Sjoberg v. Kravik
| Decision Date | 13 September 1988 |
| Docket Number | No. 87-502,87-502 |
| Citation | 759 P.2d 966,233 Mont. 33 |
| Parties | Leonard J. SJOBERG, Plaintiff and Respondent, v. Donald KRAVIK and Frieda Kravik, Defendants and Appellants. |
| Court | Montana Supreme Court |
Jardine & Grauman, John H. Jardine, Whitehall, for defendants and appellants.
Corette, Smith, Pohlman & Allen, Marshal Mickelson, Butte, for plaintiff and respondent.
Defendants/appellants, Donald and Frieda Kravik, appeal a District Court decision favoring plaintiff/respondent Leonard Sjoberg. Trial was held without a jury on May 20, 1987 in the Second Judicial District, Silver Bow County. The District Court awarded Sjoberg $43,100 in damages, $343.60 in costs, and $9,200 for attorney's fees. We affirm in part and reverse in part.
On May 30, 1980 Sjoberg and the Kraviks signed a "contract for sale of real property and escrow agreement." The land consists of approximately forty acres and is located in Madison County. As buyer, Sjoberg agreed to pay $52,500 with $11,000 as a down payment. Afterward, payments were to be made in fifteen annual installments of $5,456, with the first payment on May 1, 1981. The agreed interest rate was 10% per annum on the unpaid balance.
The forty acres which was the subject of the sale was part of farmland owned by the Kraviks. The Kraviks land, including these forty acres, was encumbered by a mortgage with the John Hancock Insurance Company. The mortgage had been duly recorded and Sjoberg entered the purchase agreement knowing the mortgage existed. The purchase agreement included a specific clause addressing the eventual release of the Hancock mortgage:
The buyer enters into this agreement with the knowledge and understanding that the real property above described is subject to a mortgage to the John Hancock Mutual Life Insurance Company recorded at book 257, pages 730-738 of Mortgage Records of Madison County, Montana, on April 3, 1978. Buyer agrees that the seller shall not cause said mortgage to be released of record until the sellers obtain at least $250,000 in sales of land of which the above real estate is a part or within one year from the date of this agreement. Upon such event the seller shall cause to be filed a partial satisfaction of said mortgage to the above described real property.
The parties agreed to an amendment to the above contract on June 12, 1980. The amendment provided that after the Hancock mortgage was released, the Kraviks would subordinate their contract interest to one acre so that the one acre would be free of both the Hancock mortgage and the Kravik contract. The express purpose of the amendment was to allow mortgage financing.
Sjoberg made his first payment on the forty acres in 1981 without incident. On May 6, 1981 Sjoberg wrote a letter to Donald Kravik stating that Kravik was to have the Hancock mortgage released by May 31, 1981 according to the terms of their original contract. However, Kravik was not able to obtain the release and failed to do so until April 1986.
On January 15, 1982, Sjoberg purchased an additional twenty acres from the Kraviks for the price of $19,200, with $1,000 as a down payment. Payments were to be made in fifteen annual installments of $2,392.75. The agreed interest rate was 10% per annum. The first payment was to be made May 1, 1982 and the remaining payments were to occur on the first day of each year thereafter. This contract also contained a clause specifically addressing the Hancock mortgage which was very similar to the clause in the first contract between Sjoberg and the Kraviks. Specifically, the clause in the second contract stated:
The buyer enters into this agreement with the knowledge and understanding that the real property above described is a portion of a larger tract of land consisting of approximately 1,515 acres which is subject to a mortgage to the John Hancock Mutual Life Insurance Company, recorded at book 257, pages 730-738 of the Mortgage Records of Madison County, Montana, on April 3, 1978. Approximately 493 acres of the larger tract have been subdivided into smaller acreage tracts. The land herein being sold is one of these acreage tracts. The sellers are in the process of selling the subdivided acreage tracts, and when there is at least $250,000 in sales of the acreage tracts or within 1 year, the seller shall obtain from the above named mortgagee, a full satisfaction of mortgage as to the subdivided acreage tracts and shall place the same of record.
On April 20, 1982 Sjoberg's attorney sent a letter to the Kraviks stating that the Kraviks were in default of the contract entered May 30, 1980 for the forty acre tract. The letter explained that default occurred because the Kraviks failed to obtain the release of the Hancock mortgage on May 31, 1981 as promised in the contract, and demanded that the Kraviks cure the default within the time provided in the agreement. The agreement provided that if the buyer defaulted, the sellers could terminate the agreement after written notice, but only if the buyer did not cure the breach within sixty days after the notice. Although the agreement did not expressly contemplate the procedure in the event of a breach by the sellers, it appears that Sjoberg's attorney was addressing this sixty day grace period and demanding that the Kraviks obtain a release of the Hancock mortgage within the sixty day period following the written notice and demand.
