Court Opinion

ID: 9851784
Source: CourtListenerOpinion
Date Created: 2023-09-24 05:19:40.6483+00
Date Added: 2024-06-11T09:22:15.336761
License: Public Domain

BISTLINE, Justice,
dissenting.
The very facts stated in the Court’s opinion veritably wave a large red flag. The 1974 agreed purchase price was $2.3 million. After the property was returned to the vendors it was again sold — this time for $3.8 million. Only two farming years had intervened, 1975 and 1976. After the vendors went back into possession, they did install a major irrigation system to portions of the huge farm which at the time of the 1974 sale was sagebrush and had not theretofore been served with water. These were improvements made by the vendors after they had regained possession, and it is beyond dispute that such expenditures would have increased the sale price on the $3.8 million second sale. The buyers in their two-year occupancy had paid almost three-quarters of a million dollars, i.e., $731,753, in payments of principal and interest, $13,783 in real estate taxes, and $7,338 on the sellers’ contract to purchase the sprinkling equipment.
The majority who may believe itself applying the rule of Graves v. Cupic, 75 Idaho 451, 272 P.2d 1020 (1954), has. charged the vendees with one-quarter million dollars which was the commission the vendors paid on the sellers’ resale which brought into them $1.5 million dollars more than they were receiving on the cancelled contract. The majority also charges the vendees with over $60,000 spent in the refinancing, and over $11,000 in attorney’s fees, unspecified, but apparently incurred in refinancing and/or reselling. By adding in those large amounts, the majority is able to then compare $747,100 in actual damages to the $752,874 forfeited as agreed liquidated damages. This is all said to be possible because “the trial court evidently found that the vendor’s need to improve the irrigation system and resell the property resulted from the purchaser’s breach.” Here is another of this Court’s recurring ipse dixit’s. Because “evidently found” is then in the following sentence transformed into the majority’s finding “that the need to resell flowed from the breach.” What the trial court actually signed as a finding, and which was not exactly what he wrote for himself in his Memorandum Decision, is:
XXIV
Plaintiffs’ expenses caused by defendant’s defaults and plaintiffs’ expenses in reselling the farm to a third party are intertwined and must be considered together.
It is highly doubtful that Finding No. XXIV is a finding of fact, but rather the conclusion of law it appears to be. Whether it be a finding or a conclusion, it finds no support in any of the other findings, and presents a novel and unsupported concept of the law — wholly at odds with Graves and its progeny. Moreover, the finding is *153not of the trial court’s manufacture, but a product of the ingenuity of plaintiffs’ counsel who prepared the findings and conclusions for the trial court at the trial court's direction, in direct contravention of this Court’s directive in Compton v. Gilmore, 98 Idaho 190, 560 P.2d 861 (1977), repeated in Matheson v. Harris, 98 Idaho 758, 572 P.2d 861 (1977), and still the case law in Idaho.1 In Marshall Bros. v. Geisler, 99 Idaho 734, 737 n. 1, 588 P.2d 933, 936, n. 1 (1978), Justice Bakes wrote for the Court:
We do not alter our strong admonitions to both bench and bar in this state, as expressed in Matheson v. Harris, 98 Idaho 758, 572 P.2d 861 (1977), and Compton v. Gilmore, 98 Idaho 190, 560 P.2d 861 (1977), that I.R.C.P. 52(a) requires the trial court in a judge-tried case to exercise its independent judgment in the preparation of findings of fact and conclusions of law. The best procedure to follow if assistance of counsel is sought in the drafting of findings of fact and conclusions of law is, as noted in Compton, to request proposed findings and conclusions from both sides and to utilize these in the drafting of the court’s findings and conclusions. (Emphasis added.)
