Engstrom v. Bushnell

TUCKETT, Justice: The plaintiffs filed this action in the District Court of Carbon County asking the court to declare invalid and of no force and effect a promissory note and second mortgage on properties in Price, Carbon County, Utah, and in Orem, Utah County, Utah, and that a certain fund being held by a real estate agency in Burley, Idaho, be declared to be the property of the plaintiffs. The plaintiffs moved for a summary judgment. The plaintiffs’ motion was granted. The court’s order granting the plaintiffs’ motion also provided that the relief sought by the plaintiffs pursuant to the motion for a summary judgment would not become effective until a determination by the court of the issues raised by the defendants’ counterclaim. The matter was ordered transferred to the trial calendar for trial upon the issues raised by the counterclaim. The defendants appeal to this court from the order granting a summary judgment in favor of the plaintiffs. It is doubtful whether this was a final judgment as contemplated by Rule 72(a), Utah Rules of Civil Procedure. However, the court was not asked to determine that problem. The transactions involved in this case arose out of a contract entered into by the parties for the sale of land in Millard County, Utah. The appeal to this court seeks a reversal of the lower court’s interpretation of the contract entered into by the parties. By the terms of the contract the Bushnells agreed to sell to the Engstroms a ranch containing approximately 840 acres in Millard County. The terms of the contract provided that the Engstroms were to pay the sum of $500 at the time of execution of the contract and the balance of $57,500 in installments of $4,000 on December 20, 1063, and like installments annually until the sum of $35,000 and interest had been paid. In addition to the above mentioned installment payments the Engstroms were to pay $3,500 on or before September 1, 1963, $4,000 on or before December 20, 1964, and further installment payments until the sum of $23,000 together with interest had been paid. The installment payments amounting to $35,000 were undoubtedly intended to retire the mortgage in that amount in favor of Equitable Life Assurance Society of the United States. The balance of .the installment payments in the sum of $23,000 appears to have been .intended to pay the Bushnells for their equity in the ranch. The installment payments coincided with those of the note set forth in the second of the payment provisions of the contract and second mortgages we are here con [252] cerned with. It would seem that the note and mortgages were intended to provide an additional security to the Bushnells for their equity in the ranch. The parties entered into a supplemental agreement wherein Engstroms agreed to permit the Bushnells to pasture 100 head of cattle together with SO head of suckling calves for a period of three months during the year 1963. The Engstroms further agreed that they would not plow any land then planted to grass or alfalfa without the approval of the Bushnells. The Engstroms defaulted, in their payment due on September 1, 1963, and based on that default together with other breaches of the real estate contract claimed by the Bushnells, the latter by letter dated October 1, 1963, notified the Engstroms that they elected to terminate the contract unless the defaults were cured within five days. From failure of the Engstroms to cure the defaults the Bushnells re-entered and took possession of the ranch. Under the terms of the real estate contract entered into by the parties the sellers, the Bushnells, had the option of three alternative remedies. The Bushnells had the right to declare the contract forfeited after notice and failure upon the part of the Engstroms to cure any default or defaults in the performance of the contract on their part. The Bushnells also-had the option of suing to recover delinquent installments, and as a third alternative they had the right to proceed to foreclose the contract pursuant to the laws pertaining to the foreclosure of mortgages^ The Bushnells elected to declare the contract terminated and to re-enter and take possession of the property. The Bushnells-in electing to forfeit the contract were entitled to retain as liquidated damages-the $500 down payment made by the Eng-stroms.1 The Bushnells in .the court below and on appeal earnestly contend that the promissory note secured by the three second mortgages was a part of the down payment which they were entitled to also claim as liquidated damages. The answer to the Bushnells’ contentions in this regard is that the contract does not so provide. As the trial judge pointed out in his memorandum decision, if the Bushnells were permitted to retain the $500 in cash paid down at the time of the signing of the contract and were also permitted to recover on the note for $15,500 their recovery for the breach of contract would amount to $16,000 in addition to the performance promised by the Engstroms in their supplemental agreement. It would appear that such a recovery on the part of the Bush-nells would far exceed any damages suffered by them by reason of the Engstroms’ [253] possession of the ranch for a period of approximately four months.2 We are of the opinion that the Bushnells having elected to terminate the contract are entitled to retain the down payment as provided therein, hut they are not entitled to retain in addition thereto the note and mortgages executed simultaneously with the contract and as a part of the transaction. The decision of the trial court is affirmed. Costs to the plaintiffs. CROCKETT, C. J., and C ALLIS TER and HENRIOD, JJ., concur. Footnotes [1] Andreasen v. Hansen, 8 Utah 2d 370, 335 P.2d 404; McMullin v. Shimmin, 10 Utah 2d 142, 349 P.2d 720. [2] Andreasen v. Hansen, supra.