Mikesell v. Newworld Development Corp.

• Decision Date: 01 September 1992
• Docket Number: No. 19389,19389
• Citation: 122 Idaho 868,840 P.2d 1090
• Court: Idaho Court of Appeals
• Parties: Larry K. MIKESELL and Rose Mikesell, husband and wife, Plaintiffs-Respondents-Cross Appellants, v. NEWWORLD DEVELOPMENT CORPORATION, an Idaho corporation, and Rockland K. Judd, Defendants and Third-Party Plaintiffs-Appellants-Cross Respondents, v. Melrose BURGESS and Berniece Burgess, husband and wife, Ed Burgess, individually and doing business as Agri-West Realty; Land Title & Escrow, Inc., an Idaho corporation, Third Party Defendants-Respondents.

Page 1090

840 P.2d 1090

122 Idaho 868

Larry K. MIKESELL and Rose Mikesell, husband and wife, Plaintiffs-Respondents-Cross Appellants, v. NEWWORLD DEVELOPMENT CORPORATION, an Idaho corporation, and Rockland K. Judd, Defendants and Third-Party Plaintiffs-Appellants-Cross Respondents, v. Melrose BURGESS and Berniece Burgess, husband and wife, Ed Burgess, individually and doing business as Agri-West Realty; Land Title & Escrow, Inc., an Idaho corporation, Third Party Defendants-Respondents.

No. 19389.

Court of Appeals of Idaho.

Sept. 1, 1992.

Petition for Review Denied Nov. 30, 1992.

Ling, Nielsen & Robinson, Rupert, for appellants/cross respondents. Brent T. Robinson argued.

Donald J. Chisholm, Burley, for respondents/cross appellants Mikesell.

James Annest, Burley, for respondents Burgesses.

Parsons, Smith, Stone & Fletcher, Burley, for respondent Land Title & Escrow, Inc. William Parsons argued.

SILAK, Judge.

This appeal concerns a dispute over the ownership of a thirty-foot wide strip of land (thirty-foot parcel) between the real properties of Larry and Rose Mikesell and Newworld Development Corp. The Mikesells claim title to the property by virtue of a partly performed oral agreement they entered into with Melrose and Berniece Burgess, Newworld's predecessors in title. Newworld claims title by virtue of its deed, which includes the disputed strip of land in the legal description of the parcel purchased from the Burgesses. The Mikesells sued Newworld to quiet title and for compensatory and punitive damages. After trial, the district court found in favor of the Mikesells and ordered Newworld to convey title to the Mikesells. The district court refused to award punitive damages to the Mikesells on the ground that the Mikesells failed to comply with I.C. § 6-1604(2). Newworld has appealed the district court's judgment, and the Mikesells have cross-appealed. For the reasons set forth below, we affirm with respect to the issues raised by Newworld, and we reverse and remand with respect to the issue raised by the Mikesells.

FACTS AND PROCEDURAL BACKGROUND

The following facts were found by the district court. On June 1, 1983, the Burgesses purchased from Isaac and Pearl Lee a parcel of real property located in Cassia County, Idaho. The Lees conveyed this real property to the Burgesses by warranty deed. The Lees financed $63,040 of the $80,000 purchase price, and the Burgesses executed a Deed of Trust to secure the unpaid balance of the purchase price. The Deed of Trust was properly recorded, naming Land Title and Escrow, Inc. as trustee.

Later, the Burgesses purchased from the Lees a second parcel of real property twenty feet wide on the west side of the original parcel purchased from the Lees. The Burgesses paid the Lees cash for the additional parcel, but did not receive or record a document of title on the property.

On November 20, 1985, the Mikesells purchased from the Lees a parcel of real property located immediately to the east of the Burgesses' parcel. The Lees conveyed this parcel to the Mikesells by warranty deed. Both the Burgesses and the Mikesells lived in the residences on their respective properties from the time they purchased them.

The southern sides of the properties purchased by the Burgesses and the Mikesells border on County Road 300 South. The east boundary of the Burgesses' property is the west boundary of the Mikesells' property. The Mikesells had a driveway which ran along the east and north sides of their property. In 1987, the Mikesells asked the Burgesses if they could purchase the eastern thirty to thirty-five feet of the Burgesses' lot in order to continue their driveway along the west side of their property so that the driveway would form a complete "U" around the Mikesells' home, beginning and ending on the east and west ends of the property at 300 South Road. At the time, the Burgesses were using this eastern portion of their lot as part of an open pasture.

