Title: Saulcy Land Co. v. Jones

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Saulcy Land Co. v. Jones1999 WY 95983 P.2d 1200Case Number: 98-107, 98-106Decided: 07/02/1999Supreme Court of Wyoming
 
SAULCY LAND COMPANY; WILLIAM SAULCY; and RICHARD RAKNESS, 
Appellants (Defendants),

v.

JEFFREY JOHN JONES and 
DENISE R. JONES, Appellees (Plaintiffs).

ELLIN WYNN and MICHAEL D. 
WYNN, a/k/a MAC WYNN Appellants (Defendants),

v.

JEFFREY JOHN JONES and 
DENISE R. JONES, Appellees (Plaintiffs).

 

Appeal from the District 
Court of Carbon County Honorable Kenneth E. Stebner, 
Judge

Timothy W. 
Miller of Reeves & Miller, Casper, Wyoming, Representing Appellants 
Saulcy Land Company, William Saulcy and Richard 
Rakness.

Michael 
Schilling and Gregory L. Winn of The Law Firm of Michael Schilling, Laramie, 
Wyoming. Argument by Michael Schilling, Representing Appellants Ellin Wynn 
and Michael D. Wynn.

R. Michael Vang 
and Craig Kirkwood of Kirkwood, Nelson & Vang, P. C., Laramie, Wyoming. 
Argument by R. Michael Vang, Representing Appellees Jeffrey John Jones and 
Denise R. Jones.

Before 
LEHMAN, C.J., and THOMAS, MACY, GOLDEN and TAYLOR,* 
JJ.

* Retired November 2, 
1998.

Golden, 
Justice.

[¶1]      This case comes 
to us after a bench trial before the district court upon a complaint filed by 
Appellees Jeffrey John Jones and Denise R. Jones (Joneses) against multiple 
defendants1 for damages for the improper 
disbursal of the Joneses' $50,000.00 earnest money deposit following a failed 
real estate transaction. The district court determined the sellers (Wynns) 
breached the contract when a condition precedent to the sale was not met, and 
the realtor (Saulcy) breached its fiduciary duty when it disbursed the earnest 
money deposit after receiving notice of a dispute between the 
parties.

[¶2]      In Case No. 
98-106, Saulcy appeals from the trial court's decision, claiming Wyo. Stat. Ann. 
§ 33-28-122(f) allows the realtor to pay out disputed funds at its discretion. 
In Case No. 98-107, the Wynns appeal from the trial court's decision that they 
breached the contract when they failed to get approval for the sale from Key 
Bank (Bank).

[¶3]      We affirm, but 
for reasons different from those relied upon by the trial court. The sale 
between the Wynns and the Joneses was dependent upon bank approval of the sale. 
This simply did not occur by the September 20, 1994, closing date. Therefore, 
the condition precedent was not satisfied, and Saulcy, according to the terms of 
the contract, should have returned the earnest money to the Joneses. As a 
result, the Wynns improperly received money belonging to the Joneses, and Saulcy 
breached its fiduciary duty to the Joneses.

ISSUES

[¶4]      The Wynns present 
the following statement of the issues in their brief of 
appellants:

1. Whether the 
Trial Court erred as a matter of law when it concluded that the nonoccurrence of 
a condition precedent constituted a breach of contract by the Wynn 
Appellants?

2. Whether the 
Trial Court's conclusion that Key Bank did not approve the sale of the property 
to the Jones' is clearly erroneous or contrary to the great weight of the 
evidence?

3. Whether the 
Trial Court erred as a matter of law when it concluded that the Wynn Appellants' 
request for disbursal of the earnest money on September 30, 1994, constituted a 
breach of contract for sale of real property?

The Saulcy 
appellants submit these issues:

1. Whether the 
trial court misinterpreted Wyo. Stat. § 33-28-122(f) (1997)[?] 2. Whether the 
trial court misinterpreted the forfeiture [sic] date under the 
contract[?]

