2013 VT 12


Prue v. Royer, Sr., and
Department of Liquor Control (2011-417)
 
2013 VT 12
 
[Filed 15-Feb-2013]
 
NOTICE:  This opinion is
subject to motions for reargument under V.R.A.P. 40 as well as formal revision
before publication in the Vermont Reports.  Readers are requested to
notify the Reporter of Decisions by email at: JUD.Reporter@state.vt.us or by
mail at: Vermont Supreme Court, 109 State Street, Montpelier, Vermont
05609-0801, of any errors in order that corrections may be made before this
opinion goes to press.
 
 

2013 VT 12

 

No. 2011-417

 

David Prue and Barbara Prue


Supreme Court


 


 


 


On Appeal from


     v.


Superior Court, Orleans Unit,


 


Civil Division


 


 


Larry C. Royer, Sr. and
  Department of Liquor Control


April Term, 2012


 


 


 


 


Robert
  R. Bent, J.


 

Paul R. Morwood, South Burlington, for
Plaintiffs-Appellants.
 
Jennifer E. Nelson of Law Office of Jennifer E. Nelson, P.C.,
Newport, for
  Defendant-Appellee/Cross-Appellant.
 
 
PRESENT:  Reiber, C.J., Dooley, Skoglund, Burgess and
Robinson, JJ.
 
