Miller v. Remior
| Decision Date | 12 July 1963 |
| Docket Number | No. 9098,9098 |
| Citation | 86 Idaho 121,383 P.2d 596 |
| Parties | Clarence F. MILLER and Ethel R. Miller, husband and wife, Plaintiff-Appellants, v. W. C. REMIOR and Martha Remior, husband and wife, Defendants-Respondents. |
| Court | Idaho Supreme Court |
Furey & Furey, Salmon, for appellants.
Frederick H. Snook, Salmon, Ferebauer & Barnard, Idaho Falls, for respondents.
The case is a consolidation of two actions, tried without a jury. One action was commenced by plaintiffs-appellants, hereinafter referred to as plaintiffs, sellers of certain real property, for cancellation of a written contract for the sale and purchase of real property, and for damages (Civil No. 1800). The other action was commenced by defendants-respondents, hereinafter referred to as defendants, the buyers, for rescission of the contract (Civil No. 1790). The trial court dismissed defendants' rescission action, and found in favor of plaintiffs on their action for cancellation and damages. The court entered judgment partially unsatisfactory to plaintiffs, from which they perfected an appeal. The basic facts are hereinafter related.
Plaintiffs and defendants entered into the contract April 15, 1958. It provided for the sale by plaintiffs and purchase by defendants of certain ranch property in Custer County, the title to remain in plaintiffs until the agreed purchase price of $29,844.25 had been paid. Plaintiffs accepted defendants' down payment on purchase price of $10,000 in cash as recited in the contract, which, according to the testimony, was the agreed value of a house and lot situate in Idaho Falls conveyed by defendants to plaintiffs as the cash down payment. Interest of $578.76 accrued to November 5, 1958, on the unpaid balance of purchase price was required to be paid. The balance of the purchase price was to be paid in ten annual equal installments of $1,984.42 with interest on deferred payments, commencing November 15, 1959.
The contract provided that time was of the essence thereof; that in the event of default of its terms by buyers, the sellers could give buyers written notice of default, and if within 60 days thereafter the default was not cured, sellers could declare the contract terminated and take possession of the property, retaining all payments theretofore made by buyers 'in liquidated damages for their non-performance of the contract'; or sellers could resort to any other remedy which could be had by law or in equity in the event of buyers' default.
Defendants, buyers, went into possession and paid only the interest payment of $578.76 due November 15, 1958, and no more. They filed suit November 9, 1959, for rescission of the contract, upon alleged grounds of fraud on plaintiffs' part in the inception of the contract, (Civil No. 1790).
Defendants failed to make payment of the annual installment and interest due under the contract on November 15, 1959. November 24, 1959, plaintiffs served defendants with written notice of default, and more than 60 days thereafter, with notice of declaration of forfeiture of the contract, together with demand for possession of the lands and premises covered by the contract.
April 18, 1960, plaintiffs filed their action (Civil No. 1800), setting forth the contract, notice of default, notice of forfeiture of the contract, and praying for a decree declaring the contract at an end, for restitution of the lands and premises, and for damages.
The trial court consolidated the two actions, and its findings, conclusions and judgment encompassed and disposed of both cases.
In defendants' action for rescission (Civil No. 1790), the trial court found that plaintiffs had not been guilty of fraud in the transaction, denied rescission and dismissed the action.
In plaintiffs' action for cancellation and for damages (Civil No. 1800), the trial court found that defendants were in default and were duly notified of default and forfeiture of the contract; that the liquidated damages claimed constituted a penalty and would not be enforced; that the court would make an equitable adjustment between the parties; that the residence property conveyed by defendants as the down payment had a rental value of $105.00 a month which, for the period from April 15, 1958, to June 15, 1961, totalled $3,900; that the fair rental value of the ranch was $2400 per annum which, during the same period, totalled $7,600; and in effect concluded that any depreciation of the premises was offset by appreciation.
