Tedco Development Corp. v. Overland Hills, Inc.

Decision Date03 May 1978
Docket NumberNo. 41546,41546
Citation266 N.W.2d 56,200 Neb. 748
PartiesTEDCO DEVELOPMENT CORP., Appellee and Cross Appellant, v. OVERLAND HILLS, INC., a Nebraska Corporation, Appellant and Cross Appellee, and Harold R. Young, Jr., Appellant and Cross Appellee.
CourtNebraska Supreme Court

Syllabus by the Court

1. When evidence on material questions of fact is in irreconcilable conflict this court will, in determining the weight of the evidence, consider the fact that the trial court observed the witnesses and their manner of testifying and must have accepted one version of the facts rather than the opposite.

2. The specific performance of a contract by a court of equity is not generally demandable or awarded as a matter of absolute legal right but is directed to and governed by the sound legal discretion of the court, dependent upon the facts and circumstances of each particular case. It will not be granted where enforcement would be unjust and may be denied where the party seeking it has failed to perform.

3. The burden is primarily on the party seeking specific performance to show his right in equity and good conscience to the relief sought.

4. The evidence which entitles a party to specific performance must be clear, satisfactory, and unequivocal.

5. A party who seeks specific performance must show not only that he has a valid, legally enforceable contract, but also that he has substantially complied with its terms by performing, or offering to perform on his part the acts which formed the consideration of the undertaking on the part of the defendant or that he is ready, able, and willing to perform his obligations under the contract.

6. Where it is sought to enforce specific performance of a contract for the sale of realty executed for a corporation by its officers in their individual names, it must be shown either that the corporation authorized the contract or that the execution of the same had been ratified by it.

7. Whether there has been a ratification in a particular case is ultimately and ordinarily a question of fact.

8. The rule applicable generally is that where an act is done without authority, under an assumed agency, it is the duty of the principal to disavow and repudiate it in a reasonable time after information of the transaction if he would avoid responsibility therefor. What constitutes a reasonable time must largely, if not wholly, depend upon the circumstances of the particular case.

James C. Cripe, Papillion, for appellant Overland Hills.

Timothy J. McReynolds of Gross, Welch, Vinardi, Kauffman & Day, Omaha, for appellant Harold R. Young, Jr.

Walsh, Walentine & Miles, Omaha, for appellee and cross appellant.

Heard before WHITE, C. J., SPENCER, BOSLAUGH, McCOWN, BRODKEY and WHITE, JJ., and KUNS, Retired District Judge.

PAUL W. WHITE, Chief Justice.

On March 22, 1977, plaintiff Tedco Development Corp. (hereinafter referred to as Tedco) filed a petition against the defendants Overland Hills, Inc. (hereinafter referred to as Overland Hills), and Harold R. Young, Jr. (hereinafter referred to as Young), seeking specific performance of a purchase agreement for the sale of an 180-acre tract of land situated in Sarpy County, Nebraska. Young was named as a defendant in Tedco's action because he claimed an interest in the real estate in question via a previous purchase agreement he had with the defendant Overland Hills, and had filed an action against Overland Hills for specific performance of his purchase agreement, which was for the identical tract of land. Young and Tedco's actions were consolidated and the case tried to the District Court.

The District Court held that Tedco was entitled to specific performance of its purchase agreement. Young's petition was dismissed. Young and Overland Hills filed motions for a new trial, or in the alternative, for a judgment notwithstanding the verdict, which were overruled. Both appeal. We affirm the judgment of the District Court.

Being equitable in character, this action is triable de novo subject, however, to the condition that when evidence on material questions of fact is in irreconcilable conflict this court will, in determining the weight of the evidence, consider the fact that the trial court observed the witnesses and their manner of testifying and must have accepted one version of the facts rather than the opposite. Marfisi v. Spagnola, 197 Neb. 211, 248 N.W.2d 24 (1976); Kolc v. Krystyniak, 196 Neb. 16, 241 N.W.2d 348 (1976).

