Court Opinion

ID: 9528480
Source: CourtListenerOpinion
Date Created: 2023-08-07 03:41:33.030672+00
Date Added: 2024-06-11T13:26:54.306967
License: Public Domain

THOMAS, Justice.
The problem posed in this case is whether the parties to an installment land contract intended to enter into a bilateral or a unilateral agreement. The trial court examined the instrument, found it to be unambiguous, and concluded that it reflected an offer that could be accepted only by making the payments required by the instrument. The buyer, Charles P. Belgarde (Belgarde), then was awarded a summary judgment because the trial court ruled that the only remedy available to the seller upon the failure of the buyer to make payments under the instrument was to retake the property. The seller’s assignee, Metropolitan Mortgage and Securities Co., Inc., (Metropolitan) had sought specific performance of the installment land contract as well as damages for past due payments. Given the language of the instrument and potential varying interpretations of that language, we conclude that the instrument was ambiguous and reverse the summary judgment because a genuine issue of material fact exists as to the intention of the parties. We remand the case to the trial court to resolve that issue of fact at a trial on the merits.
Metropolitan, in its Brief of Appellant, states the issues to be:
“1. Did the trial court err in ruling that specific performance was not an appropriate seller’s remedy in this case?
“2. Did the trial court err in ruling that the seller was limited to the remedy of forfeiting the contract and taking the property back?”
*870In his Appellee’s Brief, Belgarde adopts the issues as stated by Metropolitan.
In May of 1982, Dale and Carolyn Schilling entered into an “Agreement for Warranty Deed” to transfer ownership of some property in Gillette to Belgarde for $495,-000. That instrument provides in part:
“IN CONSIDERATION of the sum of $5,000.00 paid by Buyers to Sellers, the receipt and sufficiency of which is hereby acknowledged as part of the purchase money for the premises hereinafter described, the Sellers hereby agree, promise, and covenant to convey a fee simple title to Buyers, by a good and sufficient Warranty Deed, the following described land situate in Campbell County, State of Wyoming * * * under the following terms and conditions:
“I.
“PURCHASE PRICE
“The total sale price shall be the sum of $495,000.00, including all improvements now on said property, and any other such improvements as may hereinafter be placed on said premises by Buyers, the latter to be held as additional security in case of failure to fulfill the covenants of this contract.
“Buyers shall pay to Sellers the sum of $6,041.81 down payment as follows: $5,000.00 presently held by Sellers and $1,041.81 to be paid on the signing of this agreement. Buyers will assume a note in the amount of $94,000 from Sellers to Herbert R. Stollorz and Carol A. Stollorz, * * *. This note shall be assumed and payable prior to May 15, 1982.
“The remaining $394,958.19 shall be paid as follows: An additional $50,000.00 cash plus 14% interest per annum from May 1, 1982, shall be paid on July 1, 1983. The Buyers also agree to assume the payments under the existing Agreement for Deed in the amount of $144,958.19 payable at the rate of $2,312.71 per month, including interest at 10% per annum, with the entire balance due in approximately 7V2 years.
“The balance in the amount of $200,-000.00 shall be due and payable in monthly payments of $2,500.00 per month, including interest at 14% per annum from May 1, 1982, with the entire balance due in ten (10) years.”
The deed was to be held in escrow until Belgarde performed all the conditions of the contract. The agreement also listed those occurrences that would constitute a default on the buyers’ part and stated:
“In the event of such a default Sellers, at their option, may declare this agreement null and void and may, with or without process of law, take immediate possession of the said premises and regard any persons thereon as guilty of forcible detainer; hold and retain all monies paid hereunder as liquidated damages, rent, and compensation for the use and benefit of the property. Sellers shall be entitled to any additional damages incurred as a result of Buyers’ holding over.
“In the event Sellers declare this agreement null and void in accordance with the terms hereof, the escrow agent shall deliver all of said instruments to Sellers upon the receipt of an affidavit of default for reasons hereinabove provided.” (Emphasis added.)
