Mostrong v. Jackson
| Decision Date | 03 December 1993 |
| Docket Number | No. 920578-CA,920578-CA |
| Citation | 866 P.2d 573 |
| Parties | Larry L. MOSTRONG and Jennifer G. Mostrong, Plaintiffs and Appellants, v. Lee Roy JACKSON and Margaret R. Jackson, Defendants and Appellees. |
| Court | Utah Court of Appeals |
D. David Lambert and Linda D. Barclay, Provo, for plaintiffs and appellants.
Richard Waddingham, Delta, for defendants and appellees.
Before BENCH, GREENWOOD and JACKSON, JJ.
Larry L. and Jennifer G. Mostrong appeal from the trial court's ruling that they are not entitled to rescission of a contract with Lee Roy and Margaret Jackson for the purchase of real property. We affirm.
Lee Roy Jackson and his brother, William, bought the subject property, located near Fillmore, Utah, from Geraldine Kessler, on October 26, 1978. At that time, the only access to the property was a 3/4 mile long dirt lane (the north road) running north of the property. Kessler later sold other parcels of property adjoining this road, reserving a thirty-three foot easement along the north road in each case for road and utility purposes.
Lee Roy and William Jackson subsequently conveyed the property to Lee Roy and his wife, Margaret Jackson. The Jacksons built a house on the land in 1979. At that time Millard County had not yet adopted the Uniform Building Code (UBC), but the Jacksons' building permit provided that construction must conform to all ordinances in Millard County, laws of the State of Utah, and all rules and decisions of the building inspector. The Jacksons did not request a final occupancy permit due to the fact that Millard County did not then employ a building inspector.
Because the north road was almost impassable in bad weather, Lee Roy Jackson obtained permission from a neighbor to the south to build a 1/4 mile cinder based road (the south road) across the neighbor's property that would connect with a dedicated Millard County road. Jackson did not obtain a written or recorded easement for use of this road from the original owner of the neighboring property, and after this owner sold his property to another individual, Ralph Tuckfield, Jackson did not discuss use of the south road with Tuckfield. Nonetheless, the Jacksons continued to use the south road for primary access to their property, with the apparent acquiescence of Tuckfield. They also used the north road occasionally.
In July 1978, Larry and Jennifer Mostrong, California residents at the time, made several visits to inspect the property and initiated negotiations with the Jacksons for purchase of the property. During these visits, Larry Mostrong asked several times about access to the property. Lee Roy Jackson testified that he told Mostrong that legal access was by way of the north road, and that the Mostrongs would have "permissive" use of the south road. Mostrong testified, however, that Jackson said the south road "would always be there" for their use. With respect to the house, Jackson indicated that he had built it himself in conformance with the UBC.
On July 15, 1987, the Mostrongs entered into an earnest money sales agreement with the Jacksons to purchase the property for $65,000. This agreement stated that the Mostrongs would finance the purchase of the property through an FHA loan to be obtained through Zions First National Bank. The Mostrongs applied for both conventional and FHA financing through Zions. Two appraisers inspected the property for Zions and did not identify any problems concerning either access to the property or the construction of the house that would prevent the Mostrongs from qualifying for these loans.
On August 28, 1987, Zions denied the Mostrongs FHA financing due to insufficient verification of income, for the reasons that Mr. Mostrong was self-employed and had not resided in Utah for sufficient time to establish his income. Zions also denied them conventional financing. However, Zions told the Mostrongs that it would be willing to loan them the money in two years if they were able to establish a stable income.
Because both parties still wished to complete the sale, the Jacksons agreed to carry the financing themselves for two years. Pursuant to this revised agreement, the Mostrongs agreed to pay $20,000 as a downpayment on the property, $550 per month for two years, and a balloon payment of the remaining principal and accrued interest at the end of the two year period. The closing took place on September 1, 1987, and was memorialized by a warranty deed from the Jacksons to the Mostrongs and a trust deed note and deed of trust in favor of the Jacksons. The warranty deed included the property's legal description, but did not specifically include any easement or access from either the north or the south. Security Title Company issued a title insurance policy on the property in favor of the Mostrongs. This policy insured against both lack of a right of access to the property and lack of marketable title.
