This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1996).

STATE OF MINNESOTA

IN COURT OF APPEALS

C7-96-964

Gregory Waffensmith, et al.,

Respondents,

vs.

Luanne M. Wendland (substituted

by agreement of the parties for

Carol A. Hesch, f/k/a Carol A. Harris),

Appellant.

Filed January 21, 1997

Affirmed in part and reversed in part

Norton, Judge

Crow Wing County District Court

File No. C6-94-210

James W. Nelson, Fitzpatrick, Nelson & Ten Eyck, PO Box 631, Brainerd, MN 56401 (for Respondents)

John F. Bonner III, Malkerson Gilliland Martin LLP, Suite 1500, AT&T Tower, 901 Marquette Avenue, Minneapolis, MN 55402-3205 (for Appellant)

Considered and decided by Lansing, Presiding Judge, Huspeni, Judge, and Norton, Judge.

U N P U B L I S H E D O P I N I O N

NORTON, Judge

Appellant contends the trial court erred by awarding damages and admitting evidence related to a claim dismissed in a prior settlement agreement, by concluding that interest had ceased to run on the contract for deed, and by denying attorney fees. The record supports the trial court's conclusions regarding the admission of evidence and attorney fees. The trial court's conclusion that interest ceased to run on the contract is erroneous, because the Waffensmiths waived Hesch's repudiation and because the parties' settlement agreement relieved Hesch of her obligation to deliver good title. We affirm in part and reverse in part.

FACTS

Respondents Gregory and Kim Waffensmith entered into a contract for deed with appellant Luanne Wendland's predecessor in interest, Carol Hesch, on September 4, 1982, for the purchase of a farm in Crow Wing County for $60,000. After an $11,000 downpayment, the remaining $49,000 plus 10% interest was to be paid pursuant to a ten-year financing plan with a balloon payment. The Waffensmiths made all payments up until the balloon payment due date, except for three that are in dispute. As the balloon date approached, several problems with the transaction arose and the parties' relationship deteriorated.

Months before the balloon payment was due, the Waffensmiths contacted the First National Bank of Deerwood to secure a mortgage to pay for the balance due. The mortgage lender qualified the Waffensmiths for the amount they requested contingent on correction of defects in the title. The balloon payment due date came and went without the title defects being cured, despite the Waffensmiths' repeated attempts to urge Hesch to cure the title defects. The Waffensmiths continued to make monthly payments to Hesch after the balloon due date, but ceased making any payments after receiving a letter from Hesch in October 1993.

On February 4, 1994, Hesch served the Waffensmiths with a notice of cancellation on the contract for deed. Shortly thereafter, the Waffensmiths sued Hesch on the contract for deed for breach of warranty, misrepresentation and fraud, and other damages. In a separate matter, Luanne Wendland and Beverly Hoel, owners of an adjoining tract of land, brought a title registration proceeding contesting the boundaries of the Waffensmiths' farm. Hesch later assigned her interest in the contract for deed to Wendland.

After the Waffensmiths and Wendland held a settlement conference regarding the two causes of action between them, they reached full settlement with respect to the title registration proceeding and partial settlement with respect to the contract for deed action. They went to trial to resolve the remainder of the issues in the contract for deed action.

The trial court concluded that Hesch had made representations to the Waffensmiths that constituted fraud and misrepresentation, that Hesch was obligated by the terms of the contract for deed to convey good title to the Waffensmiths on October 23, 1992 and, having failed to do so, the running of interest ceased as of that date, and that neither the Waffensmiths nor Wendland were entitled to an award of attorney fees.

D E C I S I O N

1. Testimony regarding the fence line.

Wendland argues that the trial court abused its discretion by allowing the Waffensmiths to testify about Hesch's alleged representations of the farm boundaries, because all issues regarding the "size of the lot that was to have been conveyed" were dismissed by the settlement agreement. The Waffensmiths argue that evidence concerning the fence was properly admitted because the stipulation in the settlement agreement dismissing claims based on the "size of the lot that was to have been conveyed" does not include claims for the cost of rebuilding a fence.

Resolution of this issue by the court of appeals is improper, because Wendland failed to file a motion for a new trial. Sauter v. Wasemiller, 364 N.W.2d 833, 835 (Minn. App. 1985) (alleged evidentiary errors occurring at trial that are not challenged by posttrial motion for new trial are not reviewable on appeal), aff'd, 389 N.W.2d 200, 201 (Minn. 1986). Motions for a new trial under Minn. R. Civ. P. 59.01 "permit the correction of errors by the trial court before automatically incurring the expense and inconvenience associated with an appeal." Pierce v. National Farmers Union Prop. & Cas. Co., 351 N.W.2d 366, 368 (Minn. App. 1984). This rule enables the trial court to correct its own errors, thus possibly avoiding an expensive and lengthy appellate review. Sauter, 389 N.W.2d at 202.

