Slaymaker v. Peterkin, s. 1958

• Decision Date: 04 February 1974
• Docket Number: 1965,Nos. 1958,s. 1958
• Citation: 518 P.2d 763
• Parties: Ronald F. SLAYMAKER and Vera Slaymaker, husband and wife, Appellants, v. Thomas PETERKIN, Appellee. Thomas PETERKIN, Cross-Appellant, v. Ronald F. SLAYMAKER and Vera Slaymaker, husband and wife, Cross-Appellees.
• Court: Alaska Supreme Court

Page 763

518 P.2d 763

Ronald F. SLAYMAKER and Vera Slaymaker, husband and wife, Appellants, v. Thomas PETERKIN, Appellee.

Thomas PETERKIN, Cross-Appellant, v. Ronald F. SLAYMAKER and Vera Slaymaker, husband and wife,

Cross-Appellees.

Nos. 1958, 1965.

Supreme Court of Alaska.

Feb. 4, 1974.

Karl S. Johnstone, Anchorage, for appellants and cross-appellees.

Kenneth P. Jacobus and Jerry E. Melcher of Hughes, Thorsness, Lowe, Gantz & Clark, Anchorage, for appellee and cross-appellant.

Before RABINOWITZ, C. J., and CONNOR, ERWIN, BOOCHEVER and FITZGERALD, JJ.

OPINION

FITZGERALD, Justice.

These appeals are taken from a summary judgment entered by the superior court in favor of Thomas Peterkin against Ronald F. and Vera Slaymaker.

On February 15, 1971, Ronald F. Slaymaker entered into a written agreement to buy a tract of land from George Huff. Slaymaker promised to pay Huff $135,000 on terms which included $35,000 in cash at the time of closing, together with an unsecured note of $100,000 for the balance, made payable at $35,000 per annum beginning June 1, 1972 at 9% interest. The agreement was contingent until March 23, 1971, when Slaymaker and Huff initialed their final approval to the contract. The transaction was closed on April 29, 1971, at which time the cash payment was made and a note was executed by Vera and Ronald Slaymaker. A deed was prepared and the documents were placed in escrow.

Huff assigned the proceeds of the note to Thomas Peterkin in July of 1971. In early June of 1972, Peterkin requested payment by the Slaymakers of the first installment due on the note. The laymakers did not make the payment for reasons now in dispute. The Slaymakers' initial response to Peterkin apparently was that they were not sure who held the note or who was entitled to the payment. According to Peterkin, the Slaymakers were unwilling to pay the installment and requested a thirty-day grace period which Peterkin reluctantly granted. Other meetings followed between Peterkin and the Slaymakers concerning payment of the installment due on the note. Peterkin contends that he steadfastly pressed his demand for payment on the note; he obtained a partial payment of $15,000. Finally, after consulting with his attorneys, he brought suit on August 29, 1972. Peterkin asked for judgment for the entire sum owing on the note, some $97,000, under the note's acceleration clause. This clause provided that '(i)n the event of default . . . the entire amount shall become due and payable forthwith without demand or notice at the option of the holder. . . .'

The Slaymakers answered Peterkin by claiming that he was estopped from applying the acceleration provision in the note and that the instrument itself was usurious.

The superior court entered summary judgment ¹ in Peterkin's favor for the full remaining balance of the note and ruled that the note was not usurious. The Slaymakers now appeal from the summary judgment, and Peterkin appeals from the award of attorneys' fees, contending the award is inadequate.

THE USURY ISSUE:

When Ronald Slaymaker and George Huff entered into the final written agreement of purchase on March 23, 1971, which agreement called for Slaymaker to execute a $100,000 unsecured promissory note to carry interest at 9% per annum, the legal rate of interest was established by the Commissioner of the Department of Revenue at 9 3/4%. On April 1, 1971, the legal rate of interest became 8 3/4%. ² On April 29, 1971, Slaymaker and Huff 'closed' the land transaction pursuant to their March 23rd written agreement and at that time the promissory note was made and executed. There was apparently some concern about a possible usury problem resulting from the intervening reduction of the legal rate of interest, and the note was backdated to March 30, 1971.

The Slaymakers now contend that the note is usurious since it provides for 9% interest and was executed when the legal rate of interest was 8 3/4%. Peterkin argues that the note was executed to satisfy a pre-existing loan contract and that the date of the contract is the critical date for determining whether the note is usurious. The Slaymakers reply, however, that the written agreement was not a 'loan contract or commitment' within the terms of the statute. They contend that they were not bound to pay the 9% interest rate until April, when they signed the note, because an earnest money agreement is not an enforceable agreement to buy and sell land but rather an option contract allowing the earnest money deposit to be forfeited if the buyer repudiates. No authorities are furnished to us to support this view. ³

Additionally the Slaymakers contend that the written agreement is too indefinite to be enforced and therefore is not a 'loan contract or commitment.' The claim is made that the terms of the contract could have been altered by the parties, that the date from which interest was to run is not stated, that the parties to the proposed deed are not stated, and that the attorneys who were to examine the final agreement had not been selected.

The parties to a contract may, of course, alter its terms, unless intervening rights are involved. The uncertainties as to the starting of interest accumulation and the parties to the deed could easily have been resolved by a court in order to enable the parties to fulfill their mutual expectations. ⁴ In the absence of any evidence that the parties intended to await legal advice before committing themselves, we see the failure to name attorneys as inconsequential. In summary, a close reading of the earnest money agreement convinces us that it is sufficiently definite to be an enforceable agreement to buy land on the terms negotiated. ⁵

Clearly, when the statute contemplates quarterly changes in the legal rate of interest, the necessities of commerce, and in particular real estate financing, require that a loan commitment which is legal when agreed to shall remain legal even though the rate of interest changes before completion of the transaction. To hold otherwise would cause commercial uncertainty and unnecessarily upset...