Title: Hensley v. Williams

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Hensley v. Williams1986 WY 179726 P.2d 90Case Number: 86-112Decided: 10/06/1986Supreme Court of Wyoming
Hershal W. HENSLEY and 
Wanda V. Hensley, Appellants (Plaintiffs),

v.

Roy C. WILLIAMS and 
Connie M. Williams, Appellees (Defendants).

Appeal from District 
Court, NatronaCounty, Dan Spangler, 
J.

James R. 
McCarty, Casper, 
for 
appellants.

Douglas R. 
McLaughlin, Douglas, for appellees.

Before THOMAS, C.J., and BROWN, CARDINE, URBIGKIT 
and MACY, JJ.

MACY, 
Justice.

[¶1.]     This case involves the 
interpretation of an executory contract for the purchase of land where the 
parties each contend that the other is in default. The trial court granted 
appellees' motion for summary judgment upon a finding that appellants were in 
default for not making the required payments pursuant to the terms of the 
contract.

[¶2.]     We 
affirm.

[¶3.]     On September 29, 1979, 
appellees agreed to sell a ten-acre tract of land to appellants pursuant to a 
contract, the contentious parts of which are as follows:

"Terms of Payment. The purchase price 
shall be paid by the Buyer, as follows:

"(a) The down payment to 
be paid to the Seller upon the execution of this agreement is 
$40,000.

"(b) The balance of the 
purchase price in the amount of $42,500 shall be paid in consecutive monthly 
installments of $561.65 each including interest at ten percent (10%) per annum 
computed to the date of each monthly payment, which monthly payment shall be 
applied first to interest and the balance to principal. The Buyer shall execute 
an installment promissory note which provides for the payment of [$]42,500.00 at 
the rate of ten percent (10%) per annum at $561.65 per month for a period of 10 
years.

"(c) The Buyer covenants 
and agrees that Buyer will pay to the Escrow Bank on or before the fifteenth 
(15th) day of each calendar month commencing with the month of November, 1979, 
the aforesaid monthly installments of $561.65 as well as to pay the taxes timely 
and otherwise perform the obligations and covenants of the Buyer 
hereunder.

"7. Balloon Payment. Buyer agrees that after 
the expiration of five (5) years (60 months) Buyer shall make a balloon payment 
upon the principal and interest due as of the 1st day of October, 
1984.

"8. Type of Deed. In addition to the 
foregoing terms regarding price and payments, the parties hereto also covenant 
and agree that the conveyance from the Seller to the Buyer shall be by customary 
form of warranty deed with the warranties limited to lawful claims of persons 
claiming by, through, and under the Seller.

"9. Escrow. The parties shall cause an 
escrow to be opened at The Converse County Bank, Douglas, Wyoming (`Escrow Bank'), for the purpose of 
carrying out the provisions of this agreement. Each party agrees to execute 
escrow instructions and any further instruments which may be necessary to 
consummate the transaction and effectively convey and assign the subject 
property from the Seller to the Buyer, and to deposit into escrow all documents 
which the escrow instructions shall call upon them to deposit. The parties will 
deposit into escrow the following documents:

"(a) The original of this 
agreement; 

"(b) The warranty 
deed;

"(c) The commitment to 
issue title insurance;

"(d) The installment 
promissory note.

"The foregoing documents 
shall be deposited for safekeeping until ultimate delivery with the Escrow Bank 
in order that said Escrow Bank may hold the documents pending performance of the 
Buyer covenants hereunder, with instructions to deliver the documents to the 
Buyer upon timely completion of all payments, or to return the documents to the 
Seller in the event of a default, as will be more fully set forth in this 
agreement.

* * * * * 
*

"14. Default. In the event that the Buyer 
shall fail to meet the installment requirements of this agreement and shall be 
in default on the payments of any sums due hereunder for a period of more than 
thirty (30) days, then and in that event Seller may regard such breach and 
default to constitute a material breach of this agreement and thereupon may 
cancel and terminate this agreement and all rights of the Buyer hereunder. In 
such case the Escrow Bank shall return to the Seller the deed and any other 
papers or documents held by the Escrow Bank for safekeeping until ultimate 
delivery."