On September 1, 1989, the date the balloon payment was due, Jennifer Mostrong told the Jacksons that she had applied for an FHA loan through First Security Bank, and that this loan was expected to be finalized within four to six weeks. Based upon this information, the Jacksons agreed to extend the date for obtaining financing for an additional three months. In the process of applying for FHA financing from First Security, a question arose about access to the property. To resolve this issue, Security Title obtained a warranty deed from Geraldine Kessler, which conveyed an easement to the north road to the Jacksons. The Jacksons then conveyed this easement to the Mostrongs. These deeds were recorded on January 4, 1990.
On February 12, 1990, the Jacksons offered to continue accepting monthly payments until March 1, 1990 upon certain conditions. The Mostrongs rejected these terms, and a trustee's sale was scheduled for April 4, 1990. The parties negotiated an extension of the sale to May 18, 1990. On May 17, 1990, the Mostrongs paid the Jacksons $5257.37 for accrued monthly payments, attorney fees and costs, and trustee's fees, and the Jacksons extended the time for the trustee's sale for an additional sixty days.
During this period of time, the Mostrongs were negotiating with Valley Central Bank for financing. Valley Central indicated that two conditions would have to be met before financing would be approved. First, documentation would have to be provided of access to the property by a county road or deeded easement, and second, the Mostrongs would have to correct certain construction deficiencies with respect to the house. On May 2, 1990, the Mostrongs obtained a deed from Tuckfield for the south road, with delivery conditioned upon acceptance of the road by Millard County as a county road. On May 15, 1990, the Mostrongs received a letter from the Millard County Commission that Millard County would accept the south road as a county road. However, the Millard County attorney apparently told the Mostrongs that the road would be accepted only if the Mostrongs would bring it up to county standards and agree to be responsible for snow removal. The Jacksons, however, produced evidence at trial that the County Commission chose not to follow the county attorney's recommendation. The trial court's findings of fact accepted the Jacksons' version of these events, rejecting the Mostrongs' argument that there were preconditions to the county's accepting the road. Although no road improvements were made, the Mostrongs submitted the county's commitment to Valley Central as part of their loan application.
With respect to the construction deficiencies, the Mostrongs obtained two estimates on the cost of repairing these problems. These estimates were in the amounts of $3212 and $6085. The Jacksons apparently offered to pay for the corrections on two occasions, but, as the trial court found, they received no affirmative response from the Mostrongs.
The Mostrongs made no further attempts to secure financing, and the property was sold at a trustee's sale on September 25, 1990 to the Jacksons for $42,000. The Mostrongs vacated the property and initiated this action against the Jacksons, alleging negligent misrepresentation, breach of contract, and mistake. The Jacksons counterclaimed for damages and attorney fees. After a bench trial, the trial court entered judgment dismissing all claims and ordering both parties to pay their own attorney fees. The court's findings of fact and conclusions of law indicated that there had been no misrepresentations or mistakes and no breach of contract, and that the Jacksons had provided marketable title to the property. The Mostrongs appeal.
The Mostrongs assert three issues on appeal: (1) Did the Jacksons breach their contractual duty to provide marketable title by failing to provide legal access to the property via either the north or the south road? (2) Did the Jacksons make fraudulent or negligent misrepresentations of material facts with respect to access to the property or the construction of the house? (3) Was there a material unilateral mistake of fact that would justify rescinding the contract?
Factual findings made by the trial court will be upheld unless they are clearly erroneous. In re Estate of Bartell, 776 P.2d 885, 886 (Utah 1989). Legal conclusions are reviewed for correction of error. Marchant v. Park City, 771 P.2d 677, 680 (Utah App.1989), aff'd, 788 P.2d 520 (Utah 1990).
The standard form earnest money sales agreement between the parties provided that the Jacksons would provide the Mostrongs with "good and marketable title" to the property. The Mostrongs allege that the lack of legal access to the property precluded the Jacksons from conveying marketable title. Furthermore, the Mostrongs argue that their exposure to litigation, in attempting to obtain legal access to the property, is evidence of the property's unmarketable title. They assert that the Jacksons failed and...
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