The court adjudged the contract terminated; voided the contract, deed and other instruments relating to the sale and purchase of the ranch property; adjudged plaintiffs to be the owners and entitled to immediate possession, and that defendants had no right, title or interest therein. The court then entered the portion of its judgment in the alternative reading:
""In the event plaintiffs keep the home located in Idaho Falls, Bonneville
County, Idaho, conveyed to them by defendants as a down payment on
said ranch purchase, defendants are entitled to credits as follows:
Down payment (home) $ 10,000.00
Interest payment 578.76
Rental value of home conveyed, 4-15-58 to
6-15-61, 38 months at $105.00 a month 3,990.00
---------------
Total $ 14,568.76
And the plaintiffs are entitled to credits, as
follows
Rental value of ranch at $2400 per annum
4-15-58 to 4-15-59 $ 2,400.00
4-15-59 to 4-15-60 2,400.00
4-15-60 to 4-15-61 2,400.00
4-15-61 to 6-15-61 400.00
--------------
Total $ 7,600.00
---------------
Balance $ 6,968.76
Should plaintiffs keep the home conveyed, they must pay to defendants the
aforesaid sum of $6,968.76.
In the event plaintiffs reconvey the home to defendants, plaintiffs are
entitled to credits as follows:
Rent on Ranch $ 7,600.00
And the defendants are entitled to credits as
follows:
Interest paid $ 578.76
Rent on home 3,990.00 4,568.76
--------------------- ---------------
Balance $ 3,031.24
Should plaintiffs reconvey the home, defendants must pay to plaintiffs the
sum of $3,031.24.'' The court further adjudged that plaintiffs pay taxes on the ranch property and defendants pay taxes on the Idaho Falls residence property; also, that after June 15, 1961, until restoration to plaintiffs of the ranch property, the rent thereon be fixed at $200.00 a month; further, should the parties elect the second alternative by the judgment provided, and the residence property be restored to defendants, that the rent thereon be fixed at $105.00 a month until date of reconveyance.
Plaintiffs, by their first assignment, which we deem to be meritorious, contend that the trial court erred in awarding as a credit to defendants, the amount of $3990.00 rental value of the residence property; and contend that the judgment of the trial court is repugnant to the mandate of Graves v. Cupic, 75 Idaho 451, 272 P.2d 1020.
The issue presented herein is comparable to that of Graves v. Cupic. The trial court, under the facts shown in the case at bar, regarded as unenforceable the clause of the contract which provided, that in case of defendants' default and termination of the contract plaintiffs could take possession of the property, 'retaining all payments theretofore made by vendees [defendants] in liquidated damages for their non-performance of the contract.' Graves v. Cupic involved a similar provision which read, '[A]ny payments theretofore made hereunder by the purchaser shall be retained by the seller in liquidation of damages sustained by reason of such failure.' This Court, after holding that under the circumstances shown in Graves v. Cupic, such provision 'is for a penalty and is unenforceable,' then held:
'In such a situation the damages allowable are those which the law provides for breach of the contract as though no such provision had been inserted therein.' (Citing Perkins v. Spencer, 121 Utah 468, 243 P.2d 446.)
and therein announced the further rule, citing State ex rel. Robins v. Clinger, 72 Idaho 222, 238 P.2d 1145:
'* * * the measure of damages for breach of a contract for the sale of realty * * * [is] the difference between the contract price and the market value of the property at the time of the breach, unless by the contract the parties had stipulated otherwise.'
Here, however, neither plaintiffs' pleadings nor the evidence adduced justified application of that rule of ascertainment of damages, and the trial court did not apply the rule. Continuing in Graves v. Cupic, this Court held:
'* * * Generally where the defaulting purchaser has had possession of the property the damage due the vendor is enhanced by the rental value during such occupation.' (Citing Nelson v. Hoff, 70 Idaho 354, 218 P.2d 345; Williamson v. Smith, 74 Idaho 79, 256 P.2d 784.)
In the present case the trial court set aside the so-called penalty clause of the contract as being unconscionable in the light of the court's calculations of the amount which otherwise would be retained by plaintiffs. Such holding rested on the trial court's theory, that if plaintiffs kept the residence property and be held accountable for rent thereon, plaintiffs must pay defendants...
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