Porter v. Smith, S-89-685
| Decision Date | 26 June 1992 |
| Docket Number | No. S-89-685,S-89-685 |
| Citation | 240 Neb. 928,486 N.W.2d 846 |
| Court | Nebraska Supreme Court |
| Parties | Leland PORTER, Individually and as Trustee for Nicole Lynn Porter, Kristine Lee Porter, and Cynthia Ann Porter, Appellant, v. Robert D. SMITH and Sandra E. Smith, Husband and Wife, Appellees. |
Syllabus by the Court
1. Judgments: Appeal and Error. In reviewing a judgment in a bench trial of a law action, an appellate court does not reweigh the evidence, but considers the evidence in the light most favorable to the successful party and resolves evidentiary conflicts in favor of the successful party, who is entitled to every reasonable inference deducible from the evidence.
2. Judgments: Appeal and Error. In a bench trial of a law action, a trial court's factual findings have the effect of a jury verdict and will not be set aside unless clearly erroneous.
3. Judgments: Appeal and Error. Regarding a question of law, an appellate court has an obligation to reach a conclusion independent of that of the trial court in a judgment under review.
4. Contracts: Damages: Penalties and Forfeitures. Ordinarily, a sum paid in part performance of a contract, with a provision that it shall be forfeited in the event of a default, if not excessive, and if the actual damages are not calculable in advance, will be regarded as liquidated damages.
5. Contracts. A contract must be construed as a whole and, if possible, effect must be given to every part thereof.
6. Contracts. In interpreting contracts, the court as a matter of law must first determine whether the contract is ambiguous.
7. Contracts: Words and Phrases. An instrument is ambiguous if a word, phrase, or provision in the instrument has, or is susceptible of, at least two reasonable but conflicting interpretations or meanings.
8. Contracts. The fact that parties to a document have or suggest opposing interpretations of the document does not necessarily, or by itself, compel the conclusion that the document is ambiguous.
9. Contracts: Intent. If a contract is unambiguous, the intent of the parties must be determined from the contents of the contract.
10. Contracts: Real Estate: Sales: Penalties and Forfeitures: Words and Phrases. In the context of a land sale contract, forfeiture means that if a purchaser defaults on the payments, any sums paid by the purchaser on the contract of sale are not reimbursed to him or her.
11. Contracts: Real Estate: Vendor and Vendee: Foreclosure. A vendor in an executory land contract, upon default of payment by the vendee, has the right to foreclose on the executory land contract as if it were a mortgage and obtain a deficiency judgment after such a foreclosure.
12. Vendor and Vendee: Penalties and Forfeitures: Words and Phrases. Under the majority rule in the United States, the vendor is typically barred from seeking to recover the mortgage equivalent of a deficiency judgment once forfeiture has been accomplished. This is the so-called election of remedies doctrine.
13. Words and Phrases. Election of remedies is an ancient doctrine created by the courts. It requires a plaintiff to choose between inconsistent remedies for redress of a single injury. The doctrine originated as a means to prevent double recovery and to limit potential harassment of defendants.
14. Vendor and Vendee: Proof: Foreclosure. The election of remedies doctrine is an affirmative defense placing the burden on the purchasers to plead and prove that the seller has elected the remedy of strict foreclosure.
15. Contracts: Real Estate: Vendor and Vendee: Penalties and Forfeitures. A vendor in a real estate installment contract is barred from seeking to recover the mortgage equivalent of a deficiency judgment once forfeiture of the contract has been accomplished and the vendor is in possession of the real estate and has retained the payments made by the vendee. The seller must make an election of the remedy he or she wishes to pursue.
16. Contracts: Real Estate: Vendor and Vendee: Penalties and Forfeitures. Generally, a vendor of a real estate installment sale contract may not recover the underlying unpaid debt owing on the purchase price and also enforce the contract's forfeiture remedy because the two remedies are inconsistent and result in a windfall recovery to the vendor.
17. Contracts: Real Estate: Vendor and Vendee. The vendor in a real estate installment contract is bound by the election of remedies doctrine if the action has been pursued to a determinative conclusion, the vendor has procured advantage from his or her actions, or the vendee has been subjected to injury.
