MIKE MACKIN v. TOMMY R. HALL, LINDA R. HALL, R.C. HALL, AND BETTY M. HALL
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RENDERED:
AUGUST 2, 2002; 10:00 a.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
2001-CA-000357-MR
MIKE MACKIN
APPELLANT
APPEAL FROM BOYLE CIRCUIT COURT
HONORABLE DARREN W. PECKLER, JUDGE
ACTION NO. 98-CI-00172
v.
TOMMY R. HALL,
LINDA R. HALL,
R.C. HALL, AND
BETTY M. HALL
APPELLEES
OPINION
REVERSING AND REMANDING
** ** ** ** **
BEFORE:
BARBER, McANULTY, AND SCHRODER, JUDGES.
BARBER, JUDGE:
The Appellant, Mike Mackin (“Mackin”) seeks
review of a judgment of the Boyle Circuit Court in favor of the
Appellees, Tommy R. Hall, Linda R. Hall, R.C. Hall and Betty M.
Hall (“the Halls”).
For the reasons set forth below, we reverse
and remand with directions.
We shall refer to the underlying facts only as
necessary to a resolution of the issues before us.
On October
30, 1997, the parties entered into a contract in which Mackin
agreed to purchase the Meadow Run Apartments from the Halls for
$1,150,000.00.1
Paragraph three of the contract provides that
the buyer shall apply for a loan within ten working days of
acceptance of the offer, that the closing shall take place in 90
days, but that such time shall be extended if required, not to
exceed 120 days.
The contract provides that further extension
will be granted at $5,000.00 per month.
By late February 1998, the parties had been unable to
close the sale.
On February 20, 1998, C. Timothy Cone, the
Halls’ attorney, wrote to Mackin enclosing a list of the security
deposits for Meadow Run tenants and proposing to give Mackin a
check in an amount equal to the deposits as of the date of
closing.
In his February 20, 1998 letter, Cone states: “You
indicated you would be tied up the first part of next week and
that February 27 was the earliest you could close.
Please let me
know whether that day or March 2 is preferable, as well as a
couple of specific times.”
Cone wrote another letter to Mackin,
dated February 25, 1998, in apparent follow-up to a phone
conversation about wind damage to the roof and apartments that
needed appliances.
In that letter Cone states: “This is to
advise you that we expect to close this Friday, February 27, or
Monday, March 2, at a convenient time and place.”
1
On March 2,
Mackin explains that the trial court made an erroneous finding regarding the
deposit. At paragraph six the contract provides for a $100,000.00 good faith
deposit; at paragraph two, the Contract specifies that the deposit was to be
$1,000.00. Mackin made a $1,000.00 good faith deposit. Mackin advises that
this was not considered a breach by any party. The Halls do not dispute this
in their brief. The deposit is not at issue on appeal. The trial court made
a finding that Mackin failed to deposit $100,000.00, but that any
noncompliance was waived by the Halls. The trial court”s finding in regards
to the deposit is clearly erroneous. CR 52.01.
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1998, Cone again wrote to Mackin.
The letter, in its entirety,
states:
Tommy Hall has called me this morning and
told me of your conversation with him on
Saturday and your advice that Tommy and
Russell are not in compliance with the
agreement for the sale and purchase of the
captioned property. We do not agree with
that conclusion. However, we have reviewed
the contract, as well, and have determined
that you have failed to observe the provision
of paragraph 3 with respect to an extension
of a closing date. Even if that
consideration had been paid, the transaction
was to have been closed with 120 days from
October 30, 1996. The 120th day was Friday,
February 27, 1998, and the transaction failed
to close. Consequently, the contract has
been breached and has terminated according to
its terms because of the failure to close
within the specified period. The closing
scheduled for this afternoon is canceled.
Mackin filed a complaint in the Boyle Circuit Court
alleging that the Halls had refused to comply with the contract,
had unilaterally terminated the contract, and had failed to
close, “thereby constituting a breach . . . .”
Mackin explains
that the parties entered into a stipulation that, in the event
Mackin was successful, his remedy would be specific performance
of the contract with a reduction in the initial purchase price,
for any duplication of costs incurred in closing the sale of
Meadow Run Apartments.
On December 1, 2000, the trial court entered judgment
in favor of the Halls, and dismissed Mackin’s complaint.
trial court found that:
[T]he closing was to take place within one
hundred twenty (120) days of the Contract’s
formation, i.e., on or before February 27,
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The
2000, pursuant to the express terms of
numerical paragraph 3 of the Contract. The
Plaintiff contends that the alleged extension
of the closing date to March 2, 1998,
constitutes a waiver of the closing deadline
under Stamper v. Ford’s Administratrix, Ky.,
260 S.W.2d 942 (1953). The Court finds,
however, that the present case is
distinguishable from Stamper because, in
Stamper, the evidence was uncontroverted.
Here, the Defendants made an offer to extend
the closing deadline to March 2, 1998;
however, the Court finds that the Plaintiff
did not properly accept said offer and no
specific closing date or time was ever agreed
upon by the parties. The court having found
that there was no acceptance of the offer to
modify numerical paragraph 3 of the Contract,
a novation of the Contract did not occur and
the contract expired pursuant to its terms.
“A novation is a substitution of a new contract for an
old one which is thereby extinguished.”
[Citation omitted.]
Kirby v. Scroggins, Ky., 246 S.W.2d 453 (1952).
This case does
not involve the (attempted) substitution of a new contract.
Moreover, as Mackin notes in his reply brief, the Halls did not
even argue novation in their pretrial memorandum; however,
“novation must be pleaded either expressly or by unequivocal
implication . . . .”
Id. at 455.
