Clampitt v. A.M.R. Corp.

ON DENIAL OF PETITION FOR REHEARING

BISTLINE, Justice,

dissenting.

PREFACE

There is likely little to be gained by re-plowing the same ground. Nevertheless, I feel constrained to make a final effort at pointing out exactly where the majority is taking the law and how erroneously it gets there. The majority today is making a drastic change in the law of vendor-vendee. Time will soon demonstrate that it is bad law which wil1 lead to an increase in litigation and Produce unjust results not ever contemplated by litigating parties as evidenced by their written contracts.

As I have on many occasions conceded, any day that three members of this Court want to decide a case a certain way (result-oriented), irrespective of existing law or by making new law, their will will be done. If the majority today were to forthrightly declare themselves to be making new law, I would be less disturbed. But, the majority makes no such forthright admission, and on the contrary would have it believed that a bit of dictum found in Anderson, and a dissected excerpt from an ancient A.L.R. annotation form a backbone for the majority holding. Although my previous effort at exposing this dissemblance did not provoke the slightest response, I am not dissuaded from one last writing which is narrowed down to the dictum, and to the A.L.R. excerpt.

What the law in Idaho has been until Clampitt.

Since Graves v. Cupic, 75 Idaho 451, 272 P.2d 1020 (1954), was announced, it and its progeny have stood for the proposition that a vendee whose contract has been terminated by the vendor is, under a theory of restitution based on unjust enrichment, entitled to recover back from the vendor that amount by which the payments made exceed the vendor’s actual damages caused by the vendee’s breach — provided, however, that the difference between the same is so disproportionate that the provision whereby the vendor would be allowed to retain all monies paid by vendee (usually under the terminology of liquidated damages) is held to be a penalty.

The rules for making that determination have been many times well stated over more than 30 years. The vendor is entitled to set off against vendee’s payments that amount found to be reasonable rental for the vendee’s occupation of the premises. There may be special damages which also afford the vendor a set-off. Always a consideration is that on the vendee’s surrender of the premises, often including personalty, the same are found to be of less value than at the contract’s inception. In Anderson v. Michel, 88 Idaho 228, 239, 398 P.2d 228, 234 (1965), for instance, the trial court found that the fair market value of the realty when it was turned back was $31,140 less than when the vendees took possession. 88 Idaho at 236, 398 P.2d at 232. In no case until today, Clampitt, has the cost of a resale of the repossessed premises ever been considered as an element of a vendee's damages. Nor was it in Anderson. The trial judge who decided that case was explicit:

“Actual damages here sustained by the plaintiffs 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 they could be considered a penalty under the provisions of Idaho law, considering the magnitude of the transaction.” Anderson, supra, at 236, 398 P.2d at 232.

The Supreme Court, after making minor adjustments, came to the same conclusion. In agreeing with the district judge, it used practically the identical language of the district judge:

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 reasonable 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.

“Practically” I say, because of the insertion of the phrase, “the possible expenses of a resale of the property.” The district judge did not use that language. A resort to the file in the clerk’s office discloses that no contention was ever made that “possible expenses of a resale” was ever pleaded or claimed as an element to go into the equation. The trial court in a lengthy and comprehensive memorandum decision and in detailed findings of fact and conclusions of law, never touched on that subject — simply because it. had never been held to be a proper element of consideration. A vendor who has repossessed might decide to sell again, and he might not. He might sell again after five years, after ten years, or immediately — but in any event, no court until today has actually speculated that “possible expenses of a resale” are to be taken into account. For absolute certain, Graves, the only case cited in Anderson for the novel “possibility of resale” doctrine made not the slightest intimation that such was there involved. Nor was it involved, as a close perusal of that file discloses.

If one member of the majority would add to its opinion an explanation reasoning why the statement from Anderson is not sheer obiter dictum, I would withdraw the dissent.

If one member of the majority would likewise add to that some valid reasoning which is even halfway convincing that the A.L.R. excerpt has any application to this case, I would withdraw the dissent.