 
¶ 1.            
DOOLEY, J.   The parties in this case entered into a
real estate agreement nearly thirteen years ago, and this case requires us to
determine its repercussions.  The trial court concluded that the agreement
constituted a contract for deed and that the purchasers had therefore acquired
an equitable interest in the property in question.  The court initiated a
foreclosure on that interest, even though it had not been pled. 
Plaintiffs, the purchasers as found by the superior court—David and Barbara
Prue, appeal from the foreclosure.  Defendant, the seller as found by the
court—Larry Royer, appeals from the court’s conclusions that the contract was
an enforceable contract for deed.  We affirm the court’s conclusion that
the parties entered into a contract for deed, and that it was enforceable, but
reverse the foreclosure decree as premature.
¶ 2.            
Plaintiffs, Barbara and David Prue, were friends with Larry Royer,
defendant, and his now-deceased wife.  The Royers owned a bar in Irasburg
known as the Brewski Pub.  In 1999, plaintiffs, along with a friend,[1]
began discussing with the Royers the possibility of purchasing or taking over
the operation of the bar.  
¶ 3.            
In January 2000, these discussions produced an agreement, which was
memorialized in a document drafted by the Royers’ real estate agent.  At
the time, the real estate agent encouraged the parties to hire an attorney to
draft the proper documents.  When they did not follow that advice, the
agent included a provision that she would be held harmless for any disputes
that might arise.  As the events unfolded, it became clear that the
parties should have listened to the real estate agent.  
¶ 4.            
This case arises out of the lack of clarity in the parties’
agreements.   The primary agreement is completed on a realtor
pre-printed contract entitled “Purchase and Sale Contract,” but “Lease-Option
to Purchase” is handwritten below that title.  On this form contract, the
purchase price is listed as $190,000, and $4000 is entered as the
deposit.  In the blank for an additional deposit, an annotation is entered
to see the attached schedule.  In the blank for a closing date is written:
“proposed 6 years from date of all signatures to this contract.”  
¶ 5.            
The preprinted terms of the contract are those for the sale of
property.  The first section is headed “Agreement of Sale and Purchase”
and states, “Purchaser hereby offers and agrees to purchase from Seller and
Seller agrees to sell and convey to Purchaser the Property described herein at
the price and on the terms and conditions stated in this Contract.”
¶ 6.            
A separate page entitled “Financing Property Agreement” is
attached.  This agreement states that the price of the real estate is
$175,000, plus $15,000 for equipment, for a total price of $190,000. 
Beneath this is listed a schedule of payments.  The schedule lists three
down payments, one at signing and one each in April and June 2000.  The
one at signing is labeled an “option down payment.”  In between these down
payments, the schedule lists twelve monthly “rental” payments of $1000. 
For each down payment, “-$4000” is entered below the sale price.  The
bottom of the schedule reads “1/1/01 Balance due is . . . $178,000.” 
Following this, the financing agreement reads “Buyer/Leasee will pay starting
1/1/01, $1,400 per month for 5 years with an interest payment of 1 over the
nation’s prime rate and a balloon due of all principle and interest on
1/1/06.”  
¶ 7.            
Also attached is an addendum, referring to “Buyers” and “Sellers”
throughout.  The addendum specifies that plaintiffs are responsible for
operating licenses, any property or equipment damage, septic and spring
operations, utility payments, and real estate taxes.  The addendum also
requires that “during lease agreement” defendant’s approval be obtained prior to
any renovations.  Finally, the addendum requires that plaintiffs have fire
insurance, theft insurance, and proof of one million dollars of liability
insurance “before business opening,” and that defendant be “named as lien
holder[].”  
¶ 8.            
This arrangement went forward apparently without difficulty for several
years.  The record suggests that, at points after the first year of the
agreement, plaintiffs missed some payments, but that defendant either forgave
or put off these payments.  In 2004, the parties agreed that an addition
would be built.  Defendant paid for the addition, and the price was added
to the principal balance due from plaintiffs.  In June 2004, the parties
signed an amortization schedule calling for a new balance of $253,549, amortized
over twenty-five years.  This amortization schedule did not address the
balloon payment provision in the original agreement.  
¶ 9.            
In 2006, after the contemplated balloon payment date had come and gone,
defendant sought to complete the transfer, but plaintiffs informed defendant
that they would be unable to do so.  The trial court found that plaintiffs
probably were not sufficiently creditworthy to qualify for a bank loan at that
time.  Nevertheless, plaintiffs remained in possession of the bar and
continued to make monthly payments.  In August 2006, the parties drew up
and signed a new payment schedule, shifting to weekly payments that would run
through 2018.  
¶ 10.        
The arrangement began to really unravel as the result of issues with the
insurance coverage.  The bar, renamed Kingdom’s Playground by plaintiffs,
was described by the trial court as a “rowdy place.”  In 2004, both
plaintiffs and defendant were named as defendants in a lawsuit under Vermont’s
Dram Shop Act, 7 V.S.A. § 501.  As a result, defendant learned that he had
not been named as the lienholder on plaintiffs’ liability insurance.  He
also learned that the policy provided plaintiffs only $100,000 in liability
coverage.  Both of these inadequacies in the policy appeared to contravene
the addendum to the parties’ original contract, and defendant pressed
plaintiffs to correct them.  
¶ 11.        
The insurance issues came to a head in early 2007 when gunshots were
fired at the bar.  Another area bar had recently been the scene of a
stabbing.  The gunshots attracted the attention of the state liquor
inspector, who began inquiring whether plaintiffs had an active lease as
required by state law.  See 7 V.S.A. § 222.  Neither plaintiffs nor
defendant were able to find a copy of their original agreement.  The
inspector told plaintiffs that they would have to stop operating the bar if
they did not have a lease.  Plaintiffs’ last monthly payment was made in
mid-January 2007.  
¶ 12.        
On March 8, 2007, plaintiffs tendered their liquor license to the state
inspector and started removing property from the bar.  The trial court
found that plaintiffs took some equipment that was present when they took
possession of the premises and liquor that was part of the original
inventory.  The trial court also found that the property was left damaged
and messy, requiring defendant to expend repair and clean-up costs.  
¶ 13.        
Although plaintiffs testified that they were under the impression that
defendant was shutting them down, the trial court found that defendant did not
do anything to evict them.  The court found that plaintiffs voluntarily
surrendered possession out of frustration with the state liquor control issues,
their poor income, and defendant’s demand that they provide more liability
coverage.  
¶ 14.        
Not long thereafter, however, plaintiffs sought to be restored to
possession.  After consulting an attorney, plaintiffs learned that their
rights in the premises might not be merely those of lessees.  On March 29,
2007, they initiated this action, seeking a declaration that they hold
equitable title to the property as well as money damages.  Defendant
counterclaimed for breach of contract and unjust enrichment, seeking back rent
and damages based on the missing items and the clean-up costs.  
¶ 15.        
The central question before the trial court was how to characterize the
contractual arrangement between plaintiffs and defendant.  Plaintiffs
characterized the agreement as a contract for deed, such that they acquired
equitable title subject to a mortgage.  Defendant, in contrast,
characterized the agreement as a lease-option contract, such that plaintiffs
were only leaseholders until they paid the purchase price.  
¶ 16.        
The trial court accepted plaintiffs’ interpretation, holding that the
agreement was a contract for deed.  As a result, the court concluded that
plaintiffs held an equitable interest in the property, and treated the contract
as embodying a mortgage.  The consequence of this legal classification was
that plaintiffs held an equity of redemption, such that the only means to
extinguish plaintiffs’ interest was foreclosure.  On its own initiative,
the court commenced such a foreclosure.  The court explained, “Although
[defendant] has not sought to ‘foreclose,’ [plaintiffs] have sufficiently pled
the issue for the court to enter a foreclosure order if it becomes
necessary.”  Plaintiffs were given fifty-four days—slightly under eight
weeks—in which to pay $244,386.86 plus interest to redeem.  In the event
of nonredemption, plaintiffs were ordered to pay $8136 in damages for personal
property, cleaning, and repairs.  
¶ 17.        
Both parties appeal.  Plaintiffs argue that the trial court abused
its discretion in sua sponte ordering a foreclosure; in the alternative, they
argue that the court erred in permitting strict foreclosure, in giving a short
redemption period, and in placing the redemption amount too high; and further
argue that the trial court should not have ordered conditional damages for
waste.  Defendant, in contrast, argues the trial court was wrong to
interpret the agreement as a contract for deed, thus incorrectly giving plaintiffs
an equitable interest and incorrectly failing to award back rent.  He also
argues that the two modifications of the agreement in 2004 and 2006 were
unenforceable under the Statute of Frauds, and that plaintiffs abandoned their
equitable interest, if any existed, when they quit the property.  In the
alternative, defendant argues that plaintiffs’ appeal is not properly before us
because plaintiffs did not comply with Vermont Rule of Civil Procedure 80.1(m)
by seeking permission from the trial court to appeal within ten days of its
order, but that both the foreclosure remedy and the conditional damages for
waste awarded by the trial court were appropriate.  We deal with each of
these questions in turn below.     
¶ 18.        
Our review of the trial court’s interpretation of the parties’ agreement
is nondeferential.  See Dep’t of Corrs. v. Matrix Health Sys., P.C.,
2008 VT 32, ¶¶ 11-12, 183 Vt. 348, 950 A.2d 1201 (explaining that we review
“the trial court’s interpretation of the parties’ contract de novo” and seek,
“[i]n construing a contract, . . . to implement the parties’ intent”).  To
the extent that it is legally permissible, the trial court’s order of
foreclosure will be reviewed for abuse of discretion.  See Weed v. Weed,
2008 VT 121, ¶ 16, 185 Vt. 83, 968 A.2d 310 (holding that equitable remedies
are reviewed for abuse of discretion); Pownal Dev. Corp. v. Pownal Tanning
Co., 171 Vt. 360, 365, 765 A.2d 489, 493 (2000) (“[T]he foreclosure of mortgages is
an equitable remedy . . .
.”).  In addressing these questions, we accept the trial court’s findings
of fact as long as they are supported by the evidence.  See Whippie v.
O’Connor, 2010 VT 32, ¶ 12, 187 Vt. 523, 996 A.2d 1154.
¶ 19.        
We begin by considering the nature of the contract, which means addressing
defendant’s cross-appeal.  Defendant argues that the trial court erred in
concluding that the agreement between the parties constituted a contract for
deed, arguing instead that it was a lease with an option to purchase.  We
affirm the trial court’s interpretation of the contract.
¶ 20.        
In interpreting a contract, we look to the intent of the parties as it
is expressed in their writing.  Southwick v. City of Rutland, 2011
VT 53, ¶ 4, 190 Vt. 106, 35 A.3d 113.  When a contract is unambiguous, the
plain language of the contract governs its interpretation.  Id. 
However, there can be no serious argument that the contract here is
unambiguous.  Indeed, the ambiguity in this contract begins with the
multiple titles on the top of the instrument: “Lease- Option to Purchase” was
written by hand on the top of the form contract, right under the generic
printed title, “Purchase and Sale Contract.”  No matter which of the
titles could be said to be more authoritative, the title of an instrument is
not necessarily determinative.  See Neece v. A.A.A. Realty Co., 322
S.W.2d 597, 600 (Tex. 1959) (“While in certain cases, one must consider
captions in order to ascertain the meaning and nature of a written instrument,
it has been held that the greater weight must be given to the operative
contractual clauses of the agreement . . . .”).  So,
we must look beyond the title to the terms of the agreement to determine the
intent of the parties.  
¶ 21.        
A contract for deed is an agreement in which a “prospective purchaser
occupies the premises and makes . . . payments until the
point of delivery of the deed and execution of the mortgage.”  Tromblay
v. Dacres, 135 Vt. 335, 339, 376 A.2d 753, 756 (1977).  Such contracts
are bilateral: both parties have duties to which they have already agreed and
cannot choose not to perform without breaching the contract.
¶ 22.        
A second important characteristic of a contract for deed is that the
payments under such an agreement “are applied to the purchase obligation as
they accumulate.” Id.  Therefore, under a contract for deed, there
is an “accumulation of an equitable interest in the property that deserves
recognition even without the execution of a formal mortgage instrument.”  Id.
at 340, 376 A.2d at 756.  
¶ 23.        
A lease option to purchase, on the other hand, is “ ‘an agreement
by which one binds himself to sell and convey to another party certain property
at a stipulated price within a designated time, leaving it in the discretion of
such other party to take and pay for the property.’ ”  Buchannon
v. Billings, 127 Vt. 69, 74, 238 A.2d 638, 641 (1968) (quoting Durfee
House Furnishing Co. v. Great Atl. & Pac. Tea Co., 100 Vt. 204, 207,
136 A. 379, 381 (1927)).  It is a unilateral contract:  “The optionor
is bound that the offer shall be kept open and available in accordance with its
terms, but its acceptance rests wholly in the discretion of the optionee, and
there is no obligation upon the latter with regard to it.’”  Id. 