In this particular case, where the trial judge conscientiously labored to write his own Memorandum Decision, the foregoing passage would be regarded, and properly so, as mere diatribe. But here, the reason for the rule is self-proving. The trial court was justified in signing his name to a set of findings and conclusions which at first glance give the appearance of being mere paraphrasing by sellers’ counsel. However, in at least one particular, this is not so. In order is a comparison of Finding XXIV with the court’s own statement:
Plaintiffs’ expenses caused by defendant’s defaults and plaintiffs’ expenses in reselling the farm to a third party are intertwined and must be considered together.
Finding of Fact No. XXIV
The other expenses incurred by Plaintiffs after Defendants default were intertwined with the resale of the property and must accordingly be considered therewith.
Corrected Memorandum Decision
Expenses Caused are not the [uivalent of Expenses Incurred
Whether or not counsel took undue literary license in writing a self-serving of that which the trial court had written is of little moment. It may have as easily been wholly inadvertent. Either way, the fault is more with the majority and the use made of the Finding No. XXIV, and I quote directly from the majority who best demonstrate the taking of literary license:
*154The other expenses incurred by Plaintiffs after Defendant’s default were intertwined with the resale of the property and must accordingly be considered therewith.
Corrected Memorandum Decision
Plaintiffs’ expenses caused by defendant’s defaults and plaintiffs’ expenses in reselling the farm to a third party are intertwined and must be considered together.
Finding of Fact No. XXIV
In the present case the trial court found that the costs of repossessing, refinancing and reselling the property were “intertwined and must be considered together.”
Majority Opin.
As a follow-up to observing the remarkable metamorphosis of an honest but legally questionable statement of the trial court to a Supreme Court finding, it is only necessary to observe the majority’s use of it. in Part C of the majority’s opinion, to see the distortion effected: “This finding of fact was supported by substantial and competent evidence.” Having recreated the fact to its own liking, the majority then, ignoring that it is more of conclusion than a fact and ignoring the singular fact that the trial court did not in the least attempt to substantiate it,2 lay out what is believed to be a justification.
The groundwork for this remarkable excursion into fantasy is said to be found by melding together an unrevealed statement from an ancient annotation and a wee bit of dictum in this Court’s Anderson v. Michel, 88 Idaho 228, 398 P.2d 228 (1965). “A vendor may also claim as actual damages any costs which flow from the breach and which could have been within .the contemplation of the parties at the time of contracting____ This Court noted in Anderson v. Michel, supra, that ‘the possible expenses of resale of the property’ may be considered."
When Justice Bakes writes “see,” instead of quoting and citing, I follow that admonition.
The annotation does not deal with a case based upon a claim of unjust enrichment following forfeiture of a title-retaining real estate contract. Rather the annotation starts out with this prefix: “The rights of the vendor upon his rescission of the contract, as distinguished from an action for damages for its breach, are beyond the scope of the annotation. Cases involving actions for the recovery of liquidated damages are also beyond its scope,” 52 A.L.R. 1511, which should be enough said. If not, the full statement of what Justice Bakes has paraphrased, with citations omitted and not omitted is:
In general, the basis upon which damages will be assessed against a vendee for breach of his executory contract to purchase real estate is compensation to the vendor for the loss or injury sustained by him, by reason of the vendee’s breach ...; the amount, however, to be limited to such damages as are the natural and probable result of the breach (Dullea v. Taylor (1874) 35 U.S.Q.B. 395), and which might reasonably have been within the contemplation of the parties (Hurd v. Dunsmore (1884) 63 N.H. 171). 52 A.L.R. 1512 (emphasis added).
As will be noted from reading the Appendix, the trial court did not only rely upon the annotation, but did not mention it, nor do I see where counsel for either party had the audacity to cite it. Moreover, it must be particularly noted that the trial court made no finding, or pointed to no evidence, that the expenses of refinancing and of resale were within the contemplation of the parties at the time they contracted. Justice Bakes and his majority attempt to provide that factual determination in their appellate decision — which does not seem to be in keeping with the Justice’s much-to-the-*155contrary usual views about appellate fact finding.