If one member of the majority would likewise add to its opinion something from the record which shows that those contracting parties at the time of contracting both contemplated the kind of special damages which here were claimed by the vendors, awarded by the trial court, and sustained by a majority of this Court, I would withdraw the dissent. Presently there is nothing to behold but the majority’s ipse dixit of which mention was earlier made: “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 years has the profession labored under the mistaken belief that a party claiming special damages had to show that such were actually or implicitly within the contemplation of the parties at the inception of the contract. 22 Am.Jur.2d Damages § 56 (1965); also §§ 57, 58, 59, and 60. The law as therein reviewed was relied upon and accepted by this Court in the leading case of Brooks v. Jensen, 75 Idaho 201, 218, 270 P.2d 425, 442 (1954):

Conceding, without deciding, appellants might in rescission be entitled to damages in addition to return of payments and value of improvements, Houchin v. Braham Invest. Co., 202 Minn. 540, 279 N.W. 370, 120 A.L.R. 1154; see also Stewart v. Salisbury Realty & Ins. Co., 159 N.C. 230, 74 S.E. 736, and Vicker v. O’Connor, 218 Wis. 216, 260 N.W. 426; appellants’ expenses for trips from and loss in the sale of their property in Montana, though necessary to secure funds to make the purchase herein, are too remote and were not sufficiently within the contemplation of the parties to be recoverable. 25 C.J.S., Damages, §§ 24, 25, pp. 481, 488; 15 Am.Jur. 451, § 52 and 471, § 66. (Emphasis added.)

Although the author of the majority opinion avoids going beyond declaring what “additional damages could include in the proper case,” implicit in the majority opinion is the premise that the trial judge did find the special damages in question to have been within the rule of Hadley v. Baxendale, 9 Exch 341, 156 Eng Reprint 145 (1854), and Brooks. He did not do so. Rather, he found only the special damages actually sustained by vendors — which were said to be found intertwined — not found to have been contemplated.

The only indication in the record as to what in the way of damages was within the contemplation of the parties at the inception is the contract itself, and in particular in paragraphs 8, 9, and 16 of that agreement. The agreement, minus signatures and personal property descriptions, is appended. Paragraphs 8 and 9 make the vendee liable for waste and failure to maintain. Paragraph 16 declares the vendor’s remedies for uncured default:

If the buyer fails to correct said default within said thirty-day period, then the seller may at its option and without further notice declare the whole unpaid balance of said purchase price immediately due and payable and proceed at once to recover the same or declare a forfeiture of all of the rights of the buyer under this agreement and of all of its interest in and to said property, retaining all sums theretofore paid by the buyer under the terms hereof as the reasonable value for the use and occupation of said property during the time that possession of the same is retained by the buyer hereunder, or the seller may at its option bring an action in equity or at law for specific performance with damages. (Emphasis added.)

Of interest, paragraph 11 displays that it was within the contemplation of the parties that the vendors might fail to make payments on their underlying contracts — in which event “then for the purpose of protecting its equity in said property the buyer may at its option make any payment deemed by it to be necessary to protect its rights under this contract and any such payment made by the buyer shall be credited upon the purchase price to be paid to the seller, either of principal or interest, under the terms of this agreement.” Nothing in the contract, nor in the record, justifies the majority in finding that which the trial court did not find — that the special damages here charged against the vendees were within the contemplation of the parties at the inception of the contract.

In the four months which have gone by since our opinions were released on May 6, 1985, not one member of the majority has supplied one word to allay the concerns which I then expressed. If a member of this Court cannot obtain any response whatever to a question raised to an opinion, what may the poor practitioner expect?

AGREEMENT FOR SALE OF FARMING PROPERTY

SUBJECT:

ELMORE COUNTY FARMING LAND AND ALL WATER RIGHTS AND IRRIGATION EQUIPMENT

PARTIES:

DELBERT CLAMPITT and DELSIE CLAMPITT, husband and wife, and GARY A. CLAMPITT a single man, Sellers,

and

A.M.R. CORPORATION, an Idaho corporation, Buyer.

