Case Title: Letzig v. Rupert

Citation: 209 Kan. 143, 495 P.2d 955

Docket Number: 46,312

State: kansas

Court: Kansas Supreme Court

Date: 1972-04-08T00:00:00Z

Document:
209 Kan. 143 (1972)
495 P.2d 955
WALTER C. LETZIG, and LILLIAN I. LETZIG, husband and wife; FREDERICK K. CROSS, Administrator w.w.a. Estate of Lee Young, deceased, and JOSIE YOUNG; HOWARD P. O'HARO and MARY A. O'HARO, husband and wife, Appellants,
v.
RICHARD RUPERT, Executor Estate of Juanita R. Rupert, deceased; and LLOYD R. WALLACE, Appellees.
No. 46,312

Supreme Court of Kansas.
Opinion filed April 8, 1972.
Marion C. Miller, of Kansas City, argued the cause and was on the brief for the appellants.
William E. Scott, of Kansas City, argued the cause and was on the brief for the appellees.
The opinion of the court was delivered by
OWSLEY, J.:
This is an action for damages caused by the misrepresentation, fraud, and deceit of the defendant. The trial court sustained a motion for summary judgment in favor of the defendant *144 on the grounds that the plaintiffs' causes of action were premature.
The controversy centers around Form 319A "Option Agreement  Flat Payment," whereby each of the plaintiffs purchased property located in Wyandotte County, Kansas, from the defendant, Juanita R. Rupert, through her agent, Lloyd R. Wallace. It is conceded that each of the parties plaintiff signed the same agreement and each is in the same position. The appellant purchasers will be referred to as the plaintiffs herein and the appellee seller will be referred to as the defendant.
The parties present this appeal in accordance with Rule No. 6 (o). The agreed statement approved by the parties and approved by the court in accordance with this rule is set forth as follows:
By journal entry dated July 27, 1970, the trial court made the following finding:
The sole and agreed question presented by the parties on appeal is whether or not the trial court erred in making this finding. It is apparent that Form 319A "Option Agreement  Flat Payment," which is the subject of this action, has been popular for many years and has been used extensively in Wyandotte County, Kansas. The agreement has been before this court for construction on many occasions. (Dengel v. Lowder, 144 Kan. 735, 62 P.2d 866; Rieke v. Smith, 144 Kan. 643, 62 P.2d 889; Home Owners' Loan Corp. v. Torrey, 146 Kan. 332, 69 P.2d 1096; Hively v. Graff, 151 Kan. 594, 100 P.2d 685; Stevens v. McDowell, 151 Kan. 316, 98 P.2d 410.)
Briefly stated, in connection with plaintiff Letzig, the defendant for consideration of the sum of $100.00 gave an option until the first day of May, 1962, to Letzig, to purchase certain real estate in Wyandotte County. The option price was $4,502.37 and Letzig had the right to extend the option from month to month by paying the sum of $40.00 on the first day of each succeeding month. The agreement further provided that in the event of the exercise of the option, Letzig would be entitled to credit for the payments made to the defendant on the purchase price of the real estate. Other provisions of the contract are not necessary to decide the point on appeal.
In Stevens we properly construed this contract in the following language:
In McWilliams v. Barnes, 172 Kan. 701, 242 P.2d 1063, we considered the point raised in this appeal and said:
The contract involved in McWilliams, according to the records in this court, is similar to the contracts involved here. In McWilliams, the purchaser paid $1,000 down and extended the option by paying $35.00 each month thereafter. The McWilliams case appears to have decided the issue now raised by this appeal.
The defendant questions the rule established in McWilliams, claiming that a thorough reading of this case does not disclose the defendant ever called the court's attention to the proposition that until plaintiff exercised his option he had no rights which could be, or were, damaged. We do not agree with the proposition that plaintiff cannot be damaged until he exercises his option. Also, we do not agree that the failure of the court in McWilliams to consider the proposition detracts from the establishment of the rule of law stated therein.
Defendant cites Bushey v. Coffman, 109 Kan. 652, 201 Pac. 1103, *147 as being contrary to McWilliams. We do not construe Bushey as stating a contrary rule of law. Bushey held that a party induced by fraud to enter into a contract which has been partly performed before discovery of the fraud does not waive his cause of action based on fraud by an election to affirm the contract, complete its performance, and retain what was received under it.
We agree that purchasers' continued compliance with the contract after discovery of the fraud does not constitute a waiver, but we do not construe Bushey as holding that the purchaser in a real estate contract must complete all installment payments before an action based on the fraud of the seller can be commenced.
The record discloses that as of February 5, 1970, plaintiff Letzig had paid $2,167.50 on the purchase price of $4,502.37. Young and O'Haro had paid like amounts on the same purchase price. In view of the record, we are justified in assuming the plaintiffs have each continued to make their monthly payments. If this is true each of the plaintiffs has paid on said purchase price the additional sum of $1,000 up to and including March 5, 1972. Since interest is deducted from payments by the terms of the agreement, plaintiffs would not be entitled to a reduction of the principal in the full amount paid.
We affirm the ruling in Stevens that when the purchaser has made payments for such a length of time that the aggregate amount of said payments constitutes the equivalent of a substantial payment of the purchase price the purchaser acquires an equitable interest in the property. We conclude that the payment of $2,167.50 on a purchase price of $4,502.37 constitutes a substantial payment justifying the claim of the purchasers that they hold an equitable interest in the property. We follow the rule in McWilliams that these plaintiffs may have their action for damages without fully performing the contract. We further hold that an action for damages cannot arise until the purchasers have acquired an equitable interest in the property in accord with the test expounded in Stevens.
This conclusion disposes of cases like Caldwell v. Frazier, 65 Kan. 24, 68 Pac. 1076, and Fourth National Bank v. Hill, 181 Kan. 683, 314 P.2d 312. These were "pure option" contracts whereby for a stated sum a person is given the right to purchase property at a stated figure for a limited time. The option holder in this arrangement acquires no equitable interest in the property which will, prior to the exercise of the option, support an action for damages.
*148 The trial court found that before plaintiffs have a cause of action for damages based on fraud they must exercise their respective options by paying the entire amount due on the contracts. In so doing, the trial court has rewritten the agreement between the parties. We feel that the trial court by its judgment herein has required the plaintiffs to complete their payments and exercise their options when in fact it may be impossible for them to do so. If impossible, the ruling of the trial court, in effect, defeats plaintiffs' causes of action. An action for fraud must be commenced within two years after discovery of the fraud. (K.S.A. 1971 Supp. 60-513 [3].) If plaintiffs do not have a cause of action until each of them has completed his payments, their action would be barred by limitations, since the completion of the payments may not occur under the facts in this case until more than two years after the discovery of the fraud. This exposes the unfairness of the trial court's ruling.
We conclude that the plaintiffs' causes of action are not premature.
The judgment is reversed.