Counsel-drawn Finding No. XXXIII has no counterpart in the trial court’s Memorandum Decision, other than this one sentence: “Accordingly, except for the $5,000 claimed for lost advertising, the $310,-648.00 in expenses claimed by Plaintiffs was reasonably established by a preponderance of the evidence.” That, to my mind, is a rather cavalier way of disposing of $310,-648 — which is bad, and insufficient, but no justification for counsel’s literary license in drafting Finding No. XXXIII:
Plaintiffs incurred $305,648 in expenses caused by defendant’s defaults and from subsequent sale of the farm to a third party after defendant’s defaults.
There are no findings, as such, or statement of reasoning in the Memorandum Decision which reflect how this amount was arrived at, for which reason the Court is most often disposed to remand for adequate findings rather than to manufacture its own.
In defending his findings, Justice Bakes surmises, and I do not use the word guardedly, “It is possible that these additional damages could include, in the proper case with proper findings of fact, the costs of refinancing or reselling the property.” For this second, all-encompassing, wholly conjectural ipse dixit, no authority is cited, other than Anderson v. Michel, 88 Idaho 228, 398 P.2d 228 (1965). That case is quoted from for the proposition that possible expense of a resale may be considered in applying the Graves rule. What this Court actually stated in Anderson was:
Having in mind the costs and expenses of this litigation, the possible expense of a resale of the property, and the magnitude of the transaction, we conclude that the amount retained by plaintiffs as liquidated damages bears a reasonably relation to the actual damages sustained and is not so exorbitant and unconscionable as to constitute a penalty. Cf. Graves v. Cupic, 75 Idaho 451, 272 P.2d 1020 (1954). Anderson, supra, at 239, 398 P.2d at 235.
A review of this Court’s file will reflect that the phrase upon which the majority’s entire opinion is premised was an inadvertent gratuity on the part of the Supreme Court in paraphrasing the language of the trial court, the Honorable James G. Towles.3 Judge Towles made a conclusion *156of law encompassing the Graves v. Cupic principle of unjust enrichment where sellers otherwise gain a windfall from buyers who become unable to complete the contract:
(9) The actual damages to the plaintiffs as sustained, are not grossly disproportionate to the damages stipulated for in the terms of the contract. By application of the contract terms for stipulated damages on the defendants’ breach, the plaintiffs herein are not made more than whole, and there results no penalty by application of the contract provision for cancellation and termination of the contract, and retention of moneys paid to the plaintiffs.. Actual damages sustained, and anticipated damages, both do bear a reasonable relationship to the sums paid by the defendants on the contract and are not exorbitant or unconscionable to the extent that the same could bé considered a penalty under the provisions of the Idaho law. (Emphasis added.)
In a written, filed Memorandum Decision, he set forth in almost identical language the the necessary computations in comparing actual damages to liquidated damages, and his conclusion:
The loss occasioned to the seller by purchasers’ default, in other words, actual damages, bear a reasonable relationship to the sums paid by the purchasers on the contract and are not exorbitant or unconscionable to the extent they would be considered a penalty even under the provisions of Idaho law, in view of the magnitude of the transaction. (Emphasis added.)
The “magnitude of the transaction” language was original with Judge Towles, not with this court. Neither in his findings nor in the evidence was any mention made of possible costs of resale. Unfortunately, in using Judge Towles “magnitude” language, this Court, wholly gratuitously (I doubt that it rises to the label of dictum), responsive to nothing urged by counsel for the parties, unthinkingly interjected the thought of an expense of a possible resale. Little could the Court in 1965 have envisioned that that small and heretofore unnoticed slip of the pen, wholly unsupported in law, wholly unfounded in the case presented, would one day later be used to frustrate the principles of Graves and produce a blatant miscarriage of justice. Moreover, the huge consequential damages which the Court today allows, i.e., huge expenses of an immensely profitable resale, are not shown to have been within the contemplation of the parties at the time the title-returning contract was entered into. Nothing in the contract evidences that it was. Justice Bakes uses only pure surmise to intimate otherwise. Generally speaking, this Court has ordinarily recognized the rule of Hadley v. Baxendale, 156 Eng.Rep. 145 (1854).
