WHITE LAKES SHOPPING CTR v. JEFFERSON STANDARD LIFE INS, 46,176

• Decision Date: 06 November 1971
• Docket Number: No. 46,176,46,176
• Parties: WHITE LAKES SHOPPING CENTER, INC., a Kansas Corporation, Appellant, v. JEFFERSON STANDARD LIFE INSURANCE COMPANY, a Corporation, Appellee.
• Court: Kansas Supreme Court

208 Kan. 121

86 P.3d 543

WHITE LAKES SHOPPING CENTER, INC., a Kansas Corporation, Appellant, v. JEFFERSON STANDARD LIFE INSURANCE COMPANY, a Corporation, Appellee.

No. 46,176

Supreme Court of Kansas.

Opinion filed November 6, 1971.

Floyd E. Gehrt, of Topeka, argued the cause, and Robert L. Roberts, of Topeka, was with him on the brief for the appellant.

Arthur E. Palmer, of Topeka, argued the cause, and Ernest J. Rice, of Topeka, was with him on the brief for the appellee.

The opinion of the court was delivered by

FROMME, J.:

White Lakes Shopping Center, Inc. (appellant) brought this action in the district court to recover $77,000 which it had paid Jefferson Standard Life Insurance Company (appellee) in connection with a $3,850,000 written loan commitment agreement. The claim was denied in the trial court and this appeal followed. A brief recitation of background facts is necessary.

White Lakes desired to build a modern shopping center in Topeka, Kansas. White Lakes approached a mortgage brokerage company, Kansas City Mortgage Company, to locate financing. The brokerage company found that Jefferson Standard was interested in making a loan for construction of the shopping center. White Lakes then submitted a loan application to Jefferson Standard asking for $4,000,000 in "end financing." (We are advised the term "end financing" denotes the long term mortgage loan to be given on completion of construction as distinguished from interim or temporary financing used to make payments as construction progresses.) After a personal investigation of the project planned, Jefferson Standard prepared and submitted to White Lakes the first written loan commitment for $3,500,000 on September 5, 1963. The commitment agreement obligated Jefferson Standard to make the $3,500,000 loan to White Lakes on completion of the project on or before May 31, 1965.

The loan for "end financing" guaranteed by the commitment agreement was to be secured by a first mortgage on the completed shopping center property. The mortgage was to extend for a term of 22 years. Interest under the mortgage was to be paid at a rate of 5.75 percent per annum. The commitment agreement contained a provision for an advance payment by White Lakes to Jefferson Standard which payment is the subject of the present action. The payment was made and the commitment agreement was accepted and signed by White Lakes. At the request of White Lakes the amount of the commitment was increased on two occasions. Separate commitment agreements covering the increases were executed. These contained a similar binder provision requiring additional advance payments.

A total of $77,000 was paid to Jefferson Standard under the provision common to all three commitment agreements. This provision for advance payment reads:

"... Upon the loan being closed this $77,000 deposit is to be refunded promptly; but if the loan is not closed in accordance with the terms of this alternate commitment, the $77,000 deposit is to be retained permanently by the Jefferson Standard Life Insurance Company as liquidated damages...."

In passing, we note the trial court held that the loan commitment agreement was complete and unambiguous. We agree. Appellant fails to point to any specific provisions to the contrary.

The final commitment agreement for $3,850,000 was dated June 29, 1964, and accepted by White Lakes on July 9, 1964. Jefferson Standard refused further requests to increase the amount of the commitment. Shortly thereafter White Lakes, through the mortgage brokerage company, located another life insurance company which eventually furnished "end financing" of $4,250,000 for the shopping center. White Lakes now sues to recover the $77,000 paid to Jefferson Standard under the loan commitment agreement.

White Lakes filed the action making two claims in separate counts of the petition. The claim in count one is based upon a contention that the provision for payment of the $77,000 was a penalty provision rather than a provision for liquidated damages and that the amount paid should be returned to them. The claim in count two is based upon a contention that the $77,000 was paid under an agreement with Jefferson Standard to meet the "ultimate necessary financing as would be required" by White Lakes and that Jefferson Standard's refusal to do so entitled White Lakes to a return of the money under a theory of unjust enrichment arising from an impossibility of performance.

After the discovery of evidence had been completed by both parties Jefferson Standard filed a motion for summary judgment against count two of the petition. The motion was sustained. Error is claimed thereon.

In entering summary judgment against White Lakes on count two the trial court found, (1) there was no evidence discovered tending to support a promise to loan an amount sufficient to meet the ultimate financial needs of White Lakes to complete the project, (2) that any evidence to support such a promise would be inadmissible under the parol evidence rule as tending to change the terms of the unambiguous written agreement, (3) that there was no evidence discovered to support any legal theory of impossibility of performance, and (4) there was no genuine issue as to any material fact and that appellee was entitled to judgment as a matter of law on count two of the petition.

These findings and the judgment as to count two are supported by the record. The written loan commitment agreement is complete, unambiguous and free from uncertainty. A written contract which is complete, unambiguous and free from uncertainty cannot be varied or changed by parol evidence of prior or contemporaneous agreements or understandings in the absence of fraud. (Williams v. Safeway Stores, Inc., 198 Kan. 331, 338, 424 P.2d 541.) When no fraud is alleged and a contract is complete and unambiguous, evidence of negotiations which culminated in a written contract is not admissible for the purpose of varying the terms of the written contract (Edwards v. Phillips Petroleum Co., 187 Kan. 656, 360 P.2d 23.)

Impossibility of performance, recognized in the law as a basis for relief from contractual obligations, is not of the nature contended for by appellant. When one agrees to perform an act possible in itself he will be liable for a breach thereof although contingencies not foreseen by him arise which make it difficult, or even beyond his power, to perform and which might have been foreseen and provided against in the contract.

The impossibility which will, or may, excuse the performance of a contract must exist in the nature of the thing to be done. It must not exist merely because of the inability or incapacity of the promisor or obligor to do it. (17A C.J.S., Contracts, § 463 (1), P. 610; 17 Am.Jur.2d, Contracts, § 506, p. 987; State Highway Construction Contract Cases, 161 Kan. 7, 166 P.2d 728; Winfrey v. Automobile Co., 113 Kan. 343, Syl. 4, 214 Pac. 781.)

In Winfrey v. Automobile Co., supra, it was said:

"Where one agrees to perform an act possible in itself he will be liable for a breach thereof although contingencies not foreseen by him arise which make it difficult or even beyond his power to perform and which might have been provided against in the agreement." (Syl. ¶ 4.)

The impossibility of performance in this case existed, if at all, by reason of the inability of White Lakes to complete construction at a cost within the loan commitment it had previously secured from Jefferson Standard. This is not the impossibility recognized in the law.

We turn now to count one. The issues presented therein were submitted to the court on a stipulation of the parties as a court trial on the pleadings, depositions and the briefs of both parties. A contention of the appellant to the contrary is not supported by the record.

The issues raised on appeal as to count one depend upon the nature of the provision for payment of the $77,000. Was it a penalty provision or one for liquidated damages?

The trial court, after considering the loan commitment agreement and the deposition testimony, found the provision for the advance payment by White Lakes was a valid provision for liquidated damages and that it was not a penalty provision. In addition the court found (1) that White Lakes had willfully...