Opinion
July 2, 1974.
Editorial Note:
This case has been marked 'not for publication' by the court.
Seawell, Cohen & Sachs, Thomas C. Seawell, L. Bruce Nelson, Denver, for plaintiff-appellant.
Mack Witty, Salida, Lawrence G. Empey, Denver, for defendant-appellee.
RULAND, Judge.
Eagle County Development Corporation (ECDC) appeals from a judgment in favor of defendant Kenneth H. Winchall on his counterclaim relating to an agreement for the sale of land. We reverse and remand the cause to the trial court to make additional findings of fact and conclusions of law.
ECDC filed the present case to require Winchell to execute partial releases from a deed of trust on land which ECDC had contracted to sell to third persons, or, in the alternative, to recover damages for Winchell's failure to suppoly the releases. Winchell answered and counter-claimed, alleging that ECDC breached an agreement to develop the property in question and requested judgment on a promissory note. Following a trial to the court, the court made written findings of fact based on conflicting evidence. Those findings relate the following series of events.
Winchell owned approximately 2,841 acres in Park County, Colorado, and negotiated with Walter H. Berry, Jr., and William James Stark for the sale of this property. The negotiations culminated in the execution of a written agreement which provided that Winchell would convey the property to Berry and Stark by general warranty deed, receiving therefor a promissory note in the principal amount of $2,000,000 secured by a deed of trust. The form of the note was attached to the agreement as an exhibit. The trial court specifically found that Winchell relied upon Stark's reputation as a land developer in entering into the agreement of sale.
The note provided that payment of the $2,000,000 was to be derived from sales of parcels of the property by Berry and Stark, sales proceeds to be divided one-half to Berry and Stark and one-half to Winchell from each sale. The note also provided that the makers had no personal liability to pay the note and that in the event of default, Winchell would 'look solely to the securing land for payment'. Winchell retained the right to declare that note due and payable if either Stark or Berry voluntarily withdrew from active participation in the 'forwarding of the purposes and projects' of this transaction.
As to development of the property, the agreement provided that from and after the date the agreement was signed, Berry and Stark could enter upon the property and conduct surveys, build roads, and undertake such other developments as they 'deem appropriate'. Following execution of the agreement, Berry and Stark were employed by ECDC and their employment contract provided that they could not engage in any personal land development endeavors. Accordingly, Berry and Stark assigned all of their rights in the Winchell agreement to ECDC.
At the closing, L. Douglas Hoyt appeared for ECDC, together with Stark, Winchell, and Winchell's attorney. ECDC refused to sign a promissory note in the form attached to the agreement with Stark and Berry because of the provision granting Winchell an option to call the note due in the event Berry or Stark terminated their sales efforts. After further discussions and assurances to Winchell by Stark that Stark would handle development and resale of the property by ECDC, it was agreed that this provision would be deleted from the note and an additional agreement drawn after the closing defining Winchell's rights to terminate the transaction. Several days after the closing, Hoyt prepared such an agreement (Exhibit M) and the document was forwarded to Winchell for signature. Hoyt did not forward a copy of the agrrement to Winchell's attorney for review, but Winchell nevertheless executed the document and returned it to ECDC.
Exhibit M granted Winchell the option to terminate the transaction if Hoyt, Stark, or Berry left the employment of ECDC and further provided that if Winchell exercised his option, ECDC would reconvey all of the unsold land to Winchell, and Winchell would pay to ECDC that portion of its development expenses attributable to the unsold lands. The effective date of termination was designated as 180 days after the exercise of the option. Exhibit M specifically provided that Winchell could not record the document in the real estate records of Park County and that Winchell could not disclose the terms of the agreement to any person prior to exercising his option to terminate the transaction.
ECDC entered upon the property, conducted some surveying, and built some roads, but did not pursue development of water, sewer, and the furnishing of utilities. A sales program was initiated which resulted in sales of approximately one-half of the property in tracts of from 50 acres to 540 acres. One of the purchasers, Krueger Construction Company, retained an option on fifty acres which it attempted to exercise at the time of trial. ECDC expended approximately $138,000 in development costs and received in excess of $250,000 for its share of land sales.
