Young Farms Ltd. v. Richtron, Inc.

776 P.2d 53, 111 Utah Adv. Rep. 3, 1989 Utah LEXIS 54, 1989 WL 64616
CourtUtah Supreme Court
DecidedJune 14, 1989
DocketNo. 19902
StatusPublished

This text of 776 P.2d 53 (Young Farms Ltd. v. Richtron, Inc.) is published on Counsel Stack Legal Research, covering Utah Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Young Farms Ltd. v. Richtron, Inc., 776 P.2d 53, 111 Utah Adv. Rep. 3, 1989 Utah LEXIS 54, 1989 WL 64616 (Utah 1989).

Opinions

HOWE, Associate Chief Justice:

This action was brought by Young Farms Limited, a Utah limited partnership, and all of its limited partners against the withdrawn general partner, Richtron, Inc., and Paul Richins, its president, for an accounting, damages, and a determination of contract rights in the limited partnership’s properties. The trial court granted a partial summary judgment decreeing that Ri-chtron had no right, title, or interest in the properties and dismissed Richtron and Ri-chins from the suit. This appeal concerns only the parties’ rights to a deposit of $10,431 paid into court by Richtron which is being held by the trial court pending our determination.

Young Farms Limited was formed for the purposes of acquiring and holding for investment certain undeveloped real property and farmland in Duchesne County, Utah. The limited partnership properties were purchased by Young Farms from its general partner, Richtron, Inc., on a real estate contract dated November 15, 1974. Richtron had previously purchased the properties on contract from Robert and Betty Jean Young. The Youngs had previously acquired one of the properties on contract from defendants Aral Wesley Allred and Sarah Elaine Allred. Thus, there were three real estate contracts in connection with the limited partnership’s properties: the Allred-Young contract, the Young-Richtron contract, and the Ri-ehtron-Young Farms contract.

In 1979, Richtron put itself in the position of the Youngs and assumed the obligations and duties of the Allred-Young contract, including a $95,000 promissory note. The Youngs were released from all contractual responsibilities. Richtron agreed to make payments of $10,431 to the Allreds on the 15th day of November each year until the balance of the note was paid. Payments to the Allreds were to be made through an escrow agent, defendant Bank of Utah. Therefore, while Young Farms purchased the limited partnership properties from Richtron, its general partner, by a real estate contract payable in annual installments, the protection and preservation of its investment in one property was dependent upon Richtron’s fulfilling its obligation to the Allreds. In the most simple terms, Young Farms was to make an annual payment of $52,000 for all the partnership properties to Richtron, which, in turn, was to make an annual payment to the Allreds of $10,431.

Young Farms paid approximately $52,-000 to Richtron as the 1980 payment on their contract. Richtron, however, failed to make the November 15, 1980 payment to the Allreds and withdrew from being the general partner of Young Farms on January 2, 1981. The limited partners amended [55]*55the partnership agreement (certificate) and substituted Tower Real Estate, Inc., as the new general partner. See Utah Code Ann. § 48-2-25 (1989). Eventually, on February 20, 1981, Richtron paid $10,431 into escrow as the 1980 payment to the Allreds, but the Allreds refused the payment as being late. It is noted that Richtron had spent the $52,000 previously received from Young Farms for other purposes and could only make the $10,431 payment to the Allreds after borrowing most of that amount. After the Allreds refused the $10,431 payment from Richtron, the monies remained in escrow. On December 4, 1981, Paul Richins, on behalf of Richtron, requested that the escrow bank return the $10,431, which it did three days later. Richtron spent the money.

In the course of this litigation, which was commenced in March 1981, the trial court directed defendants Richtron and Paul Ri-chins to pay $10,431 into the court, representing the 1980 payment. At the same time, the court directed plaintiff Young Farms to deposit $10,431 into the court, representing the 1981 note payment to the Allreds. The funds were to be placed in interest-bearing certificates and held pending determination of the parties’ rights in the Allred contract and the limited partnership’s properties. Further, Young Farms was directed to amend the complaint to bring the Allreds into the action. Rather than submitting cash, Richtron and Paul Richins submitted an irrevocable letter of credit from the Barnes Banking Company in the amount of $10,431 to be drawn on the account of Leo and Lucille Richins, parents of Paul Richins. The letter of credit did not provide for any interest and was issued for a life of only six months, with an automatic extension of six months. The trial court found that Leo and Lucille Richins instructed their bank to issue the letter of credit because they loved and trusted their son, Paul, who had requested them to do it. It was considered a personal favor to Paul and not a loan to Richtron.

Recognizing that the letter of credit did not draw interest, Young Farms requested that cash be paid into court in order to draw interest as required by the previous order. The court directed Richtron and Paul Richins to either submit a letter of credit which would draw interest or pay cash into the court. Upon their failure to comply with this order, the court collected $10,431 from the Barnes Banking Company and ordered that it be held by the clerk of the court “pending the determination of the rights of the parties in the Allred contract and the properties underlying said contract ... to be determined at the time of trial.” It appears that the trial court wanted the 1980 and 1981 payments on deposit in court so that those funds would be available for payment to the Allreds (who were being made parties to the action) in case they could be induced or required by the court to accept them and restore the contract to full force and effect.

On September 30, 1983, Young Farms moved for and the court granted a partial summary judgment in favor of Young Farms, ruling that Richtron and Paul Ri-chins had “no right, title or interest or claim to or in the real property which is the subject matter of this suit” and dismissed them from the case. They promptly filed an appeal. On December 7, 1983, Paul Richins wrote a letter to the trial court, requesting a return of the $10,431 that was being held by the court. The court ordered, ex parte, that “if the defendants dismiss the appeal then it would appear proper to return the $10,431 to Leo Richins. As long as the appeal remains in process, the amount should remain with the clerk of the court.” Richtron and Paul Richins subsequently dismissed their appeal.

Thereupon, Young Farms requested an evidentiary hearing on the matter of who owned the $10,431, which hearing was held on January 12, 1984. Young Farms claimed the money as being the 1980 payment on the real estate contract, and Ri-chtron and Paul Richins claimed the money on behalf of Leo and Lucille Richins. The court made findings of fact and ruled that the money “should go back to the same source from which it came, which was Leo Richins,” but that it should not be removed from the custody of the court until Young Farms had “an opportunity for a final de[56]*56termination of this ruling by the appellate process providing they perfect their rights to appeal.” The case was subsequently settled by Young Farms with the remaining defendants, including the Allreds, which resulted in the Allreds agreeing to reinstate the contract. Young Farms has appealed only from the order awarding the $10,431 on deposit to Leo Richins. Leo and Lucille Richins were not parties to this lawsuit, but have been permitted to intervene on this appeal.

I

Having been dismissed, Richtron and Paul Richins are no longer parties to this lawsuit.

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Related

§ 48-2-1
Utah § 48-2-1
§ 48-2-25
Utah § 48-2-25

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Bluebook (online)
776 P.2d 53, 111 Utah Adv. Rep. 3, 1989 Utah LEXIS 54, 1989 WL 64616, Counsel Stack Legal Research, https://law.counselstack.com/opinion/young-farms-ltd-v-richtron-inc-utah-1989.