Ogle v. Wright

• Decision Date: 28 February 1977
• Docket Number: No. 1--376A36,1--376A36
• Citation: 360 N.E.2d 240,172 Ind.App. 309
• Parties: James A. OGLE and Wilma Rae Ogle, Defendants-Appellants, v. Lloyd WRIGHT and Louise Wright, Plaintiffs-Appellees, and Alden Rose, Defendant-Appellee.
• Court: Indiana Appellate Court

Page 240

360 N.E.2d 240

172 Ind.App. 309

James A. OGLE and Wilma Rae Ogle, Defendants-Appellants, v. Lloyd WRIGHT and Louise Wright, Plaintiffs-Appellees and Alden Rose, Defendant-Appellee.

No. 1--376A36.

Court of Appeals of Indiana, First District.

Feb. 28, 1977.

Robert L. McLaughlin, Wooden, Stark, McLaughlin & Sterner, Indianapolis, Richard N. Smith, Himelick, Himelick & Smith, Connersville, for defendants-appellants.

Phillip J. Badell, Badell & Malson, Rushville, for plaintiffs-appellees.

ROBERTSON, Chief Judge.

CASE SUMMARY

Buyer James A. and Wilma Rae Ogle (hereinafter Ogles) appeal from a judgment cancelling a conditional land sale contract and awarding damages and possession to Seller Lloyd and Louise Wright (hereinafter Wrights).

On appeal, Ogles present the following issues for our review:

1. Whether there was sufficient evidence to support the trial court's finding that Ogles breached their land contract with Wrights.

2. If there was a breach, was the trial court's decision to cancel the land contract contrary to law?

3. Whether Wrights by their conduct, waived any right, to cancel the land contract.

4. Whether there was sufficient evidence to support the trial court's finding as to the damages sustained by Wrights as a result of alleged breach.

On June 3, 1972, the parties entered into a contract for conditional sale of real estate located in Fayette County, Indiana, for a total purchase price of $18,500.00.

Section XI of that contract provides:

'The Buyers, for credit of $10,000.00 shown as down payment shall furnish to Sellers one (1) double mobile home complete and fully equipped with water line and septic tank installations to meet ordinance requirements with concrete anchors for trailer foundation installed.'

The mobile home was to be installed by Ogles on real estate owned by Wrights which is unrelated to the land purchased in the contract. The remaining $8,500.00 of the purchase price was to be paid by Ogles in equal monthly installments of $100.00 each, including interest on the unpaid balance at the rate of five percent per annum.

Shortly after the execution of the land contract, Ogles delivered the double mobile home to Wright's property where it was to be installed. On July 22, 1972, a dry well sewage system was delivered to the mobile home site. The dry well system was purchased by Ogles without consulting the Building Code Ordinance or the authorities responsible for issuing the permits required for sanitation systems in Fayette County.

On July, 25, 1972, Mr. Wright approached Mr. Ogle on the job site and told him that the dry well system did not comply with his obligation under Section XI of the contract to install a septic tank which met ordinance requirements. An argument ensued. Ogle claimed that the dry well was what they had agreed on, and that if Wright wanted a septic system he would have to pay for it or do it himself.

During the argument Ogle grabbed Wright's shoulder and turned him around. The same day, Wright filed assault and battery charges against Ogle for which Ogle was arrested. The case was subsequently dismissed.

The evidence is in dispute as to whether Wright told Ogle and his helper to leave the premises and not come back. However, Wright testified that since July 25, 1972, the date of the argument, he was not willing to allow Ogle back on his land to complete the installation.

Two days later, Wright signed a contract for another person to complete the mobile home installation and install the septic tank.

Ogle wrote a letter to the Wrights, dated July 31, 1972, to the effect that he was prepared to fulfill his part of the contract when he received written permission from Wrights to work on their mobile home.

Through a letter dated August 7, 1972, Wrights' attorney informed the Ogles that their failure to comply with Paragraph XI of the contract resulted in the Wrights independently contracting for completion of the installation, and the attorney insisted upon full compliance with the contract and repayment of the cost incurred by the Wrights.

During the early part of October, 1972, after being notified that the installation work had been completed, Ogle went to the office of Wright's attorney. Ogle looked at the charges of the contractor, and, though no demand was directly made for the total amount of the bill, he offered to pay one thousand dollars but no more. The offer was not accepted.