18. Contracts: Real Estate: Vendor and Vendee: Damages: Notice: Penalties and Forfeitures: Foreclosure. While the vendor in a real estate installment contract may not accept or take possession of the real estate and retain the amounts paid under the contract and still seek money damages, he or she may, even after sending notice of forfeiture, alter his or her choice of remedies and commence an action either for money damages or for foreclosure of the land contract.
Paul E. Hofmeister, Van Steenberg, Chaloupka, Mullin, Holyoke, Pahlke, Smith, Snyder & Hofmeister, P.C., for appellant.
Robert B. Reynolds and J.A. Lane, McGinley, Lane, Mueller, O'Donnell & Williams, P.C., for appellees.
This case involves the election of remedies. The plaintiff, Leland Porter, individually and as trustee for his children, Nicole Lynn Porter, Kristine Lee Porter, and Cynthia Ann Porter, appeals from an order of the district court which dismissed his petition seeking a deficiency judgment. This action followed the foreclosure of a land contract against the defendants, Robert D. and Sandra E. Smith. The plaintiff assigns as error generally that the trial court held that plaintiff "deliberately invoked" the remedy of liquidated damages and that the contract prohibited plaintiff from recovering a deficiency judgment. We reverse and remand for further proceedings.
In reviewing a judgment in a bench trial of a law action, an appellate court does not reweigh the evidence, but considers the evidence in the light most favorable to the successful party and resolves evidentiary conflicts in favor of the successful party, who is entitled to every reasonable inference deducible from the evidence. Nebraska Builders Prod. Co. v. Industrial Erectors, 239 Neb. 744, 478 N.W.2d 257 (1992).
In a bench trial of a law action, a trial court's factual findings have the effect of a jury verdict and will not be set aside unless clearly erroneous. Nebraska Builders Prod. Co., supra.
Regarding a question of law, an appellate court has an obligation to reach a conclusion independent of that of the trial court in a judgment under review. Nebraska Builders Prod. Co., supra.
On February 22, 1982, the plaintiff and his now former wife entered into a land sale contract with the defendants. The property listed in the contract is buildings and a section of wheatland in Deuel County, Nebraska. The contract provided that the defendants would receive the warranty deed, which was placed in escrow, upon compliance with all the terms of the contract.
The contract provided for a purchase price of $586,000, with $10,000 paid down at the date of closing, $50,000 paid on April 1, 1982, and $57,000 paid on July 15, 1982. The contract also provided for the payment of the balance "in the sum of $468,800.00 [sic]," together with interest at 11.5 percent per annum, payable in annual amortized installments of $60,805.60, which included principal and interest, and a balloon payment of $221,933.10 after 15 years. Additionally, the defendants were to receive the wheat crop then growing on the land.
Between the time of the original meeting of the parties and the preparation of the final contract, the two items listed above had been changed somewhat, and the provision as to default set forth in paragraph 10.2 was also modified. The language of paragraph 10.2, with the addition made at the time of the last amendment appearing in parentheses, is as follows:
10.2 BUYERS agree that in the event they fail to pay any amounts due under this Contract, including real estate taxes, or within THIRTY DAYS from the date such payments are due, then the entire endebtedness [sic] due under this Contract shall become due and payable immediately at the option of the SELLERS, and SELLERS may proceed to foreclose this Contract in the manner provided by law, (and the payments made thereon shall be forfeited and held as rent and liguidated [sic] damages.)
Importance was placed by the court and the parties on the question of which party, the plaintiff or the defendants, requested the change in the quoted language. The trial court found that "[t]he provision for liquidated damages was plaintiff's idea," although we fail to see the relevance of that finding inasmuch as the important consideration is the language of the contract. The court went on to say, "Having deliberately provided for a specific remedy and having deliberately invoked that specific remedy, plaintiff cannot now complain of its application."
Defendants took possession of the land and made the annual payments due on April 1, 1983, 1984, and 1985. No additional payments were made. Plaintiff's lawyer wrote the defendants on May 6, 1986, that
pursuant to paragraph 10.2 of the contract sellers hereby declare the entire indebtedness due under the contract, due and payable immediately and intend to proceed to foreclose the same forthwith and seek such other relief as the law allows. All payments thus far made under the contract are hereby forfeited and credited to the sellers as rent and liquidated damages.
Plaintiff filed an action for foreclosure in the district court for Deuel County, and pursuant to a motion for summary judgment which was granted, a decree of foreclosure issued. Only the decree,...
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