As appellees, 
the Joneses portray the issues as:

I. Did the Wynn 
Appellants perform their condition precedent under the parties' contract, which 
would therefore allow them to demand performance by the Appellees and declare a 
forfeiture under the parties' contract?

II. Did the 
Saulcy Appellants breach their fiduciary duties to the Appellees pursuant to 
W.S. § 33-28-122(f) and Wyoming Real Estate Commission Trust Account Guidelines, 
when they dispersed [sic] the Appellees' earnest money deposit with knowledge 
that there was a dispute concerning those funds and they had neither gotten 
written consent from the Appellees for the dispersal [sic] of those funds or 
filed an interpleader with a Court of competent jurisdiction to determine the 
rights of the parties to the funds?

FACTS

[¶5]      The subject of 
this lawsuit is a ranch in Carbon County, Wyoming, known as Robbers Roost Ranch. 
The record owners of the ranch were Otis and Ellin Wynn. Their son, Michael 
"Mac" Wynn, managed the ranch for his elderly parents. The Wynns placed the 
ranch for sale on an open listing with ERA through Saulcy in April of 1994. The 
Joneses signed a form captioned "OFFER, ACCEPTANCE & RECEIPT (OPTION TO 
PURCHASE) (FARM AND RANCH AND VACANT LAND)" on July 21, 1994. In response to 
that offer from the Joneses, the Wynns presented a counter offer. The Joneses 
accepted the counter offer on July 29, 1994. The offer and counter offer, once 
accepted by the Joneses, constituted a contract to purchase the ranch for 
$700,000.00. The contract provided that the Joneses put $300,000.00 down, with 
the remaining balance of $400,000.00 paid according to the terms of a contract 
for deed. The contract for deed was to call for the Joneses' payment of the 
existing Key Bank loan on the property at the time of closing (approximately 
$303,000.00) and the balance to the Wynns in equal annual installments for 
fifteen years.

[¶6]      The terms of the 
contract required the Wynns to use their best efforts to get the Bank's approval 
for the purchase. All parties agree that the Bank's approval of the transaction 
was a condition precedent to the Joneses' purchase of the 
ranch.

[¶7]      After learning 
that the Bank would require a written contract to ensure that they approved of 
the deal's structure, the Wynns failed to submit anything to the Bank concerning 
the sale of the ranch. On September 6 and 15, 1994, the Joneses sent 
correspondence to Saulcy requesting the return of their $50,000.00 earnest money 
deposit. They based their request on information from the Bank that it would not 
approve the terms of the purchase contract. The Wynns also requested the earnest 
money from Saulcy, which was disbursed to them on September 30, 1994, but not 
before the Wynns signed an agreement indemnifying Saulcy for disbursing the 
money. Saulcy took $20,000.00 of the earnest money for its services, and the 
balance was paid to the Wynns, less some costs.

[¶8]      The Joneses filed 
this action to recover the $50,000.00 earnest money deposit, plus legally 
allowable interest, punitive and exemplary damages, and costs, attorney's fees 
and such other relief as may be just and proper. Following summary judgment 
motions, the only surviving claims were against Saulcy and the Wynns. The 
defendants argued that the Joneses breached the contract, which entitled the 
Wynns to the $50,000.00 deposit; and because Saulcy properly paid the deposit to 
the Wynns, the Joneses' claims against Saulcy are 
precluded.

[¶9]      Following a bench 
trial, the district court concluded that the Joneses should prevail on their 
breach of contract claim as to the Wynns and on their breach of fiduciary duty 
claim as to Saulcy. The defendants prevailed on all other claims. Saulcy 
appealed from that decision, and the appeal was docketed as Case No. 98-106. The 
Wynns also appealed, and their appeal was docketed as Case No. 98-107. The 
Joneses filed one brief for both cases, and we heard oral argument of the cases 
together.