The basic facts are not in dispute. On October 19, 1976, Odell and Eva Lopp entered into a purchase agreement for the land in question with Overland Hills. This agreement provided for a purchase price of $450,000, which included a $10,000 earnest deposit held in escrow. On February 1, 1977, the Lopps assigned this purchase agreement to Young. On February 4, 1977, Young and Overland Hills entered into an agreement which acknowledged the assignment. The closing date was rescheduled for February 25, 1977. The agreement contained the following provision: "If for any reason the Seller is unable to tender marketable title to real estate as described * * * at the time designated for closing, then the Purchaser is relieved of its obligation to tender the purchase price and shall be entitled to either elect to have his Ten Thousand Dollars ($10,000.00) deposit returned * * * or request specific enforcement of the Uniform Purchase Agreement and this amendment."

On February 14, 1977, Tedco and Overland Hills entered into a purchase agreement for the identical tract of land. This agreement called for a purchase price of $485,000 and provided: "It is understood and agreed by and between buyer and seller that there is presently existing an outstanding purchase agreement wherein the seller has agreed to sell to third parties pursuant to the terms and conditions of the purchase agreement and amendment thereof existing between them. It is agreed, however, that in the event the third parties fail to close said transaction per the terms and conditions of their agreement with seller on or before February 25, 1977, that buyer hereunder shall have the sole and only outstanding purchase agreement legally binding upon the seller."

Representatives of Young and Overland Hills met on February 25, 1977, for the purpose of closing their agreement. It is undisputed that on this date the agreement was not closed.

On March 2, 1977, Overland Hills sent a letter to the escrow agent demanding that the $10,000 earnest money of the Young contract be forfeited for failure to close in accordance with the terms of the Young contract. Upon learning that the Young contract had not been closed, Tedco demanded that its contract be closed. On April 6, 1977, Overland Hills sent a letter to Tedco returning its $10,000 earnest money and stating that the Tedco contract, which had been recorded sometime prior to February 25, 1977, was the only impediment to the closing of the Young contract.

Both Young and Tedco requested specific performance. The specific performance of a contract by a court of equity is not generally demandable or awarded as a matter of absolute legal right but is directed to and governed by the sound legal discretion of the court, dependent upon the facts and circumstances of each particular case. It will not be granted where enforcement would be unjust and may be denied where the party seeking it has failed to perform. O'Brien v. Fricke, 148 Neb. 369, 27 N.W.2d 403 (1947); Wineberg v. Baker, 123 Neb. 411, 243 N.W. 122 (1932); Russell v. Western Nebraska Rest Home, Inc., 180 Neb. 728, 144 N.W.2d 728 (1966). The burden is primarily on the party seeking specific performance to show his right in equity and good conscience to the relief sought. Russo v. Williams, 160 Neb. 564, 71 N.W.2d 131 (1955). The evidence which entitles a party to specific performance must be clear, satisfactory, and unequivocal. Meyer v. Meyer, 180 Neb. 379, 142 N.W.2d 922 (1966).

We shall first look at Young's purchase agreement. It provided that the balance of $440,000 was to be paid either by cash or by certified check at the time of delivery of the deed. The seller was to have good, valid, and marketable title, in fee simple, and to give the purchaser a warranty deed. The closing date was February 25, 1977. If the purchaser was unable to tender the purchase price at the time designated for closing the seller was entitled to receive the earnest deposit.

The record shows that on February 25, 1977, and for some time thereafter, vendor Overland Hills did not have marketable title to the subject real estate. Marketable title is defined as a title a man of reasonable prudence, familiar with the facts and questions of law involved, would accept as a title which could be sold to a reasonable purchaser. Podewitz v. Gering Nat. Bank, 171 Neb. 380, 106 N.W.2d 497 (1960). "Marketable title means a title free from reasonable doubt both as to matters of law and (matters of) fact * * *." Robinson v. Bressler, 122 Neb. 461, 240 N.W. 564 (1932). A title search conducted by Fidelity National Title Insurance Company listed eight specific requirements which needed to be met before title insurance would be issued. The most significant of these irregularities involved a transaction in which Donald Graham, treasurer of Overland Hills, obtained deeds to Lots 1, 2, and 3 of the Overland Hills subdivision in consideration for Graham's payment to Commercial Federal Savings and Loan Association for the release of a mortgage on the lots. The release price for the lots should have been approximately $100,000, but Graham obtained a release for $9,000, by camouflaging his request for a release of the mortgage on these lots with a group of releases for other lots. As of February 25, 1977, the land had not yet been conveyed back to the corporation.

On February 25, 1977, Young's attorney brought with him two uncertified checks, both drawn upon the account of Nebraska Homestead Trade, Inc. ...

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