Monday, January 6, 2014

Hilton v. Nelsen case brief

Hilton v. Nelsen case brief summary
283 N.W.2d 877 (1979)

Plaintiff real estate investor entered into a written agreement drafted by the investor's attorney with defendant sellers to purchase their farm. After the last date for the sale of the property under the agreement, the investor filed an action in the Marshall County District Court (Minnesota) for specific performance and damages. The court entered judgment for the investor. The sellers sought appellate review.

  • Nelsen had a 720 acre farm and negotiated a contract of sale with Hilton. 
  • The contract stated a purchase price of $180,000, which would not be repaid for the first five years of a ten-year mortgage. 
  • Instead Nelsen would receive an annual 7% interest during that time. 
  • Hilton would pay only $2,000 a year in principal for during the sixth through the ninth year and $119,800 was due at maturity. 
  • Performance by Hilton was conditioned on obtaining title insurance with no policy exceptions. 
  • The property, however, was subject to easements for roads, telephone cables, as well as the state’s mineral rights. 
  • Hilton refused to close the deal without a $16,000 reduction in the purchase price. 
  • Hilton later agreed to close anyway but Nelsen then decided that he was not going to sell. 
  • Hilton sued for specific performance of the contract. 
  • The trial court held that Nelsen was in breach of the contract; Ordered specific performance and damages for the fair rental value of the property for the time in which Nelsen stayed on the premises after the contract closing date. 
  • Nelsen appealed.

  • On appeal, the court held that the investor did not abandon the agreement in the case at bar. 
  • The court accepted the trial court's factual findings as supported by the record that the sellers repudiated the agreement by letter and that they failed to close on the agreement as its terms required. 
  • The court held, however, that the agreement drafted by the investor's attorney was such that there were elements of unfairness, or at least overreaching, in the contract itself. 
  • The court held that the contract lacked mutuality of remedy. 
  • In the absence of such mutuality, the court refused to exert its equitable powers and left the parties to their remedy at law. 
  • The court held that the agreement gave the investor the right to unilaterally terminate the agreement for a variety of reasons, and that if he chose to terminate the contract he had the right to a return of his earnest money deposit. 
  • In light of the nature of the agreement, and the totality of the circumstances, including the property's redemption after a foreclosure sale in which the investor had purchased the mortgage, the court held that damages at law were an adequate remedy for the sellers' breach.
The court affirmed the factual findings of the trial court but reversed its judgment of the trial court granting specific performance of the contract. The court held that the investor was entitled to a legal remedy of damages rather than an equitable remedy in light of the nature of the agreement, and remanded the case for a trial as to damages.

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