SALES AGREEMENT, made this 11th day of July, 1974, between DELBERT CLAMPITT and DELSIE CLAMPITT, husband and wife, and GARY A. CLAMPITT, a single man, whose address is Box 106, Hammett, Idaho, hereinafter designated in the singular and by masculine gender as the seller, and A.M.R. CORPORATION, an Idaho corporation, whose address is 589 North Water Avenue, Idaho Falls, Idaho 83601,,hereinafter designated as the buyer;

WITNESSETH: That for and in consideration of the sum of Two Million Three Hundred Thousand Dollars, to be paid as hereinafter specified, and in consideration of the covenants and agreements herein contained, the seller hereby agrees to sell and convey and the buyer hereby agrees to purchase the following described real and personal property located in the County of Elmore, State of Idaho, and particularly described as follows:

REAL PROPERTY, described as follows:

PARCEL NO. 1

All of Section Twenty-seven; all of Section Thirty; All of Section Thirty-one; All of Section Thirty-two and all of Section Thirty-three, in Township Four South, Range Seven East, Boise Meridian;

The East Half of Section Five, Township Five South, Range Seven East, Boise Meridian.

That portion of the Northwest Quarter of the Southwest Quarter of Section Twenty-one, Township Five South, Range Seven East, Boise Meridian, bounded as follows:

Commencing at the Northwest corner of the Northwest Quarter of the Southwest Quarter of Section Twenty-one, Township Five South, Range Seven East, Boise Meridian; thence South 89°54' East along the North line of the Northwest Quarter of the Southwest Quarter of said Section Twenty-one a distance of 80.4 feet to the True Point of Beginning; thence continuing South 89°54' East 200.8 feet; thence South 31°49' West 267.5 feet; thence South 3°00' East 409.8 feet; thence South 22°36' East 328.3 feet; thence South 36°19' East 473.2 feet to a point on the South line of the Northwest Quarter of the Southwest Quarter of said Section Twenty-one; thence North 89°54' West along the South line of the Northwest Quarter of the Southwest Quarter of said Section Twenty-one a distance of 112.2 feet; thence North 44°50' West 221.5 feet; thence North 27°17' West 444.2 feet; thence North 13°22' West 121.25 feet; thence North 4°08' West 210.2 feet; thence North 0°39' East 287.1 feet; thence North 9°08' East 156.0 feet back to the True Point of Beginning.

PARCEL NO. 2

The West Half of Section Five, the East Half of Section Six, the Northeast Quarter of Section Seven and the Northwest Quarter of Section Eight, all in Township Five South, Range Seven East, Boise Meridian, hereinafter referred to as the “Groefsema Property”.

PARCEL NO. 3

The new pump system already installed for the irrigation of the land described in Parcel No. 1 above, including but not limited to the following:

At the River Station, four 600 hp U.S. Electric Company motors and Johnson pumps type 519-716, together with five Cook electric panels;

At the Relift Station, two 300 hp Vinson Carter Electric Company motors and Johnson pumps, together with three Cook electric panels; and one Kellogg American air compressor and panel.

At the Pressure Station, two 500 hp U.S. Electric Company motors and Johnson pumps type J519-718, together with Cook electric panels;

At the Deep Well, one 200 hp deep well pump and U.S. motor, Serial No. 1376334, together with panel.

PARCEL NO. 4

All hand lines for irrigation, more particularly described upon the schedule attached hereto marked “Exhibit A” and by this reference made a part hereof.

PARCEL NO. 5

All pipe of whatever nature installed underground for the purpose of transmitting irrigation water from the point of diversion to place of use.

PARCEL NO. 6

All canals and ditches constructed for transporting irrigation water from Snake River to place of use or from pipelines to place of use.

PARCEL NO. 7

All pumps as listed and described upon the schedule attached hereto, marked “Exhibit B” and by this reference made a part hereof.

ALL TOGETHER with all rights of way for pumping station or water transmission and together with all water permits issued for the use of irrigation water upon any of the real property above described, and together with the tenements, hereditaments and appurtenances thereunto belonging or in anywise appertaining, but all subject to patent reservations and easements visible or of record.

