Case Title: POND v LINDELL

Citation: 

Docket Number: 80-289

State: montana

Court: Montana Supreme Court

Date: 1981-08-11T00:00:00Z

Document:
80-289 IN THE SUPREME COURT OF THE STATE OF MONTANA CURTIS POND AND SHARON POND, husband and wife, Plaintiffs and Appellants, LESLIE M . LINDELL; BONNIE LINDELL, et al., Defendants-Cross Defendants and Respondents, C . K. EENSON Appeal from: District Court of the Thirtee~th Judicial District, In and for the County of Yellowstone, The Honorable Robert H. Wilson, Judge presiding, Counsel of Record: For Appellants: Moulton, Bellingham, Longo & Mather, Billings, Montana For Respondents: Kammerer and Rodli', Missoula ; Montana Submitted on B r i ' e f s : April 151 1 9 8 1 Dec2dedr August 11, 1981 Filed; AUG 11 1981 M r . J u s t i c e Frank B. Morrison, Jr., d e l i v e r e d t h e Opinion of t h e Court . his s u i t was commenced by p l a i n t i f f s C u r t i s and Sharon Pond f o r s p e c i f i c performance of a c o n t r a c t f o r deed and f o r damages caused by delay i n conveyance. Defendants Dick S. Dye and P a t r i c i a L. Dye f i l e d an answer t o the complaint. Defendant C.K. Benson answered and f i l e d a counterclaim f o r a t t o r n e y f e e s . P l a i n t i f f s , t h e Ponds, f i l e d a motion f o r p a r t i a l summary judgment seeking s p e c i f i c performance of the c o n t r a c t f o r deed and a determination t h a t defendants w e r e l i a b l e t o p l a i n t i f f s f o r damages occasioned by delay i n conveyance. Defendants Dye and Benson f i l e d cross-motions f o r summary judgment and asked f o r a t t o r n e y f e e s . On J u l y 1, 1980, t h e D i s t r i c t Court issued an order denying t h e p l a i n t i f f s ' motion f o r summary judgment, g r a n t i n g defendants, Dye and Benson's motions f o r summary judgment, and awarding defendants t h e i r c o s t s and a t t o r n e y f e e s . From t h i s decision, p l a i n t i f f s appeal. On December 1 9 , 1980, t h e D i s t r i c t Court issued a supplemental order d i r e c t i n g the e n t r y of a f i n a l judgment a s t o t h e i s s u e s decided i n the J u l y 1, 1980, order and cer- t i f y i n g t h e case f o r appeal pursuant t o Rule 54 (b) , M.R.Civ.P. This controversy a r i s e s o u t of a s e r i e s of r e a l e s t a t e t r a n s a c t i o n s involving numerous p a r t i e s . Because of t h e number of p a r t i e s involved, the following designations w i l l be used; p l a i n t i f f s C u r t i s and Sharon Pond w i l l be r e f e r r e d t o a s t h e "Ponds"; defendants Dick S. Dye and P a t r i c i a L. Dye w i l l be r e f e r r e d t o a s the "Dyes"; defendants L e s l i e M. Lindell and Bonnie Lindell w i l l be r e f e r r e d t o a s t h e " ~ i n d e l l s " ; and C.K. Benson w i l l be r e f e r r e d t o a s e ens on". Sophie M. Russell o r i g i n a l l y owned t h e property which i s a t t h e c e n t e r of the d i s p u t e i n t h i s a c t i o n . I n 1969, Russell entered i n t o a c o n t r a c t f o r deed with the Dyes. On October 27, 1971, t h e Dyes entered i n t o a c o n t r a c t f o r deed with t h e Lindells. This c o n t r a c t contained t h e following provisions: "1. That i f the buyers s h a l l f i r s t make the pay- ments and perform the covenants h e r e i n a f t e r men- tioned on t h e i r p a r t t o be made and performed, t h e s e l l e r s hereby covenant and agree t o convey and a s s u r e t o the buyers by warranty deed i n f e e simple, f r e e and c l e a r of a l l encumbrances, the r e a l e s t a t e i n the County of Yellowstone, and S t a t e of Montana, known