The Schillings assigned their interests in the land and the “Agreement for Warranty Deed” to Metropolitan in 1986. At the time of the assignment, approximately $190,761 remained due from Belgarde to complete the transaction. In August of 1988, Belgarde stopped making the monthly payments. In February of 1989, Metropolitan’s counsel sent notice to Belgarde that he was in default, owing at that time about $18,000 and, in March of 1989, Metropolitan filed suit alleging that Belgarde was in default. Metropolitan claimed that it had no speedy and adequate remedy at law and was entitled to specific performance of the “Agreement for Warranty Deed” as well as damages for past due payments.
Both parties subsequently filed motions for summary judgment. Metropolitan argued that forfeiture was not its only reme*871dy for default and that it should be able to avail itself of specific performance of the contract and seek damages for past due payments. Belgarde argued that Metropolitan was limited to pursuing the remedy specifically provided in the agreement and that Metropolitan should close out the escrow, retain all payments as liquidated damages, and retake the land.
The trial court denied Metropolitan’s motion on the specific performance issue, but requested additional briefing before considering Belgarde’s motion and Metropolitan’s damage claim. Belgarde filed a second motion for summary judgment asking for a declaration that Metropolitan’s remedies were limited to those under the agreement, an action in ejectment, or an action in strict foreclosure. A hearing followed in which the court granted Belgarde’s motion for summary judgment, stating that “taking the property is [Metropolitan’s] only remedy.” The court subsequently issued an order reflecting this determination.
In announcing his decision from the bench, the judge said:
“Having cleared those two things up, I want to turn to my analysis. Before I start, I want to tell you that, and I guess it’s merely pointing out the obvious, I’m not free to do what I think is fair and I’m not free to do what I would like. I’m bound to follow the law. In this case, I think what the parties intended was that the buyers were going to buy this property and they promised to pay the money, and the sellers were satisfied with those promises. I think what would be fair under the circumstances is to make Belgarde live with what probably everyone thought their obligations were at the time. However, I have to deal not with what I think the parties probably intended but what they, in fact, said.
“I’m looking at the agreement for warranty deed, and what it says is that the buyers — or, I mean, the sellers promise to convey the real property under the following terms and conditions. Then it goes into the recital of the purchase price and says what the buyers’ obligations are. What that says to me is that the sellers agree to perform if the buyers perform. They — the buyers have not undertaken, at least by a plain reading of the language of the statute (sic) [instrument], an obligation to do that, to an independent obligation, an independent promise to pay. They have an obligation if they want the land conveyed to them, so it’s a conditional sales contract.
“Looking at the remedies, it does provide for default, and it provides a remedy in event of default. Now, the sellers, at their option, can declare the agreement null and void. They’ve elected not to do that, and if they elect not to declare it null and void, unless there’s an independent promise by the buyers to do something, I don’t know what their remedy is. It’s not clear within the terms of the contract, and I think under existing law there’s no independent obligation on the part of the buyers to do anything. They simply don’t have the right to have the real property conveyed to them if they fail to keep up their end of the bargain. “So that is my legal interpretation of that instrument. Necessarily, from that interpretation flows the conclusion that the seller’s remedy is to take the property back, period. So while I’m somewhat dismayed that that’s — that’s the result because I don’t think it’s a fair one, nevertheless, that is, I think, what the parties agreed to and the extent of their obligation.”
The question of the intention of the original parties, as in all property disputes involving contracts, is critical to the resolution of this dispute. Johnson Storage and Moving Co. v. Victory, Inc., 774 P.2d 636 (Wyo.1989); True Oil Co. v. Sinclair Oil Corp., 771 P.2d 781 (Wyo.1989). See U.S. through Farmers Home Admin. v. Redland, 695 P.2d 1031 (Wyo.1985). In considering the issues presented by these parties, we recall that we have analyzed the rights of parties to transactions involving sales of land in this way:
“A further and more basic question, however, is presented by this case. The question, which was neither reached by the district court nor directly briefed by the parties, is whether the transaction at *872issue represents an installment land contract or a conveyance with a mortgage back. The significance of this determination can readily be seen. If the agreement represents a conveyance with a mortgage back, the forfeiture provision was unenforceable. See generally E. Rudolph, The Wyoming Law of Real Mortgages at 147 (1969) * * *. A mortgagee’s only remedy upon mortgage default is foreclosure and public sale, either by power of sale pursuant to Wyo.Stat. §§ 34-4-101 to -113 (1977) or by judicial sale in accordance with Wyo.Stat. §§ 1-18-101 to -112 (1977). L Slash X Cattle Company, Inc. v. Texaco, Inc., 623 P.2d 764 (Wyo.1981). See also Marple[v. Wyoming Production Credit Association], 750 P.2d [1315] at 1318, n. 2 [(Wyo.1988)] (in case of equitable mortgage, foreclosure was the remedy — not quiet title). * * * Conversely, when a transaction is accomplished by means of an installment land contract, the seller, while often able to enforce a forfeiture provision, is not entitled to a deficiency. Baldwin v. McDonald, 24 Wyo. 108, 156 P. 27 (1916).