Although there is considerably more which could and should be said about this case and this Court’s majority opinion, without any apologies I do hope that it will be noted that my time has been somewhat taken up with other contemporaneous opinions announced or about to be announced. The judgment in this case absolutely should be reversed, or Graves v. Cupic and its progeny overruled.
*157APPENDIX A
IN THE DISTRICT COURT OF THE FOURTH JUDICIAL DISTRICT OF THE STATE OF IDAHO, IN AND FOR THE COUNTY OF ELMORE DELBERT CLAMPITT & DELSIE CLAMPITT, husband and wife, Plaintiffs, vs. A.M.R. CORPORATION, a corporation; JUDD FARMS, a corporation; L.J. RICE & SONS, INC., and SOUTHWESTERN FINANCIAL CORPORATION, a corporation, Defendants.
Case No. 5416
CORRECTED
MEMORANDUM OPINION
APPEARANCES:
Perce Hall, Hall & Friedly, Chartered, Counsel for Plaintiffs
Blair Grover, Grover & Walker, Chartered, Counsel for Defendants
This matter was tried to the Court, post-trial briefs have been submitted, and the matter is ready for decision.
Many of the basic facts are undisputed. Plaintiffs sold Defendant A.M.R. a 3,840 acre farm in 1974 for $2,300,000.00. Defendant purchased the farm with the expectation of dividing it and reselling smaller farming parcels at a profit. 2,140 of the acres were irrigated, about 1,400 more could be developed for irrigation, and the balance was dry land. The sale was by a title retaining real estate contract whereby $10,000 of the price was paid as earnest money; $250,000, plus accrued 9 percent interest from July 11, 1974, was due December 10, 1974; $250,000 more, plus interest, on February 10, 1975; and the balance in payments of $89,500 each, plus interest, on the 10th of December and February of each year until the purchase price was paid. Defendants had difficulty making the $250,000 payments and extension agreements were twice entered into by the parties. As a result, Defendants made and Plaintiffs accepted payments of $140,000 on December 31, 1974, $150,000 on April 14, 1975, and $407,314.24 on July 1, 1975. As of July 1, 1975, therefore, Defendants had paid a total of $510,000 on the principal of the purchase price; $196,765.74 on accrued interest, and the balance for attorney, collection and escrow fees.
No other payments were made by Defendant on the agreement except a $25,000 payment on April 30, 1976 which paid the interest accrued to that date (Defendant’s Ex. 51).
In the meantime, on December 17, 1975, Plaintiffs served Defendants with a notice of default for non-payment of the December 10, 1975 payment. The parties continued to enable Defendants to try to complete payments on the agreement until May 22, 1976, when Plaintiffs again served Defendants with a notice of default, citing non-payment of both the December 10, 1975 and February 10, 1976 $89,500 payments, followed by a “notice of forfeiture” on July 1, 1976. On September 3, 1976 this action was filed by Plaintiffs to remove Defendants from the property and clear Plaintiffs title thereto.
On January 20, 1977, pursuant to stipulation, an order was entered by the Court declaring the sale contract forfeited and clear title to the farm to be quieted in the Plaintiffs.
Evidence as to the discussions leading up to such stipulation is in irreconcileable conflict. Plaintiffs contend that the stipulation was prompted by Defendant’s inability to get financing to meet its payments on the purchase and Plaintiffs necessity to pay on their purchase agreements and to perfect water rights on the undeveloped acres by getting them irrigated. They claim an oral agreement was made that they would obtain a loan to pay off their prior purchase agreements and develope the unirrigated acres, receive compensation for their work to do that, and that Defendants, to protect their interests, were to have a “first right of refusal” before there could be a subsequent sale of the farm by Plaintiffs to another. A written agreement stating the details of Plaintiffs understanding of such oral negotiations was prepared but never executed by Defendants (Defendants Ex. 43).
