judgment further provided:

Pursuant to Minn.Stat. Sec. 559.211 (1984) the contract for deed * * * shall terminate on the expiration of 15 days after the entry of this Order, unless plaintiffs [respondents] cure the default pursuant to applicable law.

Minn.Stat. Sec. 559.211, subd. 1 (1984), states:

If a temporary restraining order or injunction is granted pursuant to this subdivision, the contract shall not terminate until the expiration of 15 days after entry of the * * * decision dissolving * * * the temporary restraining order or injunction.

Before 15 days had expired, however, appellants notified respondents that they were "rescinding and revoking" the notice of cancellation, and demanded payment of the amounts owing under the contract. Respondents then brought this suit, seeking a declaration that the contract is terminated and that they therefore owe no money under it, and $600,000 for unjust enrichment based on improvements to the property. Appellants counterclaimed for the amounts due under the contract.

Both parties moved for summary judgment. The trial court granted partial summary judgment for respondents, ruling that the contract was terminated. It concluded:

[P]ursuant to Minn.Stat.Ann. Sec. 559.21, the vendor may not waive, cancel or retract a notice of cancellation once it has been duly served and further ordered by the court. Moreover, this court finds that [respondents] detrimentally relied on [appellants'] notice of cancellation and that [appellants] have effectively elected their remedy of canceling the contract. The contract is deemed canceled pursuant to the court's May 23, 1985 order.

The trial court ordered judgment entered solely on the contract cancellation issue under Minn.R.Civ.P. 54.02. This appeal is from the partial summary judgment.

ISSUE

Did the trial court err in holding that appellants could not revoke their statutory notice of cancellation of deed?

ANALYSIS

In reviewing a grant of summary judgment, this court must determine whether there are any genuine issues of material fact, and whether the trial court erred in its application of the law. Greyhound Lines, Inc. v. First State Bank, 366 N.W.2d 354, 356 (Minn.Ct.App.1985), pet. for rev. denied (Minn. June 27, 1985). This court need not defer to the trial court on issues of law. Id. Since the trial court relied solely on documentary evidence, we need not defer to it on issues of fact. Gaalswyck v. General Casualty Co., 372 N.W.2d 435, 437 (Minn.Ct.App.1985), pet. for rev. denied (Minn. Oct. 24, 1985).

When a buyer under a contract for deed defaults, the seller has his option of remedies. He can sue on the contract for specific performance (as appellants are doing here). See Wayzata Enterprises, Inc. v. Herman, 268 Minn. 117, 119, 128 N.W.2d 156, 158 (1964). Alternatively, he can cancel the contract, either by suing for a judicial termination or by giving statutory notice of termination under Minn.Stat. Sec. 559.21. Miller v. Snedeker, 257 Minn. 204, 219-20, 101 N.W.2d 213, 225 (1960). Specific performance and cancellation are inconsistent remedies because the former assumes and affirms a contract while the latter denies or unmakes it. See Northwestern State Bank v. Foss, 293 Minn. 171, 177, 197 N.W.2d 662, 665 (1972).

If the seller chooses to cancel the contract, he cannot recover payments due under the contract. Wayzata, 268 Minn. at 119, 128 N.W.2d at 158. The buyer forfeits payments already made under the contract. Andresen v. Simon, 171 Minn. 168, 172, 213 N.W. 563, 564-65 (1927). However, the buyer may bring an action for unjust enrichment to recover the value of improvements to the property if he can show fraud, mistake, or moral wrongdoing by the seller. See, e.g., Fort Dodd Partnership v. Trooien, 392 N.W.2d 46 (Minn.Ct.App.1986).

Appellants' position is that a seller under a contract for deed may withdraw his statutory notice of cancellation as long as the redemption period has not expired. Respondents argue that a seller cannot unilaterally withdraw such a notice, and that under the facts of this case appellants are precluded from enforcing the contract because they have elected their remedy of cancellation. Analysis of these positions requires consideration of the statutory notice of cancellation provisions and the common law doctrine of election of remedies.

I.

Although the redemption period in effect when appellants served their attempted revocation was technically provided for by a judgment pursuant to Minn.Stat. Sec. 559.211, subd. 1, it was merely an extension of a redemption period created pursuant to Minn.Stat. Sec. 559.21. Accordingly, the parties' rights will be analyzed under the provisions of Sec. 559.21.

The statute in effect when appellants served their notice of cancellation provided, in part, as follows:

When default is made in the conditions of any contract for the conveyance of real estate * * * whereby the vendor has a right to terminate the same, he may do so by serving upon the purchaser * * * a notice specifying the conditions in which default has been made, and stating that the contract will terminate * * * 60 days after service * * * unless prior thereto the purchaser complies with the conditions and makes all payments due * * * under the contract [plus other costs, taxes, and fees as applicable].

Minn.Stat. Sec. 559.21, subd. 2 (1984).

The statute provided a form of notice, used by appellants, which states, in part:

This notice is to inform you that by this notice the seller has begun proceedings under [Minn.Stat. Sec. 559.21] to terminate your contract for deed for the reasons specified in this notice. The contract will terminate days after [service] unless before then the [seller] receives from you the amount this notice says you owe plus any additional amounts due * * *; or unless before then you secure from a * * * court an order that the termination of the contract be suspended until your claims or defenses are finally disposed of by trial, hearing or settlement. * * * If you do not do one or the other of the above things within [60 days], your contract will terminate at the end of the period * * *.

Id., subd. 3(b) (emphasis added).

Finally, the statute provided:

If, within the time period mentioned, the person served complies with the conditions and, * * * makes all payments due and owing to the vendor * * * the contract shall be thereby reinstated; but otherwise shall terminate.

Id., subd. 4 (emphasis added).

Although the statute does not explicitly provide for the revocation of cancellation notices, we do not believe it was intended to preclude sellers from doing so. The statute was designed primarily to protect the rights of buyers under contracts for deed by abrogating the common-law rule which allowed a seller to declare a forfeiture upon a breach by the buyer, without giving the buyer time to cure. See, e.g., Conley v. Downing, 321 N.W.2d 36, 39 (Minn.1982); Tarpy v. Nowicki, 286 Minn. 257, 262, 175 N.W.2d 443, 447 (1970) (quoting Mathwig v. Ostrand, 132 Minn. 346, 348, 157 N.W. 589, 589 (1916)). In light of this, we believe that the statute's silence as to the rights of sellers to revoke notices of cancellations should not be considered as denying them that right; rather, we believe the statute does not address this issue. We find no reason to deny appellants the right to revoke their notice of cancellation based on Minn.Stat. Sec. 559.21.

In deciding that the statute does not allow sellers to withdraw cancellation notices, the trial court relied in part on the following language from Wayzata:

When notice of cancellation is served pursuant to Sec. 559.21, the vendee has his option within the 30-day period provided by the statute to make good the default or to permit the cancellation to become effective.

268 Minn. at 119, 128 N.W.2d at 158 (emphasis added). That language is dicta, however, since the court was not deciding whether a cancellation notice could be withdrawn. In Wayzata, the buyer had stopped payment on a check it had sent to seller as...