“In an installment land contract, the seller agrees to accept payments from the purchaser, generally by a series of installments over time, until the purchase price as established by the contract has been paid. When the contract price has been paid, the seller must deliver a deed to the purchaser. Insurance Company of North America v. Ventling, 771 P.2d 388 (Wyo.1989); E. Rudolph, supra at 147-48. Prior to the final installment payment and delivery of the deed, the seller retains legal title. Id.; Baldwin, 156 P. 27; 7 R. Powell, The Law of Real Property ¶ 938.20[1] (1989). Although the purchaser usually is given the right to possession, his interest in an installment land contract is equitable, not legal. Insurance Company of North America, 771 P.2d 388; Baldwin, 156 P. 27.
“The fundamental difference distinguishing a mortgage from an installment land contract, at least in states applying a lien theory to mortgages, is that, in a mortgage, fee title has vested in the purchaser/mortgagor. Marple, 750 P.2d 1315; Baldwin, 156 P. 27. When a question as to the nature of the transaction arises, however, and in order for a court to find a mortgage, it must be shown that the parties intended a mortgage transaction rather than an installment land contract; i.e., there must have been an intent to create a security, as construed from the written agreement and the surrounding circumstances. Angus Hunt Ranch, Inc. v. Reb, Inc., 577 P.2d 645 (Wyo.1978); Baldwin, 156 P. 27. See also 7 R. Powell, supra, ¶ 938.20[3] at 84D-13 (installment land contract not the functional equivalent of a mortgage absent clear proof that parties intended to create a mortgagor-mortgagee relationship (citing Angus Hunt Ranch, Inc.)).” Cliff & Co., Ltd. v. Anderson, 777 P.2d 595, 600-601 (Wyo.1989) (footnote omitted).
In an early case, this court discussed the doctrine of equitable conversion, a principle that is not invoked with respect to a unilateral contract, which is how we have characterized an installment land contract, and said:
“ * * * This rule, for many purposes, determines in equity the rights of the parties and others who have succeeded to the interest of either party by transfer or otherwise; and the rule is itself but the consequence of the familiar doctrine of courts of equity that for many purposes things agreed to be done are treated as if they were actually done, and necessarily refers to a valid contract — one binding upon both parties, containing not only an obligation on the part of the vendor to convey upon payment of the purchase price, but an obligation on the part of the vendee to purchase and pay the purchase money, and has no reference to a mere option to purchase or to complete the purchase. 3 Pomeroy’s Eq. Juris. (3rd Ed.) §§ 1260, 1261, and note; Lysaght v. Edwards, 2 L. R. Ch. Div. 499; Milwaukee v. Milwaukee County, 95 Wis. 42, 69 N.W. 796; People v. Shearer, 30 Cal. 645, 648. It is evident that, if the purchaser is not obligated to pay the purchase money, the vendor cannot be treat*873ed even in equity as the owner of the money, and therefore, in such case, there would be no ground for applying the doctrine of equitable conversion.” Olds v. Little Horse Creek Cattle Company, 22 Wyo. 336, 346, 140 P. 1004, 1007 (1914).
Like the parties in Cliff & Co., Ltd., the parties in this case, although implicitly broaching the subject, have not sufficiently addressed the language in the “Agreement for Warranty Deed” to indicate whether the actual intention of the original parties to the agreement was that it establish an installment land contract characterized by an obligation unilaterally placed on the seller only upon the occurrence of certain non-mandatory acts by the buyer or whether it was to be a bilateral agreement equivalent to a mortgage, either in law or equity, resulting in the property providing a security interest against a binding debt. See Angus Hunt Ranch, Inc. v. Reb, Inc., 577 P.2d 645 (Wyo.1978). If the latter situation pertained, a deficiency judgment could be appropriate if it were justified by the circumstances.