*158Although Defendants do not agree with Plaintiffs’ version of the oral negotiations; it is uncontradicted that Defendant did not sign the proposed written agreement and did not return it or ever advise Plaintiffs that it was not acceptable. There is furthermore no dispute but that on June 13, 1977 Plaintiffs advised Defendants that they had an offer to purchase the farm and the price offered, and that Defendants had 20 days to meet the offer.
Plaintiffs urge that Defendant is es-topped to deny that it agreed to the right of first refusal by its silent acquiescence (and apparently that it is therefore es-topped to claim any of its payments constituted an unconscionable penalty which it is entitled to recover back). I resolve this question in Defendant’s favor, however, in view of the clear inclusion in Ex. 43, prepared by Plaintiffs, that Defendant would dismiss its counterclaim only after the agreement was executed; and my conclusion that the purported first right of refusal was not fully communicated to Defendants as required by Gyurkey v. Babler, 651 P.2d 928, 931.
The Defendant contends that the “liquidated damages” provision in the contract is a penalty, void and unenforceable.
The preponderance of the evidence in this case however establishes that the payments made by Defendants and retained by Plaintiffs bear a reasonable relationship to actual damages incurred by Plaintiffs from Defendant’s breach, and do not constitute a penalty.
The best calculation of “rental value” for the 2,140 acres of developed land would be, as set out in Defendant’s brief, $401,252 based on yields from those acres and average prices. This would allow no rental value whatever for the remaining 1700 acres, which Defendants also had possession of in 1975 and 1976. In order to calculate a “rental value” for the undeveloped land, I see considerable merit in Plaintiffs “return on investment” or “return on equity” theories. The Plaintiffs’ computation of $447,518.51 would appear to reasonably approximate rental value of the entire farm. This would leave a rental value of $46,266.51 (447,518.51 less 401,252.00) allocable to the undeveloped land over the period of the contract. It appears reasonable and Defendants did not submit any evidence whatever relative to rental value of the undeveloped land.
Under Anderson v. Michel, it appears that from such $447,518.51 rental value should be deducted the $221,753.24 in interest which Defendants did pay, leaving $225,765.27 of net rental value.
Under Melton v. Omar, any decrease in value of the property during Defendant’s possession should be added to the rental value to compute Plaintiffs’ damages. Any increase in value should logically then be deducted. After considering the testimony of the appraisers, the evidence relative to the two sales of the property and of other property in the area at about the time pertinent, I conclude that the totality of the evidence shows that there was no significant increase or decrease in the value of the property between the time Defendants purchased it in July of 1974 and the ultimate default and forfeiture in July of 1976.
The other expenses incurred by Plaintiffs after Defendant’s default were intertwined with the resale of the property and must accordingly be considered therewith.
The evidence shows that the Plaintiffs were not unjustly enriched upon the second sale of the farm. Although it was sold at a higher price than Defendants contract price, Plaintiffs made substantial investments of time and money to improve it. Plaintiffs witness, James Watt, a C.P.A. familiar with Plaintiffs’ accounts and expenditures, explained how there was actually a loss on the subsequent sale.
Accordingly, except for the $5,000 claimed for lost advertising, the $310,-648.00 in expenses claimed by Plaintiffs was reasonably established by a preponderance of the evidence. When this $305,-648.00 is added to the $225,765.27 in rental value, it would appear that actual damages were $531,413.27, amounting to more than the $510,000 down payment made by Defendants.
*159As pointed out by Plaintiffs, even if the down payment were as much as 12.7% more than actual damages, our Supreme Court has held it could be reasonable.
Therefore, I conclude that Defendant has failed to establish, by a preponderance of the evidence, that under the facts here the payments it made on the contract were so disproportionate to the actual damages incurred by Plaintiffs as a result of Defendant’s breach as to be exorbitant amounting to an unconscionable penalty.
