Vermont Nat. Bank v. Dowrick

• Decision Date: 15 June 1984
• Docket Number: No. 82-525,82-525
• Citation: 481 A.2d 396,144 Vt. 504
• Parties: VERMONT NATIONAL BANK v. James P. DOWRICK and Ingeborg Dowrick.
• Court: Vermont Supreme Court

Page 396

481 A.2d 396

144 Vt. 504

VERMONT NATIONAL BANK v. James P. DOWRICK and Ingeborg Dowrick.

No. 82-525.

Supreme Court of Vermont.

June 15, 1984.

Plante, Richards, Terino & Hanley, P.C., White River Junction, for plaintiff-appellant.

John J. Long, Jr., of Johnson & Dunne, Norwich, for defendant-appellee.

Before HILL and UNDERWOOD, JJ., KEYSER and LARROW, JJ. (Ret.), and COSTELLO, District Judge (Ret.), Specially Assigned.

UNDERWOOD, Justice.

The Vermont National Bank (Bank) brought two separate foreclosure actions against James P. and Ingeborg Dowrick (Dowricks) in Windsor Superior Court which were consolidated for trial and again on appeal. One of the issues raised in the Dowricks' counterclaim was an allegation of tortious interference by the Bank with a contractual relation of the Dowricks. The jury awarded the Dowricks $32,000 in damages on their counterclaim for tortious interference by the Bank with this contractual relationship, after all other issues had been resolved prior to trial.

The Bank's motions for directed verdict, for judgment notwithstanding the verdict, for remittitur and for a new trial, all of which related to the counterclaim, were each denied. On appeal, the Bank briefs only the trial court's denial of its motion for a directed verdict.

The facts involved in the appeal follow. In 1979 the Dowricks purchased a seventy-six acre tract of land in Quechee, Vermont, known as "Meadowland Farms." Mr. Dowrick intended to develop the land into home sites and to construct one "speculation home." Through a series of transactions, the Dowricks borrowed various sums and in 1979 executed two promissory notes to the Bank totaling $197,000. The loans were secured by first and second mortgages on parts of Meadowland Farms, and a second mortgage on the Dowricks' residence in South Woodstock, known as the Giles place. The Bank already held a first mortgage on this residence. By November of 1979 the Dowricks were in default on their obligations to the Bank.

In May of 1980, the Bank initiated two separate foreclosure actions against the Dowricks on the obligations outlined above. The Dowricks answered, filed affirmative defenses and advanced numerous counterclaims. Their counterclaim against the Bank for tortious interference with contractual relations is the basis for this appeal.

In November of 1980, Mr. Dowrick located a prospective purchaser for Meadowland Farms, and the two entered into a written purchase and sale agreement for the property. The Bank was not a party but did know of the agreement and had encouraged Mr. Dowrick to sell the property so that he could satisfy his obligations to the Bank. Mr. Dowrick and the purchaser subsequently executed an escrow agreement. The Bank signed the escrow agreement to indicate its consent to act as escrow agent for Mr. Dowrick and the purchaser and to hold, in an interest bearing account, earnest money deposits made by the purchaser under the terms of the agreement. The trial court ruled that the Bank was not a A condition in the agreement between Mr. Dowrick and the purchaser required that the Bank provide the purchaser with interim construction financing at a specific rate, considerably lower than the prevailing rates at the time. Mr. Dowrick was to complete construction of a residence for the purchaser at an agreed price and to act as general contractor to develop further home sites for the purchaser after the sale. Eventually the Bank refused to provide the financing to the purchaser, who then declared the sales agreement void. The Bank had objected to the part of the purchase and sales agreement that would have made Mr. Dowrick the general contractor to complete the purchaser's residence after the sale. The Bank was skeptical of Mr. Dowrick's abilities to complete construction of the purchaser's residence at the promised price. Further negotiations between Mr. Dowrick and the purchaser, after the Bank refused financing, failed to produce an agreement. Subsequently, the Bank initiated the foreclosure actions.

party to that agreement, and that ruling is not challenged on appeal.

I.

At oral argument on the appeal, this Court on its own iniative raised the issue of the applicability of Soucy v. Soucy Motors, Inc., 143 Vt. 615, 471 A.2d 224 (1983), because the Bank's petitions for foreclosure are equitable actions. The record disclosed that the assistant judges sat throughout the trial and signed the judgment order.

