Powell v. Bastian

• Decision Date: 28 October 1975
• Docket Number: No. 13939,13939
• Citation: 541 P.2d 1127
• Parties: Cleo R. POWELL, Plaintiff and Appellant, v. Dick E. BASTIAN et al., Defendants and Respondents.
• Court: Utah Supreme Court

Page 1127

541 P.2d 1127

Cleo R. POWELL, Plaintiff and Appellant, v. Dick E. BASTIAN et al., Defendants and Respondents.

No. 13939.

Supreme Court of Utah.

Oct. 28, 1975.

Justin C. Stewart, Salt Lake City, for plaintiff and appellant.

Dallas H. Young, Jr., Ivie & Young, Provo, for Bastian.

S. Rex Lewis, Howard, Lewis & Peterson, Provo, for Prudential.

Glen J. Ellis, Maxfield, Gammon, Ellis & McGuire, Provo, for Sharp.

ELLETT, Justice:

Mrs. Powell owned a home on which there were two mortgages. There were also a judgment lien and a warrant for delinquent taxes due to the State of Utah. In all, the place was encumbered in an amount of approximately $13,000. The holder of the second mortgage threatened to foreclose because payments thereon were delinquent. Mrs. Powell tried to borrow money from Mr. Bastian, who understandably refused to make a loan. He did offer to purchase the property for $16,000, less the encumbrances, and to give Mrs. Powell an option to repurchase within three months for $18,000, plus interest, on the money advanced.

Mrs. Powell deeded the property to Mr. Bastian, who gave her $3,055.34, the balance remaining out of the $16,000 purchase price after deducting the amount of the encumbrances.

Mrs. Powell tried to find a purchaser so that she could exercise her option to rebuy the home. Ultimately she listed the property with Boley Realty Company, and it was placed on the multiple listing service in Utah County.

Mr. Sharp, a broker, connected with the multiple listing service, but not with Boley Realty Company, located a prospective purchaser and prepared, on behalf of the purchaser, an earnest money offer which he presented to Mrs. Powell. Mrs. Powell accepted the offer to purchase but told Mr. Sharp that she had sold the property to a Mr. Bastian and that Sharp would have to secure his signature to the offer. She did not disclose the fact that she had an option to repurchase the property or that she claimed any interest in it.

Sharp then obtained Bastian's signature and arranged financing for his client through Prudential Federal Savings & Loan Association. At no time did Mr. Sharp have any reason to think that he represented Mrs. Powell. His client was the purchaser of the home from Bastian. He knew nothing about the relationship between Mrs. Powell and Mr. Bastian until several months later when Mrs. Powell took out bankruptcy ¹ and he got several letters from her lawyer.

Prudential Federal Savings & Loan Association financed the purchase of the house from Mr. Bastian and distributed the funds according to the directions of the purchaser and Bastian. It was directed to pay to Mrs. Powell the surplus money remaining from the sale.

This suit was brought and the appeal taken because Mrs. Powell is unwilling for Bastian to get his $18,000, the sum which was to be paid him under the option agreement.

There is no record of the proceedings at trial before us, and we, therefore, assume the findings made by the trial judge are supported by the evidence given. ² In fact, counsel for Mrs. Powell states in his brief: 'The facts are set forth in the amended complaint and are substantially the same as the facts found in the trial court's findings of fact.'

The findings made by the court contain the following:

3. On the 17th day of June, 1970, plaintiff approached the defendant Dick E. Bastian and offered to sell her property to him for the sum of $16,000 provided that she could have an option for three months to repurchase the property in accordance with the provisions of an option agreement, Exhibit 2. Prior to offering to sell the property to the defendant Dick E. Bastian, plaintiff had requested the defendant Dick E. Bastian to make a loan to her. The defendant Dick E. Bastian had declined to make a loan to the plaintiff but did offer to purchase the above described real property.

10. The court finds that the plaintiff Powell testified at all times that her arrangement with the defendant Bastian was one by terms of which she had an option to repurchase the property for a three month period. The court finds that there is no instance in the record in which the transaction between the plaintiff Powell and the defendant Bastian was characterized as anything other than as a sale to Mr. Bastian with an option on the part of Mrs. Powell to repurchase the property.

Mrs. Powell argues that the selling costs should be taken out of the $18,000. She did not exercise the option within 90 days, or at all, and so really was not entitled to anything. However, Mr. Bastian treated the sale as if it were the exercise of the option and gave Mrs. Powell everything above the amount he claimed pursuant to the option agreement.

