Title: Gesell v. Reeves
Citation: 229 Neb. 842, 429 N.W.2d 363
Docket Number: 825
State: Nebraska
Issuer: Nebraska Supreme Court
Date: September 23, 1988

429 N.W.2d 363 (1988) 229 Neb. 842 Harold A. GESELL, Appellee and Cross-Appellant, v. Richard E. REEVES, Appellant and Cross-Appellee. No. 86-825. Supreme Court of Nebraska. September 23, 1988. *364 James M. Kelley, Lincoln, for appellant. Steven D. Burns and Beverly Evans Grenier, of Steven D. Burns, P.C., Lincoln, for appellee. BOSLAUGH, WHITE, and SHANAHAN, JJ., and SPRAGUE and THOMPSON, District Judges. THOMPSON, District Judge. Defendant-appellant, Richard E. Reeves, together with his wife, purchased 320 acres of undeveloped land in Maricopa County, Arizona, in February of 1980 for $200 per acre, or a total of $64,000. Reeves paid $13,000, financed the balance with a loan, and executed a deed of trust to the Bank of California for $51,000, with principal and interest due yearly for 6 years commencing on April 2, 1981. On February 25, 1980, Reeves entered into a written purchase agreement with plaintiff-appellee, Harold A. Gesell, whereby Reeves agreed to sell to Gesell 60 acres of the land for $30,000, with a payment of $12,500 and the balance of $17,500 to be carried on a land contract with six annual installments plus 11 percent interest. Sometime after the purchase agreement was signed and prior to May 16, 1980, Reeves advised Gesell that he had a chance to sell the land for approximately $450 per acre. At this price Gesell would take a loss. On May 17, 1980, the parties entered into another written agreement, incorporating the terms of the February 25, 1980, agreement. Under this agreement Gesell paid an additional $2,500 and obtained a 20-percent ownership interest in the land. In the event of sale of the land, the parties agreed that Reeves would receive his base investment of $66,000 ($2,000 for previously incurred expenses was added by Reeves), plus 80 percent of the profit above this. Gesell would receive 20 percent of the profit above $66,000, plus Reeves would pay Gesell $15,000 and any reduction in principal made on a promissory note to be executed by Gesell for $17,500 payable in six yearly installments at 11 percent interest commencing February 25, 1981, and each year thereafter through 1986. Gesell also agreed to pay 20 percent of all taxes, insurance, and other expenses as agreed attributed to the maintenance, upkeep, and future development of the property. Two weeks later, Reeves and Gesell flew to Phoenix, Arizona, to conduct negotiations with a prospective purchaser, Betty Boo, Inc. Betty Boo was represented by Hugh Johnson, president of Betty Boo. A purchase agreement was reached and a written purchase agreement executed in June of 1980. The agreement called for a purchase price of $144,000 on the following terms: (1) $1,000 in cash payable on the execution of the agreement; (2) $1,000 due on or before July 10, 1980; (3) $19,600 at time of closing; (4) $51,000 by purchaser paying Reeves' note with the Bank of California; and (5) Two promissory notes, each for $35,700, with 10 percent interest payable on a 10-year amortization schedule. The agreement was signed by Betty Boo, Reeves, and his wife. Reeves and his wife, on June 25, 1980, executed two deeds covering the land under the terms of the agreement, which were placed in escrow. Gesell executed a quitclaim deed to Betty Boo. Betty Boo actually paid Reeves $6,000 prior to closing and $17,699.01 on January 2, 1981. Reeves' closing costs were $898.72. Betty Boo's first annual payment on the two notes, including principal of $10,001.20 and interest of $1,619.16, or a total of $11,620.36, was due on March 22, 1981. Betty Boo was given credit for interest paid at closing of $2,809.15, with a balance due of $8,811.21. This payment was made by Betty Boo in 1981. Betty Boo also remitted Reeves' 1981 payment to the Bank of California in the amount of $14,100. In September 1982, Johnson gave Reeves $5,000 as consideration for an extension for Betty Boo's already overdue payment. Betty Boo later defaulted and deeded the *365 land back to Reeves. Thereafter, Johnson and Reeves entered negotiations, this time with Johnson representing Southwest Jojoba Company. On October 1, 1982, Jojoba gave Reeves $5,000 earnest money. An agreement was reached on the property for a purchase price of $176,000, and a closing took place on November 19, 1982. Reeves' closing costs were $9,254.77. Payment was made by Jojoba's paying $39,000 in cash at closing, and executing a note and deed of trust for $132,000. By September of 1983, Jojoba had paid all that was due on the note, as admitted by Reeves at trial. Jojoba paid $110,500 to an escrow agent, and the escrow agent paid the balance due to the Bank of California of $36,409 and remitted a check to Reeves of $74,091. The difference between $132,000 and $110,500 is $21,500. Reeves, by his admission of receiving all the amounts due, would also have received the $21,500 between