Stewart Livestock Co. v. Ostler
| Decision Date | 13 December 1943 |
| Docket Number | 6596 |
| Citation | 144 P.2d 276,105 Utah 529 |
| Court | Utah Supreme Court |
| Parties | STEWART LIVESTOCK CO. v. OSTLER et al |
Appeal from District Court, Second District, Weber County; Lester A Wade, Judge.
Action by Stewart Livestock Company against J. S. Ostler and others to foreclose a mortgage. From a judgment for defendants plaintiff appeals.
Affirmed.
J. T Hammond, Jr., and Elias Hansen, both of Salt Lake City, for appellant.
Moyle & Moyle, of Salt Lake City, for respondents.
WADE, J., being disqualified, did not participate.
Plaintiff brought this action to foreclose a mortgage. Judgment was for defendant and plaintiff appeals.
On October 16, 1920, appellant Stewart Livestock Company, then a corporation, entered into a written contract to sell to respondent J. S. Ostler 11,957.75 acres of land with water rights, in Weber and Morgan counties, together with certain personal property, for the total sum of $ 103,624.75, on which purchase price a down payment of $ 25,000 was made by Ostler. At the time the transaction was entered into, appellant company represented that it was the owner of all lands described in the contract except certain lands it was then purchasing from the State of Utah on an installment contract, more particularly described in paragraph "A" of said contract.
The agreement of sale provided that the balance of $ 78,624.75 should be paid in installments, the first one of $ 8,000 to be paid on or before July 21, 1921, and $ 70,624.75 to be paid in nine principal annual installments of $ 7,847.11 each, together with interest. Each of said installments was to be evidenced by a promissory note payable on the annual date specified. On payment of the $ 8,000 installment the seller was to convey to Ostler by warranty deed subject to taxes assessed after 1920, all of the lands described in said contract except the 320 acres mentioned in the contract of purchase with the State of Utah; and Ostler was to execute and deliver to plaintiff a mortgage in the principal sum of $ 70,624.75 to secure payment of said notes representing the balance of the purchase price. The agreement further provided that the vendor would pay all taxes to and including the year 1920, and would complete payment of its contract of purchase with the State on the 320 acres and perfect title thereto prior to October 15, 1925, and thereupon convey the 320 acres to Ostler. On receipt of such deed, Ostler was to execute a mortgage covering the lands acquired from the State as additional security for the unpaid balance of the purchase price. The vendor also agreed to furnish abstracts of title continued to date of delivery of the deed or deeds, and also covenanted that in case the title proved to be defective to perfect title for the purchaser with due and reasonable diligence.
Ostler paid the $ 8,000 installment in 1921 and the vendor-appellant company executed and delivered the warranty deed and received back from Ostler and wife a mortgage for $ 70,624.75 to secure payment of the nine notes aggregating said sum as the balance of the purchase price. It will be observed that those installment notes, and the mortgage given to secure payment of the same, represented the entire unpaid consideration for the purchase of all of the lands, including the purchase price for the 320 acres of State land which plaintiff was then buying on installment contract. At the time of delivery of the deed, Ostler was given an abstract of title which did not cover Section 17, Township 5 North, Range 1 East, Salt Lake Meridian, although said section was one of the tracts included in the purchase. There is some dispute as to whether Ostler or his attorney received an abstract covering said section 17 prior to the date the last installment note became due.
There is no dispute as to the fact that when the abstract of title to section 17 was delivered it clearly showed that plaintiff had conveyed said section by warranty deed to a third party three years prior to date of the contract of sale with Ostler, and that plaintiff had no title to said 640 acres of land, which was stated by witnesses to be part of the watershed and a "key tract" worth not less than $ 7 per acre. Both the abstract of title introduced in evidence by plaintiff and the one introduced by defendants show that plaintiff did not have a marketable title to section 17 or any title thereto, and that no title was subsequently acquired. Each abstract shows that the grantee of Stewart Livestock Company conveyed the land to strangers prior to the time plaintiff entered into the contract to sell said land and other lands to Ostler.
The pleadings and evidence indicate that Ostler paid all of the notes as they matured, except $ 3,357.17 on the ninth and final note which matured in 1930. It is not disputed that plaintiff did not apply the payments received on the mortgage to complete payment of the contract of sale with the State as to the 320 acres; that plaintiff repeatedly defaulted in payments although it had notice from both the State and Ostler to comply with the contract of sale, and that in 1929 the contract was cancelled by the State Land Board with the result that these lands were never conveyed to Ostler.
Ostler testified that he did not receive the abstract of title to section 17 at the time the abstract covering most of the lands was delivered, and that he did not know that appellant had conveyed to a third party three years before Ostler bought the land from plaintiff; that in 1924 he received a letter from one Charles G. Wallace, record owner of said tract, in which letter said Wallace asserted ownership of said section; that Ostler quit paying taxes on such tract when he became convinced that he did not own the land; that plaintiff repeatedly promised to get the title straightened out, but did nothing about it other than to suggest that Ostler advance the money to Weber County to procure a tax deed and take credit on the mortgage indebtedness for such advance; and that notwithstanding the promises made to reinstate the contract with the State, plaintiff continually failed to do so, and that Ostler told plaintiff at the time partial payment of the last note was made, that the money was ready for plaintiff as soon as it gave him a good title to section 17 and the lands it had promised to acquire from the State of Utah.
As to the dispute over failure of plaintiff to make good the title to Section 17 she testified:
"I don't think I knew a thing about it until his payment was due, and I think I wrote to Mr. Ostler, and I think he answered me back and said that there was trouble with the title, * * * and when we fixed that up that he would make the payment and straighten it out."
She further testified to a conversation with Ostler as to section 17:
"I couldn't see why he couldn't pay the taxes and get a tax deed, but he said that wasn't a good deed."
The trial court found that there was a partial failure of consideration, and that plaintiff could not recover in the foreclosure action by reason of the fact that the failure of consideration was in excess of the balance allegedly due at the time Ostler refused to pay the $ 3,357.17 final payment on the mortgage until or unless plaintiff completed its performance under the contract by furnishing good title.
On this appeal plaintiff attacks the judgment in favor of defendants on several grounds: (1) That the second amended answer does not state a defense. (2) That neither Ostler nor Ostler Land & Livestock Company can plead any offset or breach of covenant in the foreclosure action. (3) That action on any claim asserted by any of the defendants is barred by the statute of limitations. The first and second contentions are somewhat interrelated and will first be considered.
As to the first contention, appellant bases its argument on the premise that the second amended answer in substance is the same as the answer which we formerly held was vulnerable to demurrer. Stewart Livestock Co. v. Ostler et al., 99 Utah 240, 104 P.2d 632. An examination of the second amended answer, however, reveals that defendants severally plead the contract of sale and attach a copy as an exhibit which is incorporated into said answer by reference. That contract shows the duty of plaintiff to furnish certain consideration--good title to section 17, and good title to the 320 acres. The second amended answer also alleges that Ostler executed the notes and mortgage on all of the lands except the lands to which plaintiff covenanted to acquire title and then convey to Ostler; and there are definite allegations which show a partial failure of consideration (1) Allegations that plaintiff never acquired title to the 320 acres; (2) allegations that plaintiff had no title and never re-acquired title to section 17; and (3) allegations that the property rights and title which Ostler purchased but failed to obtain from plaintiff exceeded by...
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