When no motion for a new trial has occurred, the only questions for appellate review are whether the evidence supports the findings of fact and whether such findings support the conclusions of law and the judgment. Gruenhagen v. Larson, 246 N.W.2d 565, 569 (Minn. 1976). The Waffensmiths testified that: 1) Hesch told them that the fence line represented the boundaries of the property; 2) they relied on appellant's assurances when they purchased the property; 3) they hired a surveyor who determined that the fence line was not the boundary of the property; and 4) in order to move the fence, it would cost between $2,700 - $2,800, due to the terrain of the farm in that area. The trial court made findings consistent with that evidence.

The trial court concluded that Hesch's representations constituted fraud and misrepresentation, and that the Waffensmiths reasonably were induced to act upon the representations, relied upon them, and thereby suffered damages in the amount of $2,700. The findings support these conclusions. Therefore, as this court's review is limited to whether the evidence supports the findings and the findings support the conclusions, the trial court's decision with respect to the admission of evidence for the replacement of their fence must be upheld.

Appellate courts possess the inherent power to make exceptions to this rule in the interests of substantial justice or to prevent denial of fundamental rights. Gruenhagen, 246 N.W.2d at 568. But that principle appears inappropriate in this case. Generally, the cases in which courts have been willing to make an exception to the general rule have been criminal cases involving the deprivation of life or liberty. Id. In this case, Wendland is faced only with the loss of a property interest.

Finally, Wendland argues the trial court abused its discretion by admitting representations concerning the fence line as a boundary of the property, because the Waffensmiths failed to plead fraud in their complaint pursuant to Minn. R. Civ. P. 9.02. We disagree. The record shows that Wendland failed to object to the deficient complaint at the trial court level. A party who fails to raise an issue below is ordinarily precluded from raising the issue for the first time on appeal. Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988) (stating that failure to raise issue below precludes judicial review). The trial court properly admitted the evidence.

2. Interest on the contract for deed.

Wendland argues that the trial court erred by concluding that interest ceased to accrue on the balloon payment due date, because the Waffensmiths failed to make a sufficient tender. We agree. The trial court concluded that Wendland was obligated by the terms of the contract for deed to convey "good title" to the Waffensmiths on approximately October 23, 1992, and, when Wendland failed to do so, the running of interest ceased as of that date.

"The construction and effect of a contract are questions of law for the court." Turner v. Alpha Phi Sorority House, 276 N.W.2d 63, 66 (Minn. 1979). A reviewing court is not bound by and need not give deference to a trial court's decision on a purely legal issue. Frost-Benco Elec. Ass'n v. Minnesota Pub. Utils. Comm'n, 358 N.W.2d 639, 642 (Minn. 1984). In this case, the contract for deed required that Wendland provide the Waffensmiths with "a warranty deed accompanied by an abstract evidencing good title * * * upon the prompt and full performance" by the Waffensmiths. Therefore, the express language in the contract for deed required the Waffensmiths to tender their performance first.

The Waffensmiths' purported tender, a contingent loan, failed to satisfy their performance obligation, because negotiability of the payment was a prerequisite to proper tender. Extraordinary Learning & Educ. Complex/Minneapolis Communiversity v. New Bethel Baptist Church, 430 N.W.2d 184, 187 (Minn. App. 1988) (holding that photocopied checks delivered after the redemption period are not negotiable and unconditional tender). Here, Waffensmiths only placed themselves in a position to deliver payment by securing a conditional loan from a bank; they did not even present a non-negotiable check. Unlike Extraordinary Learning, "Without first tendering performance, a party cannot justify nonperformance by the other party's failure to perform." Bell v. Olson, 424 N.W.2d 829, 832 (Minn. App. 1988) (holding that, because contract for deed required seller to provide abstract and warranty deed only upon full performance by buyer, buyer's failure to tender performance precluded them from justifying their nonperformance on seller's failure to provide abstract).