the November 19, 1982, closing and September of 1983. Gesell filed his petition in the district court on December 21, 1984, praying for "an accounting, judgment in an uncertain amount but in excess of $34,702.00, together with interest as allowed by law and costs...." Reeves filed an answer admitting portions of the petition and denying portions. Reeves filed a counterclaim alleging a breach of the contract by Gesell with Reeves, and alleging the following: Cross-petitioner prayed for an accounting and judgment of $113,500, plus 20 percent of expenses. Jury trial was waived, and the matter was tried before the court. The evidence consisted of the testimony of the two parties and exhibits that were received. The trial court made the following findings: 5. Plaintiff contends that plaintiff's obligation to pay $17,500.00 by a promissory note to the defendant was discharged upon the sale of the property to Betty Boo, Inc., in December, 1980. The Court does not agree with plaintiff's contention. It appears to the Court that *366 defendant had the right under the agreement, Exhibit No. 4, to insist that plaintiff make the full investment of $32,500.00 as set forth in the terms of Exhibit No. 4. The court entered judgment in favor of Gesell for $15,000, plus prejudgment interest from January 1, 1981, to date of judgment entry of $9,926.84, for a total of $24,926.84, and dismissed Reeves' counterclaim, with costs taxed to Reeves. Reeves appealed, and Gesell cross-appealed. An action for an accounting may under one set of circumstances find its remedy in an action at law and under another find it within the jurisdiction of equity. Schmidt v. Henderson, 148 Neb. 343, 27 N.W.2d 396 (1947). Where the intimate relationships of the parties are involved, an adequate remedy is available only within the equitable jurisdiction of the court. Philip G. Johnson &amp; Co. v. Salmen, 211 Neb. 123, 317 N.W.2d 900 (1982). In an action in equity, this court must review the record de novo and reach an independent conclusion without being influenced by the findings of the trial court; however, where credible evidence is in conflict, we may give weight to the fact that the trial court saw the witnesses and observed their demeanor while testifying. J.J. Schaefer Livestock Hauling v. Gretna St. Bank, 229 Neb. 580, 428 N.W.2d 185 (1988); Allen v. AT &amp; T Technologies, 228 Neb. 503, 423 N.W.2d 424 (1988); Philip G. Johnson &amp; Co. v. Salmen, supra. We find that the trial court erred in finding that Gesell repudiated the contract. The testimony of Reeves and Gesell was in direct conflict as to whether Gesell repudiated the contract during the trip to Arizona in June of 1980. However, documents received into evidence clearly support the testimony of Gesell. In a letter from Reeves to Gesell dated February 5, 1981, Reeves wrote: *367 In a letter from Gesell's attorney dated March 17, 1981, to Reeves, the attorney demanded $29,722.98 from Reeves. In Reeves' response to the attorney by letter dated April 3, 1981, he wrote: Reeves further indicated in the letter: It is highly unlikely that Reeves would acknowledge the validity of the contract some 10 months after the alleged repudiation of Gesell, if indeed the repudiation had actually occurred. Hence, we find that Gesell did not repudiate the contract. This court has held that a party to a contract may waive the provisions made for his benefit. Carter v. Root, 84 Neb. 723, 121 N.W. 952 (1909). The February 5 and April 3 letters constitute a waiver by Reeves of Gesell's annual payments due under the contract as long as Betty Boo made its payments. The facts show that Johnson, on behalf of Betty Boo, made the payments on the notes and the payment due the Bank of California in 1981. There is no evidence that Reeves demanded further payment in 1982. Gesell testified: It appears from the record that by the fall of 1982, especially after the purchase agreement was made between Reeves and Jojoba, Reeves was primarily interested in avoiding Gesell and their contract. A summary of the money paid to Reeves or on Reeves' behalf follows: Received by Reeves: The interest due from Gesell to Reeves pursuant to their agreement is as follows: Pursuant to the parties' agreement, the amount due Gesell is computed as follows: Prejudgment interest is allowable only when the amount claimed is liquidated. Where a reasonable controversy exists as to the plaintiff's right to recover or as to the amount of recovery, the claim is generally considered to be unliquidated, and prejudgment interest is not allowed. Lutheran Medical Center v. City of Omaha, 229 Neb. 802, 429 N.W.2d 347 (1988); Otto Farms v. First Nat. Bank of York, 228 Neb. 287, 422 N.W.2d 331 (1988); Philip G. Johnson &amp; Co. v. Salmen, 211 Neb. 123, 317 N.W.2d 900 (1982). We determine that there is due from Reeves to Gesell the sum of $41,959.25 and that the district court's judgment is modified accordingly. Costs are hereby taxed to Reeves. AFFIRMED AS MODIFIED.