Ute-Cal Land Development Corp. v. Sather, UTE-CAL

Citation605 P.2d 1240
Decision Date11 January 1980
Docket NumberUTE-CAL,No. 16017,16017
PartiesLAND DEVELOPMENT CORPORATION, Plaintiff, Respondent and Cross-Appellant, v. Robert R. SATHER and Bonnie Lee Sather, Defendants, Appellants and Cross-Respondents.
CourtSupreme Court of Utah

Cullen Y. Christensen of Christensen, Taylor & Moody, Provo, for defendants, appellants and cross-respondents.

Robert M. McRae of McRae & Deland, Vernal, for plaintiff, respondent and cross-appellant.

MAUGHAN, Justice:

The defendants 1 bring this appeal from the jury's special verdict which found them guilty of acting maliciously and wilfully in gaining possession of a tract of land near Roosevelt, Utah. The defendants also appeal the jury's assessment of the amount the plaintiff owes them as guarantors of a loan between the plaintiff and First Security Bank of Utah, and the trial court's refusal to grant interest on the amount owed. The plaintiff cross-appealed the jury's determination. It found he suffered no damages, because of the acts of the defendants. He requested a new trial on the issue of damages. We affirm the jury verdict and decision of the trial court, and deny the plaintiff's request for a new trial. All statutory references are to Utah Code Annotated, 1953, as amended.

Ute-Cal Land Development Corporation, hereinafter "Ute-Cal," initiated this action in district court to regain possession of a tract of land known as the Moss Ranch. The property, which the plaintiff intended to develop into a recreational facility, was used as collateral for a $40,000 loan received from the First Security Bank of Utah, Roosevelt, Utah, hereinafter "Bank." This loan, which Ute-Cal applied for on October 11, 1972, was also secured by the personal guarantees of the President of Ute-Cal, Pete J. Buffo, hereinafter "Buffo," and the defendants, Robert R. Sather and Bonnie Lee Sather, hereinafter collectively "Sather."

At the time of this first loan Buffo and Robert Sather were close personal friends and business associates, and were involved in several assorted business transactions. When Ute-Cal applied for the October 11th loan, Buffo acting as President of the corporation entered into an agreement with Sather under the terms of which Sather was to receive a Warranty Deed to the Moss Ranch upon Ute-Cal's default and Sather's repayment of the loan. A copy of this written agreement accompanied by a Warranty Deed conveying the property to Sather was delivered to the bank with a note securing the loan.

The principal factual disputes in the present action stem from a subsequent loan between Ute-Cal and the Bank. The reason Ute-Cal borrowed the additional money and the use of the additional funds represent the basis of the present controversy.

Buffo alleged at trial that on September 15, 1973, Sather came to his office in Torrance, California, and requested Buffo loan him $25,000. In his testimony Buffo explained:

Q. And what was the purpose of the meeting?

A. The purpose of the meeting? Bob (Sather) had flown down the night before and said that he had to see me on a matter of grave importance. That he had bought some diamonds and was in serious financial trouble and needed $25,000.

Q. Alright and can you relate the rest of the conversation?

A. Well, I told him that I didn't have $25,000 and he said that he had taken the liberty to go to First Security Bank and make arrangements to borrow. At that time the $40,000 loan that we had originally taken out I had paid on was down to $20,000 2 and he said that he had made arrangements with the bank to make a loan for $50,000 and if I would go ahead and borrow $50,000 on the property in Utah, then we could go ahead and give him $25,000 of it. 3

In contrast to this testimony, Sather claims the money which he received from Ute-Cal was in payment of prior debts between the two. Buffo acknowledged monies had been loaned back and forth between the two but in his testimony stated:

. . . I told him, at the September 15, 1973 meeting, that there had been conversations and rumors around from other people that he was telling that I owed him money and that I had prepared an accounting and sent it to them and that I didn't feel that I owed him any money.

Buffo explained his motivation in securing the additional funds when he testified:

I told him (Sather) rather than injure a friendship that I would like to sit down and get the accounting done 4 and that if he really needed to borrow the money on this, that we would go ahead and do this because he had accommodated me before when I was in trouble.

Subsequent to this meeting Sather returned to Utah and filed the application for the $50,000 loan with the bank on September 21, 1973. Along with the application Sather gave the bank the Trust Deed for the Moss Ranch which Buffo had signed and notarized in California. He also gave the bank a Guaranty Agreement, between Sather and Ute-Cal, similar to the one entered into between the parties at the time of the first loan.

