Themy v. Seagull Enterprises, Inc.

• Decision Date: 04 April 1979
• Docket Number: No. 15641,15641
• Citation: 595 P.2d 526
• Parties: Tim THEMY, Plaintiff and Respondent, v. SEAGULL ENTERPRISES, INC., a Utah Corporation, Shirley K. Watson, United Bank, a Utah Corporation, Zions First National Bank and Murray Broadcasting Company, Inc., Defendants and Appellants.
• Court: Utah Supreme Court

Page 526

595 P.2d 526

Tim THEMY, Plaintiff and Respondent, v. SEAGULL ENTERPRISES, INC., a Utah Corporation, Shirley K Watson, United Bank, a Utah Corporation, Zions First National Bank and Murray Broadcasting Company, Inc. Defendants and Appellants.

No. 15641.

Supreme Court of Utah.

April 4, 1979.

Gary A. Frank, Murray, Craig T. Vincent, W. Clark Burt, Salt Lake City, for defendants and appellants.

Steven H. Gunn, of Ray, Quinney & Nebeker, Salt Lake City, for plaintiff and respondent.

MAUGHAN, Justice:

This case concerns the sale of a radio station, comprised of real property, broadcasting equipment and an FCC broadcasting license. Defendants admitted they had failed to make the required payments pursuant to the terms of the two operative agreements, and the district court granted plaintiff's motion for summary judgment, declaring the interests to be forfeited. Defendants contend factual issues prevent proper disposition by summary judgment, and the court improperly invaded the jurisdiction of the FCC by declaring defendants' interests in the license to be forfeited. We affirm, and award costs to plaintiff.

On June 26, 1974, the owner of KMOR (now KPRQ) radio station, O. J. Wilkinson, entered into two written agreements for the sale of the station to defendant Seagull Enterprises, Inc. (hereafter Seagull). Although one of the agreements concerned only the sale of the real property while the other concerned the sale of the personal property and the FCC license, both documents were executed simultaneously, and each expressly stated that a breach of one would constitute a breach of the other. The consummation of both documents was expressly conditioned upon FCC approval of the transfer of the broadcasting license to Seagull. Both documents were closely patterned after the standard Uniform Real Estate Contract often used in this state; for example, both provided the seller with the same alternative remedies in the event of a breach by buyer: 1) seller could, after giving five days written notice, declare the interest of buyer to be forfeited and take possession of the premises; 2) seller could sue for all delinquent installments; or 3) seller could treat the contract as a note and mortgage and proceed to foreclose according to statutory provisions and have the property sold.

Upon obtaining FCC approval of the transfer of the license to Seagull in December, 1974, Seagull paid the required down payments of $5,000 for the real property and $74,000 for the personal property and license. No further payments were made by Seagull under the installment payment provisions of the contracts.

Because of Seagull's default under the agreements, Wilkinson notified Seagull on September 4, 1975 that Seagull's interest would be forfeited if it failed to bring all payments current within five days. Seagull tendered no payments, but Wilkinson took no further action regarding the forfeiture.

On May 26, 1976, Wilkinson entered into an installment sale contract with plaintiff Tim Themy (hereafter Themy) for the sale of the radio station, including all real and personal property and the license. Wilkinson also assigned to Themy his interest in the purchase agreements with Seagull.

On March 8, 1977, after obtaining FCC approval, Seagull transferred its interest in the license and the broadcasting equipment to defendant Shirley K. Watson, dba Murray Broadcasting Company. Thereafter, with FCC approval, Watson assigned her interest to defendant Murray Broadcasting Company, Inc. (hereafter MBC).

Plaintiff's original complaint was filed in October, 1976. In July, 1977, plaintiff filed an amended complaint, naming, in addition to the above defendants, United Bank and Zions First National Bank; the interests of the banks, however, are not in issue on appeal. The amended complaint asked the court to adjudge the interests of defendants Seagull, Watson, United Bank, and MBC in the real property to be forfeited; alternatively, it requested judgment for $245,000, the amount owing on the contract concerning the real property, and judgment foreclosing the agreement as a mortgage according to the contract terms. Regarding the contract to sell the personal property and the license, the amended complaint contained four alternative prayers for relief: 1) judgment declaring the license and property to be forfeited as per the contract terms; 2) judgment for $176,000, the amount owing on the contract, and judgment foreclosing the agreement as a mortgage; 3) judgment declaring plaintiff's interests to be secured according to the UCC, and allowing a sale of the collateral under the secured transactions provisions of the UCC; 4) judgment setting aside the conveyance by Seagull to Watson as fraudulent, and appointing a receiver to protect the property involved in the litigation.