On May 1, 1982, Sjoberg did not make any payment on either of the two contracts entered. On June 8, 1982, Sjoberg attempted to make payment on both contracts, but did so under the provision that the escrow agent hold the check in escrow and not actually deliver the payment. Under those terms, the escrow agent rejected the payment. Also on June 8, 1982, Sjoberg's attorney sent a letter to the Kraviks notifying them that they were in default on the contract for the purchase of the twenty acre tract because the Hancock mortgage was not released. The letter stated that the agreement entered on January 15, 1982 stated that "when there is at least $250,000 in sales of these acreage tracts or within one year, seller shall obtain a full satisfaction of mortgage ..." Although the letter did not specify the reason for breach, one year had not passed since the date of the contract. Therefore, the allegation must have been that the Kraviks had by that time sold at least $250,000 worth of their total acreage. The letter demanded that the Kraviks obtain the mortgage release within the time provided in the contract.
On July 2, 1982, an attorney for the Kraviks wrote a letter to Sjoberg stating Sjoberg was in default on the contracts by failing to make payments when they were due. Sjoberg responded by making the payments within the specified grace period of sixty days.
Sjoberg filed a lawsuit against the Kraviks April 7, 1983 and alleged they had breached both contracts and damaged him in the amount of $71,700, the total sale price of the two tracts of land. Sjoberg has stated he deposited the 1983 payments on both tracts in a bank account pending the outcome of the lawsuit. No further payments have been made on the contracts. On April 11, 1986, the Kraviks obtained the release on the Hancock mortgage as a result of another lawsuit. The Kraviks then sent Sjoberg a notice of default on May 16, 1986 alleging Sjoberg had failed to render any payments since 1982. The District Court stayed all proceedings regarding this default pending the outcome of the litigation.
A bench trial was held May 20, 1987. Plaintiff Sjoberg alleged he had intended to construct a house and develop a horse farm on the property, but was unable to obtain any financing for the construction because of the Hancock mortgage. The District Court found that the Kraviks materially breached the contracts by failing to obtain a release of the Hancock mortgage. Sjoberg claimed a number of damages including loss of profits and good will regarding the horse farm which the District Court denied because they were too speculative. However, the District Court did award Sjoberg damages totaling $43,100, which Sjoberg claimed to have sustained due to a general increase in costs of construction of various buildings, equipment, power, wells, and a horse trailer and truck. The District Court also awarded attorney's fees in the amount of $9,200 and costs of $343.60. In the District Court's final judgment, it found there was a total of $56,529.38 remaining on the principal balances due and owing under both...
To continue reading
Request your trial
-
Davidson v. Barstad
...the contract. Estate of Gleason v. Cent. United Life Ins. Co. , 2015 MT 140, ¶ 35, 379 Mont. 219, 350 P.3d 349 ; Sjoberg v. Kravik , 233 Mont. 33, 38, 759 P.2d 966, 969 (1988). Accord Beckenheimer's Inc. v. Alameda Assocs. Ltd. P'ship , 327 Md. 536, 611 A.2d 105, 114 (1992) ; Rohauer v. Lit......
-
HD Irrigating, Inc. v. Kimble Properties, Inc.
...Inc.'s obligation to pay on the note until the District Court resolved the parties' rights and obligations. Relying on Sjoberg v. Kravik (1988), 233 Mont. 33, 759 P.2d 966, the Buyers argue that the accrual of all interest due under the note should have been suspended pending the District C......
-
Saunders v. Sharp, s. 880710-C
...breach of contract, and if so, when, and by whom. Such questions constitute issues of fact for the fact finder. See Sjoberg v. Kravik, 233 Mont. 33, 759 P.2d 966, 969 (1988); Wasserburger v. American Scientific Chem., Inc., 267 Or. 77, 514 P.2d 1097, 1099 (1973) (en banc); see also American......
-
Eschenbacher v. Anderson
...omitted). ¶ 22 The determination of whether a party materially breached a contract is a question of fact. See Sjoberg v. Kravik (1988), 233 Mont. 33, 38, 759 P.2d 966, 969. We review a district court's findings of fact to determine whether they are clearly erroneous. See Daines v. Knight (1......