Concerning his intent in entering into this guaranty agreement Buffo explained:

Then he (Sather) told me that the bank also would require another this agreement here (indicating the guaranty agreement) besides and I told him that I didn't want to sign an agreement . . .

. . . I told him that I didn't want to sign the agreement, have the use of the money. I was borrowing the money to give it to him so why should I sign an agreement if I didn't pay it back he would have the property. He said well that was the only thing that he could do and the only way that he could get the loan through the bank and I said that I will go ahead and sign the agreement providing you go ahead and cancel it so as soon as the loan is through I can go ahead and get my documents back from the bank and Bob (Sather) said, 'Fine, I will take care of it.' 5

At the same time Sather presented the bank with an unlimited personal guarantee of any and all Ute-Cal debts.

On September 24, 1973, the disbursement of the loan applied $20,000 to the renewal of the prior obligation, and credited the Ute-Cal account with the remaining $30,000. On the following day, September 25, 1973, Ute-Cal, under the signature of its President, Pete Buffo, issued a $25,000 check to Sather. This check was paid by the bank on September 27, 1973.

This presents the second factual dispute which involves the use of the proceeds of the loan. While Sather alleges he immediately applied the Ute-Cal check to the purchase of a savings certificate worth $25,000, several discrepancies exist as to the chronology of events surrounding this check and the savings certificate purchase.

A representative of the bank, Verl Haslem, testified the $25,000 check was used to purchase Savings Certificate No. 19479. However, while he stated certificates are not issued until they are paid for he acknowledged this certificate was dated September 25, 1973, but the check allegedly used as payment was not paid until September 27, 1973. 6

Also, while the certificate was allegedly purchased for cash on September 25, 1973, it was not received by the bank as additional collateral until October 16, 1973. Thus, a period of 22 days elapsed between the disbursement of the proceeds of the loan and the bank's receipt of the required collateral, and 19 days lapsed between the payment of the check and the bank's receipt of the required additional collateral. 7

Ute-Cal paid the first installment of the new loan on October 20, 1973, but failed to pay the following installment due on January 20, 1974. On March 25, 1974, Sather paid off the remainder of the Ute-Cal obligation and accepted delivery of the Warranty Deed. Sather cashed the $25,000 certificate and applied this money and $21,500 from his business account to cover the $46,500 which Ute-Cal owed the bank under the loan. This amount included both the principal and the interest payments due.

Prior to his acceptance of the Warranty Deed which the bank delivered to him under the terms of the Guaranty Agreement, Sather executed on March 15, 1974, a deed conveying the Moss Ranch property to James A. Sheya as security for a $70,000 loan. However, when Sather went to record this deed on March 25, 1974, he found the plaintiff had caused a Trust Deed covering the property to be recorded on November 2, 1973, securing a loan between itself and Silvio Fassio for the sum of $150,000. Upon notice of this encumbrance Sather requested and received from First Security Bank on April 5, 1974, an assignment of the original note from the $40,000 loan and the Trust Deed accompanying the second loan. Sheya later reconveyed the property to Sather, who retained actual possession and use of the property until the conclusion of the trial below. 8

Following unsuccessful negotiations between Buffo and Sather concerning the reacquisition of the property and the repayment to Sather of monies expended as guarantor, Ute-Cal initiated the present suit to regain possession of the property and recover damages it incurred by the delivery of the Warranty Deed to Sather. Sather counterclaimed against Ute-Cal for monies spent in paying off the second loan.

At the conclusion of the evidence the jury was presented with a special verdict containing 13 questions. In answering these the jury found: (a) the second Guaranty Agreement between Sather and Buffo dated September 15, 1973, was cancelled prior to the time the Warranty Deed was delivered to Sather; (b) after subtracting any monies due Sather, Ute-Cal sustained no direct money damages as a result of the delivery of the Warranty Deed to Sather; (c) defendant Sather was guilty of wilful and malicious conduct against Ute-Cal, but assessed no punitive damages; (d) Ute-Cal was required to make a valid tender of $46,500 or any part thereof to Sather in order to regain possession of the Moss Ranch; and (e) Ute-Cal was entitled to the return of the Moss Ranch from Sather.

When the verdict was returned the plaintiff objected to the vagueness of the...

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