Trail Realty, Inc. v. Beckett, 71-1478.

• Decision Date: 26 June 1972
• Docket Number: No. 71-1478.,71-1478.
• Citation: 462 F.2d 396
• Parties: TRAIL REALTY, INC., a Corporation, Appellant, v. Ralph G. BECKETT and Elizabeth G. Beckett, Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

462 F.2d 396 (1972)

TRAIL REALTY, INC., a Corporation, Appellant, v. Ralph G. BECKETT and Elizabeth G. Beckett, Appellees.

No. 71-1478.

United States Court of Appeals, Tenth Circuit.

June 26, 1972.

Louis A. Silks, Jr., Shawnee Mission, Kan., for appellant.

J. D. Lysaught (Robert H. Bingham, Kansas City, Kan., with him on the brief), Kansas City, Kan., for appellees.

Before LEWIS, Chief Judge, DOYLE, Circuit Judge, and BRATTON, District Judge.

BRATTON, District Judge.

This appeal is from the denial of Trail Realty's action for specific performance of a real estate contract entered into between it and Ralph and Elizabeth Beckett.

Appellant's predecessor in interest had entered into a contract with the Becketts in 1966 to purchase a twenty acre tract of land. The contract was assigned to appellant in October of 1966.

The contract contained a variety of provisions, but only those pertinent to the issues on appeal follow.

The purchase price for the land was $200,000.00. The money was to be paid as follows: a $5,000.00 down payment, which was paid by August 20, 1966; $53,000.00, which was to be paid within thirty days after appellant obtained zoning but in no event later than December 31, 1966; and $142,000.00, which was to be paid by January 31, 1967.

The appellees were to escrow their deed with the bank at the time the $53,000.00 payment was made and deliver it upon payment of the balance.

The contract provided that time was to be of the essence and that a five day grace period would be allowed following each payment date within which the purchaser could still tender payment.

Appellant was unable to arrange financing in time to meet its payment due at the end of December, and it was given a one month extension, at the end of which the entire purchase price would be due. It was still without funds on the payment date in January, and the time for payment was again extended for one month. Ultimately, the time for payment was extended until April 1, 1967, but payment was not tendered on that date. All extensions were given for consideration.

In March, Beckett made a trip to Kansas, and met on March 21 with Patterson and Bell, two of the principals of Trail Realty. He told them that he needed the money from the sale and would grant no further extensions of time. He also told them that the agent who handled the land for him had found another buyer, although he did not know who the buyer was. He asked if Trail would have the money by April 1 and was informed that it might not.

Trail Realty's people at this meeting suggested to Beckett that perhaps an arrangement could be worked out other than the one called for under the existing contract. In essence, they proposed that Beckett take an interest in the property in lieu of payment of all of the purchase price as provided for in the original contract.

A discussion was had concerning what arrangement other than the existing one might interest Beckett, and it was finally agreed that any proposal Patterson and Bell might make should be made in writing and submitted by Trail Realty's attorney to Beckett's attorney prior to the April deadline for payment.

A written proposal was so submitted on the following day.

On April 3, 1967, Beckett's attorney related to Trail Realty's attorney that his client was not interested in what had been proposed and that appellant's failure to tender payment on April 1 had terminated the contract and effected a forfeiture of the monies paid.

Beckett's agent handling the land called Beckett's lawyer soon after April 1 and was told the contract with Trail Realty had not been closed. He wrote a contract for the land on April 4 and took it to the new purchaser to be signed. After it was signed, it was forwarded to the Becketts in Florida. Mrs. Beckett signed it on April 6. Mr. Beckett signed it on the following day and at that time discovered that the purchaser was George Gagel, president of the Valley View State Bank.

Appellant tendered a cashier's check for full payment on April 13, 1967, which was refused. It filed this action two weeks later, seeking specific performance of its contract with the Becketts.

On November 2, 1967, the appellant filed a motion to amend its complaint, seeking to add George W. Gagel and his bank as defendants. As a basis for its motion, appellant related that its principals had attempted to arrange the financing for the purchase of the Becketts' property with Mr. Gagel and his bank. During these negotiations disclosures concerning potential use of the land and corporate and personal financial information had been given to Gagel. Following such disclosures, he had contacted the agent who managed the land for the Becketts and had offered to buy it. This, Trail Realty claimed, was a breach of a fiduciary duty to it, and its amended complaint sought to join Gagel and the bank as defendants and to impress a constructive trust upon the land. Even though the joinder would destroy diversity, appellant argued that the court could hear the claim under its ancillary jurisdiction.

Its motion to thus amend the complaint was denied by the trial court on the ground that the action against the Becketts for specific performance of a real estate...