Reno v. Beckett

• Decision Date: 14 March 1977
• Docket Number: No. 75-1496,75-1496
• Citation: 555 F.2d 757
• Parties: S. H. RENO et al., Appellants, v. Ralph G. BECKETT and Elizabeth G. Beckett, husband and wife, Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 757

555 F.2d 757

S. H. RENO et al., Appellants, v. Ralph G. BECKETT and Elizabeth G. Beckett, husband and wife,

Appellees.

No. 75-1496.

United States Court of Appeals, Tenth Circuit.

Argued and Submitted March 23, 1976.

Decided March 14, 1977.

John Anderson, Jr., Anderson, Granger, Nagels & Lastelic, Overland Park, Kan., for appellants.

J. D. Lysaught, Weeks, Thomas, Lysaught, Bingham & Mustain, Overland Park, Kan., for appellees.

Before LEWIS, Chief Judge, SETH, Circuit Judge, and MORRIS, Chief Judge. ^*

MORRIS, Chief Judge.

Appellants seek review of a judgment denying them as buyers specific performance of a contract for the sale of real estate. At oral argument appellants stated that they did not dispute the findings of fact announced by the trial court and neither are those findings of fact disputed in their briefs. Except for omitting the land description and certain exhibits referred to, those findings are substantially as follows:

1. This controversy involves a written agreement wherein appellees agreed to sell to appellants, a group of people operating as I-435 Land Company, the following tract of real estate in Johnson County, Kansas: (The 20 acre tract was described).

2. The history of facts and circumstances relevant to the present action dates back to 1966 when Ralph Beckett and his wife, Elizabeth Beckett, entered into a previous written agreement to sell the above described 20 acre tract to Trail Realty, Inc. This agreement required a down payment of $5,000 and a second payment of $53,000 was to be made by December 31, 1967 (sic). A final payment of $142,000 was required by January 31, 1967. The contract provided that time was of the essence, but a five-day grace period was allowed following each payment date.

3. During the fall of 1966, C. A. Jones, a licensed real estate agent and broker with the J. C. Nichols Company, learned of the Trail Realty agreement. Jones had managed property for the Becketts, including the twenty-acre tract in question, securing tenants, making leases, planning crops, and collecting rents. Jones was a friend and client of John W. Breyfogle, Jr., Ralph Beckett's attorney. In late 1966 Jones heard that the Trail Realty contract might fail. At a chance meeting between Jones and George W. Gagel (one of appellants), Jones told Gagel the property might be for sale and Gagel informed Jones he might be interested in purchasing it. By letter dated January 19, 1967, Jones advised Beckett that he had heard rumors that Trail Realty was having difficulty obtaining financing and indicated that he had some responsible people who would be interested in the property and would be in a position to pay cash.

4. Trail Realty was, in fact, having difficulty obtaining the necessary financing. The deadline for payment was extended several times by mutual agreement, and finally Trail Realty was given until April 1, 1967, at which time the entire purchase price was due. Trail Realty, unable to obtain financing, failed to tender payment by April 1, 1967, or within the five-day grace period thereafter, and the Becketts refused to further extend the agreement.

5. In March of 1967, Breyfogle, Ralph Beckett's attorney, advised Jones of the April 1, 1967 deadline for payment by Trail Realty, and indicated that Trail Realty probably would not be able to perform. Jones told Breyfogle that he would contact his people and see if they were interested.

6. Shortly after April 1, 1967, Breyfogle advised Jones that Trail Realty had not performed and the property was available for another buyer. Jones immediately took steps to arrange for purchase of the property by I-435 Land Company. A written agreement was prepared by the J. C. Nichols Company and submitted to Gagel for his signature. Gagel, on behalf of the I-435 Land Company, signed the agreement and gave a check for $10,000 as earnest money. The $10,000 was deposited with the J. C. Nichols Company, Jones' employer. Jones then took the signed instrument to Breyfogle, who in turn forwarded it to the Becketts in Florida. Elizabeth Beckett signed this agreement on April 6, 1967, and Ralph Beckett signed it on April 7, 1967. The instrument itself is dated April 4, 1967.

