Waggoner v. Johnston
| Decision Date | 14 December 1965 |
| Docket Number | No. 40656,40656 |
| Citation | 408 P.2d 761,1965 OK 192 |
| Parties | H. WAGGONER, Mrs. Christine Waggoner, Robert B. Waggener and Jessie M. Waggoner, Plaintiff in Error, v. Katherine F. JOHNSTON, J. M. Smith, and The First National Bank & Trust Company of Oklahoma City, Oklahoma, Defendants in Error. |
| Court | Oklahoma Supreme Court |
Syllabus by the Court
1. It is within the inherent power of the court to allow an action in interpleader where (1) two or more claims arise out of the same or related subject matter, and (2) the stakeholder is exposed to double or multiple litigation as a result of these claims.
2. Interpleader is an equitable proceeding from beginning to end. Claims of the litigants arising from the common law are converted to actions in equity by interpleader in which the right to a jury trial rests in the discretion of the court.
3. Purchaser alleging the right to rescind a contract and to recover an earnest money deposit has the burden of establishing that he was induced to enter into the contract as a result of fraud or misrepresentation on the part of the vendor.
4. A broker, who has been guilty of no misconduct and who was the moving cause of a sale, is entitled to his commission where the purchaser, after making an earnest money deposit, wrongfully rescinds the contract.
5. It is harmless error to place the burden of proof on the issue of stipulated damages on the wrong party where the evidence produced at the trial establishes the fact that actual damages were extremely difficult to determine as required by Oklahoma statute.
6. Under Oklahoma statutes, a stipulated damage provision is valid where the evidence shows that (1) the damages were extremely difficult to determine at the time the contract was made and (2) the provision does not impose a penalty.
Appeal from the District Court of Oklahoma County; Clarence Mills, Trial Judge.
Action in interpleader by The First National Bank and Trust Company as disinterested stakeholder against named defendants who were asserting claims arising out of a real estate transaction against an escrow deposit with the plaintiff bank. From a judgment in favor of defendant Katherine F. Johnston for liquidated damages and defendant J. M. Smith, for a brokerage commission, defendants H. Waggoner, Robert B. Waggoner, and Jessie M. Waggoner appeal. Judgment Affirmed.
Glenn H. Grubb, Monnet, Hayes, Bullis, Grubb & Thompson, Oklahoma City, for plaintiff in error.
John H. Cantrell, Lee B. Thompson, Ralph G. Thompson, Cantrell, Douglass, Thompson & Wilson, Oklahoma City, for defendant in error Katherine F. Johnston.
John Chiaf, Cargill, Cargill, Chiaf, Rudkin & Cargill, Oklahoma City, for defendant in error J. M. Smith.
The petition of the plaintiff bank requesting interpleader alleged that defendants, the Waggoners, had entered into a contract to purchase certain real property from defendant, Mrs. Johnston, and that pursuant to that agreement, the Waggoners had deposited $15,000.00 earnest money with the plaintiff bank. The petition alleged further that the plaintiff bank claimed no interest in the deposit, but that the deposit was claimed by each of the named defendants and that the plaintiff bank was in doubt as to which claimant was rightfully entitled to the money. The trial court then ordered that the plaintiff bank place the disputed sum of $15,000.00 into the custody of the court, for an adjudication of the entitlement of the defendants thereto.
The defendants, the Waggoners, alleged that their contract with Mrs. Johnston should be cancelled and that the earnest money deposit should be returned to them because their consent to purchase the property had been procured by fraud and misrepresentation on the part of agents representing Mrs. Johnston, the seller. The defendant, Mrs. Johnston, claimed entitlement to the deposit based on a clause in the contract of sale with the purchasers, the Waggoners, liquidating the damages at $15,000.00 in the event of a breach by the purchasers, which breach allegedly occurred when the Waggoners repudiated the contract. The defendant, Mr. Smith, alleged that, as the real estate broker in the transaction, he was entitled to his commission in the amount of $7,800.00.
The Waggoners have appealed from the judgment of the trial court in favor of Mrs. Johnston for the $15,000.00, with interest, which amount was subjected to payment of the claim of Mr. Smith, as broker, for whom judgment was also rendered in the amount of $7,800.00.