¶ 24.        
Besides its unilateral nature, the other main way in which a lease
option is distinguished from a contract for deed is that the lease payments are
“not . . . applied on the purchase price.”  Tromblay,
135 Vt. at 340, 376 A.2d at 756.  Therefore, no equity is accrued. 
See Harden v. Vt. Dep’t of Taxes, 134 Vt. 122, 125, 352 A.2d 685, 687
(1976) (citing LaGue v. Vt. Highway Bd., 128 Vt. 212, 214, 260 A.2d 387,
389 (1969)).  
¶ 25.        
Defendant maintains that the document in this case was a lease option,
where the decision to purchase on January 1, 2006 was “in the discretion” of
plaintiffs, and “none of the rental payments were to be applied to reduce the
purchase price of the sale.”  However, despite the confusion produced by
this poorly drafted amalgamation of instruments, the weight of the evidence
suggests that the instrument has the two crucial characteristics of a contract
for deed, rather than a lease option: (1) the contract is bilateral, rather
than unilateral, and (2) the payments after January 1, 2001 are meant to be
applied to the purchase price.
¶ 26.        
In relation to the first of those characteristics, the language of the
agreement in many instances demonstrates that this was a bilateral contract.[2]  The first clause of the agreement
states: “Purchaser hereby offers and agrees to purchase from Seller and Seller
agrees to sell and convey to Purchaser the Property described
herein . . . .”  There is also a clause saying that
the offer is open for acceptance until January 2, 2000, and the signatures show
that the contract was signed the day after that by all parties.  The
clause that refers to “Purchaser’s obligation to close under this contract,”
subject only to a financing contingency, and the clause that states that “This
Contract is for the benefit of and is binding upon Seller and Purchaser,”
represent a mutuality of obligation that belies defendant’s argument that this
is only an option agreement.  
¶ 27.        
The language that suggests the parties entered into an option agreement
is sparse.  Defendant particularly points to the designation of the first
down payment in the financing agreement as an option down payment.  But
beyond that label in one place, the financing agreement does not have words to
describe plaintiffs’ right as an option.  In fact, that agreement is
written as a bilateral agreement specifying that after the initial year
“Buyer/Lesee will pay starting 1/1/01.”  The bilateral nature of the
agreements weighs strongly in favor of interpreting this instrument as a contract
for deed.
¶ 28.        
Second, the Financing Property Agreement strongly supports the view that
the payments after January 2001 will be applied to the purchase price: it
states that the balance due (which amounts to the purchase price less the three
down payments of $4000), is effective on January 1, 2001, at which point
“Buyer/Leasee will pay starting 1/1/01, $1,400 per month for 5 years with an
interest payment of 1 over the nation’s prime rate and a balloon due of all
principal and interest on 1/1/06.”  Defendant glosses over this clause,
stating: “Thereafter, the rent was increased to $1,400 per month.”  This
characterization is erroneous.  If the $1400 monthly payments were merely
rent, it would be hard to understand the phrase “balance due” on January 1,
2001, the inclusion of interest, or the “principal” that was to be paid in
2006.  The trial court found that “the parties appear to have calculated
[the amount of $1400] using an amortization schedule with a roughly twenty-year
schedule and seven to eight percent interest, which is a reasonable mortgage
arrangement.”  Furthermore, when the parties switched to weekly payments
in 2006, the principal was lower than it had been in 2004, which suggests that
the monthly payments were being applied to the principal.  
¶ 29.        
Because we find that the contract represented a bilateral agreement to
purchase the property, and that the payments after January 2001 went towards
the purchase price of the property, we affirm the finding of the trial court that
the agreement was a contract for deed, rather than a lease-option
agreement.  The consequence of this conclusion is that defendant’s
interest is as an equitable mortgagee, not as a landlord or optionor.  We
first explained the interests of seller and purchaser in a contract for deed in
Weston v. Landgrove:
If Holt, when he
purchased his farm, had taken a deed and given back a mortgage to secure the
payment of the purchase-money, it could not be denied that he held his estate
in his own right.  The conveyance which he in fact took is equivalent to
the same thing.  It is only a difference in the form of the
conveyance.  Holt, holding under his bond, is, to all intents and
purposes, predicable of the statute in question, as much the owner of his farm
as he would be, if he had a deed of it.  So long as he performs the
conditions of his bond, Abbott cannot question his title.  Abbott would be
a trespasser, like a stranger, if he invaded Holt’s possession; and had no more
“right” in the farm than a stranger.  He had only the rights of a
mortgagee before breach of condition.
 