In the meantime, commencing with the execution of the contract in June of 1972 and continuing through January of 1973, Wrights accepted from Ogles all the monthly installments of principal and interest which were due under the land contract. Also, Ogles' attempt to pay the real estate taxes on the property being purchased was rejected by the county treasurer's office because the Wrights had paid the taxes.

On March 8, 1973, more than seven months after the July 25 incident, Wrights served upon Ogles a 'Notice and Cancellation of Contract for Buyer's Default', in which they demanded repayment of the installation costs within ninety days, or they would consider the contract null and void. Such notice of default was accompanied by a return of Ogles' February payment under the land contract.

Ogles, through a letter from their attorney, denied Wrights' right to cancel and stated that Ogles would deposit all payments due under the contract in a bank account for the benefit of Wrights.

The Ogles First question the sufficiency of the evidence for the trial court's finding of breach. This court will not weigh the evidence nor determine the credibility of witnesses. The trial court's decision will be affirmed if there is substantial evidence of probative value to support the judgment. Goff v. Graham (1974), Ind.App., 306 N.E.2d 758.

There was sufficient evidence from which the trial court could conclude that Ogles breached their agreement to provide the mobile home with a septic tank disposal system. Ogles did not inquire into ordinance requirements for the sewer system, but instead proceeded to order the cheapter dry well system. When Wright informed Ogle that the dry well system would not meet county ordinance requirements, Ogle flatly refused to take it upon himself to procure an appropriate septic tank system. Failure to perform an obligation which he agreed in the contract to undertake constituted a breach of that contract. 6 I.L.E. Contracts § 232 (1958).

The Ogles next contend that even if a breach is found, the cancellation of the contract was not the proper remedy.

The land contract provides in section IX, Seller's Remedies on Buyer's Default:

'Time shall be of the essence of this contract.

'In case of failure of Buyer to make any of the payments as they become due, or any part thereof, or perform any of Buyer's covenants, this contract shall, at the option of Seller, be forfeited and terminated and all payments theretofore made shall be retained by Seller as rent for the use of the Real Estate, and Seller shall have the right to re-enter and take possession of the Real Estate and, in addition, may recover any loss or damage which Seller may sustain by reason of any default; or Seller may sue (after giving the notice required by the next paragraph) and recover all of the unpaid balance of the purchase price which, at the option of Seller, shall become immediately due and payable. All sums payable pursuant to this contract are payable with accrued interest and with attorney fees, without relief from valuation or appraisement laws. The failure or omission of Seller to enforce his rights upon any breach of any of the terms or conditions of this contract shall not bar or abridge his rights upon any subsequent default.

'Before Seller shall file in a court of competent jurisdiction any action in respect of this contract, he shall first serve on Buyer written notice of the default complained of and Buyer shall have 90 days from the posting or service of said notice to correct such default; provided, however 90 days' notice shall be required in the case of any default in payment of any monies agreed to be paid by Buyer herein.

'Buyer agrees to pay the reasonable expense of preparation and delivery of any notice of default, including attorney fees if incurred.'

The contract expressly provides that a failure by the Ogles to perform any of their covenants shall, at the option of the Wrights cause the contract to terminate and be forfeited.

The trial court, in effect, granted Wrights a rescission of the contract by providing for cancellation of the contract and by attempting to return the parties to their respective positions before execution of the contract.

However, the Wrights prayed in their complaint for termination of the contract under its terms and for forfeiture of all prior contract payments.

'The declaration of a forfeiture for the breach of a condition of a contract, in accordance with a stipulation therein, is to be distinguished from a rescission of the contract in that it is an assertion of a right growing out of it. It puts an end to the contract and extinguishes it in accordance with its terms similarly to the manner in which it is extinguished by performance. Forfeiture terminates an existing contract without restitution, while rescission of such contract terminates it with restitution and restores the parties to their original status.' 17A C.J.S. Contracts § 406, p. 493 (1963).

We are of the opinion that both the complete forfeiture requested by the Wrights in their action at law on the contract, and the remedy imposed by the trial court are improper in the case at bar.

The remedies available to a plaintiff seeking termination and forfeiture of a land sale contract, granted therein upon breach by the other party, were established by the Indiana Supreme Court in Skendzel v. Marshall (1973), 261 Ind. 226, 301 N.E.2d 641, cert. denied 415 U.S. 921, 94 S.Ct. 1421, 39 L.Ed.2d 476. Therein the Supreme Court held that forfeiture clauses...