DISCUSSION

Standard of 
Review

[¶10]   This case presents us with a 
factual issue and questions of contract and statutory interpretation. In Case 
No. 98-107, the parties agree that the contract is not ambiguous. Interpretation 
of the language of an unambiguous contract is a matter of law. Union Pacific 
Resources Co. v. Texaco, Inc., 882 P.2d 212, 219 (Wyo. 1994). Resolution of Case 
No. 98-106 requires interpretation of Wyo. Stat. Ann. § 33-28-122(f). Statutory 
interpretation is also a question of law. Corkill v. Knowles, 955 P.2d 438, 440 
(Wyo. 1998). Our standard of review when a trial is held before the bench, 
rather than a jury, was set forth in Springer v. Blue Cross and Blue Shield of 
Wyoming, 944 P.2d 1173, 1175-76 (Wyo. 1997):

The factual 
findings of a judge are not entitled to the limited review afforded a jury 
verdict. Hopper v. All Pet Animal Clinic, Inc., 861 P.2d 531, 538 (Wyo. 1993). 
While the findings are presumptively correct, the appellate court may examine 
all of the properly admissible evidence in the record. Id. Due regard is given 
to the opportunity of the trial judge to assess the credibility of the 
witnesses, and our review does not entail weighing disputed evidence. Id. 
Findings of fact will not be set aside unless the findings are clearly 
erroneous. Id. A finding is clearly erroneous when, although there is evidence 
to support it, the reviewing court on the entire evidence is left with the 
definite and firm conviction that a mistake has been committed. Id. We review a 
district court's conclusions of law de novo on appeal. Id.

The Contract 
Claim

[¶11]   The contract required the Bank's 
approval as follows:

(1) Purchaser 
hereby accepts the property subject to, but specifically not assuming, 
Sellers['] first mortgage loan with Key Bank in Cheyenne, Wyoming. This 
transaction is subject to Key Bank approval, which Seller hereby agrees to 
extend their best efforts to obtain.

The district 
court determined that the Bank's approval of the purchase was a condition 
precedent to the sale of the property. A condition precedent is "an act or 
event, other than a lapse of time, which must exist or occur before a duty of 
immediate performance of a promise arises." Sannerud v. Brantz, 879 P.2d 341, 
343 (Wyo. 1994). It is undisputed that the Bank's approval "was an event which 
must have occurred before [the Joneses] had an obligation to effectuate" the 
sale. Mad River Boat Trips, Inc. v. Jackson Hole Whitewater, Inc., 803 P.2d 366, 
368 (Wyo. 1990). However, the dispute between the parties concerns the financing 
terms found in the counter offer, which became part of the purchase 
contract:

Paragraph 1 
shall be changed to read as follows:

Purchaser agrees 
to buy the above described property upon the following terms and conditions and 
for the purchase price of $700,000.00 payable as follows:

$50,000.00 
earnest money deposit and part payment, previously receipted for by broker, 
and:

$650,000.00, the 
remaining balance, which shall be paid as follows:

$250,000.00 
additional in cash or certified funds at closing. The then remaining balance of 
$400,000.00 shall be paid according to terms of a Contract for Deed which shall 
call for (1) Purchaser's payment of, but specifically not Purchaser's assumption 
of, an existing Key Bank first loan on the property at time of closing (present 
Key Bank balance is approximately $303,000.00), and (2) Balance to be paid to 
Seller in equal annual installments reflecting a 15 year amortization and 9% 
interest per annum. First payment shall be due on the first anniversary date of 
closing with succeeding payments due on each and every anniversary date of 
closing until the fifth anniversary at which time all principal and any accrued 
interest shall be due and payable. No prepayment of the Key Bank loan or amounts 
due Seller shall be allowed. The deed shall be placed in escrow; and; by virtue 
of this paragraph, any and all mention of delivery of deed at closing shall be 
changed to be struck from Attachment "A" hereto.

[¶12]   The Wynns contend that the Bank 
approved the sale and the Bank's insistence that it receive $100,000.00 from the 
Wynns or it would enforce its due on sale clause did not result in a material 
alteration to the contract. These contentions are simply without 
merit.