1.PURCHASE PRICE. The buyer, in consideration of the premises, agrees to pay to the seller for said real and personal property the said sum of Two Million Three Hundred Thousand Dollars, payable at the times and in amounts as follows:

The sum of $10,000.00 prior or at the time of the execution of this agreement, the receipt of which is hereby acknowledged by the seller;

The sum of $250,000.00 on or before the 10th day of December, 1974;

The sum of $250,000.00 on or before the 10th day of February, 1975;

The sum of $89,500.00 on or before the 10th day of December, 1975;

The sum of $89,500.00 on or before the 10th day of February, 1976;

The sum of $89,500.00 on or before the 10th day of December, 1976, and a like sum on or before the 10th day of February and 10th day of December of each and every year thereafter until said purchase price, together with the interest hereinafter mentioned, has been paid in full.

2. INTEREST. The deferred balance of said purchase price shall bear interest from the date of this agreement until paid at the rate of nine per cent per annum. The first payment of interest shall be made on or before the 10th day of December, 1974, at the time of the payment of $250,-000.00 upon the principal sum, and the interest shall be paid thereafter upon the 10th day of February and upon the 10th day of December of each year, simultaneously with the payment of the installment upon the principal sum in accordance with the schedule set forth above.

3. RIGHT OF PREPAYMENT. The buyer may at its option pay all or any part of said purchase price on or before the due date thereof, without penalty, and interest shall be charged only upon the principal balance remaining from time to time unpaid.

4. ALLOCATION OF PURCHASE PRICE. It is understood and agreed that the total purchase price of Two Million Three Hundred Thousand Dollars is allocated to and being paid for each parcel of property as set forth, on the schedule attached hereto, marked “Exhibit C” and by this reference made a part hereof.

5. PLACE OF PAYMENT. All of said deferred payments shall be paid by the buyer to the seller at the Idaho First National Bank in Mountam Home, Idaho, which said bank is designated as escrow holder under the provisions of this agreement.

6. TAXES AND WATER PUMPING CHARGES. The seller agrees to pay and discharge all unpaid taxes and water pumping and maintenance charges levied or assessed against said property or incurred in connection therewith for the year 1974 and all prior years. The buyer agrees to pay all taxes, water pumping charges and maintenance charges levied or assessed against said property or incurred in connection therewith for the year 1975 and all subsequent years. If the buyer fails to pay the taxes or assessments herein agreed by it to be paid before the same go delinquent, the seller may declare the buyer in default under the terms of this agreement, after notice as hereinafter mentioned, or may at his option make any payment deemed by him to be necessary to protect the title to the property herein sold, and any such payment made by the seller shall be considered as a portion of the unpaid purchase price and shall bear interest at the rate of nine per cent per annum from the date of payment until repaid by the buyer and the buyer agrees to repay the same upon demand. It is understood that the seller has entered into a service contract with Idaho Power Company for the purpose of obtaining electric power with which to operate the electric motors and pumps for irrigation purposes and that under the terms of said contract the seller has guaranteed to pay to Idaho Power Company a minimum annual payment. The buyer hereby assumes the seller’s obligation under said service agreement, commencing January 1, 1975, and agrees to pay the minimum annual payment as required by said contract for the year 1975 and each year thereafter, together with such additional charges, if any, as are required by said contract, and the buyer agrees to indemnify and hold the seller harmless from all further liability under said Idaho Power Company electric service contract. It is understood that the money deposit made by the seller with Idaho Power Company for the purpose of guaranteeing payment for electric service for the year 1974 shall belong to the seller and any refund in connection with such deposit shall be paid to the seller. Any deposit required by Idaho Power Company for 1975 and thereafter guaranteeing payment shall be paid by the buyer.

7.POSSESSION. It is understood that the seller now has crops planted upon a portion of the real property above described; that the seller retains the title to said crops and shall have the right to continue in possession of said crop lands and the irrigation system for the purpose of maturing and harvesting the 1974 crops and removing the same from said real property. Possession of the irrigation system and equipment and the lands planted with crops shall not be delivered to the buyer until after the seller has matured, harvested and removed said crops during the year 1974, after which possession of . the crop land and irrigation system shall be delivered to the buyer, it being understood that the operating units, consisting of motors and pumps, used in connection with the irrigation system will be turned over to the buyer in operating condition. The buyer shall be entitled to the possession of any part of said real property not planted with crops immediately upon the execution of this agreement and may continue in possession of said property so long as the buyer complies with the terms of this agreement.