and described as follows, t o w i t : T r a c t s K and L of the Second Amended P l a t of CERTIFICATE O F S U R V E Y NO. 744, which is located i n t h e S W 1 / 4 of Section 23, Township 2 North, Range 26 East, P.M.M., Yellowstone County, Mon- tana, according t o the o f f i c i a l p l a t thereof on f i l e and of record i n the o f f i c e of the Clerk and Recorder of s a i d County, under Document No. 739015. "4. The s e l l e r s agree t o provide a t i t l e insur- ance policy evidencing t h a t t i t l e t o the proper- t y i s i n s u r a b l e i n the amount of $9,000.00 and w i l l place the same i n escrow a s h e r e i n a f t e r men- tioned. " 5. Upon t h e execution of t h i s agreement, t h e s e l l e r s s h a l l execute a warranty deed running t o t h e buyers i n the usual form, conveying v a l i d , mar- k e t a b l e , f e e simple t i t l e t o the premises t o the buyers, f r e e and c l e a r of a l l l i e n s , encumbrances, and t i t l e d e f e c t s , i f any, b u t excepting r i g h t s - of-way, easements, and taxes f o r t h e period sub- sequent t o t h e d a t e of t h i s instrument . . ." On May 9, 1973, the L i n d e l l s entered i n t o a c o n t r a c t f o r deed with t h e Ponds. That c o n t r a c t contained t h e following provisions: "That if Buyers s h a l l f i r s t perform t h e covenants h e r e i n a f t e r mentioned on t h e i r p a r t t o be made and performed, and s h a l l make t h e payments a s herein s p e c i f i e d , t h e S e l l e r s do hereby covenant and agree t o s e l l , t r a n s f e r and convey t o the Buyers i n f e e simple, c l e a r of a l l encumbrances whatever, with t h e exception of r e s e r v a t i o n s , r e s t r i c t i o n s and easements of record, and a s may have been incurred by t h e Buyers a f t e r the d a t e of t h i s agreement, by warranty deed, r e a l property s i t u a t e d i n the County of Yellowstone, S t a t e of Montana, and more p a r t i c u - l a r l y described a s follows . . . " I t i s understood and agreed t h a t t h i s c o n t r a c t i s s u b j e c t t o t h e terms and conditions of c o n t r a c t s f o r deed between Sophie M. Russell, a s S e l l e r s , and Dick S. Dye and P a t r i c i a L. Dye, dated October 25, 1969; and a c o n t r a c t f o r deed dated October 27, 1971 between Dick S. Dye and P a t r i c i a L. Dye, a s S e l l e r s , and L e s l i e M. Lindell and Bonnie A. L i n d e l l as Buyers; t h a t s a i d c o n t r a c t s a r e held i n escrow by t h e Security T r u s t & Savings Bank, B i l l i n g s , Montana, and t h a t t h i s c o n t r a c t s h a l l be placed i n escrow a t the S e c u r i t y T r u s t & Savings Bank, B i l l i n g s , Montana, and t h a t payments made under t h i s c o n t r a c t s h a l l be applied t o t h e payment of s a i d e a r l i e r c o n t r a c t s . "At such time a s the Buyers s h a l l have paid the f u l l purchase p r i c e balance of $11,500.00, p l u s i n t e r e s t a t 8% per annum, a s s e t f o r t h i n t h i s c o n t r a c t f o r deed, S e l l e r s s h a l l f u r n i s h a t i t l e in- surance policy t o t h e Buyers showing good and m e r - chantable t i t l e . The Security T r u s t & Savings Bank i s hereby authorized t o pay the c o s t of s a i d t i t l e insurance policy from t h e l a s t two payments t o be made under t h e t e r m s of t h i s c o n t r a c t and deduct t h e same from t h e payments t o be made t o the S e l l e r s . " On October 24, 1973, Contemporary Products, Inc., a f o r e i g n corporation which was not r e g i s t e r e d t o do business i n Montana, recorded