The Waffensmiths argue that even if they failed to produce sufficient tender, Hesch's actions in failing to cure the breach of warranties of title was an anticipatory repudiation which excused their failure to make the final balloon payment. We disagree. An anticipatory breach is generally only found where there is an "unequivocal repudiation of the entire contract." Bell, 424 N.W.2d at 832. "In the absence of express unqualified repudiation, inability to perform may constitute anticipatory breach." Id. at 833. In the months prior to the balloon due date, Hesch exhibited no signs of dealing with the title defects, thus making it unlikely that she would convey good title to the Waffensmiths upon their final payment. After the balloon payment due date, however, the Waffensmiths waived Hesch's failure to correct the title defects by continuing to make contract payments to Hesch for almost a year. See Creative Communications Consultants, Inc. v. Gaylord, 403 N.W.2d 654, 657 (Minn. App. 1987) (party's continued recognition of binding contract after other party's alleged breach serves as waiver of breach). Thus, the Waffensmiths are precluded from arguing that Hesch anticipatorily repudiated the contract.

Moreover, the parties' settlement agreement dismissed Hesch's obligation to convey good title. During the settlement agreement, Wendland's attorney stated:

There is a claim with regard to some title problems, and this probably couldn't be more vague, but with respect to any and all issues regarding title and also with respect to any issues regarding the size of the lot that was to have been conveyed, those are being dismissed with prejudice today with an understanding that a $1,500 credit will be given once the amount due on the contract is finally determined.

Additionally, the Waffensmiths' trial brief statement demonstrates that Wendland's obligation to convey clear title was dismissed: "In addition, issues relating to the title to the property were dismissed upon the agreement of Luanne M. Wendland to give credit to the Waffensmiths in the amount of $1,500.00 in order to have the necessary legal work done to correct the title." Although the settlement conference transcript enumerated the claims preserved, including claims for the balance and interest due on the contract for deed, those claims deal with the resolution of the number of payments the Waffensmiths made to Hesch during the period from 1982-1993, not with the accrual of interest. The trial court's decision with respect to this matter is reversed, because the Waffensmiths failed to tender performance to Wendland sufficiently on October 23, 1992; therefore, the interest on the contract for deed should have continued to accrue.

3. Attorney fees.

The Waffensmiths argue that the trial court abused its discretion by failing to award them reasonable attorney fees incurred in the contract for deed action. We disagree. This court must affirm the trial court's award or denial of attorney fees unless a clear abuse of discretion exists. Becker v. Alloy Hardfacing & Eng'g Co., 401 N.W.2d 655, 661 (Minn. 1987). The trial court found that the Waffensmiths incurred reasonable attorney fees of $14,427.07 and expert witness fees of $550, but concluded that neither party was entitled to an award of attorney fees.

Generally, a party may recover attorney fees in litigation only if a specific contract or statute authorizes them. Langeland v. Farmers State Bank of Trimont, 319 N.W.2d 26, 33 (Minn. 1982). The Waffensmiths seek relief under the exception to this rule that allows an award of attorney fees in situations where the defendant's wrongful act thrusts the plaintiff into litigation with a third person. Bergquist v. Kreidler, 158 Minn. 127, 130-31, 196 N.W. 964, 965 (1924); Lundeen v. Lappi, 361 N.W.2d 913, 917 (Minn. App. 1985), review denied (Minn. Apr. 18, 1985). Langeland, 319 N.W.2d at 33. Again, we disagree.

The exception does not apply here, because the Waffensmiths did not incur attorney fees in litigation with a third party. See Chris/Rob Realty v. Chrysler Realty Corp., 260 N.W.2d 456, 460 (Minn. 1977) (stating that where landlord is suing tenant, no third party is involved, therefore the Bergquist exception is not applicable). The Waffensmiths sued the original seller, Hesch, for breach of warranty of title, fraud and misrepresentation, and other damages relating to the contract for deed. Hesch was not a third party. The Waffensmiths were then forced into litigation with a "quasi" third party, Wendland, due to the assignment between Hesch and Wendland. Hesch and Wendland are in effect the same person due to the assignment. See Marquette Appliances, Inc. v. Economy Food Plan, Inc., 256 Minn. 169, 173, 97 N.W.2d 652, 655 (1959) (unconditional or absolute assignment generally transfers to assignee all rights and duties possessed by assignor, with result that assignee stands in shoes of assignor); see also State ex rel. Southwell v. Chamberland, 361 N.W.2d 814, 818 (Minn. 1985) (valid assignment generally vests in assignee the same right, title or interest that assignor had in thing assigned). Thus, Wendland is not a third party. The trial court did not abuse its discretion in denying attorney fees.

Affirmed in part and reversed in part.