Since Mr. Bastian was obligated to furnish title insurance or an abstract to date to Mrs. Powell if she exercised the option, the trial court correctly gave her judgment for the cost of title insurance in the amount of $119, and charged that against Mr. Bastian's $18,000. The trial court also gave her judgment for the sum of $228.33 for taxes with which she had been charged in the sale to Mr. Bastian.

Prudential Federal Savings & Loan Association was dismissed from the case on a motion for summary judgment. It knew nothing of Mrs. Powell's claims and so was properly let out of the case.

Mr. Sharp, the realtor representing the purchaser, is entitled to his fee through the multiple listing service, and then Mr. Bastian should get his $18,000 less the cost of title insurance and taxes, and the balance should be given to Mrs. Powell.

We think Mrs. Powell was dealt with fairly and correctly by the trial court. The judgment is hereby affirmed. Costs are awarded to the respondents.

HENRIOD, C.J., and CROCKETT, J., concur.

MAUGHAN, Justuce (dissenting):

For the following reasons, I dissent.

Plaintiff initiated this action, seeking equitable and legal relief for the damages she sustained in a transaction involving the sale of her home. From judgment of the trial court, denying her relief except for certain adjustments hereinafter noted, she appeals.

The equitable jurisdiction of this court being invoked, it is both the duty and prerogative of this court, pursuant to Article VIII, Section 9, Constitution of Utah, to review the law and the facts, make its own findings and substitute its judgment for that of the court below, ¹ if it deems such justifiable.

In June 1970, plaintiff owned a home in Orem, utah, which was encumbered by first and second mortgages. She had defaulted on the second mortgage and was confronted with imminent foreclosure proceedings. A friend suggested that she contract one Bastian to secure a loan. Bastian agreed to a transaction, whereby he would accept a warrantly deed to the property and in return he would grant plaintiff a 90-day option to purchase the property from him or sell it to someone else and then repay him. Bastian agreed, in exchange for the deed, to pay off or assume certain indebtedness up to the sum of $16,000, and if the option were exercised to convey to plaintiff a fee simple title, free and clear. Plaintiff executed a warranty deed with no encumbrances noted thereon. Bastian issued the following checks: Mrs. Powell, $3,055.34; title insurance, $103; Lockhart Company (second mortgage), $5,545.00; totaling $8,703.35. Although there was no writing to evidence the agreement, Bastian was alleged to have promised to pay or assume the first mortgage with Walker Bank in the sum of $7,296.65. In return for the warranty deed, as part of the option, plaintiff has the right to purchase the property, within 90 days, for the price of $18,000 plus interest, at the rate of 8 per cent per annum on $16,000, from the date of the option until the time it was exercised.

This transaction was for the express purpose of giving plaintiff an opportunity to sell her home and recover her equity. Following this 'sale,' plaintiff attempted unsuccessfully to sell her home. On August 1, 1970, she listed her property for sale with Boley Realty. On August 18, 1970, a realtor, Dee V. Sharp, a defendant herein, presented plaintiff with an earnest money offer for $20,500, which plaintiff signed. She informed the realtor that she had 'sold' the property to Bastian, whom she contacted and requested that he sign, which he did. The purchase of the property was financed by Prudential Federal Savings and Loan Association, which closed the transaction and disbursed the money.

Plaintiff was not informed of the time or place of the closing, by anyone. She had no representation, although it was due her. On the seller's statement, Bastians were listed as the sellers. The total sale price, including $70 for rent owed by the purchasers for 14 days, was $20,570. Prudential deducted the following from the sale price: Real property taxes for 8 1/3 months, $228.33; Equity of Cleo Powell, $247.26; Title Insurance, $119; Recording, $6; Provo Adjustment Service (this was an outstanding judgment against Powell), $296.32; Real estate commission of D. V. Sharp, $630; Down payment, $600; Walker Bank (first mortgage), $6,783.12; State Tax Commission (this was an unpaid tax owed by Powell), $30; Orem City (special assessment on the home), $49.09. The total deductions were $8,989.12. The Bastians received $11,580.88.

In her action, plaintiff alleged that the transaction between her and Bastian was not a sale but a security agreement cast in the form of an absolute deed and option to repurchase, at an advanced price; that this arrangement was unconscionable and usurious in that Bastian exacted $2,877.53 interest for the loan of $8,703.35 for a period of 85 days.

On appeal, plaintiff contends that the court erred in its determination that the arrangement between Powell and Bastian was a sale and not a security agreement disguised to cover up a scheme to collect usurious interest.

In Kjar v. Brimley, ² this court stated, that whether a transaction is a sale or a security...