8. WASTE. Any buildings or permanent improvements placed upon said real property by the buyer shall become a part of said property and shall not be removed. The buyer covenants to commit no waste upon said premises and to permit no waste to be committed by others and further covenants to keep said property free and clear of all mechanics’ liens, materialmen’s liens and all other liens of every kind or nature whatsoever, save and except current taxes and the liens herein mentioned.

9. CARE OF PROPERTY. After receipt of possession of the same, the buyer agrees to keep up and maintain all of said real and personal property in as good a condition as the same was at the time of the delivery of said real and personal property, or may hereafter be placed, natural wear and {ear from the ordinary use thereof excepted.

10. NO WARRANTIES. The buyer acknowledges that it has inspected the real and personal property hereby agreed to be sold knows the condition of the same and accepts said property in its present condition and acknowledges that it is relying upon the judgment of its own officers as to the condition and value of said property and acknowledges that the seller has made no representations concerning said property, except the representations contained in this agreement.

11. EXISTING CONTRACT OBLIGATIONS. The buyer understands that the seller is purchasing the real property described as Parcel No. 1 above, from Intermountain Gas Company, a corporation, under a contract in writing dated August 24, 1973, which contract is payable over a period of years, with the buyer having the right to prepay any part of the purchase price at any time. The buyer further understands that under the terms of the Intermountain Gas Company sale contract the seller Clampitt has assumed and agreed to pay State of Idaho Land Sale Certificate No. 24140 covering the East Half of Section Twenty-seven, Township Four South, Range Seven East, Boise Meridian; State of Idaho Land Sale Certificate No. 24141 covering the West Half of Section Twenty-seven, Township Four South, Range Seven East, Boise Meridian; State of Idaho Land Sale Certificate No. 24134 covering the East Half of Section Thirty-two, Township Four South, Range Seven East, Boise Meridian; State of Land Sale Certificate No. 24135 covering the West Half of Section Thirty-two, Township Four South, Range Seven East, Boise Meridian; State of Idaho Land Sale Certificate No. 24138 covering the East Half of Section Thirty-three, Township Four South, Range Seven East, Boise Meridian; State of Idaho Land Sale Certificate No. 24139, covering the West Half of Section Thirty-three, Township Four South, Range Seven East, Boise Meridian; State of Idaho Land Sale Certificate No. 24136 covering the East Half of Section Thirty-one, Township Four South, Range Seven East, Boise Meridian, and State Land Sale Certificate No. 24137 covering the East Half of the West Half and Lots One to Four, inclusive, of Section Thirty-one, Township Four South, Range Seven East, Boise Meridian. The buyer further understands that the seller is purchasing the real property described in Parcel No. 2 above from Christine Groefsema et al under a sale contract in writing dated March 1, 1974. It is agreed that it shall be the obligation of the seller to continue to make the payment falling due upon the land sale certificates and the sale contract above-described, or to see that the same are paid, as and when the same become due and payable and the seller agrees to pay and discharge the same in full prior to the time the buyer completes payment of the purchase price required under the terms of this contract, so that the seller will then be in a position to convey marketable title to all of said property to the buyer in accordance with the provisions of this agreement. If the seller fails to pay any of the installments required under any of said purchase contracts or land sale certificates at the time the same become due and before the same become delinquent, then for the purpose of protecting its equity in said property the buyer may at its option make any payment deemed by it to be necessary to protect its rights under this contract and any such payment made by the buyer shall be credited upon the purchase price to be paid to the seller, either of principal or interest, under the terms of this agreement. Such credit shall be entered upon the records of the escrow holder hereinafter mentioned upon delivery by the buyer to the escrow holder of a duly executed receipt showing such payment to have been made by the buyer for or in behalf of the seller.

