Nelson v. Butcher

• Decision Date: 27 July 1976
• Docket Number: No. 2--474A87,2--474A87
• Parties: David NELSON and Nancy Nelson, Appellants (Defendants below), v. John BUTCHER and Virginia Butcher, Appellees (Plaintiffs below).
• Court: Indiana Appellate Court

Page 106

352 N.E.2d 106

170 Ind.App. 101

David NELSON and Nancy Nelson, Appellants (Defendants below), v. John BUTCHER and Virginia Butcher, Appellees (Plaintiffs below).

No. 2--474A87.

Court of Appeals of Indiana, First District.

July 27, 1976.

Rehearing Denied Aug. 30, 1976.

Transfer Denied Nov. 11, 1976.

Joseph H. Davis, Lawrence R. Murrell, Fell, Davis & Murrell, Kokomo, for appellants.

Edward S. Mahoney, O'Mahoney & Mahoney, Simmons & Fleming, Kokomo, for appellees.

LOWDERMILK, Judge.

STATEMENT OF THE CASE:

This case was transferred from the Second District to this office on July 1, 1976, in order to lessen the disparity in caseloads among the Districts.

Defendants-appellants David and Nancy Nelson (Nelsons) appeal from a judgment awarding possession of real estate of which they were purchasers under a conditional sales contract to plaintiffs-appellees John and Virginia Butcher (Butchers), and denying their prayer for damages on their counterclaim.

We reverse.

FACTS:

The facts necessary for our disposition of this appeal are as follows: On June 11, 1966, the Butchers entered into a contract to sell certain described real estate to the Nelsons. The pertinent provisions of this contract are set forth infra:

'ARTICLES OF AGREEMENT

1. In consideration of the sum of $9,900 to be paid as hereinafter set out with interest at 7% per cent per annum on the unpaid balance, John Butcher and Virginia Butcher husband and wife hereinafter designated as the Owner, agrees to sell to David Nelson and Nancy Nelson, husband and wife, hereinafter designated as the purchaser, upon compliance with the conditions herein contained, real estate described as follows: Subject to survey at time of signing of deed. Property known as 1009 S. Purdum.

2. The purchaser agrees to buy said real estate, and to pay the purchase price as follows: $400.00 on the date of this agreement, receipt thereof is acknowledged, and the balance of $9,500.00 as follows: $85.00 per month P.I.

3. The first monthly payment shall be payable Aug. 11, 1966, and one on the same date of each month thereafter until paid in full. The monthly payment includes interest and principal. The Purchaser may pay any greater amount than herein required, including the entire balance, without penalty and interest shall cease as to such payments. Time of payment is of the essence of this Contract.

4. The Purchaser is entitled to possession on the 10th day of July, 1966, to continue so long as he performs the conditions herein. Purchaser agrees to pay all Taxes beginning with the installment of Taxes due and payable in Spring 66 due 67 of 19 and all assessments of any kind after this date. Purchaser agrees to keep the property insured under Fire and Extended coverage in a Policy acceptable to the owner in the amount of $10,000.00 payable as the interests of the parties may appear, and to deliver said policy to the Owner until such purchase price as paid in full. Time of payment is of the essence of this Contract.

5. Title to said real estate shall remain in the Owner until this contract shall have been fully performed, no right, title or interest in said real estate, or in any improvements thereon, legal or equitable, shall pass to the purchaser by virtue of this agreement, until an terms and conditions shall have been performed.

6. The Purchaser shall use said premises well and shall keep them in good repair and shall commit no waste thereon. In the event of any re-entry by the Owner, the Purchaser shall deliver the premises in good condition as same are now in or may be put in, reasonable wear and tear and acts of God and public authorities excepted. The Owner reserves the right at reasonable times to inspect said premises during the term of this contract.

7. The Owner agrees to furnish an abstract of title showing merchantable fee simple title or insurance title in the Owner within _ _ days of this date, unless it shall have been previously done. The Purchaser shall have _ _ days in which to examine said abstract, at the end of said period, title shall be conclusively presumed acceptable, unless within said period, Purchaser shall deliver objections to title in writing to the Owner. The Owner shall have _ _ days to perform such acts as are necessary to vest merchantable fee simple title in himself; if he is unable to do so for any reason, this contract shall be void and all payments refunded. No further continuation of the abstract by the Owner shall be required.