After reviewing the record, including affidavits and the depositions of Themy, Watson and an officer of Seagull, the district court heard arguments of counsel and granted Themy's motion for summary judgment. The judgment declared the interests of Seagull, Watson, United Bank and MBC in the real property, the personal property and the FCC license to be forfeited according to the terms of the agreements between Wilkinson and Seagull. The court named Themy as the owner of all interests forfeited by virtue of Wilkinson's assignment to Themy on May 26, 1976.

As usual in reviewing a case disposed of in the district court by summary judgment, we consider the evidence in the light most favorable to the losing party, ¹ and affirm only where it appears there is no genuine dispute as to any material issues of fact, or where, even according to the facts as contended by the losing party, the moving party is entitled to judgment as a matter of law. ²

We note preliminarily that defendants do not contest the validity or enforceability of the agreements between Wilkinson and Seagull, and this Court will uphold the forfeiture provisions of such contracts, unless amounts retained as liquidated damages are so great as to be unconscionable, or in the nature of a penalty. ³ Nor do defendants Watson and MBC contend their interests are insulated from the forfeiture provisions by Seagull's assignment of its interests under the agreements. As assignees from the purchaser, Watson and MBC obtained only the interests held by Seagull, and clearly hold those interests subject to the original seller's rights retained by Wilkinson and later assigned to Themy. ⁴

Defendants allege the existence of disputed facts concerning Themy's rights as the successor to Wilkinson's interest in the two purchase agreements which prevent summary judgment below. To support this claim, defendants assert Wilkinson assigned his interest in the agreements to Zions Bank prior to the assignment to Themy, and thus Wilkinson had no assignable interest to convey to Themy. Defendants also assert Wilkinson retained no enforceable forfeiture remedies under the contracts as they related to the FCC license, after the FCC approved the transfer of the license to Seagull. We address this issue at a later point herein.

No material factual issue exists regarding Themy's right to bring this action as successor to Wilkinson's interests. The undisputed evidence from Themy's deposition and accompanying exhibits showed Wilkinson assigned all his interests in both agreements to Themy. Wilkinson's prior assignment to Zions Bank affected only his interest in the agreement concerning the real estate, and was simply an assignment for security which accompanied a Trust Deed in favor of the bank. Although the interests which Wilkinson assigned to Themy in the real estate agreement were indeed subject to the security interest of Zions Bank, this in no way divested Wilkinson of all interest in the agreement, any more than a homeowner is divested of his ownership rights by mortgaging his property. ⁵

Defendants next allege a factual issue exists regarding Themy's compliance with the remedial provisions of the agreements. The agreements provide:

DEFAULT OF BUYER. In the event of a failure to comply with the terms hereof by the Buyer, or upon failure of the Buyer to make any payment or payments when the same shall become due, or within 90 days or after, the Seller, at his option shall have the following alternative remedies:

A. Seller shall have the right upon failure of the Buyer to remedy the default within five days after written notice, to be released from all obligations in law and in equity to convey said property, and all payments which have been made theretofore on this contract by the Buyer shall be forfeited to the Seller as liquidated damages for the non-performance of the contract . . . It is undisputed that none of defendants has made any payments under the contract subsequent to the initial down payments. In September, 1975, Wilkinson notified Seagull of its default, and of Wilkinson's intent to declare a forfeiture unless the default was remedied within five days. However, Wilkinson took no further action, and assigned his interests to Themy in May, 1976. Defendants allege that Wilkinson's right to declare a forfeiture was therefore waived; but regardless of that possibility, defendants were properly notified by Themy in September, 1977. The notice of default was delivered to Jay Gardner, a vice president of Seagull and manager of the radio station operated by MBC. The notice informed Seagull of Themy's election to declare a forfeiture under the agreements unless the delinquent payments were made current within five days, and the amount necessary to remedy the default was specified. No payments were made in response to this notice, nor have any payments been made at any time since 1974.

Although defendants make several objections to the validity of the notice given by Themy, they raise these claims for the first time before us, and we therefore decline to review them. ⁶

Defendants also contend the district court improperly...