VIETHS v. THORP FINANCE CO

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Docket Number

No. 45352.

Attorney(S)

Peterson Law Office and Michael B. Goodman, for appellants. Holst, Vogel, Erdmann Vogel and George F. Vogel, for respondents Stemmann. Bentley Christianson and Gary Fridell, for respondents Blattner.

Judges

PER CURIAM.

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Smart Summary

Factual and Procedural Background

Plaintiffs Maynard and Donna M. Vieths and Larry Vieths contracted on June 8, 1973, to purchase a farm from defendants Ervin and Carol Blattner for $62,000, with $1,000 earnest money (paid by note) and $61,000 due at closing on August 15, 1973. On August 14, 1973, the Blattners entered a purchase agreement with Elmer and Delores C. Stemmann for the same property containing a clause making that contract void if the pre-existing contract was consummated by August 15, 1973. Plaintiffs did not pay on August 15; on August 17 they paid $1,000 in cash and executed a document stating they had until noon August 31, 1973 to pay the balance. The Blattners deny acquiescence, but the trial court found the time was extended to August 31. On August 25 the Blattners served a "NOTICE of Default" alleging default for failure to pay by August 15 and stating the contract would terminate 30 days after service if not paid. Plaintiffs did not pay the $61,000, and on October 19 the Blattners conveyed the property to the Stemmanns by warranty deed. Plaintiffs alleged by affidavit that the Blattners, Stemmanns, and Land Merchants Company informed Thorp Finance Company that plaintiffs would not obtain clear title, causing Thorp to withdraw a loan commitment prior to termination. The trial court granted summary judgment for Blattners and Stemmanns; plaintiffs appealed. The Supreme Court of Minnesota reversed.

Legal Issues Presented

Whether a notice of cancellation of a contract for the sale of real estate served prior to actual default is effective.
Whether summary judgment was properly granted for defendants Blattner and Stemmann given disputed material facts (including whether performance time was extended and whether defendants' conduct caused plaintiffs' inability to perform).

Arguments of the Parties

Appellants' (Plaintiffs') Arguments

Plaintiffs asserted they had an extension of the closing date until August 31, 1973 (per the August 17 document) and that the Blattners' August 25 notice of default was served before actual default if the extension is recognized.
Maynard Vieths' affidavit stated that defendants Blattner, Stemmann, and Land Merchants Company told Thorp Finance Company plaintiffs would not obtain clear title, causing Thorp to withdraw its loan commitment prior to termination—raising a factual issue whether defendants caused plaintiffs' inability to perform.

Respondents' (Defendants') Positions

The Blattners denied that they acquiesced to any extension of time for payment and denied the asserted extension to August 31.
The trial court accepted the finding that plaintiffs were given until August 31 to complete the deal, but the respondents moved for and were granted summary judgment below. The opinion does not detail additional arguments by the Stemmanns or other defendants.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Mattson v. Greifendorf, 183 Minn. 580, 237 N.W. 588 (1931)	That a notice of cancellation of an agreement to purchase real estate served prior to actual default is ineffective.	The court relied on this precedent to hold that a pre-default notice of cancellation is ineffective, undermining the respondents' basis for termination if an extension was in place.
Boulevard Plaza Corp. v. Campbell, 254 Minn. 123, 94 N.W.2d 273 (1959)	Support for the rule that a pre-default cancellation notice is ineffective.	Used as additional authority to support the ineffectiveness of a cancellation notice served before actual default.
Sauter v. Sauter, 244 Minn. 482, 70 N.W.2d 351 (1955)	Principles governing summary judgment: sole function is to determine existence of genuine issues of material fact; moving party burden; nonmoving party entitled to favorable view of evidence.	Applied to conclude that summary judgment is inappropriate where unresolved material factual issues exist in the record.
Ahlm v. Rooney, 274 Minn. 259, 143 N.W.2d 65 (1966)	Further statement of summary judgment standards and limitations.	Cited in support of the standard that summary judgment should not substitute for trial where material issues remain.

Court's Reasoning and Analysis

The court reviewed the timeline and disputed facts: the original June 8 purchase agreement, the Blattner–Stemmann agreement of August 14 containing a clause conditioned on consummation by August 15, plaintiffs' failure to pay on August 15, the August 17 payment of $1,000 and document stating plaintiffs had until August 31, the August 25 notice of default, and the October 19 conveyance to the Stemmanns. The court stated the legal rule from Mattson and Boulevard Plaza that a cancellation notice served prior to actual default is ineffective. It observed that, assuming the time for performance had been extended, plaintiffs' affidavit claiming defendants' conduct caused withdrawal of financing by Thorp Finance raised a genuine issue of material fact as to plaintiffs' ability to perform during the extension. Applying summary judgment principles (Sauter; Ahlm)—that the court's role is limited to determining whether genuine material issues exist and that the nonmoving party must be viewed favorably—the court concluded the record contains unresolved material factual questions which should have precluded granting summary judgments to the Blattners and the Stemmanns. The opinion also referenced Rule 19.01 regarding joinder of persons whose interests may be impaired by disposition in their absence.

Holding and Implications

REVERSED.