We hold that the trial court
erred as a matter of law in construing the “offer to extend the
closing deadline to March 2, 1998;” as a novation which Mackin
“did not properly accept.”
The trial court also erred in finding that “no specific
closing date was ever agreed upon by the parties.”
C. Timothy
Cone, the Halls’ attorney, wrote three letters to Mackin.
The
first two letters, dated February 20 and 25, 1998, proposed a
closing date of either February 27 (the closing deadline,
-4-
according to the contract) or March 2, the next business day.
The third letter, dated March 2, 1998, states that: “[t]he
closing scheduled for this afternoon is canceled.”
The Halls
remind us that although we may have decided the case differently,
the trial court’s findings must be affirmed, so long as they are
supported by substantial evidence.
We agree; however,
“[s]ubstantial evidence is not simply some evidence or even a
great deal of evidence; rather, substantiality of evidence must
take into account whatever fairly detracts from its weight.”
Pierce v. Kentucky Galvanizing Co. Inc., Ky. App., 606 S.W.2d
165, 168 (1980).
Here, the March 2, 1998 letter written by the
Halls’ attorney specifically refers to a closing “scheduled for
this afternoon.”
clearly erroneous.
The trial court’s finding to the contrary is
CR 52.01.
In the trial court, Mackin had argued that the
extension of the closing date to March 2, 1998, constituted a
waiver of the closing deadline under Stamper, supra.
The trial
court disagreed, finding Stamper “distinguishable, . . .
in Stamper, the evidence was uncontroverted.”
because
This finding is in
error, because the evidence, in Stamper, was “in sharp conflict.”
Id. at 943.
Stamper and his wife sold their farm to Ford.
The
contract provided the balance of the purchase price would be paid
on or before January 1, 1950.
On December 2, 1949, Ford signed
an option to sell the farm to Dixon, the same day.
Stamper
claimed that he told the Dixons his contract was with Ford and he
would not make a deed to anyone else.
-5-
Shortly thereafter, Dixon
discussed the sale of the farm with Stamper.
The Dixons
testified that Stamper said he did not care to whom he sold the
farm, as long as he got his money.
Jesse Dixon testified that
when he told Stamper the balance of the purchase money was ready
for him later that month, Stamper replied he was in no hurry and
they could deed the farm anytime.
Jesse Dixon also testified
that he had made a diligent search for Stamper on December 31,
but could not locate him.
An attorney for the appellees testified that he wrote
Stamper a letter on January 3 or 4, requesting that he set a
closing date.
Stamper testified that following his receipt of a
letter on January 10, he called the attorney advising that the
contract had expired, because Ford had not closed the deal by
January 1, 1950.
Ford filed a suit for specific performance.
The Stampers insisted that time was of the essence of the
contract, and that since Ford failed to make a legal tender of
the balance of the purchase price before January 1, 1950, they
were not required to perform the contract.
The court held that
Stamper in effect agreed to waive the requirement as to time.
“A
party may waive or relinquish rights to which he is entitled
under a contract, and having done so may not reverse his position
to the prejudice of another party to the contract.”
omitted.]
[Citations
Id. at 943.
We agree with Mackin that the Halls waived their right
to insist upon strict performance of the closing deadline, by
virtue of their correspondence through Cone dated February 20 and
25, 1998, proposing to close on either February 27 or on March 2,
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1998, after the closing deadline in the contract.
Furthermore,
we are not convinced that failure to close by the next business
day, under the circumstances of this case, constitutes a breach
of the contract.
In Bennett v. Stephens, Ky., 293 S.W.2d 879 (1956), the
buyer sought specific performance of a contract to convey real
estate.
The sellers contended that the buyer had breached the
contract of sale, by failing to pay the purchase price on the day
specified for such payment.
The sellers maintained that they
were released from their obligation to make the conveyance.
The
contract provided that the sum was due and payable January 1,
1955.
The parties met on January 1, 1955; however, the buyer was
unable to pay the full purchase price of $2,500.
The sellers did
accepted a check for $500 in part payment, and it was agreed that
the balance be paid during the following week.
The following
week the buyer was ready, willing, and able to pay the balance of
$2,000; sellers returned the $500 check and refused to convey.
On appeal, the court held that:
In the first place, the January 1st date
fixed in the contract was not made such a
significant date that failure of performance
on that day vitiated the contract. The
general rule is thus stated in 55 Am. Jur.,
Vendor & Purchaser, Section 110, page 586:
It is a well established
general principle in
equity that time is not
ordinarily regarded as of
the essence of contracts
for the sale of real
property unless it is so
stipulated by the
expressions thereof or it
is necessarily to be so
implied. In the ordinary
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case, performance of a
contract for the sale of
real property within a
reasonable time after the
time named in the
contract and
substantially according
to the contract, regard
being had to all the
circumstances, is
regarded in equity as
sufficient.
Appellee in good faith sought to consummate the contract within a
reasonable time after the date specified.
In the second place,
even had time been of the essence of this contract, it is clear
appellants waived complete performance on January 1, 1955, when
they accepted the $500 check.
They relinquished their right to
rely upon this provision of the agreement by consenting to a
delay in full payment.
Id. at 880-81.
Accordingly, the judgment of the Boyle Circuit Court is
reversed and this case is remanded for entry of judgment in favor
of Mackin, for specific performance of the October 30, 1997
contract, pursuant to the terms of the parties’ stipulation.
ALL CONCUR.
BRIEFS FOR APPELLANT:
BRIEF FOR APPELLEE:
Ephraim W. Helton
Helton, Erwin & Sanders
Danville, Kentucky
Elizabeth S. Hughes
Gess, Mattingly & Atchison,
PSC
Lexington, Kentucky
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