Court Opinion

ID: 9552568
Source: CourtListenerOpinion
Date Created: 2023-08-07 19:13:07.451+00
Date Added: 2024-06-11T15:28:11.843552
License: Public Domain

Mr. Justice Sheehy
dissenting:
I dissent to the foregoing opinion. I fear that much of what is said therein may lead the District Court in any retrial into egregious error.
This is a case where the District Court granted a summary judgment in favor of the defendants. Therefore, the facts before us are either admitted, or there is no issue of fact. It is important to bear in mind that posture of this appeal.
In the first place, the parties entered into a contract for deed which contained in paragraph 9 a default clause. The pertinent portion of that default clause provided as follows:
“In case of the failure of the said Purchasers to make any of the payments of principal or interest . . . then the whole of said payments and interest shall, at the election of said Seller, become immediately due and payable ... and this contract shall, at the option of Seller, be forfeited and determined by giving to the Purchasers sixty (60) days’ notice, in writing, of the intention of the Seller to cancel and determine this Contract . . . should the said Purchasers make good such default within said 60-day period, then their rights under this Contract shall be fully reinstated, and said acceleration of said payments shall fail; however, should said Purchasers fail to make good any such default within said 60-day *562period, said acceleration shall be good and this Contract may be terminated by the Sellers as aforesaid.”
The purchasers having defaulted in their payments pursuant to said provisions, the seller accelerated the remaining payments due to make the whole of said payments and interest immediately due and payable. It is clear the seller may not accelerate unpaid payments under a purchase contract such as this unless there is in the contract an agreement to the effect that such debt can be accelereated as to its maturity. Rader v. Taylor (1958), 134 Mont. 419, 428, 333 P.2d 480, 486, and those cases cited therein.
In serving their written notice of default, the seller following the contract, told the purchasers:
“As a consequence of said default, the undersigned, pursuant to paragraph 9 of said contract for deed have elected to declare the full balance payable and do hereby declare the full balance due under the terms of said contract immediately due and payable as of this date.”
Thus, under the terms of the contract, the seller had an option: it could if it wished, accelerate the payments by giving the notice that was provided in paragraph 9 of the contract. It was left to the seller’s option. It opted, in accordance with the contract to accelerate the maturity of the debt. By doing so, it set in motion certain legal effects which cannot now be reversed.
The cases cited in the foregoing opinion, and other cases, are sufficient authority for the following statements respecting the legal relationships of the parties hereto when default occurs: the seller had the right to choose between the legal relations that would affect the parties after such a default — they could choose between a contract and no contract. The first is affirmance and the latter is disaffirmance. A choice of one precludes the other. The two are mutually exclusive. They both cannot exist at the same time. One is yes, and the other is no. There is no possible co-existence. It is a case of having substantive rights under a contract, or having substantive rights outside of the contract. The seller had the option, and once having exercised it, it cannot resort to the other choice.
*563There is more involved here than merely an election of remedies. The seller has made an election of substantive rights. An election of substantive rights goes not to the form, but to the substance of the rights selected. See 25 Am.Jur.2d Election of Remedies Sec. 7.
When, as here, the purchasers, having been served notice under the contract, failed to make the required payments in default within the 60-day period, the contract for deed became dead.
“The failure to pay the installment due September 15, 1947, or any part thereof on or before 30 days from and after September 22, 1947, on which date the vendees were served with the notice terminating and cancelling the contract for deed, forfeited all defendants’ rights thereunder and made of such contract a dead instrument and rendered the continued occupation of the premises a trespass.” Light v. Zeiter (1950), 124 Mont. 67, 71, 219 P.2d 295, 297.
The contract now being dead, the seller may not sue upon it as though it were alive; yet that is precisely what it seeks to do under counts 1 and 2 of its amended complaint.
Let us first look at count 2 of the amended complaint. It is the easiest to dispose of. The seller alleged in it that defendants are “presently in default of said contract” and owed plaintiff payments to date amounting to $78,334.26. That could only be true if the contract were alive. There are no ongoing payments due from the purchasers to the seller if the contract is dead. Therefore, count 2 affords no basis upon which the District Court could have afforded relief to plaintiff as seller under the contract.
Count 1 seeks a slightly different relief. There, the prayer is for the full amount of the unpaid purchase price plus interest, in other words, the accelerated debt. There is no tender of deed to the plaintiff nor offer to tender such deed. Although it may be “fanciful” for us to assume the District Court would not order a deed if it rendered its judgment against purchasers for the full amount of the purchase price, yet it cannot be escaped that count 1 is asking the District Court to enforce the terms of a contract that is legally dead by granting judgment for the whole of the unpaid installments. *564Even if a deed were ordered, the real estate would be subject to execution on the judgment, with the possibility of a deficiency judgment after sheriff’s sale.
The District Court recognized the situation when in its findings it said:
“7. The contract for deed contains no provision for money judgments, and since the provisions in terms of the contract are to be construed against the plaintiffs as drafters of the contract, the relief requested in plaintiff’s amended complaint was not within the understanding and contemplation of the parties.
“8. A money judgment for the amount of unpaid installments to date, plus a possible subsequent cancellation and termination of the contract by plaintiffs would violate the contract’s express condition and forfeiture of payments made plus repossession of the property would constitute full satisfaction and full liquidation of all damages sustained by the plaintiffs.”
This is not to say that seller such as here involved is not given a choice of several remedies when default occurs. In this case, the seller could have (1) sued for breach of contract; (2) sued for specific performance of the contract; or (3) served the notice and forfeit the contract as it did. Once having decided to accelerate the maturity of the unpaid installments, it set in motion the chain of legal consequences that cancelled the contract so that it became a dead instrument. We cannot undo what the seller effectuated.
The language in the default clause of the contract prepared by the seller brought about the result found by District Court. Most default clauses with which I am familiar provide that the first notice to the defaulting purchasers shall require only the payment of the installments already due and unpaid. Only when the purchasers fail to make up those late payments is the seller given the further right to accelerate the whole of the unmatured debt, usually by a further written notice. That kind of default provision allows the seller to keep its choice of remedies until it has determined whether it will forfeit and terminate the contract, or pursue damages for the breach. Moreover, wise drafting of such clauses *565will dictate the inclusion of a proviso that the seller reserves the right to pursue any legal or equitable remedy, including specific performance. None of those saving clauses appear in the contract before us here.
It appears to me that the District Court was correct and accordingly, I would affirm its summary judgment.