Opinion ID: 1446423
Heading Depth: 2
Heading Rank: 2

Heading: The Transactions Giving Rise to the Lawsuits

Text: On May 26, 1976, Oral Wilkinson and his wife, Edna Mae, executed a uniform real estate contract to sell a parcel of land in Salt Lake County and radio broadcasting equipment located on the land to Tim Themy for $360,000. The contract required no down payment, nine percent interest, monthly installment payments of $1,000 for the first two years, and $4,000 per month thereafter until the purchase price and the interest were paid in full. Since the initial $1,000 monthly payments did not cover the monthly interest, which accrued at $2,700 for the first month alone, the total amount Themy was required to pay increased during the first two years as the unpaid interest was added to the principal. Themy made payments during the first eleven months of the contract, but paid nothing on the contract after June, 1977. As a result, Themy did not reduce the principal owed the Wilkinsons during the life of the contract. Nevertheless, the Wilkinsons initiated no formal contractual or judicial actions to forfeit or rescind the contract until June 5, 1978, when Themy quitclaimed the property back to the Wilkinsons and the parties entered into an indemnity agreement which nullified the land sale contract. Themy, working with the Wilkinsons, did, however, bring legal proceedings to foreclose the interest Seagull Enterprises, Inc., had in the same property pursuant to two earlier executory contracts between the Wilkinsons and Seagull. One contract was for the sale of the same real estate as is involved in this case, and one contract was for the sale of radio broadcasting equipment and an FCC broadcast license. Both contracts were in the form of uniform real estate contracts. Seagull defaulted on both contracts after it made the required down payments to Wilkinson. Wilkinson gave Seagull notice after its default that its interests would be forfeited if the contracts were not brought current within five days. Seagull failed to do so, but Wilkinson took no further action against Seagull. Instead, he contracted to sell the land to Themy, who subsequently filed a suit and obtained a decree foreclosing Seagull's interests. That decree was affirmed in Themy v. Seagull Enterprises, Inc., 595 P.2d 526 (Utah 1979). [2] After June 1, 1977, Themy was in default under the Wilkinson-Themy contract. At the same time, he was suing to foreclose Seagull's interests in the suit mentioned above. In November or December 1977, Wilkinson was informed by Themy that he could no longer perform under the contract, and Oral Wilkinson asserts that he told Themy that he was taking the property back, although, as previously stated, he neither gave proper notice of default under the contract nor initiated formal legal action. Wilkinson did, however, lease the land to third parties for livestock pasture, collect the rents, pay the property taxes, and make several attempts to sell the property to third parties. Themy, on the other hand, continued to act as if he had an ownership interest, also attempting to sell the property to third parties. In May, 1978, Stephen L. Christensen contacted Oral Wilkinson and expressed an interest in purchasing the subject property. On May 18, 1978, Christensen and Wilkinson met to negotiate the purchase of the property. Themy also appeared and actively participated in the negotiations. He signed the earnest money agreement as seller. A few days later, on May 25, 1978, Wilkinson also signed as co-seller the earnest money agreement, which described the subject property as the property known as the O.J. Wilkinson and Themy property. At that time, Themy had been in default under the Wilkinson-Themy contract for approximately eleven months. After Themy executed the first earnest money agreement, Christensen's realtors ordered a title report from Guardian Title Company. The report listed as exceptions to the title insurance commitment seven unsatisfied judgments in the approximate amount of $149,000 then docketed against Themy in Salt Lake County. [3] On May 31, 1978, Wilkinson and Christensen executed a new earnest money agreement which omitted Themy's name as a seller and showed no interest owned by him in the property. A new title report, prepared by a different title insurance company, McGhie Land Title Company, showed no reference to any of Themy's judgment liens or to any ownership interest claimed by Themy in the property. It did, however, show a possible interest in Themy by reason of the Themy v. Seagull Enterprises suit. For that reason, the title company refused to issue a title insurance policy until Themy quitclaimed any interest he might have had in the property back to the Wilkinsons. The title report did not resolve Christensen's questions about the status of the title to the land since he had been informed that the Wilkinsons had contracted to sell the land to Themy. Wilkinson attempted to allay Christensen's concern by stating that he had taken the property back because of Themy's default and assured Christensen that Themy had no claim to, or interest in, the property. In accord with the title company's requirement, Wilkinson obtained the quitclaim deed from Themy to assure formally the termination of Themy's interest. On June 5, 1978, Themy met with Wilkinson and his attorney and executed an indemnity agreement and the quitclaim deed. The indemnity agreement declared the real estate contract to be null and void and waived all of Themy's rights thereunder. Thereafter, on June 8, 1978, plaintiffs Samuel Butler and Donald and Roberta Toomer obtained a judgment against Themy for $78,011. The earnest money agreement between the Wilkinsons and Christensens called for the Christensens to pay $25,000 down. That sum was paid June 15, 1978, and Wilkinson loaned the full amount to Themy the next day. Part of that sum was subsequently repaid. On July 27, 1978, the Wilkinsons and the Christensens closed the sale of the property by the Christensens assuming a first mortgage on the property in the approximate amount of $47,000, executing a note for the balance secured by a trust deed, minus the $25,000 down payment, and making a cash payment at closing of $57,752.23. Oral Wilkinson invested the $57,752.23 in Themy's business, Halogenics. The trial court found Halogenics to be Themy's alter-ego. At the time of the execution of the Wilkinson-Themy contract, the following two judgments had been docketed against Themy in the District Court of Salt Lake County: JUDGMENT CREDITOR DATE OF DOCKETING AMOUNT OF JUDGMENT Pearl Shaw Sept. 19, 1975 $30,054.84 Dene R. and Helen Lawson April 9, 1976 $28,239.55 Subsequent to the execution of the contract, the following judgments were entered against Themy: JUDGMENT CREDITOR DATE OF DOCKETING AMOUNT OF JUDGMENT Hart, Schaffner & Marx Dec. 21, 1977 $20,769.00 Edward P. Ramras March 15, 1978 $58,087.30 Zions First Nat'l Bank April 10, 1978 $13,278.72 Samuel J. Butler, Donald H. & Roberta Toomer June 8, 1978 $78,011.00 Gene Leo Oct. 16, 1978 $ 5,743.29 None of the above judgment creditors initiated execution proceedings upon Themy's interest in the property, whatever that may have been, either before or after his reconveyance of the property to the Wilkinsons.