53 Vt. 375, 378
(1881); see also Tromblay, 135 Vt. at 339, 376 A.2d at 756 (“The
doctrine of equitable mortgages does apply to agreements denominated as a
‘contract for a deed’ or, in older usage, ‘bond for a deed.’ These agreements
are entered into, in many instances, where the prospective purchaser cannot
raise the difference between the price of the property and an acceptable
mortgageable balance.  The prospective purchaser occupies the premises and
makes the payments until the point of delivery of the deed and execution of the
mortgage is reached.  Since the payments are applied to the purchase
obligation as they accumulate, an equity, though perhaps small, comes into
being.  It is this interest that is referred to as the equitable mortgage
interest that requires foreclosure.”); Aldrich v. Lincoln Land Corp.,
130 Vt. 372, 374, 294 A.2d 853, 854 (1972) (“The legal title in this lessor is
viewed as a security interest held for the payment of the purchase money due,
with equitable title in the lessees.  Given a breach of the contractual
provisions, foreclosure is the remedy.” (citation omitted)). 
¶ 30.        
Although Vermont has consistently treated a contract for deed as an
equitable mortgage, it has been one of only a small minority of states to do
so.  See G. Nelson, The Contract for Deed as a Mortgage: The Case for
the Restatement Approach, 1998 B.Y.U. L. Rev. 1111, 1125.  In more
recent years, however, a trend has developed consistent with the Vermont
view.  Thus, the Restatement (Third) of Property: Mortgages § 3.4(b)
(1997) provides that “[a] contract for deed creates a mortgage.”
¶ 31.        
Having determined that the agreement was a contract for deed, we turn to
defendant’s claim that the two modifications in 2004 and 2006—both of which
took the form of amended payment schedules signed by all parties—are
unenforceable under the Statute of Frauds.[3]  12 V.S.A. § 181(5).  In
support of this contention, defendant relies on Chomicky v. Buttolph for
the proposition that for a modification of an agreement within the Statute of
Frauds to be enforceable, “any proposed changes or modifications ‘are subjected
to the same requirements of form as the original provisions.’ ”  147
Vt. 128, 128, 513 A.2d 1174, 1175 (1986) (quoting Evarts v. Forte, 135
Vt. 306, 311, 376 A.2d 766, 769 (1977)).
¶ 32.        
Defendant argues that the 2004 and 2006 modifications do not satisfy the
Statute of Frauds, although they are written and signed by all parties, for two
reasons.  First, defendant claims that they “fail to refer to or describe
the property in any manner,” and also that they do not refer to or purport to
amend the original agreement.  Second, defendant argues that since
no modified closing date is included in either of the modifications, an
essential term is left out, making the agreement as modified incomplete and
unenforceable under the Statute of Frauds.  
¶ 33.        
To begin with, defendant is correct that a modification of a contract
within the Statute of Frauds must be written and signed to be
enforceable.  Evarts, 135 Vt. at 311, 376 A.2d at 769; see Secrest
v. Sec. Nat’l Mortg. Loan Trust 2002-2, 84 Cal. Rptr. 3d 275, 282 (Ct. App.
2008) (written modification unenforceable because unsigned by lender). 
However, the cases that cite Evarts for the proposition that “any
proposed changes or modifications are subjected to the same requirements of
form as the original provisions,” including Chomicky itself, 147 Vt. at
130, 513 A.2d at 1175, are exclusively those where the modification in question
was entirely oral rather than in writing.  See Heathcote Assoc. v.
Chittenden Trust Co., 958 F. Supp. 182, 186-87 (D. Vt. 1997);  Kingsbury
v. Villeneuve, 144 Vt. 648, 648, 475 A.2d 241, 241 (1984); North v.
Simonini, 142 Vt. 482, 485, 457 A.2d 285, 287 (1983).  The situation
is different in this case, where the agreement is written and signed, but does
not include all the same specifications as the original agreement because it
modifies only a few terms.  There is no claim here by either party that
the modifications contained oral terms not reduced to writing.
¶ 34.        
Turning to the first of defendant’s arguments—that the modifications do
not reference the property or the original agreement—other jurisdictions have
allowed contract modification to satisfy the Statute of Frauds with rather
informal notations, as long as it is clear that the new writing is related to
the first.  See, e.g., In re 4Kids Entm’t, Inc., 463 B.R. 610,
693-94 (Bankr. S.D.N.Y. 2011) (finding that email communications about the
terms that were intended to be changed satisfied the Statute of Frauds); Raleigh
Assocs. v. Jackson, 96 N.Y.S.2d 528, 531 (Sup. Ct. 1950) (declining to find
a written modification unenforceable under the Statute of Frauds despite the
fact that the corporation to be bound was not named in the modification,
because it was “clear from the evidence that [the person who signed the
modification] was acting for the benefit of the corporation”).  This is an
application of a more general contract law principle relating to an agreement
composed of various documents, wherein express reference between documents is
not required: “If all are signed, the rule generally followed is that all the
papers that show by their contents a connection with the agreement sought to be
enforced may be taken together though the writings do not refer to each
other.”  10 S. Williston, A Treatise on the Law of Contracts § 29:31 (4th
ed. 2012); see also Thayer v. Luce, 22 Ohio St. 62, 74 (1871) (“[I]f the
several papers relied on be signed by such party, it is sufficient if their
connection and relation to the same transaction can be ascertained and
determined by inspection and comparison.”).  
¶ 35.        
In this case, there is no doubt that the 2004 and 2006 modifications are
intended to refer to and modify the earlier agreement: in both, the parties to
the contract are the same, the amount that is to be refinanced is derived from
the previous contract, and defendant does not seriously contest that the
modifications relate to the ongoing agreement.  Therefore, the trial
court’s finding that the modifications were related to the original contract is
supported by the evidence.
¶ 36.        
In relation to the second issue, defendant relies strongly on Evarts
v. Forte to argue that the closing date is a material term and must be
included in written form to satisfy the Statute of Frauds.  Therefore, he
reasons, because a modified date is not included in the 2004 and 2006
modifications, neither of those modifications is enforceable.  Evarts
is not a helpful precedent for defendant.  In Evarts, the seller
wished to advance the closing date, and although there was evidence that the
purchaser had agreed orally to do so, the purchaser failed to sign the modified
purchase and sales agreement to that effect.  Thus, the written agreement
that included the earlier closing date was found not to satisfy the Statute of
Frauds because it was signed only by the seller; this Court characterized it as
a counter-offer rather than a binding contract.  Evarts, 135 Vt. at
311, 376 A.2d at 769 (“There can be no doubt that in the present case the
change in closing date requested by the appellants was, in effect, a counter-offer
requiring the appellee’s assent.”).  This precedent is inapposite: not
only were the 2004 and 2006 modifications signed by both parties in this case,
but to apply Evarts to the case at hand presupposes that the closing
date was in question and up for change during the 2004 and 2006
modifications.  There is no evidence that the parties made an oral
agreement to change the closing date or that the closing date was discussed at
all.  If the modifications were not intended to change the closing date, there
would have been no need to include the date in the written documents.
¶ 37.        
As alluded to above, it is extremely common to have a modification of a
contract that changes only certain terms, and that modification would not be
expected to include any of the other terms of the original contract. 
“Where ‘two contracts are made at different times, [but where] the later is not
intended to entirely supersede the first, but only modif[y] it in certain
particulars [,][t]he two are to be construed as parts of one contract, the
later superseding the earlier one wherever it is inconsistent
therewith.’ ” SCO Grp., Inc. v. Novell, Inc., 578 F.3d 1201, 1211
(10th Cir. 2009) (quoting Hawes v. Lux, 294 P. 1080, 1081 (Cal. Dist.
Ct. App. 1931)).  Courts around the country accept written modifications
even if they relate only to certain terms, as long as it is clear which terms
of the contract are being modified. See In re 4Kids Entm’t, Inc., 463
B.R. at 693; In re Estate of Mullen, No. 298039, 2011 WL 3130044, at *8
(Mich. Ct. App. July 26, 2011) (“Here, there was evidence that the parties
mutually agreed that Fr. Mullen would not have to pay interest from a
particular date. Carl Fagerman memorialized that agreement on the schedule for
the receipt of payments and initialed it. The notation and initials were
sufficient to create a binding writing that modified the land
contract.”).  Therefore, the trial court was right to evaluate each of the
two modifications to see if there was any reason for a closing date to be
included.
¶ 38.        
In relation to the 2004 modification, the trial court found that it
could not “conclude that this document was intended to reflect an agreement to
extend the original purchase date contained in the original 2000 agreement.”
 It found, instead, that the principal was modified merely to reflect the
addition that had been put on the building, and thus there would have been no
reason to include a closing date in the modification.  It is confusing, of
course, that the agreement contains a long string of dates that extend past
January 1, 2006—the closing date specified in the initial agreement—but it was
not clear error for the trial court to find that this modification did not
change the date of the closing, and therefore the omission of a new date in the
modification did not mean that an essential element was left out.  We note
also that in the context of a contract for deed, a closing is a formality that
does not discharge or change the rights and responsibilities of the parties unless
the purchaser has fully paid the purchase price.
¶ 39.        
Turning to the 2006 modification, the trial court concluded that,
although the closing date had passed, defendant had talked to plaintiffs about
whether they would be able to meet the closing date—and then, by coming up with
a new payment plan as memorialized in the modification agreement, effectively
waived the closing date.  Even when a contract is within the Statute of
Frauds, a time limitation may be waived without written agreement.  North,
142 Vt. at 485, 457 A.2d at 286 (“[W]here the parties waive, by their words and
conduct, the time limitations of the contract, the nonwritten modification does
not violate the Statute of Frauds since waiver and estoppel operate
independently of the statute.” (citing 6 S. Williston, A Treatise on the Law of
Contracts § 856, at 232 (3d ed. 1962))).  Therefore, as the closing date
had been waived, or even if it was waived by the very execution of the
modification, the Statute of Frauds did not require that it be written in the
new agreement modifying the payment terms.  
¶ 40.        
Although we affirm the trial court’s finding that the two modifications
were valid under the Statute of Frauds, it should be noted that such a holding
is not strictly necessary in the context of defendant’s argument.  That
is, defendant objects to the use of the modifications as evidence that the
original contract was a contract for deed, but does not argue that the contract
was unenforceable as modified.  
¶ 41.        
Insofar as the agreement was a valid contract for deed and not
unenforceable under the Statute of Frauds, plaintiffs acquired an equitable
interest in the property.  Defendant argues, however, that plaintiffs’
failure to make payments and their “voluntary abandonment” of the property
served as abandonment of their equitable interest.  Defendant admits that
the question has not been addressed by this Court, but cites cases from other
jurisdictions for the proposition that “an unperfected equitable title may be lost
by abandonment.” 
¶ 42.        
The trial court, acknowledging the absence of precedents in this
jurisdiction, applied the principle as derived from other jurisdictions. 
The applicability of the principle is a question of law that we review de novo,
see State v. Valyou, 2006 VT 105, ¶ 4, 180 Vt. 627, 910 A.2d 922 (mem.),
and we recognize the abandonment doctrine as rooted in common law.  See
State v. Jackson, 40 A.3d 290, 300 (Conn. 2012) (identifying the “common
law sense” of the term abandonment as the “voluntary and intentional
renunciation of ownership”).  Applying the law of abandonment to the facts
of the case, the trial court found no abandonment.  We review this factual
finding for clear error, First Congregational Church of Enosburg v. Manley,
2008 VT 9, ¶ 12, 183 Vt. 574, 946 A.2d 830 (mem.), and find none.
¶ 43.        
Although the trial court found that plaintiffs did stop making payments
to defendant and paying taxes in January 2007, and left the property in March
2007, it found nonetheless that plaintiffs did not demonstrate sufficient
intent to abandon their rights to the property.  This finding was based
upon evidence that plaintiffs left the property under the impression that they
were to be shut down by the liquor inspector and almost immediately contacted a
lawyer in order to ascertain what their rights were.  As for the cessation
in payments, the court found that this action stemmed from financial
difficulties, as well as from the history of friendship between the parties and
the fact that a number of missed payments had occurred in the past without the
seller taking action, so merely missing payments was not enough to show a clear
intent to abandon the property. 
¶ 44.        
The trial court did not err. “A finding of abandonment depends upon the
intentions of the parties and is not predicated on any single factor, but on
all of the facts and circumstances concerning the owner’s relationship with the
subject property and the seller.” In re Berman, 247 N.W.2d 405, 408
(Minn. 1976).  Defendant focuses his argument on the undisputed fact that
plaintiffs left the property and returned their keys in March 2007, but that
fact does not dictate the result he seeks.  As the Kansas Supreme Court
noted in Botkin v. Kickapoo, Inc.,
Mere
relinquishment of the possession of a thing is not an abandonment in a legal
sense, for such an act is not wholly inconsistent with the idea of continuing
ownership; the act of abandonment must be an overt act or some failure to act
which carries the implication that the owner neither claims nor retains any
interest in the subject matter of the abandonment.  
 