The facts indicate that the Waggoners, who were interested in buying some property, contacted Mr. Smith, a licensed real estate broker, who showed them various tracts of land including the property belonging to Mrs. Johnston, known as Faircroft Farm. As the Waggoners indicated an interest in Faircroft Farm, Mr. Smith contacted Mrs. Johnston to determine if the property was still available for sale. Mr. Smith had listed this property at an earlier date for Mrs. Johnston, but had no listing on the property at the time. Mrs. Johnston indicated that she would sell the property. After some negotiation, in which Mr. Smith acted as intermediary, the parties agreed upon a selling price of $130,000.00. The contract was drafted in the form of an offer signed by the Waggoners and accepted by Mrs. Johnston on April 2, 1962. The Waggoners then deposited $15,000.00 earnest money in accordance with the terms of the contract of sale with the escrow agent, the plaintiff bank. Later, by letter, dated June 23, 1962, the Waggoneers notified Mrs. Johnston of their intention to rescind the contract because of misrepresentations concerning the use which could be made of the property by Mr. Smith, who was alleged in the letter to be the agent of Mrs. Johnston. The reply letter from Mrs. Johnston dated June 26, 1962, denied any representations were made concerning the property's use and demanded compliance with terms of the contract by July 2, 1962. Subsequently, on July 3, 1962, Mrs. Johnston made demand upon the plaintiff bank for the $15,000.00 deposit as liquidated damages under the contract; and on July 5, 1962, the Waggoners indicated to plaintiff bank that the deposit should properly be returned to them because of the misrepresentations that had induced them to enter into the contract.
The forfeiture provision of the contract states:
Faircroft Farm consists of approximately 171 acres of land and is lacated immediately north of U.S. Highway 66, north of and adjacent to Lake Overholser. It is not in dispute that Lake Overholser is a part of the water supply of the city of Oklahoma City, and as such the area is subject to the ordinances of that City enacted for the sanitary protection of its water supply. Under these ordinances, it would not be possible to use the property in question for a housing project. Conflicting evidence was presented by the claimants concerning the alleged false and fraudulent misrepresentations purportedly made by Mr. Smith, the broker, and by Mrs. Johnston's attorney.
The Waggoners allege on appeal that the trial court committed error in denying their request for a jury trial; in finding that there was no misrepresentation or fraud on the part of Mrs. Johnston; and in failing to find the forfeiture provision of the contract was void as imposing a penalty.
This case is a proper one for disposition by an action in interpleader. While there is no specific statutory authority in this state for commencing an action in interpleader, it is within the inherent power of the court to allow such an action. Wells v. United States Fidelity & Guaranty Co., 182 Okl. 290, 77 P.2d 716; Bank of Earlsboro v. J. E. Crosbie, Inc., 182 Okl. 327, 77 P.2d 547 (); Board of Education of City of Atchison v. Scoville, 13 Kan. 17. The stakeholder, the plaintiff bank, claims no interest in the property and has incurred no independent liability to any of the claimants. The claim of each of the remaining parties arises from the same transaction, and is asserted against the same fund. Interpleader is viewed with favor by this court as a means of avoiding multiple and vexatious litigation. It is an appropriate proceeding whenever (1) two or more claims arise out of the same or related subject matter and (2) the stakeholder is exposed to double or multiple litigation as a result of these claims. Applying this test, interpleader is appropriate in the instant case.
It is the position of the Waggoners, the plaintiffs in error, that interpleader involves two successive phases of litigation. The first phase concerns whether interpleader is a proper remedy, and the second phase involves the controversy between the claimants. It is as to the condtroversy between the claimants in this case that the Waggoners assert entitlement to a jury trial. They do not deny that the first phase of the litigation in interpleader is equitable in nature; but they contend that the character of the second phase of the litigation should be determined by the legal or equitable nature of the dispute between the interplead claimants. What is the nature of the second phase of the litigation in this case? This court has reled, in accordance with the majority view, that where a party rescinds a contract prior to coming into court on the ground that the contract was induced by fraud, as the Waggoners did in this case, and sues to recover an earnest money deposit, the essence of the suit is for money had and received, a common law...
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