Perkins v. Spencer, 7565

• Decision Date: 21 April 1952
• Docket Number: No. 7565,7565
• Citation: 121 Utah 468,243 P.2d 446
• Parties: PERKINS et al. v. SPENCER et al.
• Court: Utah Supreme Court

Page 446

243 P.2d 446

121 Utah 468

PERKINS et al. v. SPENCER et al.

No. 7565.

Supreme Court of Utah.

April 21, 1952.

Peter M. Lowe, Provo, Richard M. Taylor, Spanish Fork, for appellants.

Hugh V. Wentz, Provo, for respondents.

CROCKETT, Justice.

This controversy is grounded upon a uniform real estate contract by which the defendants Spencer sold a home in Provo to the plaintiffs Perkins. The action in the district court, from which this appeal is taken, supplants an action for unlawful detainer in the city court of Provo wherein the Spencers alleged forfeiture of the contract and sought to evict the Perkinses from the property. In this action, the Perkinses sought to avoid the effects of the strict provisions of the contract and the unlawful detainer action by asking for cancellation of the contract and the return of their money, or in the alternative to reform it in accordance with additional terms as claimed by them, and which they could meet. Defendants answered denying any such agreement and counterclaimed on the same basis as their action in the city court was founded upon, alleging forfeiture of the contract for non-payment, and sought to repossess the premises.

The trial court ruled for the defendants, allowing them to rescind the contract for non-payment; permitting them to keep the amount paid in as liquidated damages, and also awarding treble damages for unlawful detainer after notice to quit.

Two points are urged on appeal, that the court erred: (1) In granting treble damages for unlawful detainer against the plaintiff, Mrs. Perkins; and (2) In ruling that the money paid in by plaintiffs constituted liquidated damages and not a penalty.

The contract provided that plaintiff Perkins would pay $10,500 for the home; $2500 was paid down and the balance was to be paid $75 per month until the Perkinses sold their home in Bountiful, Utah. When this was accomplished, they were to use the proceeds therefrom, together with what money they could borrow under an F. H. A. loan on the home purchased from the Spencers, and pay the remaining balance on the contract. The Perkinses claim that the parties agreed that if these two sums were not enough to pay off the Spencers, the latter would accept a promissory note payable over a reasonable time, to take care of the difference. This was not included in the written contract. Upon conflicting evidence, the trial court found that there was no such collateral agreement and this finding will not be disturbed although it is obvious that there was, or ought to have been, some agreement regarding it because the parties could not be absolutely certain that the two sums mentioned would cover the entire contract price.

The contract was signed May 18, 1949. No time limit was fixed in which the Perkinses had to sell their Bountiful home but the idea seems to have been that they would go forward with selling it and arranging for the loan as soon as possible. They made their payments of $75 per month for June, July, and August. The F. H. A. loan on the Provo home for the maximum amount procurable, $6,000, was arranged for and the Bountiful home was sold by September 17th. Perkinses then indicated to the Spencers that they were in a position to pay off the contract except for $1,092.29. They offered to sign a promissory note for that amount payable on some reasonable terms the parties could agree upon. This the Spencers refused, insisting on payment of the whole balance. They claimed that the proceeds of the sale of the Bountiful home, plus the F. H. A. loan, were sufficient to pay off the contract.

It is true that the gross amounts of such proceeds would have paid off the Spencers. But when the real estate commission, loan costs, insurance, and certain other expenses necessary to the completion of the transaction are taken into account, not enough money remained to pay off the contract. It is impossible to tell from the record just how the figure of $1092.29 was arrived at or whether it was the correct amount. Suffice it to say that there has never been any dispute between the parties as to the amount the Spencers had coming. The dispute was only as to the manner of payment. The Perkinses were offering to perform the contract according to their understanding of the collateral agreement and the Spencers refused to accept any note at all.

The parties were in disagreement as to the carrying out of the contract; the Perkinses did not make any payment for September the 30-day grace period was up on October 25th, and on November 3d, the Spencers served notice that unless the buyers paid the entire remaining balance of $7940.10 within five days the buyers would be tenants at will and all moneys paid would be forfeited as liquidated damages. Payment was not made and on November 9th, the sellers served another notice informing the buyers that they were tenants at will and requiring them to vacate the premises within five days. No question is raised in this case concerning the sufficiency or propriety of the notices served except as hereinafter discussed in reference to the item of treble damages.