[¶13]   First, we agree with the district 
court's finding that there is "no basis upon which to suggest that the Wynn 
Defendants ever received Key Bank's approval for the transaction, the condition 
precedent that would require Jones to complete his payment under the contract." 
That finding is not "clearly erroneous," as the Wynns claim. Second, the 
unambiguous terms of the contract called for payments of approximately 
$303,000.00 to the Bank and the remainder to the Wynns. The Wynns submitted 
these contract terms in their counter offer and, when the Joneses accepted the 
counter offer, they became part of the contract. We presume that a particular 
provision is placed in a contract for a purpose and strive to avoid a 
construction which renders a provision meaningless. Examination Management 
Services, Inc. v. Kirschbaum, 927 P.2d 686, 690 (Wyo. 1996) (quoting Moncrief v. 
Louisiana Land & Exploration Co., 861 P.2d 516, 524 (Wyo. 
1993)).

[¶14]   The contract also contained the 
following default provisions:

15. Time is of 
the essence hereof, and if any payment or any other condition hereof is not 
made, tendered or performed as herein provided, there shall be the following 
remedies: In the event that the Purchaser fails to make any payment or meet any 
other condition hereof, the parties hereto are mutually released from all 
obligations hereunder, and all payments made hereon shall be retained on behalf 
of the Seller as liquidated damages. In the event that the Seller fails to 
perform any condition hereof as provided herein, then the Purchaser may, at his 
election, treat the contract as terminated, and all payments made hereunder 
shall be returned to the Purchaser; PROVIDED, HOWEVER, that the Purchaser may, 
at his election, treat this contract as being in full force and effect with the 
right to compel specific performance of the Seller and to such consequential 
damages from the Seller resulting from Seller's failure to properly perform 
under this Agreement.

(Emphasis 
added.) The contract provided for a $50,000.00 earnest money deposit by the 
Joneses, to be held by Bill Saulcy, the broker. When the Wynns, as the sellers, 
failed to obtain the Bank's approval, the Joneses properly treated the contract 
as terminated, and the $50,000.00 earnest money deposit should have been 
returned to them. The Joneses had no further obligation under the purchase 
contract. We affirm the district court's decision insofar as it rendered a 
judgment for the Joneses.2 Wyo. Stat. Ann. § 
33-28-122

[¶15]   The district court determined that 
Saulcy breached its fiduciary duty to the Joneses when it disbursed the earnest 
money deposit to the Wynns and awarded $50,000.00 plus postjudgment interest and 
allowable costs of the litigation. Saulcy argues the district court committed 
two errors of law when it held Saulcy liable for breach of fiduciary duty: 
first, that it misinterpreted Wyo. Stat. Ann. § 33-28-122(f); second, that it 
misinterpreted the contract, and the Joneses actually breached the contract. We 
decided the contract issue in the preceding section of this opinion, leaving 
only the statutory interpretation issue to resolve.

[¶16]   In its brief, Saulcy claims that 
Wyo. Stat. Ann. § 33-28-122(f) did not require Saulcy to retain the earnest 
money deposit for the benefit of the Joneses. The statute 
provides:

(f) In the event 
of a dispute over the return or forfeiture of any deposit held by the listing 
broker, the listing broker may continue to hold the deposit in his trust account 
until he has a written release from the parties consenting to this disposition 
or until a civil action is filed, at which time it may be paid to the 
court.

Wyo. Stat. Ann. 
§ 33-28-122(f) (Michie 1997). Saulcy contends that the term "may" in the statute 
signifies the acts are discretionary and that the statute merely permits, but 
does not require, a realtor to retain a deposit in the event of a 
dispute.

[¶17]   This Court has recognized the 
unique nature of the real estate agent's relationship to third parties and has 
acknowledged that real estate agents may be held to a higher standard of care to 
purchasers. Hagar v. Mobley, 638 P.2d 127, 137 (Wyo. 1981). In Hagar, that 
standard of care was found in the form of legislative enactment. Id. at 137. In 
Mader v. James, 546 P.2d 190, 194 (Wyo. 1976), we held that any payment of a 
deposit after the agent has notice of a dispute over the deposit is at the 
agent's own risk until the matter is settled. Wyo. Stat. Ann. § 33-28-122(f) 
provides a method for settling the matter.