The trial judge’s conclusion was that the instrument he was construing imposed no duty upon Belgarde to make the payments provided for in the instrument. Although admittedly troubled by the result, the judge ruled that this left Metropolitan with no remedy other than forfeiture. Metropolitan, as others might, reads the contract differently, treating it as a bilateral contract with mutual obligations to the end that the seller would have available the full panoply of remedies in law and equity.
These parties chiefly question whether an installment land contract is limited entirely to the remedy of forfeiture as a matter of law. The arguments presented implicitly assume the existence of a bilateral installment land contract. The usual obligations of a bilateral contract are different from those generally accepted with respect to a contract for deed. While the debated issue is intriguing, the question cannot, and need not, be resolved under the circumstances of this case without first determining the factual issue involving the intentions of the parties. Cf., Olds (doctrine of equitable conversion implies buyer’s obligation under contract for deed). Consequently, we focus on that single aspect.
It is apparent from the circumstances that the property in dispute no longer is worth what is owed upon it. It follows that Metropolitan’s claim is the functional equivalent of a demand for a deficiency judgment, a remedy normally found only in a mortgage situation. Belgarde’s stance, on the other hand, hinges on the generally adopted view that forfeiture is the sole remedy under the normal construction of an installment land contract. Resolution of this divergence requires a factual determination as to whether the language of the parties was sufficient to create a contract binding on both parties. A bilateral contract is the predicate for any conclusion that the real intent, as the trial judge intimated, of the parties was to create a security interest in Metropolitan’s predecessor that would justify a remedy alternative to forfeiture.
Our rule is that an ambiguity in a written instrument precludes the trial court from awarding a summary judgment because there is a genuine issue of material fact with respect to the intent of the parties. Weaver v. Blue Cross-Blue Shield, 609 P.2d 984 (Wyo.1980); Meuse-Rhine-Ijssel Cattle Breeders of Canada, Ltd. v. Y-Tex Corporation, 590 P.2d 1306 (Wyo.1979). See Centric Corp. v. Drake Bldg. Corporation, 726 P.2d 1047 (Wyo.1986). It is only when there is no ambiguity in the instrument that summary judgment is appropriate in a contract case. Wyoming Game and Fish Commission v. Mills Co., 701 P.2d 819 (Wyo.1985); Kuehne v. Samedan Oil Corp., 626 P.2d 1035 (Wyo.1981); Madison v. Marlatt, 619 P.2d 708 (Wyo.1980). Furthermore, we have said that the intent of the parties that the property transaction be a mortgage rather than an installment land contract is to be shown from their written agreement and the surrounding circumstances. Angus; Baldwin v. McDonald, 24 Wyo. 108, 156 P. 27 (1916).
*874The parties in this case appear to have different perceptions of the decision of the trial court. We are satisfied that the trial judge followed the foregoing precepts in concluding that the contract was unambiguous and that Belgarde was entitled to judgment as a matter of law. The judge simply treated the instrument as an offer subject to acceptance only through completion of an act by the purchaser (sometimes called a unilateral contract). The court ruled that the buyer’s acceptance of the seller’s offer could be accomplished only by the buyer making the payments provided for in the instrument. Since it was not a bilateral contract, however, it imposed no obligations upon the buyer.
What the judge overlooked is that the seller presented the instrument as a bilateral contract in this instance by seeking remedies different from forfeiture, and the court, as well, did not analyze the language of this court that expands the consideration of the parties’ intent on this issue beyond the written agreement to a consideration of the surrounding circumstances. The “Agreement for Warranty Deed” is, therefore, subject to a different construction from that adopted by the trial court, and the diametrical views that are offered with respect to that instrument lend credence to a conclusion that it, in fact, is ambiguous. The trial judge read the language as providing only the method for accepting the offer to sell. The same language can be read as imposing a duty upon the buyer to make the payments that are provided. That duty is the essence of a bilateral contract. Olds.