Direct effect: The Supreme Court of Minnesota reversed the trial court's summary judgments in favor of defendants Blattner and Stemmann, finding unresolved material factual issues sufficient to preclude summary judgment. The opinion does not announce or establish a new legal precedent beyond applying existing authorities; it requires that the disputed factual matters proceed rather than being disposed of by summary judgment.

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MAYNARD VIETHS AND OTHERS v. THORP FINANCE COMPANY AND OTHERS.

Contract for deed — cancellation — service of notice before default — effect. Judgments — summary judgment — propriety.

PER CURIAM.

This is an action for specific performance of an agreement for the purchase of real property or, in the alternative, for damages, brought by Maynard Vieths and Donna M. Vieths, husband and wife, and Larry Vieths, against Ervin Blattner and Carol Blattner, husband and wife; Elmer F. Stemmann and Delores C. Stemmann, husband and wife; Thorp Finance Company; and Land Merchants Company. The trial court granted summary judgment in favor of defendants Blattner and Stemmann from which plaintiffs appeal. We reverse.

On June 8, 1973, plaintiffs, as purchasers, and defendants Blattner, as vendors, entered into a purchase agreement for the purchase of a farm. The agreement set the purchase price at $62,000, "which the buyer agrees to pay in the following manner: Earnest money herein paid $1,000.00 and $61,000.00, cash, on 8/15/73, the date of closing." The $1,000 was not paid at the time of the execution of the agreement. Instead, plaintiffs gave the Blattners a note for $1,000.

On August 14, 1973, defendants Blattner, as vendors, entered into a purchase agreement with defendants Stemmann, as purchasers, for the same real estate. The purchase agreement contained the following typewritten clause:

"There is an existing contract on this property. If pre-existing contract is consummated by August 15, 1973 this contract is null and void."

Plaintiffs did not pay the purchase price on August 15, 1973, as required in the purchase agreement, but on August 17, 1973, the plaintiffs paid the Blattners $1,000 in cash and executed a document which stated that the plaintiffs had until 12 noon on August 31, 1973, to pay the full purchase price. The Blattners deny that they acquiesced to this alleged extension of time for payment, but the trial court found that the time for payment had been extended.

On August 25, 1973, the Blattners served a "NOTICE of Default in Conditions of Contract for the Conveyance of Real Estate" upon the plaintiffs. This notice stated that plaintiffs were in default on the contract because the purchase price had not been paid by August 15, 1973, and that the contract would terminate 30 days after the date of service of the notice if the purchase price was not paid in full by that time. Plaintiffs did not pay the $61,000 to the Blattners. On October 19, 1973, the Blattners conveyed the property to the Stemmanns by warranty deed.

In response to the motions for summary judgment, plaintiff Maynard Vieths, in a sworn affidavit made part of the record, stated that defendants Blattner, Stemmann, and Land Merchants Company informed defendant Thorp Finance Company that plaintiffs would not obtain clear title to the property in question and that this caused Thorp to withdraw a loan commitment to the plaintiffs prior to the termination of the purchase agreement as extended. Plaintiffs also contend that the closing date of the purchase agreement had been extended, a fact vigorously denied by defendants Blattner both in the trial court and in this court. However, as previously noted, the trial court, in granting summary judgment, found:

"That plaintiff did not close the deal on August 15, 1973, and on August 17, 1973, paid Defendants Blattner the earnest money of $1,000.00 and were given until August 31, 1973 to complete the deal."

Of course, a notice of cancellation of an agreement to purchase real estate which is served prior to actual default is ineffective. Mattson v. Greifendorf, 183 Minn. 580, 237 N.W. 588 (1931). See, also, Boulevard Plaza Corp. v. Campbell, 254 Minn. 123, 94 N.W.2d 273 (1959). Further, assuming that the time of performance of the contract had been extended, the claim of plaintiff Maynard Vieths in his affidavit that plaintiffs were unable to perform during the period of the extension because of the alleged actions of defendants Blattner, Stemmann, and Land Merchants Company raises a genuine issue as to a material fact.

In passing upon a motion for summary judgment, the sole function of the trial court is to determine whether there is a genuine issue of any material fact. The moving party has the burden of proof, and the nonmoving party has the benefit of that view of the evidence most favorable to him. While summary judgment is intended to secure a just, speedy, and inexpensive disposition, it is not designed as a substitute for trial where there are issues to be determined. Sauter v. Sauter, 244 Minn. 482, 70 N.W.2d 351 (1955); Ahlm v. Rooney, 274 Minn. 259, 143 N.W.2d 65 (1966).

It appears from the affidavits and the entire record presented to us that there do exist unresolved material questions of fact which should have precluded the granting of summary judgments to either the Blattners, the sellers of the property, or the Stemmanns, the present record owners, who at the time they entered their agreement to purchase the real estate had knowledge of the existence of the agreement between plaintiffs and the Blattners.

See, also, Rule 19.01, Rules of Civil Procedure, which reads in part as follows: "A person who is subject to service of process shall be joined as a party in the action if (1) in his absence complete relief cannot be accorded among those already parties, or (2) he claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may (i) as a practical matter impair or impede his ability to protect that interest * * *."

Reversed.