Nugent v. Beckham

260 S.E.2d 172 (1979) 43 N.C. App. 703

Alfred S. NUGENT, Jr. and Regina M. Nugent
v.
Wallace BECKHAM and Ann L. Beckman.

No. 781SC1160.

Court of Appeals of North Carolina.

November 20, 1979.

Leroy, Wells, Shaw, Hornthal, Riley & Shearin by Roy A. Archbell, Jr. and Norman W. Shearin, Jr., Kitty Hawk, for plaintiffs.

Aldridge, Seawell & Khoury by Christopher L. Seawell, Manteo, for defendants.

CLARK, Judge.

I. APPEAL BY PLAINTIFF-BUYERS

The plaintiffs present one question on appeal and assert that Judge Small erred in granting the defendants interest on the balance of the purchase price which had accrued since 25 May 1977, the date at which Judge Tillery entered judgment on the issue of abatement. This issue is complicated by the fact that three different determinations were made by three different trial judges as to what the proper award of interest should be. We now undertake to reconcile these three orders with each other and with the former decision on this issue in this case as set forth in Nugent v. Beckham, 37 N.C.App. 557, 246 S.E.2d 541 (1978).

The following actions and dates are pertinent to this issue:

(1) On 15 April 1977, Judge Collier granted summary judgment in plaintiffs' favor and ordered that "[p]rior to the coming on for trial of the issues as to abatement of purchase price and an accounting of rents and profits, plaintiffs shall deposit with the Clerk of Superior Court of Dare County the balance of the purchase price required by the aforesaid contract . . . which amount shall be placed in an interest bearing account . . . with interest from said account being paid to the plaintiffs";

(2) Following the trial on the issue of abatement of the purchase price, Judge Tillery, on 25 May 1977, ordered the Clerk to pay to plaintiffs $7,700.00 out of the funds held in the aforementioned account and ordered that all interest for both the plaintiffs and defendants be denied;

(3) In the former appeal by defendants, Judge Mitchell, for the Court, stated:

". . . It is true that the general rule is that the buyer is entitled to rents and profits during the period in which the seller has refused to convey and wrongfully kept the buyer out of possession, while the seller is entitled to interest on the purchase price. Harper v. Battle, 180 N.C. 375, 104 S.E. 658 (1920); Stern v. Benbow, 151 N.C. 460, 66 S.E. 445 (1909). We do not think, however, that the seller's right to interest on the purchase price in such cases is absolute as a matter of law. See, 81A C.J.S. Specific Performance § 198, pp. 169-70.

Here, the interest sought on the purchase price would exceed the amount awarded the plaintiffs by the jury and would result in a net gain to the defendants in the form of a reward for their failure or refusal to comply with the terms of their contract. We do not feel the general rule is so inflexible as to require a court of equity to reach such results. Rather, we find the denial of interest to all parties in the discretion of the trial court to have been proper in this case."

37 N.C.App. 557, 562-63, 246 S.E.2d 541, 545-46 (1978);

(4) On 26 October 1978 Judge Small entered an order, pursuant to plaintiffs' motion to compel execution of the deed, requiring, inter alia, that the Clerk of Court pay plaintiffs all interest which accrued in the account prior to 25 May 1977 and to pay the interest to defendants after that date.

We can find only one interpretation which renders all of the above actions both consistent and equitable. First, it is apparent that the orders of Judges Collier and Small refer to disposition of the interest paid by the bank on the purchase money which had been deposited, whereas the order of Judge Tillery and the former appeal to this Court address the question of whether one of the parties must pay interest to the other. Consequently, we must only reconcile the orders of Judge Small and Judge Collier concerning the disposition of the interest paid by the bank, and to this end the opinion of Judge Tillery and the former appeal are not relevant.

Second, the order of Judge Collier was not limited in time, and it would be frivolous to assume that the plaintiff-buyers would forever be entitled to the benefit of the funds in the account. We hold that plaintiffs' rights in the account terminated when Judge Tillery entered the judgment of 25 May 1977 directing that the plaintiffs recover $7,700.00 from the account. Prior to 25 May 1977 the net amount due to the defendant-sellers had not been established, see Teich & Co., Inc. v. LeCompte, 222 N.C. 602, 24 S.E.2d 253 (1943) (interest not awarded on undetermined or unliquidated sums), and it would have been appropriate to allow the plaintiffs, who had been deprived of the use and enjoyment of their money, to recover the interest paid by the bank up to 25 May 1977, the point at which the parties' respective rights to the purchase money were determined. Consequently, we affirm the order of Judge Small with respect to the interest paid by the bank on the purchase price.