The case, however, never went to trial on the foreclosure actions, as they were resolved by the parties prior to trial. The only actions considered at trial were those raised by the Dowricks in their counterclaims. The Dowricks had also requested a permanent injunction to prevent the Bank from pursuing its foreclosure actions; but since the foreclosure actions were resolved prior to trial, neither the presiding judge nor the assistant judges ever considered the request for an injunction. Therefore, the foreclosure issue and the injunction issue, although raised in the pleadings, never went to trial and were never the subject of any trial court rulings.

The Dowricks, as one of their affirmative defenses to the Bank's foreclosure actions, pleaded estoppel, and counsel for the Bank argued that the Dowricks pursued equitable estoppel as an issue during trial and thus continued to invoke the court's equitable jurisdiction. We note, however, that estoppel is an affirmative defense, V.R.C.P. 8(c), and therefore relates only to the Bank's foreclosure actions which, as previously mentioned, were disposed of by the parties prior to trial. Estoppel is not a cause of action in and of itself cognizable as a counterclaim. Thus the defense of equitable estoppel was never an issue at trial.

The critical question before us is at what point in the suit jurisdiction is to be determined. The Bank argues that jurisdiction is determined from the pleadings; since the case began as a foreclosure action and since the Dowricks in their counterclaim requested an injunction, the Bank insists that equity was invoked. The Bank relies on Soucy, supra, for the proposition that "[o]nce invoked, equity retains jurisdiction over the entire action to see that complete relief is administered." Id. at 617, 471 A.2d at 225 (citing LaMantia v. King, 129 Vt. 628, 634-35, 285 A.2d 741, 745 (1971)). Counsel for the Dowricks argues that the equitable issues (foreclosure and request for an injunction) were resolved before trial commenced leaving only legal issues for determination. Thus, the presence of the assistant judges would not be jurisdictional error under Soucy.

LaMantia, supra, would seem to support the Bank's proposition:

The plaintiffs, in their bill of complaint, seek specific performance on the part of the defendants, ... an accounting, ... damages and other proper relief. The jurisdiction of chancery was rightfully invoked and under such circumstances when equity has taken jurisdiction 129 Vt. at 634-35, 285 A.2d at 745 (emphasis added) (citations omitted). We are convinced, however, that this language is too broad if applied to the instant facts. LaMantia indicates that some of the equitable relief requested in the complaint was actually heard and considered by the court. In the instant appeal, we have a somewhat unique situation in that none of the plaintiff's or defendants' requests for equitable relief were considered at trial. We now hold that, under circumstances such as these, the critical time for determining jurisdiction is at the time of trial, not when the pleadings are filed. Any indication in LaMantia or Soucy to the contrary is of no force. Therefore, because the equitable claims--foreclosure and the injunction--were resolved before trial and were never considered by the court during trial, only legal jurisdiction was invoked at trial, and the presence of the assistant judges was proper. Thus, we now address the Bank's appeal on its merits.

                of a case it will retain it for all purposes and dispose of the whole matter.   An equity court, obtaining jurisdiction of a controversy on any ground or for any purpose, will retain jurisdiction for the purpose of administering complete relief
                

II.

The Bank argues that it was error for the trial court not to have granted its motion for directed verdict on the issue of tortious inference with a contractual relation as raised in defendants' counterclaim. We agree. Because we reverse on this issue, we need not address the Bank's claims of error relating to attorney's fees and damages.

The Dowricks seek to raise an issue that they were third-party beneficiaries under a contract between the Bank and the prospective purchaser. This issue was raised by them for the first time by way of a reply brief allowed under V.R.A.P. 28(c) and filed after oral argument. We have held that issues not raised in either the appellant's or appellees' briefs may not be raised in reply briefs filed under V.R.A.P. 28(c). Condosta v. Condosta, 139 Vt. 545, 547, 431 A.2d 494, 496 (1981). Thus, we will not address the third-party beneficiary issue on appeal, and now turn to the Bank's claim that the trial court erred in not granting its motion for a directed verdict.

When reviewing a trial court's denial of a directed verdict, we will view the evidence in the light most favorable to the nonmoving party and exclude any modifying evidence. Currier v. Letourneau, 135 Vt. 196, 199, 373 A.2d 521, 524 (1977). The facts disclose a situation where the Bank was anxious for the Dowricks to sell Meadowland Farms so that their obligations to the Bank, then in default, could be satisfied. There did not seem to be a hostile climate during the default; indeed there is evidence of a cooperative attitude between the Bank and the Dowricks. The Bank was aware of Mr. Dowrick's negotiations with the prospective purchaser and had even expressed interest in trying to offer the purchaser interim construction financing to help facilitate the...