12. ESCROW. The seller agrees at the time of the execution of this agreement to place in escrow with the Idaho First National Bank at Mountain Home, Idaho, a warranty deed in standard form executed by the seller and conveying to the buyer marketable title to the real property above-described, subject to the reservations herein contained, together with a bill of sale in standard form conveying to the buyer marketable title to the personal property above described, subject to the provisions of this agreement. Said escrow holder is hereby authorized and directed to deliver said instruments to the buyer upon its depositing in said bank to the credit of the seller the deferred payments of purchase price above mentioned with interest, at the times specified above, and upon a compliance of the other terms and conditions hereof; otherwise, said escrowed instruments shall be returned to the seller. An executed copy of this agreement shall be deposited with said bank as escrow holder and shall be directions and instructions to it with reference to the terms and conditions hereof.

13. ESCROW FEES. All escrow fees of said bank shall be paid one-half by the seller and one-half by the buyer.

14. WATER PERMITS. It is understood that certain applications have been made to the Idaho Department of Water Administration for the appropriation of water for use in irrigating the land above described, and that it will be necessary in the future to file with the Idaho Department of Water Administration final proof that said water has been put to beneficial use, in order to obtain a permanent license for the use of said water. A list of said permits showing the permit number and the date for submission of final proof of beneficial use is attached hereto, marked “Exhibit D” and by this reference made a part hereof. It is understood that it shall be the obligation of the buyer to submit proof of beneficial use of said water at the time the same becomes due and the seller agrees upon demand of the buyer to assign to the buyer any water permit for which proof of beneficial use is to be made.

15. SECURITY INTEREST. It is understood that the seller retains a security interest in the personal property hereby agreed to be sold and that title to said personal property shall be and remain in the seller until said purchase, with the interest, has been paid in full. As evidence of such lien and upon request of the seller, the buyer agrees to execute and deliver to the seller financing statements under the Uniform Commercial Code of the State of Idaho, designated as UCC-1, to be filed for record as evidence of the seller’s continuing security interest in said personal property. In the event the buyer fails to comply with the terms of this agreement and it becomes necessary for the seller to foreclose its security interest, then the seller may exercise its rights either by foreclosure in accordance with the provisions of this agreement or by any method prescribed by the Uniform Commercial Code of the State of Idaho.

16. REMEDIES FOR DEFAULT. Time is agreed to be of the essence of said payments and of this agreement and of any subsequent agreement in relation hereto and full performance by the buyer of all its obligations hereunder is and shall be a condition precedent to its right to a conveyance hereunder. In the event the buyer fails to comply with any of the terms hereof, then the seller, through said escrow holder, shall first give the buyer thirty days’ notice in writing specifying wherein the buyer has failed to comply with the terms hereof and which said notice shall be delivered to the buyer personally or may be sent to it by registered or certified mail, addressed to the buyer at its last post office address as furnished to the escrow holder. If sent by mail, said notice shall be deemed served upon the buyer upon the date it is deposited in the United States mails with postage prepaid, certified or registered and addressed as above mentioned. If the buyer fails to correct said default within said thirty-day period, then the seller may at its option and without further notice declare the whole unpaid balance of said purchase price immediately due and payable and proceed at once to recover the same or declare a forfeiture of all of the rights of the buyer under this agreement and of all of its interest in and to said property, retaining all sums theretofore paid by the buyer under the terms hereof as the reasonable value for the use and occupation of said property during the time that possession of the same is retained by the buyer hereunder, or the seller may at its option bring an action in equity or at law for specific performance with damages.

17. ATTORNEY’S FEES. In the event it becomes necessary for either of the parties hereto to place this agreement in the hands of an attorney for enforcement of their rights hereunder for the default of the other party or to institute suit for enforcement of their rights hereunder, then the defaulting party, or the successful party in case of suit, shall be entitled to recover reasonable attorney’s fees from the other party, in addition to the other damages allowed by law.

18. HEIRS AND ASSIGNS. The terms and conditions of this agreement shall extend to and be binding upon the heirs, administrators, executors and assigns of the respective parties hereto.

IN WITNESS WHEREOF, the said parties have hereunto set their hands the day and year in this agreement first above written.

/s/ Delbert Clampitt

Delbert Clampitt

/s/ Delsie Clampitt

Delsie Clampitt

/s/ Gary A. Clampitt

Gary A. Clampitt,

Sellers,

A.M.R. CORPORATION, an Idaho corporation,

By

Buyer.