Possession, however, was not delivered until 16 September 1978, over a year after Judge Tillery's order. The period between May 1977 and September 1978 closely approximates the period in which the earlier appeal in this case was argued and decided. N.C.Gen.Stat. § 1-292 clearly contemplates that the seller must compensate the buyer for the buyer's loss of use and occupation of the property pending an appeal in which a judgment and decree ordering sale and possession to buyer is affirmed. Even though the determination of rents and profits from 25 May 1977 to 16 September 1979 is not an issue raised directly by and is not determined by this appeal, plaintiffs may elect to proceed for the recovery of rents and profits during this period; and we note that N.C.Gen.Stat. § 1-292 was enacted precisely for the purpose of protecting those in the position of the plaintiffs in the instant case.

II. APPEAL BY DEFENDANT-SELLERS

Defendants contend that the trial court erred in ordering that the notes secured by two deeds of trust be satisfied out of the funds on deposit in the office of the Clerk of Superior Court of Dare County. In addition, defendants argue that Judge Small erroneously concluded that (1) the pleadings raised no abatement issue except as to the mislocation of the house; (2) that defendants are required to specifically perform the contract; and (3) that the defendants are required to execute a deed. We find no merit in these contentions.

The contract for sale of the subject property specifically provided:

"[t]hat the Seller will convey to the Purchaser by deed of warranty, free from all encumbrance except as hereinafter mentioned. . . ." (Emphasis supplied.)

Plaintiffs' complaint provides in relevant part:

"4. In accord with the provision of said agreement, plaintiff tendered to defendant the purchase price and requested a conveyance of the land, but defendant refused to accept the tender and refused to make the conveyance in accord with the contract, in that the dwelling located on the property is situated in violation of the subdivision ordinances of Dare County, adopted as by law provided. Said violation being contrary to the provisions of the contract." (Emphasis supplied.)

On 15 April 1977, Judge Collier ordered specific performance of the above contract and further ordered that "[t]he defendants shall convey to plaintiffs by general warranty deed, the property described in the aforesaid contract in return for the payment to defendants of the balance of the purchase price ($31,050.00) less the amount of the abatement of the purchase price and the rents and profits since October 12, 1973. . . ." (Emphasis supplied).

At trial plaintiffs presented Willie Rogers, a house mover in Dare County, who testified that the cost of moving the subject house to comply with the setback restrictions would be $5,500.00, plus material costs. In summarizing the evidence, Judge Tillery explained that "[t]he evidence further tends to show in substance that in the opinion of Willie Rogers, a person who is engaged in the business of house moving, it would require an expenditure of $5,500.00 for labor costs to move the house first back from one line and then in a different direction back from the other . . .."

Finally, the following issue was presented to the jury concerning abatement:

"(1) What amount, if any, are the plaintiffs entitled to recover by way of abatement of the purchase price of the property which is the subject of this lawsuit?"

To this the jury responded:

"Answer: $5,500.00."

All of the above reveals that the complaint did not set forth and the jury did not consider offsetting the two outstanding deeds of trust in their determination of the proper amount by which the purchase price should be abated. Consequently, even if, as defendants argue, outstanding deeds of trust can be matters of abatement, we do not agree that the verdict of the jury included these matters, and it would be unjust for us to hold that the right of plaintiffs to satisfy these deeds of trust was lost when the issue of abatement was sent to the jury.

Since the defendants refused to carry out their contract voluntarily, it was entirely proper for the trial court, in compelling specific performance of the contract, to insure that the outstanding encumbrances on the property were removed, particularly when the funds from which these obligations could be satisfied were in the custody of the court. See generally, 77 Am.Jur.2d Vender and Purchaser § 192 (1975). Moreover, it would approach absurdity for this Court to hold, six years after the contract of sale was signed, that plaintiffs must pay off defendants' notes and then seek reimbursement in an action for damages.

The appeal by plaintiffs is affirmed.

The appeal by defendants is affirmed.

HEDRICK and HARRY C. MARTIN, JJ., concur.