505
P.2d 749, 752 (Kan. 1973); see L. Tellier, Annotation, What Constitutes
Abandonment of Land Contract by Vendee, 68 A.L.R.2d 581, 584-85, § 2 (1959)
(“That the vendee under such a contract went out of possession, either by
abandonment of the premises, express surrender of possession, or otherwise, may
be an element in the determination that he abandoned the agreement, but it does
not follow that, regardless of circumstances, his going out of possession
constituted an abandonment of the contract.”).  The focus is on the intent
of the purchasers.  Here, the trial court found that plaintiffs left under
an impression that the liquor department was about to shut down the bar, and,
thus, their action in leaving did not necessarily carry the implication
that they were abandoning all interest in the property.  The trial court’s
conclusion is supported by the evidence.
¶ 45.        
Furthermore, because abandonment is the “voluntary relinquishment of a
known right,” Kottis v. Cerilli, 612 A.2d 661, 665 (R.I. 1992), a
crucial part of the inquiry is whether the persons thought to be abandoning
their right are aware of the effect of their actions.  In Bennett v.
Galindo, No. 94-1101-PFK, 1994 WL 613429, at *7 (D. Kan. 1994), the
plaintiffs surrendered their keys “without understanding the import of their
actions,” and the court declined to find the surrender to constitute actual
abandonment of the plaintiffs’ equitable interest.  Just as in this case,
the plaintiffs in Galindo did not know of their rights or the effect of
their actions on those rights until consulting with a lawyer, and
“[i]mmediately upon retaining counsel, the Galindos sought to correct their
‘error’ by filing an affidavit of equitable interest.”  Id. 
The principle is the same as in the context of abandonment of personal
property.  See Grande v. Jennings, 278 P.3d 1287, 1292 (Ariz. Ct.
App. 2012) (“[T]he facts are undisputed that the estate did not know that the
money was mislaid, and did not intend to abandon the funds.  In fact, the
evidence is to the contrary; once Grande learned of the discovery, she filed a
probate petition to recover the property.”).  Here, the trial court did
not commit clear error in declining to find that plaintiffs relinquished a
known right when they left the property.
¶ 46.        
Another important factor in finding intent that is ignored by defendant
is the context of the abandonment of the premises and the actions taken
immediately after leaving.  Some of the very cases cited by defendant make
it clear that in searching for signs of intent to abandon, courts look to
parties’ actions after leaving a property, including the time elapsed before
bringing a claim and the external factors that affect their choice to do
so.  See, e.g., Flath v. Bauman, 722 S.W.2d 125, 128-29 (Mo. Ct.
App. 1986) (finding as a factor indicating intent to abandon that “purchaser
waited nearly a year to seek enforcement of the contract”); Hull v. Clemens,
267 P.2d 225, 233 (Or. 1954) (finding it important to the abandonment analysis
that the purchaser left the property in 1942, and that property value rose
before the case was brought in 1948: “When that development occurred, Hull
bethought the recent past and seemingly looked around in an effort to regain
his hold upon the land which a few years previously he had walked away from,
but which now gave promise of easy wealth.”).  Again, the trial court did
not commit error in taking into account in its intent analysis the fact that
plaintiffs consulted with a lawyer and almost immediately brought suit to
recover their interest. 
¶ 47.        
Because there is evidence in the record to support the trial court’s
findings that plaintiffs could have imagined that the late payments would be
forgiven, stopped paying because of financial difficulties, left under the
impression that their bar was to be closed by the liquor inspectors, and did
not know what the effect of leaving the property would be on their equitable
interest, we affirm its holding that plaintiffs did not abandon their interest
in the property.
¶ 48.        
Having concluded that the trial court correctly interpreted the
agreement as a valid contract for deed such that plaintiffs hold an equitable
interest, we turn to the issues raised in plaintiffs’ appeal, focusing on
whether the court’s foreclosure order was proper.  We start with the
threshold question of whether plaintiffs’ appeal is properly before us. 
Defendant argues that plaintiffs’ appeal is not properly before us because
plaintiffs failed to obtain permission for the appeal from the trial court as
required by 12 V.S.A. § 4601: “When a judgment is for the foreclosure of a
mortgage, permission of the court shall be required for review.”[4]  As defendant notes, plaintiffs
never sought permission to appeal.   
¶ 49.        
Despite this failure, we conclude that the appeal is properly before
us.  The issue is controlled by Herrick v. Teachout, 74 Vt. 196,
202, 52 A. 432, 434 (1902), which construed substantially the same statute.[5]  In that case, the parties’ parol
agreement that a property be “reconveyed” was judged to be a mortgage, the
trial court ordered a foreclosure, and the foreclosed-upon party appealed
without permission of the trial court.  We explained that the appeal did
not violate the statute: 
Although
the conveyance is held to be a mortgage, we consider the case properly here.
 We think the provision in regard to appeals in foreclosure cases applies
only to mortgages which are such upon their face, or recognized as such by the
parties, and not to cases where the character of the instrument is in issue.
 