a judgment a g a i n s t Dick S. Dye, i n t h e amount of $12,471.08, p l u s i n t e r e s t , c o s t s , and $1,149.00 i n a t t o r n e y f e e s . This judgment was docketed i n the D i s t r i c t Court, Yellowstone County, case no. 59091. O n August 26, 1978, t h e Dyes assigned t h e i r r i g h t s a s s e l l e r s under t h e Dye-Lindell c o n t r a c t t o Benson. A t t h i s t i m e Dyes a l s o gave Benson a warranty deed t o the property, which was recorded August 2 9 , 1978. Subsequent assignments of c o n t r a c t s were made by t h e L i n d e l l s and Benson. The following c h a r t , numbered chrono- l o g i c a l l y , d e p i c t s a l l of the above occurrences and transac- t i o n s r e l a t i n g t o t h i s p a r c e l of property. (See I l l u s t r a t i o n On Next Page) -- Ccntrrrpomry P r O d ~ a c Judgment aga. - 5 : L . C . ; . :.e :or $ ; 2 . 4 ; : . C : cote; 1 C o n t r a c t f o r Deed d a t e d O c t ~ t e c 2 5 , 1 9 6 3 . D i c k S . Dye - i ) Z. K. E?nso- P a t r l c i a Sye 1 C o r . t r z c t f o r ' n ' a r r a n t v 3 c e d a n l D c ; ~ d a t e 3 n _ - -_.-.. +&. ..-LL C z t o h c r 2 7 , i 3 i : . r e c o r z e d Adj~s: 2 3 , 1 5 7 8 ( U n r e c o r d e d ) C o n t r a c t As;lqnr.ent ! G r a T t P. ? . a i t : a l ? ~ e L i n d e l l - S o n i t r L i - d e l i I Warra::? 3c.?5 "it C::L? I R z c c r l . 2 P;ck 3z:ei Con:ract f o r D e c e . r s e r I i , Leccrlcrr ;a, Deed d l t c d 1973 !!ay 3 , 1 0 7 3 , : J o t ~ c e r e c o r d e d J u n e 1 4 , 1 9 7 3 C u r t i s P o n d - S h ~ r o n Pond L l o y d E. P c t e r s a r . Q Tender of f u l l payment made December 6, 1978. This controversy f i r s t began i n t h e summer of 1978, when t h e Ponds negotiated a r e a l e s t a t e construction loan f o r t h e purpose of building a home on t h e property, and made preparations t o pay t h e balance due under t h e i r c o n t r a c t f o r deed with t h e Lindells. O n October 4 , 1978, t h e Ponds obtained a t i t l e insurance commitment from Safeco T i t l e Insurance Company of Idaho which r e f l e c t e d , among o t h e r things, t h a t t h e policy t o be issued would contain an exception f o r the October 24, 1973, judgment entered i n favor of Contemporary Products, I n c . , a g a i n s t Dick S. Dye. Ponds n o t i f i e d a l l defendants of t h e a l l e g e d d e f e c t i n t h e t i t l e and requested t h a t the d e f e c t be removed so t h a t merchantable t i t l e could be delivered t o t h e Ponds pursuant t o t h e c o n t r a c t t e r m s . O n December 6, 1978, the Ponds tendered f u l l and f i n a l payment under t h e Pond-Lindell c o n t r a c t by depositing $9,600 w i t h the escrow agent. The funds were n o t t o be paid u n t i l c l e a r and merchantable t i t l e was d e l i v e r e d t o the Ponds and a t i t l e insurance p o l i c y issued which would n o t include the Dye judgment a s an exception. A s u i t was f i l e d by t h e Dyes t o have t h e judgment l i e n declared void a s a g a i n s t the r e a l property i n question and seeking permanent i n j u n c t i v e r e l i e f preventing Contemporary Products, Inc., from enforcing the judgment a g a i n s t t h i s r e a l property. Such a c t i o n was f i l e d by t h e Dyes on June 1 2 , 1979, 17 days p r i o r t o the f i l i n g of the i n s t a n t case by t h e Ponds. The c o u r t f i l e i n DV-79-979 r e v e a l s t h a t although t h e complaint was f i l e d , no summons was ever issued o r returned. The judgment remained an exception. On June 29, 1979, the Ponds f i l e d t h i s s u i t f o r s p e c i f i c performance of t h