Metropolitan also relies upon language in the contract that provides that in the event of default “Sellers, at their option, may declare this agreement null and void and may, with or without process of law, take immediate possession” of the property. (Emphasis added.) Metropolitan contends that this language recognizes an option to declare the agreement null and void and, by implication, provides that it may, in the alternative, enforce the contract. Belgarde argues that this language does nothing more than provide a right to declare a forfeiture and that is Metropolitan’s only option. He contends that, in the absence of a declaration of forfeiture, the contract remains in effect thus permitting him to cure any default. Neither party refers to the language in the instrument providing that improvements later made to the premises are “to be held as additional security in case of failure to fulfill the covenants of this contract.” (Emphasis added.)
Belgarde does not account for the provision for liquidated damages found in the forfeiture clause. That could be perceived as evidencing his recognition that a bilateral contract was entered into that created a security interest in the property and established obligations on his part. Under a true unilateral contract, the concept normally applicable to an installment land contract because it provides for acceptance only through performance of the stated conditions, the offeree or buyer would be bound to no obligations whatsoever, including any duty to pay liquidated damages. Until he had accepted by paying according to the instrument, no contract existed. It was only an offer until the buyer had completely performed the conditions attached to the offer to sell. Cf., Shellhart v. Axford, 485 P.2d 1031 (Wyo.1971) (mutuality of obligation is a requirement for a contract). Belgarde’s reliance on the forfeiture clause is a matter of concern, but that reliance avoids the argument that commencing performance might invoke a binding promise to completely perform. That question, however, is not before us in this case. We do emphasize that the possibility of a bilateral contract should not encourage those whose rights under a contract for the sale of land have been forfeited to seek the return of moneys paid on the defaulted contract. There are theories under which such a forfeiture is clearly justified, See Bentzen v. H. N. Ranch, Inc., 78 Wyo. 158, 320 P.2d 440 (1958), and, indeed, the time to raise that question must be when the forfeiture is pursued.
It is obvious that reasonable minds can, and do, differ over what the parties intended when entering into the “Agreement for Warranty Deed.” In a contract *875case, that difference in interpretation constitutes the genuine issue of material fact that forecloses summary judgment. Weaver; Meuse-Rhine-Ijssel. See Centric Corp. The concomitance is that the other party seeks to enforce a contract that is no less ambiguous, and the factual issue of intent must first be submitted to the trier of fact before the pertinent rules of law may be applied. In arriving at that determination, the surrounding circumstances must be accounted for in a case involving an instrument such as this.
Our cases structure a presumption that an instrument such as this is a “unilateral contract” pursuant to which the seller is limited to forfeiture as a remedy, but they also recognize that a contrary intention can be established by either party. The claim of a contrary contention can first be raised by the seller simply by eschewing forfeiture as the remedy and seeking the alternative remedy of foreclosure followed by a deficiency. The question of the intention of the parties is squarely raised when the seller proceeds in that fashion and, in treating with that issue, the court must address both the written agreement and the surrounding circumstances. It is likely that the issue will require a trial in most cases in the absence of an admission by the purchaser that the remedy invoked by the seller is correct.
Conversely, the purchaser can assert this issue by bringing an action for relief if the seller proceeds to assert the remedy of forfeiture. In the absence of any admission by the seller, the claim that a bilateral contract is present would require a trial in most cases because of the necessity to consider the written agreement and the surrounding circumstances to discern intent. It appears that, once the question is raised, any presumption that favors an installment land contract can be rebutted by the party asserting a bilateral contract if that party can demonstrate an intent to create a mortgage.
We view our cases as manifesting a strong bias in favor of a trial on the issue of the intent of the parties, to be determined from their written agreement and the surrounding circumstances. We also are satisfied that the parties can draft agreements to settle the question. They have the opportunity, and the power, to specify in their agreement whether it is an installment land contract limiting the remedy to forfeiture or, in the alternative, whether it is intended to be a bilateral agreement invoking the doctrine of equitable conversion. If they choose to endeavor to keep their options open by not specifying the nature of their agreement, they should have no complaint about the necessity of a trial to settle the question of intent in accordance with this opinion.
The summary judgment is reversed and the case is remanded to the district court for trial.
URBIGKIT, C.J., files an opinion concurring in the result.
CARDINE and MACY, JJ., file dissenting opinions.