Id.  In this regard, the statute has not changed since Herrick
was decided.
 
¶ 50.        
We conclude that the same principle applies to this case.  Like Herrick,
the central question in this case was whether the parties contract in fact
constituted a mortgage[6]—this was not a
run-of-the-mill foreclosure action.  We therefore do not read 12 V.S.A. §
4601 to bar plaintiffs’ appeal because the trial court did not grant permission
for it.   
¶ 51.        
Since we have found that the contract was a contract for deed, that it
satisfied the Statute of Frauds, and that plaintiffs did not abandon their
equitable interest, it is therefore clear that the relationship between the
parties was that of mortgagor and mortgagee.  Having found that
relationship, the court proceeded to consider foreclosure of the mortgage based
on plaintiffs’ breach.  See Ross v. Shurtleff, 55 Vt. 177, 181
(1882) (foreclosure of a mortgage “in whatever form it may exist” is a proper
matter for a court of equity).  Plaintiffs argue that the court’s action
was error because defendant relied solely on a landlord and tenant theory and
never sought foreclosure.  The trial court responded to that argument as
follows: “Although [defendant] has not sought to ‘foreclose,’ [plaintiffs] have
sufficiently pled the issue for the court to enter a foreclosure order if it
becomes necessary.”  Apparently, the court was relying on plaintiffs’
complaint, which characterized the original contract as a mortgage and sought
as relief a declaration that “plaintiffs to own equitable title to the
building.”  
¶ 52.        
Not only did defendant not make a counterclaim for foreclosure, he based
his case entirely on the theory that the contract in question was a lease
option.  Defendant contends that foreclosure was nonetheless appropriate
pursuant to Vermont Rule of Civil Procedure 54(c), whereby “every final
judgment shall grant the relief to which the party in whose favor it is
rendered is entitled, even if the party has not demanded such relief in the
party’s pleadings.”[7] 
That rule represents the general power of a court sitting in equity.  See
Reporter’s Notes, V.R.C.P. 54(c) (“The provision for judgments other than by
default provides for all cases the flexibility inherent in the general prayer
for relief formerly permitted in chancery.”); Bell’s Estate v. St. Johnsbury
& Lake Champlain R.R. Co., 85 Vt. 240, 245, 81 A. 630, 631 (1911).
  