[¶18]   We have said that "[t]he word `may' 
in a statute will be construed to mean `shall' whenever the rights of the public 
or of third persons depend upon the exercise of the power of the performance of 
the duty to which it refers . . . ." Board of County Commissioners v. State, ex 
rel. Miller, 369 P.2d 537, 542 (Wyo. 1962). The rights of the Joneses were 
dependent upon the proper exercise of Saulcy's statutory duty to hold the 
deposit until receiving "a written release from the parties consenting to this 
disposition or until a civil action is filed, at which time it may be paid to 
the court." Wyo. Stat. Ann. § 33-28-122(f) (Michie 1997). "It is contrary to 
reason to ascribe to a statute a meaning that will nullify its operation, if 
capable of any other interpretation." Corkill, 955 P.2d  at 444 (quoting 
DeHerrera v. Herrera, 565 P.2d 479, 482 (Wyo. 1977)). If we were to read the 
statute as Saulcy suggests, brokers could disburse deposits with 
impunity.

[¶19]   The district court held that the 
"language of the statute gives the listing broker discretion concerning the 
holding of a deposit or paying it to the court in conjunction with a civil suit. 
. . . [T]he language of the statute is discretionary only in relation to 
choosing between the two options listed in the statute and not whether the 
broker can choose to hold the deposit or just disburse it upon request of one 
party to the dispute." We agree. Saulcy clearly had notice that a dispute 
existed between the parties. After receiving notice of the dispute, Saulcy was 
required to either hold the deposit or pay it to the court. We affirm the 
district court's judgment against Saulcy.

CONCLUSION

[¶20]   The Bank's approval was a condition 
precedent to the sale of the property between the parties. The contract called 
for the Wynns to seek that approval. The Bank never approved the sale. According 
to the terms of the contract, if the Wynns failed to meet one of the conditions 
of the contract, the earnest money deposit should have been returned to the 
Joneses. Saulcy improperly disbursed the deposit to the Wynns. We affirm the 
district court's judgment in favor of the Joneses against the Wynns and 
Saulcy.

Footnotes

1 The 
defendants in this action included:

1. 
Otis Wynn (who passed away in 1996); Ellin Wynn, his wife; and Michael D. Wynn 
a/k/a Mac Wynn, their son; (collectively referred to as the 
Wynns);

2. 
Richard Rakness, William R. Saulcy Jr., and Saulcy Land Company, Inc., 
(collectively referred to as Saulcy);

3. 
Leland Thomas Grieve d/b/a Western United Realty; Electronic Realty Associates, 
Inc. a/k/a ERA, a Delaware Corporation, ERAGP, Inc. a Delaware Corporation, and 
Electronic Realty Associates, L. P. an Illinois Limited 
Partnership.

The 
district court's rulings in this case dismissed the claims against all of the 
defendants except the Wynns and Saulcy, who appeal from the court's judgment 
against them in the case at bar.

2 We note 
that the district court determined that the failure of the condition precedent 
resulted in a breach of the contract by the Wynns. In Frost Construction Co. v. 
Lobo, Inc., 951 P.2d 390, 397 (Wyo. 1998), we 
stated:

The 
assertion that the nonperformance of a condition precedent constitutes a breach 
of the agreement is incorrect. . . . A condition precedent should not be 
described as broken. [3A Arthur L. Corbin, Corbin on Contracts § 634 at 33 
(1960).] "The condition merely does not exist or does not occur. If the 
condition consists of action by some person, it may properly be said not to be 
performed; but such non-performance is not a breach of contract unless he 
promised to render the performance - to perform the condition." 
Id.

Although the court's determination that the failure of the condition 
precedent was a breach of the contract was incorrect, we affirm the resulting 
judgment against the Wynns based on the default language in the 
contract.