By oral agreement, the Burgesses agreed to sell and the Mikesells agreed to purchase the thirty-foot parcel for $50 per front foot along the county road. The parties agreed that the payments would be made in installments, upon demand, and that the Mikesells would receive clear title to the parcel in question upon completion of payment. No agreement was reached as to when the entire amount of $1,500 ($50 X 30 front feet) would be paid. The Mikesells paid by check an initial installment of $600 on or about May 19, 1987. In July, 1987, the Burgesses requested that the Mikesells pay additional money on the parcel. Pursuant to that request, the Mikesells issued another check to the Burgesses for $600. Shortly after the Mikesells made the second payment, the Burgesses gave the Mikesells a receipt for the payments which had been made. This receipt acknowledged the two $600 payments by the Mikesells, and indicated that the payments were for the thirty-foot parcel, at $50 a foot, leaving a balance of $300 to be paid. The Mikesells did not make the final $300 payment prior to the commencement of this action, and they never received or recorded a document of title for the thirty-foot parcel.

After entering into the oral agreement, the Mikesells took immediate possession of the parcel and began to make a number of improvements on it. They paid approximately $800 for the excavation, grading and construction of a gravel driveway down the length of the parcel. In the spring of 1989, they purchased and planted about twenty-one trees along the west boundary of the parcel at a cost of $20 per tree, plus the time and labor for planting. The Mikesells also purchased the materials and performed the labor to install a drip irrigation system. Until March 26, 1990, the Mikesells were in exclusive possession and control of the now-disputed parcel.

In the summer of 1989, the Burgesses were delinquent on their payments to the Lees, and the Lees started proceedings to foreclose the Deed of Trust which they held on the Burgesses' parcel. The foreclosure sale was scheduled for January 29, 1990. Notice of the foreclosure sale was advertised in the local newspaper, which notice contained the same legal description When the Mikesells learned of the pending foreclosure sale, they contacted the Lees, the beneficiaries under the Deed of Trust, to inform the Lees of their interest in the thirty-foot parcel on the east side of the Burgesses' property, and to inquire as to what they should do to protect that interest. The Mikesells also contacted Larry Roberts, general manager of Land Title, to inform him of their interest in the strip of land. The Lees also contacted Roberts to tell him about their conversation with the Mikesells and to let him know that they were sympathetic to the Mikesells' situation and that they wanted to see that the Mikesells received title to the thirty-foot parcel.

[122 Idaho 871] of the Burgesses' property as the Warranty Deed from the Lees to the Burgesses, as well as the Deed of Trust from the Burgesses to the Lees. Thus, the thirty-foot parcel was included in the description of the Burgesses' property in the notice of foreclosure sale. The district court found that the thirty-foot parcel which the Mikesells had purchased from the Burgesses was encumbered by the Lees' Deed of Trust and was included in the foreclosure sale. The foreclosure sale did not include the twenty-foot strip of land on the west side of the Burgesses' lot which the Burgesses had purchased from the Lees after purchasing the original parcel of property. The Lees had not deeded the twenty-foot parcel to the Burgesses and did not have a Deed of Trust on that parcel.

Rockland Judd is the president and a director of Newworld; his wife, Ellen Judd, is the secretary of Newworld; and their thirteen-year-old daughter is the vice president. Rockland Judd testified that his thirteen-year-old daughter owns all of Newworld's stock, but that he controls all of the actions of Newworld. After the Judds learned of the pending foreclosure sale of the Burgesses' property sometime in November, 1989, they contacted the Lees, the Burgesses, and Ed Burgess, the Burgesses' son and realtor, to see if they could make arrangements to purchase the Burgesses' property. At this time, Rockland Judd was a licensed real estate agent, and he had worked in the real estate business on a full or part-time basis for several years. Ed Burgess was working with his parents at this time trying to salvage whatever equity they might have in the property that was the subject of the foreclosure. In addition to the Deed of Trust in favor of the Lees, the Burgesses' property was encumbered by a judgment of between $80,000 to $100,000 in favor of Donna Arnold, the former wife of Ed Burgess.

Prior to purchasing the Burgesses' property, Rockland Judd knew of the Mikesells' interest in the thirty-foot parcel on the east side of the property. Judd had a number of conversations with the various Burgesses prior to purchasing the property, during which he was expressly told that the Mikesells had already purchased the thirty-foot parcel at the east end of the Burgesses' lot, and that he could not purchase that land. The Burgesses told Judd, however, that instead of the thirty feet on the east side of the property, he would receive the twenty-foot parcel located on the west of the Burgesses' property. In these various conversations, Judd indicated to the Burgesses that he had no problem with the proposed exchange if the Burgesses would agree to sell him their property before the scheduled foreclosure sale.

Judd made arrangements to purchase the Burgesses' property on January 26, 1990, three days before the scheduled foreclosure sale. Prior to closing, Judd made arrangements to obtain the release of the Donna Arnold judgment lien against the Burgesses' property. He also hired a professional land surveyor to locate the four corners of the Burgesses' property. However, Judd did not at any time attempt...