Miller v. American Wonderlands, Inc., 60965

• Decision Date: 21 February 1979
• Docket Number: No. 60965,60965
• Citation: 275 N.W.2d 399
• Parties: Verda Mae MILLER, Appellee, v. AMERICAN WONDERLANDS, INC., et al., Appellants.
• Court: Iowa Supreme Court

Page 399

275 N.W.2d 399

Verda Mae MILLER, Appellee, v. AMERICAN WONDERLANDS, INC., et al., Appellants.

No. 60965.

Supreme Court of Iowa.

Feb. 21, 1979.

James S. Updegraff of Donohue Law Office, West Union, for appellants.

Alice T. Koempel of Traeger & Koempel, West Union, for appellee.

Considered by REYNOLDSON, C. J., and LeGRAND, HARRIS, McCORMICK, and McGIVERIN, JJ.

HARRIS, Justice.

Is it ever appropriate to order the forfeiture of a $30,000 real estate contract by reason of a $10.48 default? We believe the trial court was right in holding it was appropriate in this case. We vacate a reversing decision of the court of appeals and reinstate the judgment of the trial court quieting title in plaintiff vendor.

We adopt as our own the statement of facts from the opinion of the court of appeals:

"On October 26, 1972, plaintiff, the owner in fee simple of a 107 acre farm in Fayette County, entered into a written contract for the sale of that property to defendant for $30,000, with a down payment of $5000 and the deferred balance payable in ten $1000 annual installments beginning in October, 1973, with a balloon payment of the remainder due in October, 1983. Unpaid balances were to bear interest at the rate of six percent per year. American (the vendee, sometimes hereafter called the company) was to pay one-fourth of the 1972 real estate taxes due in 1973 and all real estate taxes for subsequent years.

"The contract also specified that the vendor could pay delinquent taxes and that such sums so advanced were due and payable on demand, or, at the election of vendor, could be added to the principal amount due under the contract. Delinquent amounts and cash reasonably advanced by either party were to draw interest at the highest applicable legal rate. The contract recited that time was of the essence and provided for forfeiture proceedings in accordance with chapter 656, The Code.

"Donald L. Kimball, president and chief executive officer of American since its inception in October, 1972, executed the contract on behalf of the (company). . . .

"Performance of the contractual provisions by both parties proceeded smoothly until May 6, 1975, when plaintiff was notified by the county treasurer that (the company) had failed to pay the 1973 real estate taxes totaling $672.78, including penalty. Plaintiff promptly forwarded a check for this amount to her attorney, who in turn paid these taxes.

"On May 21, 1975, plaintiff served upon defendant a notice of forfeiture which stated (the company) had failed to comply with the real estate contract by failing to pay the 1973 taxes, that (plaintiff) had advanced the amount of the taxes and penalty on May 13, 1975, and . . . demanded payment of $672.78 with interest at nine percent (totalling $6.23), as provided in the contract.

"The notice also stated that the contract would stand forfeited unless (the company) cured this default and paid the reasonable costs of serving the notice within 30 days after the completion of service. Plaintiff . . . expended $4.25 in sheriff's fees for serving the notice of forfeiture and $35 in attorney's fees for preparing it.

"At some time between the service of the notice on May 21, and June 16, 1975, Kimball telephoned (plaintiff) at her home . . . and, according to his testimony, promised to pay her delinquent taxes and accrued interest . . .. However, (plaintiff) testified that Kimball had agreed to pay both interest and the costs of serving the notice. This matter was somewhat clarified in the letter written by Kimball to (plaintiff) and dated June 16, 1975 which accompanied the $672.78 check, wherein Kimball promised to mail an additional check for the interest and cost of service as soon as his bookkeeper computed the interest and plaintiff's attorney informed him of the costs involved. Plaintiff received (this) check and letter on or about June 20, after which time she cashed the check and deposited the proceeds in her bank account.

"On June 25, (plaintiff) sent the letter which Kimball had written to her attorney and advised him that she had received the check for $672.78 for the taxes but had not as yet received payment for the interest and costs. By the latter part of July, plaintiff had still not received a check for the interest and costs and on July 22, plaintiff's attorney mailed a letter to Kimball demanding payment of $4.25 for the sheriff's fee, $6.23 for accrued interest, and $35 for the attorney's fee, and advising him that unless payment of the $45.48 was made by August 1, 1975, the notice of forfeiture would be filed with the county recorder. On August 6, the notice of forfeiture and affidavit in support thereof were recorded and that same day, plaintiff's attorney mailed Kimball a letter informing him of these facts and demanding immediate peaceful possession. Although it was established that the letters written to Kimball July 22 and August 6 were prepared and mailed by plaintiff's attorney, Kimball denied ever receiving them and testified that he had no knowledge of the recording of the forfeiture until so informed by an internal revenue agent on May 4, 1976. He stated that upon receiving this information, he contacted plaintiff's attorney to inquire about the matter. The attorney responded by sending Kimball photocopies of the July 22 and August 6, 1975 letters on May 5, 1976. In its findings of fact, the trial court indicated that Kimball's credibility in this area was questionable.

"The record also reflects that on April 28, 1976, plaintiff, believing that the farm had been vacated, entered into a contract for the sale of the property to a third party for $38,000. However, during some of the time subsequent to the service of notice of forfeiture on (the company), Kimball, in an individual capacity and not on behalf of the corporation, kept some livestock on the farm and permitted various people to reside in the house located thereon in exchange for farm labor, purportedly in the mistaken belief that no forfeiture had ever been filed.

"It also appears from the record that American has experienced substantial financial difficulties since 1974. In October, 1974, a mechanic's lien in the amount of $4400 was filed against the premises."

Causing the filing of a mechanic's lien against the property was also a violation of the real estate contract. Other violations occurred during 1975 and 1976 when default judgments totaling more than $6900 were filed against the property, together with a federal tax lien of more $2000.

On our review, we agree with the trial court in accepting plaintiff's version of disputed facts. This quiet title action was brought to perfect plaintiff's title after the contract was entered with the third party.

I. A threshold question,...