e c o n t r a c t and f o r damages f o r delay i n performance of t h e c o n t r a c t . The Ponds and/or Safeco Insurance Company determined t h a t on October 2 4 , 1979, s i x years would have run on the Dye judgment, and it would no longer c o n s t i t u t e a v a l i d l i e n a t t h a t time. Therefore, t h e Ponds proceeded t o take a c t i o n t o c l o s e a second construction loan which had been obtained and t o secure the instruments of conveyance from the escrow agent a f t e r October 24, 1979. On October 12, 1979, Benson n o t i f i e d t h e escrow agent, Security Bank, n o t t o d e l i v e r the instruments of conveyance t o t h e Ponds without c o l l e c t i o n by t h e escrow agent of t h e sum of $510 which Benson claimed a s a t t o r n e y f e e s pursuant t o c o n t r a c t f o r deed. Benson's claim stemmed from t h e f a c t t h a t he had been required t o obtain l e g a l counsel t o defend t h e s u i t commenced by the Ponds under circumstances i n which Benson claimed he had n o t been g u i l t y of a breach of c o n t r a c t . P l a i n t i f f s , t h e Ponds, then assumed t h e p o s i t i o n t h a t they had r i g h t f u l l y commenced t h e i r a c t i o n f o r s p e c i f i c per- formance by reason of t h e f a i l u r e of t h e defendants t o f u r n i s h t o them evidence of c l e a r and merchantable t i t l e and they r e f u s e d t o pay t h e $510 a t t o r n e y fees demanded by defendant Benson. The following i s s u e s a r e h e r e resolved: 1. Did t h e District Court err i n holding t h a t p l a i n t i f f s , t h e Ponds, were n o t e n t i t l e d t o summary judgment g r a n t i n g s p e c i f i c performance of t h e c o n t r a c t ? 2. Did t h e D i s t r i c t Court err i n holding defendants, Dyes, and Benson were e n t i t l e d t o summary judgment? 3. Did t h e District Court err i n holding t h a t p l a i n t i f f s , t h e Ponds, were n o t e n t i t l e d t o damages caused by d e l a y i n conveyance of c l e a r t i t l e t o t h e p r o p e r t y and performance of t h e c o n t r a c t ? These i s s u e s a r e resolved by determining (1) whether t h e Ponds w e r e ready, w i l l i n g and a b l e t o perform t h e i r p a r t of t h e and c o n t r a c t , / ( 2 ) whether Benson a s a s s i g n e e of t h e Dye t o L i n d e l l c o n t r a c t could be r e q u i r e d t o perform t o t h e same e x t e n t a s t h e Dyes could have been. For t h e Ponds t o be e n t i t l e d t o s p e c i f i c performance, they must have o f f e r e d t o perform. Hanlon v. Manger (1929), 85 Mont. 31, 39, 277 P. 433, 436. Ponds tendered t h e c o n t r a c t balance of $9,600 a s shown by t h e a f f i d a v i t of t h e escrow agent. However, they d i r e c t e d t h e funds n o t be d e l i v e r e d u n t i l a t i t l e p o l i c y could be i s s u e d showing good and merchantable t i t l e . Benson claims t h i s w a s a c o n d i t i o n a l tender. W e d i s a g r e e . Ponds were o n l y i n s i s t i n g upon r e c e i v i n g t h a t which they had a c o n t r a c t u a l r i g h t t o r e c e i v e . A t t h e same t i m e , Ponds were i n d i c a t i n g t h a t they w e r e ready, a b l e and w i l l i n g t o c l o s e . Such i s s u f f i c i e n t . Van A t t a v . S c h i l l i n g e r (1981) - Mont. , 625 P.2d 73, 77, 38 St.Rep. 426, 430. There can be l i t t l e doubt t h a t s p e c i f i c performance w i l l l i e a g a i n s t Benson a s assignee of Dye. When Benson purchased Dyes' i n t e r e s t i n the c o n t r a c t with L i n d e l l , Benson had n o t i c e t h a t Lindell had sold t o t h