11. If the Purchaser fails to pay any installment of the purchase price or interest thereon, or any installment of taxes on the real estate, or public assessment, or any premium of insurance, as the same become due and payable, and if such failure continues for a period of 60 days, or if the Purchaser fails to perform or observe any condition or term of this agreement and such default continues for a period of 60 days, the Owner may cancel this agreement, take immediate possession, and remove the Purchaser or those holding under him, without further notice or demand whatsoever, notice and demand being expressly waived by the Purchaser, and in the event of cancellation all payments theretofore made by the Purchaser, including the payment on this date shall be retained by the Owner not as a penalty but as liquidated damages for the breach of this agreement, said damages being uncertain and difficult of measurement; and in such event, all rights of the Purchaser shall cease and the Purchaser shall have no right, title, interest or claim of any kind in or to the real estate described herein or improvements thereon, or under the terms of this agreement.

12. Failure or delay of the Owner to exercise any option or remedy hereunder for any default or breach of condition shall not operate as a waiver of the right of the Owner to pursue such option or remedy for the same or any subsequent default at any time thereafter. (Our emphasis.)

* * *'

The Nelsons' record of principal and interest payments was sporadic. ¹ On August 30, 1967, the Butchers, through their attorneys, gave the Nelsons notice that pursuant to paragraph eleven (11) of their contract that it was now cancelled and demanded immediate possession of the property. On September 8, 1967, the contract was reinstated when the Nelsons brought all payments up to date.

Following the reinstatement of their contract, the next payment from the Nelsons was due on October 11, 1967. This payment was not made. On November 15, 1967, the Butchers received their next installment from the Nelsons which they credited to the payment due on November 11, 1967. Instead of cancelling the contract on December 11, 1967, which would have been 60 days subsequent to the delinquent payment of October 11, 1967, the Butchers accepted another payment on December 12, 1967, and applied it to the payment due as of December 11, 1967.

The Nelsons then made a regular series of payments until they missed the payment which came due on December 11, 1968. The next payment received from the Nelsons was on January 2, 1969, and was credited for the payment due on January 11, 1969. The Nelsons continued to make regular payments until July, 1969, which payment they missed. The Butchers accepted a payment from the Nelson on August 12, 1969, and applied it to the payment due on August 11, 1969. The Nelsons missed their September, 1969, payment, but tendered a payment on October 3, 1969, which was accepted by the Butchers and applied toward the Nelsons' payment due on October 11, 1969. Finally, the Nelsons failed to make a payment for January, 1970. The next payment was made on February 7, 1970, and applied by the Butchers toward their contract with the Nelsons.

On March 11, 1970 the Butchers served notice on the Nelsons that they had until April 1, 1970 to vacate the property.

At the time the Nelsons were given notice to vacate they were a total of five payments in arrears.

ISSUES:

We have chosen to consolidate Nelsons' overlapping assignments of error. As consolidated, the following issues are presented for our review:

1. Did the trial court err in finding that the Butchers were lawfully entitled to possession of the real estate described in their complaint?

2. Did the trial court err in denying the Nelsons' counterclaim for damages?

ISSUE ONE:

The Nelsons argue that the trial court committed reversible error by finding that the Butchers were entitled to possession of the land which was being sold to them pursuant to a conditional sales contract. They contend that the Butchers were not entitled to exercise the contract's forfeiture clause because of the Butchers' failure to notify them that the time of making payments would be considered 'of the essence' in the future after customarily accepting late payments. Furthermore, the Butchers were forbidden from exercising the forfeiture clause because of the mandates of Skendzel v. Marshall (1973), 261 Ind. 226, 301 N.E.2d 641, which recognized that under certain circumstances a vendor's interest under a contract to sell land must be treated as analogous to that of a mortgagee, hence, relegating him to the remedy of foreclosure as provided for by Ind. Rules of Procedure, Trial Rule 69(C).

We should note at the outset that the trial court made general findings of fact pursuant to Tr. 52(A). Therefore, on appeal, our standard of review is limited to determining whether the trial court's findings were clearly erroneous. As stated in Citizens Gas & Coke Utility v. Wells (1971), 150 Ind.App. 78, 275 N.E.2d 323, 329:

"On appeal of claims tried by the court without a jury or with an advisory jury, at law or in equity, the court on appeal shall not set aside the findings or judgment unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge the credibility of the witnesses.'

In 3 Harvey, Ind. Practice 427, the author recites the 'clearly erroneous' test to be applied to such findings:

'The United States...