Respecting the matter just mentioned, the notice to quit was served upon Mrs. Perkins but not upon Mr. Perkins personally. An attempt was made to serve him under the alternate to personal service set forth in Section 104-60-6(2), U.C.A.1943, which requires the leaving of a copy with some person of suitable age and discretion at the residence and sending a copy through the mail addressed to him. A copy for him was left with Mrs. Perkins but none was mailed. Unlawful detainer, being a summary procedure, the statute must be strictly complied with in order to enforce the obligations imposed by it. The trial court correctly ruled that the action for unlawful detainer could not be maintained against Mr. Perkins. He awarded judgment against Mrs. Perkins for treble damages totalling $535.50 for the period of occupancy after the notice to quit.

Mr. Perkins was working in Carbon County at the time the notice was served. However, there is nothing to indicate that he had abandoned the premises, or that the marital unity of the parties had been severed. The fact appears to be to the contrary. The manner of procedure by the Spencers against both seems to assume that fact and the pre-trial order to which the parties agreed recites that the plaintiffs (plural) were in occupancy of the premises. Therefore, it is to be regarded as conclusive that Mr. Perkins was occupying the premises. So long as he remained in possession, it is difficult to see how the Spencers could be damaged by the fact that Mrs. Perkins remained there. Even if she had moved. Spencers would have had no right to possession of the premises as against Mr. Perkins, They, therefore, suffered no actual damage. In Forrester v. Cook, 77 Utah 137, 292 P. 206, 211, we held that 'The damages which may be recovered in an action such as this one (unlawful detainer) are measured by the rule that they must be the natural and proximate consequences of the acts complained of and nothing more.' Nominal damages to vindicate their right to possession against her is all that could properly be awarded.

A more serious question is raised by the appellants' second point, that is, that the court erred in holding the total sum paid in to be liquidated damages. It is true that '* * * This court is committed to the doctrine, that where the parties to a contract stipulate the amount of liquidated damages that shall be paid in case of a breach, such stipulation is, as a general rule, enforceable, if the amount stipulated is not disproportionate to the damages actually sustained.' Bramwell Inv. Co. v. Uggla, 81 Utah 85, 16 P.2d 913, 916. In that case the amount of forfeiture involved was $500 on a contract of $5,128 and was not greatly disproportionate to the actual damage. Other Utah cases consistent with this rule and considering the matter of liquidated damages as opposed to penalty are Dopp v. Richards, 43 Utah 332, 135 P. 98; Cooley v. Call, 61 Utah 203, 211 P. 977; Western Macaroni Mfg. Co. v. Fiore, 47 Utah 108, 151 P. 984; Thomas v. Foulger, 71 Utah 274, 264 P. 975; Croft v. Jensen, 86 Utah 13, 40 P.2d 198; Christy v. Guild, 101 Utah 313, 121 P.2d 401. See also Malmberg v. Baugh, 62 Utah 331, 218 P. 975; Young v. Hansen, Utah, 218 P.2d 666, and Green v. Nelson, Utah, 232 P.2d 776.

It will be observed that in all cases where the stipulation for liquidated damages was enforced it bore some reasonable relation to the actual damages which could reasonably be anticipated at the time the contract was made and was not a forfeiture which would allow an unconscionable and exhorbitant recovery.

Illustrative of this is the case of Cooley v. Call, 61 Utah 203, 211 P. 977, relied on by the defendants. Plaintiff sellers sued defendant purchasers who were in default under a real estate contract. Defendants had paid in $1850 as an initial payment and some interest and taxes, making a total of about $2100. No monthly payments were provided for but certain lump sum payments were to be paid to complete the contract in two years so there was no immediate return to the sellers to take care of the current rental value. None of the sums were ever paid and the entire two years expired before the action was brought. The court figured the amount paid in mathematically, concluded that it equalled about 10% per annum on the purchase price and accordingly held that the amount was not so excessive as to be unconscionable and therefore did not represent a penalty upon the defendant.

The same is true of Christy v. Guild, 101 Utah 313, 121 P.2d 401. There, the defendants had made no down payment. While they had paid in approximately one-third of the purchase price, they had paid only $20 to $30 each month over the period, plus making improvements on the premises totalling $2,000. But the property had a monthly income to them of $75, which exceeded the total of the...