¶ 53.        
Despite the breadth of the language of the rule, our decisions have
imposed limits on its use.  Our chief precedent is Johnson & Dix,
Inc. v. Springfield Fuels, Inc., 131 Vt. 156, 159-60, 303 A.2d 151, 153
(1973), which clarified that for due process reasons of notice and opportunity
to defend, any unpled remedy must be within the “ambit of the controversy being
litigated.”  Furthermore, relief cannot be granted if the party against
which it is granted was prevented from raising appropriate defenses or
submitting evidence because it did not know that that remedy was being
considered.  An example of the application of this principle is Laquerre
v. Martin, 139 Vt. 159, 423 A.2d 840 (1980), in which the original
defendants had brought in third-party defendants, and the trial court granted
judgment against the third-party defendants, but not the original defendants,
despite the fact that the plaintiffs had never sought judgment against the
third-party defendants.  This Court noted that, as a result, the
third-party defendants lost a defense of expiration of the statute of
limitations, which they could not raise against the original defendants but
could raise against the plaintiffs.  Id. at 161, 423 A.2d at
841.  This Court applied Johnson to hold that the trial court had
gone beyond the ambit of the controversy being litigated and that
“[s]ubstantial justice” required reversal of the judgment against the
third-party defendants.  Id. at 161, 423 A.2d at 841-42.  
¶ 54.        
Rule 54(c) is identical to Federal Rule of Civil Procedure 54(c). 
In Albemarle Paper Co. v. Moody, the U.S. Supreme Court construed the
word “entitled” in the rule so that it may not apply if a party’s “conduct of
the cause has improperly and substantially prejudiced the other party.” 
422 U.S. 405, 424 (1975).  Essentially, plaintiffs have argued prejudice
in this case.
¶ 55.        
While we would not hold that Rule 54(c) is inapplicable to all
foreclosure claims, we note the likelihood of prejudice that arises from such
an application.  Unlike virtually all other civil actions, foreclosure has
specific pleading and processing requirements that ensure consideration and
resolution of a number of issues.  See V.R.C.P. 80.1.  Although it
might have been possible for the trial court to have announced that it was
proceeding to foreclosure and then given defendant an opportunity to submit a
pleading in compliance with Rule 80.1(b), and plaintiffs an opportunity to
raise issues with respect to the time for redemption, V.R.C.P. 80.1(e),
the need for an accounting, V.R.C.P. 80.1(f), and the opportunity for
foreclosure by sale, V.R.C.P. 80.1(h), there was no such notice
here.  As a result, the situation is similar to that in Laquerre,
albeit for a different reason.  Plaintiffs lost important rights because
they had no opportunity to address them.  
¶ 56.        
One of the main lost rights involved the time for redemption.  The
governing statute provided that the time for redemption “shall be six months
from the date of decree unless a shorter time is ordered.”  12 V.S.A. §
4528.[8]
 Under Rule 80.1(e), “[m]otions to shorten the time for redemption may be
filed and served with the complaint or at any time during the course of the
proceedings.  Such motion shall be heard on oral testimony, unless
otherwise ordered by the court, with reasonable notice to those parties who
have appeared.”   The considerations for the court in determining
whether to shorten the redemption time are in the statute: “The court shall fix
the period of redemption taking into consideration whether there is value in
the property in excess of the mortgage debt and debt owed to junior
lienholders, any assessed but unpaid property taxes, the condition of the
property, and any other equities.”  12 V.S.A. § 4528.  Here, there
was no motion, no oral testimony, and no notice of consideration of the issue. 
The court shortened the time for redemption without giving a reason for its
action.  There is no indication that the court considered the factors
itemized in the statute, or “any other equities” as also mentioned in the
statute.  Plaintiffs were thus prejudiced by the lack of opportunity to
address the issue.
¶ 57.        
The same is true of the opportunity for foreclosure by sale.  The
statute provides: 
 
 
All liens and mortgages affecting real property may, on the written motion of
any party to any suit for foreclosure of such liens or mortgages, or at the
discretion of the court before which the foreclosure proceedings are pending,
be foreclosed by a judicial foreclosure sale, even if the mortgage does not
contain a sale provision instead of a strict foreclosure.
 
Id.
§ 4531(a).  Consistent with long-standing Vermont law, the norm is strict
foreclosure.  See In re Willette, 395 B.R. 308, 316-18 (Bankr. D.
Vt. 2008).  See generally K. Riedl, Note, The Relation of the Equitable
Doctrine of Subrogation to Vermont’s Strict Foreclosure Laws, 7 Vt. L. Rev.
71, 77-80 (1982).  The statute provides opportunities to require a sale
and avoid strict foreclosure.  It allows a party to move for a sale, and
the court must order a sale in certain instances and may allow a sale where
there is no requirement.  Here, to their prejudice, plaintiffs had no
opportunity to make such a motion.
¶ 58.        
Less important in this case, but also a source of potential prejudice,
was the absence of the accounting provided by V.R.C.P. 80.1(f).  Based on
defendant’s evidence of what payments plaintiffs had made, and when the
payments were made, the court was able to calculate the amount owed under the
contract as modified.  Plaintiffs do not contest this amount.  To the
base amount, the court added interest from the date of the last payment in
January 2007.  Plaintiffs contest the addition of interest, arguing that
the redemption amount should not include interest because defendant has
offsetting income from renting the premises after plaintiffs gave up
possession.  Interest on an amount owed is a normal component of a
judgment based on a breach of contract, see V.R.C.P. 54(a), and is particularly
authorized in the mortgage foreclosure context.  V.R.C.P. 80.1(f). 
Any rent obtained by leasing the property would not be an offset against
interest.  Plaintiffs argue that they were not aware that an accounting
was occurring and may have offered evidence for that purpose.  We do not
see what evidence they could have offered, except to contest the evidence of
defendant, and they had ample opportunity to raise that contest.
¶ 59.        
As in LaQuerre, we hold that “substantial justice” requires a
reversal of the foreclosure judgment and a remand for further proceedings, which
may include proper pleading and consideration of at least the issues discussed
above.  Plaintiffs were prejudiced by the court’s sua sponte introduction
of foreclosure into the case, and Rule 54(c) does not in this case allow
consideration of this remedy.
¶ 60.        
Finally, we turn to the issue of whether the conditional damages for
waste ordered by the trial court were appropriate.[9]  The court awarded $4036 in damages
for cleaning and repairs, and $4100 for personal property and liquor taken by
plaintiffs.  The initial contract described the property as “the Brewski
Pub, building, lot and equipment.”  Attached to it were lists of equipment
and liquor transferred to plaintiffs.  Defendant testified to the equipment
and liquor on the list not found in the building when he reentered.  The
court’s award was apparently based on that testimony.  The court stated,
“These are damages which could be recovered in an action for waste and the
court treats them as such.” [10]

