Rector v. Alcorn

• Decision Date: 14 April 1976
• Docket Number: No. 2--57354,2--57354
• Citation: 241 N.W.2d 196
• Parties: Frances RECTOR, Appellee, v. B. G. ALCORN and Vera Alcorn, Appellants.
• Court: Iowa Supreme Court

Page 196

241 N.W.2d 196

Frances RECTOR, Appellee, v. B. G. ALCORN and Vera Alcorn, Appellants.

No. 2--57354.

Supreme Court of Iowa.

April 14, 1976.

Mossman & Grote, Vinton, for appellants.

John W. Tobin of Tobin, Bordewick, Fischer & Fischer, Vinton, for appellee.

Heard by REYNOLDSON, Acting C.J., and RAWLINGS, LeGRAND, UHLENHOPP and McCORMICK, JJ.

RAWLINGS, Justice.

Defendants appeal from trial court's adjudication enjoining forfeiture of a real estate contract. We affirm.

January 28, 1972, defendants (vendors) and plaintiff (vendee) entered into a real estate contract whereby the later agreed to purchase from the former a commercial building in downtown Vinton. At all times here relevant, the building was leased from vendors by J. C. Penney Company for use as a retail outlet.

The involved instrument, with certain modifications, is an Iowa State Bar Association Land Contract (Official Form No. 20). After a down payment of $3000, the remaining $57,000 was payable as provided by paragraph 3 of the contract, which states:

'BALANCE OF PURCHASE PRICE. The balance of the purchase price shall be payable to Sellers, in cash, as follows, to-wit:

'1) $2,000.00 in cash on or before March 1, 1972.

'2) Seller shall execute a promissory note in favor of buyer in the sum $5,000.00 with interest at 6% Per annum, payable annually. Upon payment of the balance of the selling price, $55,000.00, interest on said note shall be paid to date and the principal of the note shall stand cancelled.

(The purpose of this provision is that seller shall be receiving rental to settlement date and therefore buyer should receive interest on her down payment during the same period).

'3) Seller will accept any payment over $3,000.00 at anytime between March 1, 1972 and June 1, 1975.

'4) Balance of contract due and payable on June 1, 1975.'

Vendors were permitted to remain in possession until the 'settlement date', June 1, 1975, or until vendee tendered full payment of the balance, whichever first occurred.

Paragraph 9 provides:

'STATUS QUO MAINTAINED. Sellers agree that the subject matter of this sale, as now existing, and in its present condition (or better, if herein agreed) will be preserved and delivered intact at the time of settlement. However, in case of loss or destruction of part or all of such subject matter from causes covered by the insurance thereon, Buyers agree to accept such insurance recovery (proceeds to be applied as the interest of the parties appear) in lieu of the damaged or destroyed improvements and Seller shall not be required to repair or replace same. Buyers shall thereupon complete the contract and accept the property.'

The contract further states, in paragraph 27:

'Normal upkeep not exceeding $600.00 annually shall be paid by seller during the pendency of this contract. All upkeep over $600.00 annually shall be paid for by buyer.'

In January 1973, a year after execution of the contract, the Penney store manager (vendors' tenant) notified the parties a section of the building rear wall had 'bowed out' and pulled away from the interior floor and partitions.

Vendee's husband then arranged for a masonry contractor, Carl Wells, to inspect the wall. Wells concluded the bulging section should be removed completely and rebuilt from the footings up, at an estimated cost of $6190.

Meanwhile, vendors engaged another contractor, Youngblut Construction Company, to replace the defective wall. Although vendee approved the reconstruction, she disclaimed responsibility for its cost.

The Youngblut work consisted of removing the 'bowed' (east) section of the north wall, pouring concrete footings, and replacing the former brick wall with new concrete block from base to roof. In addition, however, new footings were placed on the West half of the rear wall, where there had been no structural 'bowing'. The first floor wall on this half was replaced with concrete block. A new concrete slab loading dock was also installed, with metal frame and door added to provide access from dock to building. Finally, a new concrete block storage room, 6 10 , was constructed, and wall paneling installed in the second floor offices.

Vendee does not claim the $6,214.74 charge for Youngblut's work was excessive. Rather, she denies liability for any of this cost, particularly the latter additions and improvements which, she contends, in no event qualify as 'upkeep' or costs of 'repair'.

After paying Youngblut in full, vendors unsuccessfully demanded reimbursement from vendee. Vendors thereupon served notice of forfeiture, supportively alleging vendee's breach of contract paragraph 27, quoted Supra. Vendee then brought this equitable action to enjoin forfeiture, denying vendors' allegation of contractual breach. By cross-petition, vendors allege vendee consented to performance of the Youngblut work and its cost, seeking judgment for $5,728.46--total cost of all 1973 repairs, less vendors' contractual liability of $600 per annum for 'upkeep'.