e Ponds some f i v e years e a r l i e r . This Court s t a t e d i n Thompson v. ~ i n c o l n Nat. L i f e Ins. Co. (1943), 1 1 4 Mont. 521, 529, 138 P.2d 951, "The d o c t r i n e i s w e l l s e t t l e d t h a t when t h e vendor, a f t e r e n t e r i n g i n t o a c o n t r a c t of s a l e , conveys t h e land t o a t h i r d person who has knowledge o r n o t i c e of t h e p r i o r agreement, . . . such grantee takes t h e land impressed with the t r u s t i n favor of the o r i g i n a l vendee, and holds it a s t r u s t e e f o r such vendee, and can be compelled a t the s u i t of t h e vendee t o spec- i f i c a l l y perform the agreement by conveying the land i n the same manner, and t o t h e same e x t e n t , a s t h e vendor would have been l i a b l e t o do, had he n o t trans- f e r r e d the l e g a l t i t l e ; and such grantee i s t h e proper defendant i n t h e s u i t a q a i n s t whom t o demand t h e - remedy of a conveyance." (Citing Pomeroy's S p e c i f i c Performance - of Contracts, Section 465.1 (3d Ed. ) . I n Myhre v. Myhre (1976), 170 Mont. 4 1 0 , 4 1 9 , 554 P.2d 276, t h i s Court s a i d : "The r u l e seems t o be t h a t one who acquires o r purchases property, knowing t h a t t h e property i s s u b j e c t t o a c o n t r a c t t o be sold t o another, may be compelled t o perform the c o n t r a c t i n the same manner and t o t h e same e x t e n t a s h i s grantor would have been l i a b l e t o do had t h e grantor n o t made the t r a n s f e r t o him. " ( C i t a t i o n s omitted. ) The Ponds had t h r e e separate r i g h t s which could be en- forced a g a i n s t Benson, namely (1) the r i g h t t o r e c e i v e a deed, ( 2 ) t h e r i g h t t o r e c e i v e a merchantable t i t l e , and (3) t h e r i g h t t o receive a t i t l e policy showing c l e a r t i t l e . The D i s t r i c t Court apparently denied r e l i e f t o t h e Ponds and granted summary judgment t o t h e defendants because t h e c o u r t found t h e Contemporary Products' judgment n o t t o be a l i e n on the property. The c o u r t f e l t t h a t the f a c t a t i t l e insurance company would include t h e judgment a s an .Zl-A. exception d i d n o t c r e a t e a d e f e c t rendering t h e t i t l e merchantable. W e need n o t decide whether t h e judgment c o n s t i t u t e d a v a l i d l i e n on the property. The t r i a l c o u r t e r r e d by n o t c o n s i d e r i n g t h a t t h e r e were two s e p a r a t e c o n t r a c t u a l covenants i n u r i n g t o Ponds' b e n e f i t . The f i r s t covenant w a s t o convey good t i t l e ; t h e second was t o f u r n i s h a t i t l e p o l i c y i n s u r i n g t h a t good t i t l e . The Ponds w e r e e n t i t l e d t o have each covenant performed. The defendants f a i l e d t o s o perform. Benson c l a i m s a t t o r n e y f e e s a r i s i n g o u t o f c o n t r a c t . Whether f e e s should be awarded i f Benson had been s u c c e s s f u l h a s now been rendered moot. The p o s i t i o n taken by Benson from t h e beginning h a s been u n j u s t i f i e d . H e had a n o b l i g a t i o n t o de- l i v e r t h e deed and a n i n s u r a b l e c l e a r t i t l e . H e w a s n o t , and i s not, e n t i t l e d t o e i t h e r a t t o r n e y f e e s o r c o s t s . The o r d e r of t h e D i s t r i c t Court g r a n t i n g summary judgment t o t h e defendants, Dyes and Benson, i s reversed. The cause i s remanded w i t h d i r e c t i o n s t o e n t e r summary judgment f o r s p e c i f i c performance i n f a v o r o f t h e p l a i n t i f f s and f o r t r i a l on t h e