[¶4.]     The promissory note, in 
addition to the standard acceleration and attorney's fee clauses applicable in 
the event of nonpayment, provided the same payment provisions as the contract 
with the exception that the balloon payment provision was not 
mentioned.

[¶5.]     At the time of sale, 
the ten acres purchased by appellants were encumbered by two mortgages. Despite 
the encumbrances, appellants continuously made their monthly payments through 
September 1984. On October 25, 1984, appellants' attorney sent a letter to 
appellees advising them that, because the mortgages against the property had not 
been released and because there was not free access to the property, appellants 
rescinded the contract. The letter also requested that appellees return all of 
the money appellants had paid pursuant to the terms of the 
contract.

[¶6.]     On January 22, 1985, 
appellants filed a complaint against appellees in district court, alleging in 
substance that when they made arrangements during the month of October 1984 to 
make their final balloon payment pursuant to the contract, they discovered that 
the mortgages against the property had not been released; that they did not have 
free access to the property; and that by reason thereof they should have 
judgment against appellees for the amount they paid to them. Appellants alleged 
in the alternative that, if the court should find them in default, appellees' 
remedy should be restricted to that of a mortgagee under Wyoming 
law.

[¶7.]     Appellees timely filed 
an answer denying the essential allegations of appellants' complaint and 
asserting that payment of the final balloon payment was a condition precedent to 
delivery of good and merchantable title to appellants. Appellees also filed a 
counterclaim alleging appellants' default for nonpayment and praying for an 
order either terminating appellants' rights in the property and returning the 
monies they paid on the purchase price or directing appellants to pay the 
balance due under the promissory note. Appellants denied the essential 
allegations of the counterclaim and prayed that appellees take 
nothing.

[¶8.]     On October 3, 1985, 
appellees filed their motion for summary judgment in which they alleged that 
appellants were in default as a matter of law for failing to timely make the 
balloon payment and pay the 1984 taxes. Accompanying the motion were the 
affidavits of appellees and depositions of the parties and real estate agents 
involved in the sale. Appellants, apparently relying on the pleadings and the 
depositions to demonstrate the existence of a substantial question of fact, did 
not file opposing affidavits.

[¶9.]     On February 7, 1986, 
the court entered partial summary judgment for appellees on their counterclaim 
after finding that neither appellees' failure to release the mortgages nor the 
alleged lack of access excused appellants' failure to make the payments under 
the contract. This partial summary judgment also gave appellees the election to 
either (1) terminate the agreement, repossess the papers held in escrow, retake 
possession of the property, and return all sums paid after retaining a 
reasonable sum for rental or (2) proceed to take judgment against appellants for 
those sums due under the terms of the promissory note.

[¶10.]  Appellees elected to take payment 
pursuant to the terms of the promissory note. On March 24, 1986, after appellees 
filed their affidavits of the amounts due, the court entered judgment for 
appellees against appellants for the balance due on the note, interest thereon, 
costs, and attorney's fees, which balance due was equal to the balloon payment 
owing pursuant to the terms of the contract.

[¶11.]  Appellants raise the following 
issues:

"1. WHETHER THE TRIAL 
COURT ERRED IN GRANTING SUMMARY JUDGMENT AND RULING THAT THE HENSLEYS, RATHER 
THAN THE WILLIAMSES, DEFAULTED UPON THE CONTRACT.

"2. WHETHER THE COURT 
ERRED IN RULING THAT THE SELLERS WERE ENTITLED TO ENFORCE PAYMENTS DUE UNDER THE 
PROMISSORY NOTE WHICH WAS SIGNED ALONG WITH THE CONTRACT FOR 
DEED.

"3. WHETHER THE COURT 
ERRED IN GRANTING SUMMARY JUDGMENT SINCE THE CONTRACT, THE PLEADINGS AND THE 
DEPOSITIONS RAISED FACTUAL QUESTIONS CONCERNING THE INTENT OF THE PARTIES AND 
CONCERNING THE QUESTION OF WHICH PARTY WAS IN DEFAULT UPON THE 
CONTRACT."