Approximately two years after Exhibit M was signed, Winchell's accountant made projections on future proceeds Winchell would receive from ECDC's sales efforts if sales continued at the prior per acre prices. The projections showed Winchell would receive approximately $680,000 from sales instead of the contemplated $2,000,000. At about the same time, Winchell learned that Stark was terminating his employment with ECDC. Winchell then refused to grant any additional partial releases from the deed of trust, thus precipitating the present lawsuit.
The court found that Exhibit M was ambiguous and that since it had been drawn by ECDC, the document should be construed in favor of Winchell. Accordingly, the trial court concluded that when either Hoyt, Stark, or Berry left the employment of ECDC, the option to terminate became available to Winchell. The trial court also found that the parties had contemplated a sophisticated development of the property (which ECDC abandoned) and sales thereof in small tracts for low cost cabin sites. Conversely, the trial court concluded that the parties did not contemplate the bulk sale of land in large tracts as carried out by ECDC, especially to employees of ECDC and persons in a close business relationship thereto.
Based upon its findings of fact, the trial court made specific conclusions of law as follows:
'The Court is mindful of the Parol Evidence Rule and has examined the voluminous exhibits in the action to ascertain the agreement which was made between the parties.
'The Court is further aware of the proof necessary for a case in fraud but feels that 'Plaintiff's Exhibit M' and the circumstances under which it was prepared and transmitted is tainted with fraud.
'The Court further feels that the Defendant for a period of time acquiesced in the transaction which were transpiring and received monetary benefits therefrom. The Court finds that the Defendant could have exercised his option under 'Plaintiff's Exhibit M' at the time William James Stark left the Plaintiff corporation on May 31, 1970 and desired to do so at that time as evidenced by his consulting an attorney and refusing to grant any further partial releases.
'That agreement (Plaintiff's Exhibit M) required a period of 180 days following election to terminate by the Defendant, and accordingly the Court fixes the closing date of the transaction between the parties as November 30, 1970.'
Based upon its findings and conclusions, the court entered judgment against ECDC for $2,000,000, less prior amounts received by Winchell from sales procured by ECDC. The court also ordered ECDC to reconvey all unsold land to Winchell, and that Winchell was to receive all amounts due on land sales payable after November 30, 1970. The judgment provided that if the amounts paid Winchell prior to entry of judgment, together with the amounts awarded Winchell after November 30, 1970, did not satisfy the judgment, then these amounts together with reconveyance of the land would be considered as satisfying the judgment in full. The court also ordered Winchell to execute a partial release in conjunction with the option to Krueger Construction Company.
In this appeal, ECDC contends that the trial court has, in effect, terminated the transaction between the parties based upon the provisions of Exhibit M and that therefore it was error to award Winchell all proceeds due after November 30, 1970, since Exhibit M requires that each party receive one-half of all sales effected before the termination date. In addition, ECDC contends that a pro-rata share of the development costs should be awarded to it. Finally, ECDC asserts that the court has made no disposition of its claim for damages based upon Winchell's refusal to execute additional partial releases.
Neither party here disputes the trial court's findings and conclusions relative to Winchell's right to terminate the transaction between the parties effective November 30, 1970. However, from a review of the trial court's findings and conclusions, we are unable to determine the basis upon which Winchell was awarded all proceeds due after November 30, 1970, and ECDC was not awarded its development costs. Specifically, we cannot determine: (1) Whether the trial court concluded that there was an additional oral agreement between the parties relative to the development of the property and for sale of the land in small tracts which Winchell proved by admissible evidence and ECDC breached; or (2) whether the trial court concluded that the issue of fraud had been tried by consent of the parties and that Winchell was entitled to the judgment in question as a result of fraudulent acts of ECDC; or (3) whether the court determined that Winchell was entitled to terminate the transaction pursuant to Exhibit M but that ECDC was precluded by fraud or breach of contract from recovering its share of sales proceeds after November 30, 1970, and the development costs called for by Exhibit M. The trial court's judgment likewise fails to dispose of all of the issues raised by plaintiff's complaint.
Inasmuch as we are unable to determine on what specific grounds the trial court reached its decision on the issues specified above, the judgment is reversed and the cause remanded with directions to the trial court to make findings of fact and conclusions of law in accordance with C.R.C.P. 52(a) and enter appropriate judgment thereon. See Hipps v. Hennig, 167 Colo. 358, 447 P.2d 700.
PIERCE and SMITH, JJ., concur.