It was established by the evidence that, outside of the contract involved here, Defendants purchased personal property consisting of mobile homes and furniture from Plaintiffs and paid therefor $20,907.00 in principal and $2,453.85 in interest. Plaintiffs retained no title or lien interest in the personal property. The evidence indicates Plaintiffs also took possession of such property when they re-took possession of the land in January 1977, although neither the stipulation or court order covered such personal property. Although I do not feel that Defendant is entitled to credit on the real estate contract for money paid for the personal property, neither should Plaintiffs retain such personal property without fair compensation therefor to Defendant.
Counsel may accordingly draft Findings, Conclusions and Judgment consistent with this opinion for my consideration.
DATED this 22nd day of February, 1983, NUNC PRO TUNC.
/s/ Robert M. Rowett
ROBERT M. ROWETT
DISTRICT JUDGE

. As Judge J. Skelly Wright said in his "Seminars for Newly Appointed United States District Judges," which was approvingly quoted by the United States Supreme Court in United States v. El Paso Natural Gas Company, 376 U.S. 651, 656, n. 4, 84 S.Ct. 1044, 1047, n. 4, 12 L.Ed.2d 12 (1964), and by this Court in Compton, supra, 98 Idaho at 193, 560 P.2d at 864:
"I suggest to you strongly that you avoid as far as you possibly can simply signing what some lawyer puts under your nose. These lawyers, and properly so, in their zeal and advocacy and their enthusiasm are going to state the case for their side in these findings as strongly as they possibly can. When these findings get to the courts of apeals they won’t be worth the paper they are written on as far as assisting the court of appeals in determining why the judge decided the case."

. Whether I am correct in this assumption is best gleaned from the trial court's Memorandum Decision, a copy of which is attached as Appendix A.

. It may be worthy of note that his decision was that Graves had no application. Conclusions of Law Nos. 6 and 7 slated:
The contract between the plaintiffs and the defendants was an executory contract for the sale and purchase of real property, with the contract performable in the slate of Washington and the contract is governed by the law of the state of Washington.
(7) Under the law of the state of Washington, regardless of whether the termination of the contract is considered a penalty or forfeiture, on the one hand, or a stipulation for liquidated damages, on the other, the contract of the parties will be enforced according to its terms.
The contract between the plaintiffs and the defendants provides:
"Time is of the essence of this agreement and it is mutually agreed that in the event second parties fail to comply with the terms of this agreement, with any thereof, then first parties may at their option declare this agreement to be null and void in all rights or interests hereby creating or existing in favor of second parties, their heirs or assigns shall utterly cease and determine the premises here contracted to be sold or improvements made thereon by second parties, shall revert to and revest in first parties their heirs or assigns as absolutely and fully as if this agreement had not been made and first parties shall forthwith be entitled to the possession of said premises and every party thereof into the said improvements and may keep and retain all payments theretofore made as liquidated damages
These conclusions were supported by Findings of Fact Nos. 20 and 21 as to Washington law, and as to Conflicts law:
(20) The contract between the parties was executed in Washington by the majority of the parties, and in Oregon by the balance of the parties. This contract involved Oregon and Idaho Real property, and was escrowed in the state of Washington, at the Boyer-Baker Bank in Walla Walla, and the contract called for all payments to be paid there at the bank in Washington. The state of Washington was the state of place of performance of the contract.
(21) The law of the state of Washington, as applicable to title retaining contracts of conditional sale for the sale and purchase of real property, including personal property, is stat*156ed in the cases of Ball [Hall] v. Nordgren, 196 Wash. 68, 81 Pac. (2) 857; Van Keulen v. Sealander, 183 Wash. 634, 39 [49] Pac. (2) 19; and Thiel v. Miller, 122 Wash. 52, 209 Pac. 1080 [1081], The law of the state of Washington is that a forfeiture clause, such as contained in the instant contract, is not void as against public policy, regardless of whether or not it is considered a penalty, or a provision for liquidated damages.