[¶12.]  Appellants contend that the contract is 
ambiguous in that it does not provide when or if the mortgages against the 
property must be released of record and in that it required the signing of a 
promissory note in addition to the contract. Because of these ambiguities, 
appellants claim that the court was required to look to extrinsic evidence, 
which evidence demonstrates an issue of material fact making summary judgment 
improper.

[¶13.]  Whether an ambiguity exists is a question 
of law. Amoco Production Company v. Stauffer Chemical Company of Wyoming, Wyo., 612 P.2d 463 (1980); State v. Moncrief, Wyo., 720 P.2d 470 (1986). We do not find the 
contract to be ambiguous and, therefore, limit our review to the language of the 
contract itself.

[¶14.]  The failure of the contract to 
specifically provide that the mortgages be released of record prior to final 
payment being made does not create an ambiguity. We can understand appellants' 
reluctance to make the final payment prior to being assured that they would 
receive good and merchantable title to the property, but we cannot now provide 
appellants with that assurance by rewriting the contract and finding an 
ambiguity where none existed before.

[¶15.]  A deed placed in escrow creates no 
warranties until the conditions of the escrow are met. Dunham and Ross Company 
v. Stevens, Tex.Civ.App., 538 S.W.2d 212, 216-217 (1976), citing Williams v. 
Shamrock Oil & Gas Co., 128 Tex. 146, 95 S.W.2d 1292, 107 A.L.R. 269 (1936). 
See also generally 77 Am.Jur.2d, Vendor and Purchaser § 564 (1975). The contract 
between the parties clearly provided that timely payment of the total purchase 
price was a condition precedent to the delivery of the warranty deed to 
appellants. This is not a case where appellees are being accused of 
misrepresenting the status of the title, nor have they done so. Again, the 
contract clearly provided that appellees represented and warranted that they 
were the owners in fee simple subject only to the exceptions contained in the 
title insurance commitment. The exceptions were the mortgages which are the 
subject of this appeal. This is also not a case where appellants can contend 
that the alleged defects in the title cannot be removed by appellees. The 
depositions and exhibits which are a part of the record on appeal clearly show 
that the mortgages were released of record prior to the commencement of this 
action and that the property joined a public road. We, therefore, hold that 
appellants were in default for failure to pay the full purchase price for the 
property, which was a condition precedent to receiving good and merchantable 
title to the property. We also hold that appellees were not in default for the 
reason that they were not required to convey good and merchantable title until 
appellants paid the purchase price in full.

[¶16.]  Appellants contend that there is an 
ambiguity, not only because of the existence of the promissory note in addition 
to the contract but also because the contract does not refer to the provisions 
in the promissory note as an alternative remedy in the event of default and 
because the payment provisions of the note do not coincide with the terms of the 
contract. We do not agree. A written agreement may consist of more than one 
document, and reference in a contract to extraneous writings renders them part 
of the agreement. Busch Development, Inc. v. City of Cheyenne, Wyo., 645 P.2d 65 (1982). The contract must be 
construed as a whole, and meaning should be afforded to all of the language if a 
reasonable construction can be achieved. Rossi v. Percifield, Wyo., 527 P.2d 819 (1974). The district court 
correctly applied these principles in finding the two default provisions to be 
alternatives.

[¶17.]  Appellants' only concern regarding the 
payment of the purchase price was whether the mortgages would be released prior 
to the time they made the balloon payment. We, therefore, fail to see the 
relevance of the differing payment schedules to the question of whether or not 
appellants were in default, particularly in view of the fact that payment was 
not made pursuant to the note or the contract.

[¶18.]  Appellants also contend that there are 
substantial questions of fact which would show that it was not the intent of the 
parties that the default provisions of the promissory note be enforced. Having 
found that the default provisions contained in the contract and the note provide 
alternative remedies and are not ambiguous, we will not resort to extrinsic 
evidence in an attempt to determine what may have been the intent of the 
parties. Amoco Production Company v. Stauffer Chemical Company of Wyoming, 
supra.

[¶19.]  For all of the reasons stated above, we 
find that the district court did not err in granting partial summary judgment 
for appellees.

[¶20.]  Affirmed.