7. At the time of the trial in this matter, the $10,000 remained on deposit with the J. C. Nichols Company.

8. The agreement between the Becketts, as sellers, and I-435 Land Company, as buyers, contains the following provisions relating to title defects and title insurance:

7. The seller shall, within twenty (20) days from the date hereof, deliver to the buyer or for the buyer at the office of J. C. Nichols Company an abstract of title by competent abstractors. . . . If there are objections to the title, the buyer shall specify the objections in writing, to be delivered to the office of J. C. Nichols Company. The seller shall have any defects in the title corrected and shown on the abstract within thirty (30) days from date of delivery of such objections. . . .

8. In lieu of furnishing such abstract of title, or in lieu of correcting such objections, the seller may furnish the buyer an Owner's Title Insurance Policy in the amount of the purchase price from a company authorized to insure titles in this state, insuring a merchantable fee simple title to said property in the buyer as of the date of recording the deed. The seller may, within twenty (20) days from the date hereof or the date of receipt of objections to said title, deliver to the buyer or for the buyer at the office of J. C. Nichols Company a commitment for said policy. The seller shall have an additional thirty (30) days to make any required corrections in the title. In case such defects in title cannot be rectified or the title insurance commitment is not delivered within the time specified, this contract shall be null and void, unless the buyer elects to waive such objections, and the money deposited aforesaid shall be returned to the buyer and the abstract returned to the seller.

9. Paragraph eleven of the agreement provides, in relevant part, that: "Time is of the essence of this contract."

10. Appellants desired title insurance and a title insurance policy was requested by letter from Breyfogle to Sam McCaffree of the Columbian Title and Trust Company. Breyfogle also furnished the title insurance company with an abstract of title on the subject property. On April 26, 1967, before title insurance could be secured, Trail Realty filed an action for specific performance of its contract with the Becketts and an order of attachment was issued the same day. A copy of the order of attachment was filed with the Register of Deeds of Johnson County, Kansas, on April 28, 1967. The title insurance company refused to issue a policy on the subject property until the attachment was released. The order of attachment was not vacated until April 9, 1971, when the trial court ruled that Trail Realty was not entitled to specific performance of its contract.

11. On May 3, 1967, five days after the attachment was filed, Breyfogle wrote Ralph Beckett, with a copy of the letter sent to Jones, advising Beckett concerning the Trail Realty action as follows:

(T)he suit does cloud the title and make it impossible for you to deliver merchantable title until disposed of. The question thus arises as to what position George Gagel may elect to take under these circumstances so I am sending Chuck Jones copies of the above instruments (the pleadings and order of attachment in the Trail Realty case) for his information and that he may advise Mr. Gagel.

12. On May 5, 1967, Jones wrote, in response to Breyfogle's letter:

I received your letter this morning together with copy of the action Trail Realty v. Beckett. I have talked to Mr. Gagel and his statement was that we have contracted to buy the property and want the property and expect to get the property. He informed me that he is mailing a check to Sam McCaffree in the amount of $190,000.00, the balance of the purchase price under their contract with instructions to deliver it when Mr. McCaffree can issue an owner's title policy on the property in question.

13. Also, on May 5, 1967, Gagel sent the $190,000 to McCaffree with a letter directing McCaffree to hold the money subject to the following conditions:

(T)his money is to be held in escrow until the Becketts are able to complete their portion of the contract, namely:

1. Provide a satisfactory and clear title to the property.

2. Provide and have issued a title insurance policy on the property.

3. Provide the proper Deed and other instruments to conclude the contract.

When the transaction can be properly closed you will, of course, hand this payment over to either the Becketts or their attorney, Mr. John W. Breyfogle, Jr.

14. As Gagel testified at the trial of this matter, he and I-435 Land Company never indicated any intention, and in fact were never willing to waive the title defect created by the Trail Realty action.

15. Of the $190,000, appellants borrowed $125,000 from the Commercial National Bank and appellants individually contributed the remainder. The title insurance company placed the $190,000 in a non-interest bearing account at the Valley View State Bank. Appellants were officers and directors and owned substantial portions of stock in the Valley View State Bank. At appellants' request, some $137,000 was withdrawn from the account in October of 1969 to repay appellants' loan at the Commercial National Bank. Appellants paid a total of $17,321.84 in interest on the borrowed money. At the time of trial, the remainder of the $190,000 was still in the title insurance company's account at the Valley View State Bank.

16. Some time after the filing of the Trail Realty action, Jones saw and talked with appellant S. H. Reno in a social meeting at the Saddle and Sirloin Club. Jones told S. H. Reno that a problem had arisen but that it soon would be cleared up and the deed would be delivered. S. H. Reno was not aware of the...