Title: Kreger v. Hall
Citation: 425 P.2d 638, 70 Wash. 2d 1002
Docket Number: 38720
State: Washington
Issuer: Washington Supreme Court
Date: March 31, 1967

70 Wn.2d 1002 (1967) 425 P.2d 638 PAUL KREGER et al., Respondents, v. ALMA E. HALL et al., Appellants.[*] No. 38720. The Supreme Court of Washington, Department Two. March 31, 1967. Cummings &amp; Harris, by Theodore P. Cummings, for appellants. Lycette, Diamond &amp; Sylvester, by Lyle L. Iversen, for respondents. OTT, J. December 7, 1964, Kreger Brothers, Inc., a corporation, (hereinafter referred to as Kreger Brothers) entered *1003 into an earnest money receipt and agreement with Alma E. Hall and Gilbert Carraher (hereinafter referred to as sellers) for the purchase of approximately 15 acres of land in King County containing a gravel pit, for the sum of $40,000. The earnest money agreement acknowledged receipt of the payment of $1,000 and provided that upon the sellers' furnishing title clear of encumbrances that $11,500, including the earnest money, be paid in cash on the closing of the sale, February 1, 1965, and that "Encumbrances to be discharged by seller may be paid out of purchase money at date of closing." The balance of the contract was to be paid in annual installments in an amount of $2,500 or more at the option of purchasers, Kreger Brothers. Section 8 of the earnest money agreement provided: According to the title report, there were two encumbrances on the property at the time of the execution of the earnest money receipt, an unexpired lease, and a mortgage to Security Savings and Loan Association in the sum of $10,000. The lease encumbrance was satisfied of record prior to the closing date of February 1, 1965. The mortgage encumbrance was not satisfied. The sellers on the 28th day of January 1965, wrote the following letter to Kreger Brothers: Kreger Brothers, upon receipt of the letter, advised the office of the sender that they were ready, able and willing to pay the $10,500 down payment, upon the furnishing of title clear of encumbrances and that, if this encumbrance was not previously satisfied, it be paid out of the down payment, or in the alternative the purchasers would assume the mortgage and remit to the sellers any balance remaining over and above the amount of the encumbrance. Kreger Brothers had previously been informed by the sellers that their down payment would not be used to satisfy the mortgage on the property but would be used for other purposes, and that sellers intended to satisfy the encumbrance at a later date from insurance payments. January 29, 1965, Hall and Carraher entered into an earnest money receipt and agreement for the sale of the property to Parker, Smith, Pauscheck, and Pauscheck, Jr., upon the same terms except that these prospective purchasers did not require that the mortgage encumbrance be satisfied out of the down payment. The agreement provided "This agreement is signed subject to complete clearance of default of agreement between the Kregers and sellers, and will be null and void if Kregers' default of purchase becomes valid." February 5, 1965, when the down payment had not been made, the sellers wrote the following: *1005 Upon receipt of this letter of forfeiture, Kreger Brothers' attorney sent the following letter in reply: Kreger Brothers commenced this action for specific performance of the earnest money agreement. They contended that at all times they were ready, willing and able to pay the balance of the down payment of $10,500; that the sellers failed to deliver a title report showing clear title; that the sellers refused to apply the down payment to satisfy the savings and loan encumbrance as required by the agreement; and that the seller in the alternative refused to permit Kreger Brothers to assume the indebtedness against the premises as a part of the down payment. Kreger Brothers prayed that they be permitted to deposit the $10,500 into court; that the sum be applied to satisfy the encumbrance; that the sellers be required to execute the installment contract as provided in the earnest money agreement; and that the subsequent prospective purchasers' claim, if any, be adjudicated to be junior to the claim of Kreger Brothers. The sellers answered the complaint and alleged that the earnest money agreement was regularly forfeited after due notice; that Kreger Brothers failed to pay any sum other than the earnest money payment prior *1006 to the termination date, February 1, 1965; and prayed that Kreger Brothers take nothing by virtue of the cause of action. The cause was tried to the court which entered findings of fact and conclusions of law predicated upon evidence substantially as above outlined. The court directed that Kreger Brothers deposit into court the sum of $10,500, that the payment be used to satisfy the encumbrance and that the sellers execute a contract for the balance of the sale price in accordance with the provisions of the earnest money agreement. The court further held that the alleged sale to Smith, Parker and the Pauschecks was junior to the prior rights of Kreger Brothers. From the entry of a judgment predicated on the court's findings of fact and conclusions of law, sellers have appealed. On appeal, the appellant sellers assert that the trial court erred in ordering specific performance of the earnest money agreement and in failing to find that there had been a forfeiture. The trial court's pertinent findings of fact are as follows: [1, 2] An action for specific performance of a contract is an equitable proceeding. McAlpine v. Miller, 51 Wn.2d 536, *1008 319 P.2d 1093 (1958). When the equitable jurisdiction of the court is invoked by the parties, whatever relief the facts warrant will be granted. Hubbell v. Ward, 40 Wn.2d 779, 246 P.2d 468 (1952), and cases cited. An earnest money receipt will support an action for specific performance. Hubbell v. Ward, supra. Specific performance will lie to compel compliance with the terms of a valid contract. Paullus v. Fowler, 59 Wn.2d 204, 367 P.2d 130 (1961). [3] The court's findings are determinative of the factual issues involved if there is evidence in the record to sustain them. Thomsen v. State, ante p. 92, 422 P.2d 824 (1966); Simonson v. "U" Dist. Office Bldg. Corp., ante p. 35, 422 P.2d 1 (1966); Kueckelhan v. Federal Old Line Ins. Co., 69 Wn.2d 392, 418 P.2d 443 (1966); Ferguson v. McBride, 69 Wn.2d 35, 416 P.2d 464 (1966); Wise v. Farden, 53 Wn.2d 162, 332 P.2d 454 (1958). A part of the evidence which sustains the trial court's findings is the testimony of Paul Kreger, quoted as follows: With regard to the insurance money which the sellers intended to use to satisfy the encumbrance, Mr. Carraher testified that the fire insurance money was not received to be applied upon the mortgage until after February 1, 1965, and when received it was not in a sufficient amount to satisfy the mortgage. The record before us in some instances contains conflicting evidence. The trial court resolved the conflict in favor of Kreger Brothers. We are convinced that there is substantial evidence to sustain the trial court's findings of fact. [4] It is a general rule that specific performance will not lie where the party seeking it is in default. Ferris v. Blumhardt, 48 Wn.2d 395, 293 P.2d 935 (1956). The trial court found that "Plaintiffs would have closed the sale of the property in question before February 1, 1965 except for the sellers' failure to furnish clear title and to cooperate in closing." (Finding of Fact No. 26.) The trial court found that Kreger Brothers were not in default and were relieved of the actual tender of the money for the reason that (1) the sellers did not furnish a clear title to the property; (2) the sellers asserted that if the down payment was received it would not be used to satisfy the encumbrance as the contract provided; and (3) the sellers refused to permit Kreger Brothers to assume the encumbrance as a part of the down payment. It is the law that one who is ready, able and willing to tender performance of a contract is relieved of his duty to tender when the other contracting party has by word or act indicated that he will not perform his duties under the contract. McCormick v. Tappendorf, 51 Wash. 312, 99 Pac. 2 (1909). In this case, the trial court found: Applying the rules announced above to the court's factual determination, we hold that the trial court did not err in ordering specific performance of the contract. Judgment is affirmed. FINLEY, C.J., HUNTER and HAMILTON, JJ., and DENNEY, J. Pro Tem., concur. [*] Reported in 425 P.2d 638.