Russell v. Ferrell, s. 40466

• Decision Date: 11 May 1957
• Docket Number: Nos. 40466,40465,s. 40466
• Citation: 311 P.2d 347,181 Kan. 259
• Parties: Homer B. RUSSELL and Marion F. Russell, Jr., Appellees, v. J. D. FERRELL and Ann I. Ferrell, Appellants, American State Bank, a Corporation, Appellee. J. D. FERRELL and Ann I. Ferrell, Appellants, v. AMERICAN STATE BANK, a Corporation, and Homer H. Russell and Marion F. Russell, Jr., Appellees.
• Court: Kansas Supreme Court

Page 347

311 P.2d 347

181 Kan. 259

Homer B. RUSSELL and Marion F. Russell, Jr., Appellees, v. J. D. FERRELL and Ann I. Ferrell, Appellants, American State Bank, a Corporation, Appellee.

J. D. FERRELL and Ann I. Ferrell, Appellants, v. AMERICAN STATE BANK, a Corporation, and Homer H. Russell and Marion F. Russell, Jr., Appellees.

Nos. 40466, 40465.

Supreme Court of Kansas.

May 11, 1957.

Syllabus by the Court

1. Time is not ordinarily regarded as of the essence of a contract unless it is so stipulated by express terms, or is necessarily implied from the character of the obligations assumed; this is especially true with respect to executory contracts for the sale of real estate which are considered in equity as vesting the equitable title in the purchaser subject to the claim of the vendor for the purchase money.

2. A party to a contract for the sale of real estate who asks for rescission must himself be without fault, and when payment of the purchase money, delivery of possession and tender of the warranty deed are to occur simultaneously, they are regarded as mutual concurrent acts which disable either party from putting an end to the contract without performance or a valid offer to perform on his part.

3. Following Reid v. Mix, 63 Kan. 745, 66 P. 1021, 55 L.R.A. 706, where a mutual contract is equitable and fairly entered into by the parties and time is not expressly made the essence of the contract and one party seeks to evade his obligation on the ground of the delay of the other in tendering performance, he must show either damage resulting to himself or such willful and intentional delay as to evince the intention of the party delaying to treat the contract at an end.

4. The record in two actions involving a written contract for the sale of real estate, examined and held: The trial court did not err (1) in rendering judgment against the vendors denying rescission and forfeiture of the contract in cause No. 19,038 and (2) in decreeing specific performance of the contract and for the reasonable rental value of the building in favor of the purchasers in cause No. 19,047.

Jerry M. Ward, Great Bend, argued the cause, and S. R. Blackburn, Tudor W. Hampton and J. W. Hannah, Great Bend, were with him on the briefs, for appellants.

Boyce P. Hardman, Great Bend, argued the cause, and Herbert Diets, Great Bend, was with him on the briefs, for appellees.

FATZER, Justice.

These two appeals, ordered consolidated in this court, arise out of actions in the trial court and its application of equitable principles to a written contract for the sale of real estate, in which both parties sought affirmative relief. Appeal No. 40,465 (cause No. 19,038 in the court below) was an action by the vendors, J. D. Ferrell and Ann I. Ferrell, hereafter refrred to as the Ferrells, against the American State Bank, Great Bend, the escrow agent designated in the contract, hereafter referred to as the Bank, for rescission of the contract and for liquidated damages. Appeal No. 40,466 (cause No. 19,047 in the court below) was an action by the purchasers, Homer B. Russell and Marion F. Russell, Jr., hereafter referred to as the Russells, against the Ferrells and the Bank for specific performance of the same contract and to recover the reasonable rental value of the building from January 6, 1956. Upon application, the district court permitted the Russells to intervene and defend in cause No. 19,038.

By agreement of the parties both actions were tried together. The pleadings are of little consequence except as will be hereafter specifically noted. The trial court's extensive findings of fact and conclusions of law best tell the story of the events leading up to the execution of the contract and of the parties' subsequent proceedings thereunder. They are summarized as follows: The Russells are medical doctors and reside in Great Bend, however, during the period of this litigation Homer was in Chicago and Marion was in Kansas City. Each returned to Great Bend for the Christmas holidays of 1954 and while there discussed with Don C. Foss, an attorney, their desire to purchase a building in Great Bend to be used as a clinic for the practice of medicine with their father, Marion F. Russell, Sr., a practicing physician in Great Bend. Foss advised the Russells he thought the Ferrell building might be suitable for their purpose and that the Ferrells were interested in selling it. After looking at the building, the Russells told Foss they would purchase it if it could be obtained for a reasonable price and authorized Foss to proceed to negotiate for its purchase and to take all necessary action to acquire it.

