Opinion ID: 874055
Heading Depth: 1
Heading Rank: 4

Heading: Did the District Court Err in Including Prejudgment Interest in the Vendee's Lien?

Text: In Sorensen v. Larue, 47 Idaho 772, 278 P. 1016 (1929), we held that [w]hen rescission is granted the vendee, he is entitled not only to a return of so much of the purchase money as he has paid, but to interest thereon from time of payment. Id. at 778, 278 P. at 1018. We also held that the purchaser may recover the amount of his necessary outlays, taxes, etc., incurred under the contract, with interest. Id. at 778-79, 278 P. at 1018. In Brooks v. Jensen, 75 Idaho 201, 270 P.2d 425 (1954), we held that upon rescission of a real estate contract, the purchasers were entitled to recover the payments on the contract and mortgage, taxes paid, and water assessments ... and the value of the improvements they made, less the reasonable rental value of the land. Id. at 218, 270 P.2d at 437 (citations omitted). In this case, however, the issue is the amount secured by the vendee's lien, not the amount that the vendee would be entitled to recover by from the vendor. Idaho Code section 45-804 states: One who pays to the owner any part of the price of real property, under an agreement for the sale thereof, has a special lien upon the property, independent of possession, for such part of the amount paid as he may be entitled to recover back, in case of a failure of consideration. The statute provides that a vendee who pays to the owner any part of the price of real property under a purchase contract has a lien independent of possession for such part of the amount paid as he may be entitled to recover back if there is a failure of consideration. In context, the words such part of the amount paid can only refer to the part of the price of real property that the vendee had paid. Thus, under the wording of the statute, the lien only secures repayment of such part of the purchase price paid that the vendee is entitled to recover back. This Court has previously stated and held that the vendee's lien secures the payment of additional sums. In Graves v. Cupic, 75 Idaho 451, 272 P.2d 1020 (1954), we held that the sum secured by the vendee's lien included interest, id. at 460, 272 P.2d at 1026, but we did so without any analysis of the wording of the statute. Likewise, in McMahon v. Cooper, 70 Idaho 139, 212 P.2d 657 (1949), we held that the vendee's lien included the amount found due to the vendee with interest, id. at 147, 212 P.2d at 662, but again without any analysis of the wording of the statute. Buyer relied upon McMahon in arguing for prejudgment interest, and Bank argued that it may ask this Court to overrule that decision. We agree with Bank that Graves v. Cupic, 75 Idaho 451, 272 P.2d 1020 (1954), and McMahon v. Cooper, 70 Idaho 139, 212 P.2d 657 (1949), must be overruled to the extent that they hold the vendee's lien includes any sum other than the amount of the payments of purchase price the vendee is entitled to recover back. The wording of the statute simply cannot be construed to hold that the vendee's lien includes anything other than the amount of the payments made under the contract that the vendee is entitled to recover back. The amount that the vendee is entitled to recover back would be the total amount paid on the purchase price less any sum that the vendor is entitled to offset against that amount as damages that the vendor is entitled to recover as a result of the transaction, such as the reasonable rental value of the land while the vendee was in possession. The amount of the vendor's offset, if any, is to be calculated by deducting from the amount of the vendor's damages any additional sums that the vendee is entitled to recover from the vendor as a result of the failure of consideration, such as payments made under the contract in addition to the purchase price, the value of any permanent improvements made by the vendee, and prejudgment interest. In this case, there is no contention that Seller was entitled to offset any sums against the total of the payments made by Buyer as part of the purchase price.