Trial resulted in this finding of fact:

'THE COURT FINDS that the replacing of the entire north wall with new footings is not normal upkeep, and further finds that a new concrete slab at (the) loading dock and new concrete block storage room * * * is not normal upkeep. The Court further finds that the (vendee) is obligated to pay to the (vendors) normal upkeep in excess of the sum of $600.00 annually.'

Consequently, vendee was held not liable for any part of the wall reconstruction or improvement cost. On vendors' cross-petition, however, trial court found there had been upkeep expenditures of $805.58. Thereupon, vendors were awarded this sum, less their $600 liability assumed under paragraph 27, or $205.58. Subject to satisfaction of that judgment, trial court enjoined forfeiture of the contract.

By motion for new trial vendors claimed trial court's construction of paragraph 27 'rewrote' the agreement. In overruling this motion, the court below explained:

'The crux of the (vendors') motion is their contention that the Court inserted the word 'normal' immediately preceding the word upkeep in the second sentence of (paragraph 27) and in effect rewrote the terms of the contract for the parties.

'While the findings of the Court included a finding that the replacing of the entire north wall with new footings is not normal unkeep * * *, the Court construed the contract to mean that paragraph 27 referred to the same upkeep in both sentences.'

Vendors' sole contention on appeal is that trial court erred in adding the word 'normal' to the second sentence of paragraph 27. As so phrased it would read: 'Normal unkeep not exceeding $600.00 annually shall be paid by seller during the pendency of this contract. All Normal upkeep over $600.00 annually shall be paid for by buyer.' The ultimate issue posed is whether this construction is correct. Resolution of the question depends upon a number of subsidiary matters, hereafter discussed separately.

I. A preliminary dispute focuses upon our scope of review. Vendee maintains 'the case was tried to the Court upon (vendors') Cross-petition, a law action for money judgment'. It is therefore argued, appellate review is restricted to correction of errors at law, although she has no objection to de novo review.

On the other hand, vendors correctly insist trial court simultaneously adjudicated both their cross-petition (at law) and vendee's equitable action to enjoin forfeiture. While the ultimate issue was construction of the contract--generally treated as a question of law, see Atlantic Veneer Corporation v. Sears, 232 N.W.2d 499, 502 (Iowa 1975)--it still remains vendee's petition to enjoin forfeiture invoked trial court's equitable jurisdiction. We are therefore guided by this statement from Grandon v. Ellingson, 259 Iowa 514, 518, 144 N.W.2d 898, 901 (1966):

'It is conceded the allegations of plaintiff's petition called for equitable jurisdiction. '* * * once equity has obtained jurisdiction of a controversy, it will determine all questions material or necessary to accomplish full and complete justice between the parties, even though in doing so it may be required to pass upon some matters ordinarily cognizable at law.' (Citation).'

See also Kriener v. Turkey Valley Community School Dist., 212 N.W.2d 526, 530 (Iowa 1973); Brammer v. Allied Mutual Insurance Company, 182 N.W.2d 169, 172 (Iowa 1970); cf. Atlantic Veneer Corporation v. Sears, supra; Braverman v. Eicher, 238 N.W.2d 331, 334 (Iowa 1976).

Because the case stands in equity, our review is de novo. We accordingly give weight to, but are not bound by, trial court's findings. See Iowa R.Civ.P. 334, 344(f)(7).

II. Additionally, segregation of issues which this case posits from those Not involved is essential.

Our independent review of the record establishes cause of the problem at hand is not attributable to fault or negligence by either vendors or vendee. Rather, as trial court found, the limestone foundation and mortar of this relatively old building had deteriorated with age, and no footings remained beneath the defective wall section. Moreover, the evidence indicates deterioration occurred gradually, over many years antedating execution of the contract, but not until 1973 did symptoms of the problem become observable.

The pleadings below raise various theories seeking to impose or deny liability for the wall rebuilding expense, including 'caveat emptor', implied warranty, misrepresentation, and failure by prudent inspection to discover apparent defects. See generally 92 C.J.S. Vendor & Purchaser § 578; 77 Am.Jur. 2d, Vendor and Purchaser, § 329, et seq. Trial court's findings are, however, restricted to construction of paragraphs 9 and 27 of the contract, both quoted above. No specific findings of fact were made as to other theories of liability. Furthermore, since vendors neither requested additional findings of fact and conclusions of law, nor here assign as error trial court's exclusive reliance...