Foss and the members of his law firm had acted as attorneys for the Ferrells for several years and were representing them in a number of other matters at the time Foss discussed with the Russells the purchase of the building. Foss continued to represent the Ferrells until January 6, 1956, the date the Ferrells repudiated the contract as hereinafter related. Following Foss' discussion with the Russells, he advised the Ferrells of the Russells' desire to purchase the building and of their intention to use it for medical offices. The Ferrells told Foss they would be willing to sell the building for $42,411.28. Foss advised the Russells the amount of the purchase price and they authorized him to take all necessary action in their behalf to obtain the building. On March 8, 1955, Ferrell went to Foss' office to discuss with him specific terms of the contract. At that time Foss mentioned to Ferrell there was an outstanding mortgage on the building in the principal amount of $20,000 executed by the Ferrells to the Security State Bank of Great Bend, and Ferrell advised Foss he was in a position to pay the mortgage at any time, but in any event it would be paid long before consummation of the sale of the building and possession given to the Russells. During that discussion Ferrell told Foss he would like to remain in the building until November 1, 1955, as a number of his tenants had leases for office space in the building which would not expire until that time. Foss advised Ferrell he could keep possession of the building until January 1, 1956, as the Russells would not have any use for it before that date. Upon the basis of that discussion, Foss, acting as attorney for both parties, prepared the written contract for deed and a warranty deed conveying the real estate in controversy. The Ferrells executed both the contract for deed and the warranty deed and Foss obtained a check from Marion F. Russell, Sr. in the amount of $5,000 as the down payment and showed it to Ferrell. In addition to acting as the Ferrell's attorney in the preparation of the documents for the sale of the property, he (Foss) acted as their agent in obtaining the $5,000 down payment provided for in the contract for deed. After the contract had been signed by all the parties Foss deposited that instrument, the warranty deed, and the $5,000 down payment with the escrow bank and notified Ferrell of that fact by letter on May 17, 1955.

The contract for deed was entered into March 8, 1955, and is summarized and quoted as follows: It was recited that the Ferrells were the owners of the building and were desirous of selling the property to the Russells and that the Russells were desirous of purchasing it for the sum of $42,411.28, payable $5,000 upon execution of the agreement, the receipt of which was acknowledged by the Ferrells, and 'the balance of $37,411.28 to be paid at such time as all of the terms and conditions of this agreement as hereinafter provided have been complied with.' The parties agreed that an executed copy of the contract, together with the $5,000 down payment and a warranty deed, conveying the Ferrells' entire interest in the property to the Russells, be placed in escrow in the Bank. It was further agreed that the Ferrells would retain possession of the building until January 1, 1956, and on that date deliver possession to the Russells and furnish abstract of title certified to date covering the premises, and revenue stamps for the warranty deed. Paragraph 4 of the contract reads:

'As of January 1, 1956, and upon being advised by first parties of the payment of the balance of the purchase price as herein set forth, the escrow agent is hereby directed to deliver to second parties the warranty deed hereinbefore mentioned and to deliver to first parties the initial payment herein referred to. In the event that second parties shall fail to fulfill, keep and perform the terms and conditions of this agreement, the $5,000.00 payment herein set forth shall be paid to first parties as unliquidated damages.'

The trial court found there was no dispute as to the extent of Foss' authority as agent for the Ferrells relative to the closing of the sale of the building. He had authority to order the abstract of title brought up to date on December 27, 1955, but his authority to act for the Ferrells did not extend to the payment of the mortgage of record, to the eviction of Ferrell's tenants or to giving possession of the building to the Russells. The Russells did not personally negotiate with the Ferrells since complete authority was given Foss and he conducted all negotiations with the Ferrells concerning the sale of the building, and Foss knew the Russells had money available to pay the balance of the purchase price prior to January 1, 1956.

Relying upon the contract, the Russells employed an architect to prepare plans for remodeling the buildings, and blueprints and specifications were drawn; they also purchased a lot to the south of the building to be used either as a residence for an employee or for parking facilities for their clinic. During the Christmas holidays of 1955 they made preparations for interior decoration of the building, purchased insurance for it effective January 1, 1956, and made arrangements to pay the balance of the purchase price.

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