¶ 61.        
Our precedents establish, and plaintiffs acknowledge, that the doctrine
of waste applies to the mortgagor-mortgagee relationship.  See Whiting
v. Adams, 66 Vt. 679, 687, 30 A. 32, 33 (1894).  Indeed, it has been
applied in other jurisdictions to precisely the situation confronted here: when
a purchaser defaults on payments for a contract for deed, the seller may bring
an action for waste for damage to the property during the purchaser’s
occupation of such.  See, e.g., Vogel v. Pardon, 444 N.W.2d 348,
349 (N.D. 1989).  The crux of plaintiffs’ disagreement with the trial
court’s order, then, is not that they could not have committed waste, but
rather that there was no evidence of the diminution in value of the property,
the measure of damages for waste. 
¶ 62.        
The traditional common law concept of waste, in Vermont and many other
jurisdictions, requires a permanent diminution in property value.  “The
general principle is that the law considers every thing to be waste which does
a permanent injury to the inheritance.” Keeler v. Eastman, 11 Vt. 293,
294 (1839); see, e.g., Mannick v. Wakeland, 2005-NMCA-098, ¶ 15, 117
P.3d 919, 925 (to constitute waste, an “act must be to the prejudice of the
estate or interest therein of another” (emphasis added)); Judy v. Judy,
712 S.E.2d 408, 411 (S.C. 2011) (“Waste may be committed by acts or omissions
which tend to the lasting destruction, deterioration, or material alteration of
the freehold and the improvements thereto or which diminish the permanent value
of the inheritance” (quoting Wingard v. Lee, 336 S.E.2d 498, 500 (S.C.
Ct. App. 1985))).  Based on this principle, the traditional measure of
damages in a claim for waste has been the reduction in property value beyond
that caused by normal wear and tear.  See Lustig v. U. M. C. Indus.,
Inc., 637 S.W.2d 55, 58 (Mo. Ct. App. 1982) (“[T]he proper measure of
damages in an action for waste is the difference in value of the freehold
estate or inheritance before and after the waste.”); Meyer v. Hansen,
373 N.W.2d 392, 396 (N.D. 1985). 
¶ 63.        
The requirement of “permanent injury” goes together with a measure of
damages based on before-and-after value.  Nevertheless, even the Court in Keeler
was not willing to draw a bright line to determine what acts constitute
waste.  See Keeler, 11 Vt. at 294 (“We are not aware of any
decisions in the courts of this state, laying down any precise rules
establishing what acts shall constitute waste; and, indeed, it is difficult
there should be any.”).  In practice, it is very common for courts to find
waste in situations where the damage to the property consists of removal of
fixtures or neglect of the premises, conditions that can be remedied and,
therefore, are not permanent injuries. See, e.g., Johnson v. Nw. Acceptance
Corp., 485 P.2d 12, 16-17 (Or. 1971) (approving an award of damages for
removed fixtures and the damage to the building caused by their removal,
stating that “proof of . . . diminution of value can be
made by introducing the cost of repairs”).  Some jurisdictions have even
reframed their inquiries away from the search for permanent injury to property
value.  See, e.g., Meyer, 373 N.W.2d at 395 (“Waste may be defined
as an unreasonable or improper use, abuse, mismanagement, or omission of duty
touching real estate by one rightfully in possession, which results in a
substantial injury.”).  
¶ 64.        
The question for us to determine, of course, is whether Vermont is one
of those states that considers waste to include more than permanent injury to
property value.  Although no case has clearly stated this, Vermont has
implicitly placed itself in that group of states.  We have found waste
where the only damages were holes and nails in walls, broken windows, a damaged
light, and a scratched door—all clearly repairable.  Prevo v. Evarts,
146 Vt. 216, 218, 500 A.2d 227, 228 (1985).  In Turgeon v. Schneider,
150 Vt. 268, 553 A.2d 548 (1988), we approved a trial court’s jury instructions
relating to waste that “while defendants were in lawful possession of the farm,
they had a duty to take care of the farm and the equipment therein and return
it to plaintiffs in substantially the same condition as when their occupancy
began, reasonable wear and tear excepted.”  Id. at 277, 553 A.2d at
553.  The fact that the instruction included the care of the equipment,
which could of course have been replaced, as well as the fact that the approved
damage award also included the cost of reseeding the fields, id. at
273-74, 553 A.2d at 551-52, suggests that to qualify as waste, damage to the
property need not be permanent.  
¶ 65.        
By this decision, we explicitly define waste to include repairable
damage to property.  Thus, we affirm the trial court’s finding that
plaintiffs’ removal of items and neglect of the property constituted waste
because they constituted a substantial injury to the property, even though they
could be repaired and replaced so as to avoid a permanent diminution of
property value.[11] 
As plaintiffs have not contested any other element of the doctrine of waste, we
need not reach other elements. 
¶ 66.        
We next turn to the question of computation of damages.  If we
recognize repairable damage to property as waste, we necessarily must allow the
cost of repair as a measure of damages.  Thus, we join the “[s]everal
states [that] . . . allow an injured party to establish
damages for waste by showing either the before-and-after difference in fair
market value or by the reasonable cost of repair.”  Bell v. First
Columbus Nat’l Bank, 493 So. 2d 964, 969 (Miss. 1986) (citing Meyer,
373 N.W.2d at 396); see also Eleopulos v. McFarland & Hullinger, LLC,
2006 UT App 352, ¶ 11, 145 P.3d 1157 (“The measure of damages for waste is
established by showing either the difference in market value before and after
the injury, or the cost of restoration.” (quotation omitted)); Three &
One Co. v. Geilfuss, 504 N.W.2d 393, 409-10 (Wis. Ct. App. 1993) (“Where an
injury to property is easily repairable and the cost of restoration is readily
ascertainable, the cost of repair is the preferred method of calculating
damages.”).  In line with those states, we hold that the computation of
damages for waste in Vermont can be based either on a demonstration of diminution
of property value or on the cost of repairs and/or replacement of removed
objects.  The trial court did not err in its computation of waste, as it
included the cost of cleaning and repairing the premises, as well as replacing
the items that plaintiffs removed when they vacated.[12]
¶ 67.        
As a final note, plaintiffs contend that the trial court “went beyond
the pleadings” in making this award of damages, based on the fact that
defendant did not counterclaim for waste.  Although defendant did not use
the word “waste” in his counterclaim, he sued for damages based on the damage
to the property effected during plaintiffs’ time in possession, and plaintiffs
were given ample time to respond to the evidence presented.  The trial
court, in making its decision, clarified that the damages award was one for
waste, but did not reach any questions beyond the pleadings.  This is not
at all like the court’s foreclosure ruling, where the court awarded a remedy
that was not pled or fully litigated.
¶ 68.        
For these reasons, we affirm the trial court’s rulings that the
agreement was a contract for deed, that the modifications were enforceable
under the Statute of Frauds, that plaintiffs had an equitable interest in the
property, and that they did not abandon that interest.  We also hold that
this matter is properly before us, despite noncompliance with 12 V.S.A.
§ 4601, and affirm the conditional award for damages for waste.  We
remand, however, for a new foreclosure proceeding.  
Affirmed in part, reversed in
part and remanded for further proceedings not inconsistent with this decision.
 

 


 


FOR THE COURT:


 


 


 


 


 


 


 


 


 


 


 


Associate
  Justice

 





[1]  The
friend was a party to the original agreement, but ceased to be involved after a
few months and is not involved in this litigation.  


[2]
 We recognize that the many instances are generally in the preprinted
language because the realtor used a property purchase and sales agreement as
the template for the contract.  We do not believe, however, that because
the terms are preprinted they are any less binding.


[3] 
All parties agree that the original contract was enforceable.


[4] 
The statute is implemented procedurally by our rules.  See
V.R.C.P. 80.1(m); V.R.A.P. 6(a).  Thus, defendant framed his
argument as: plaintiffs failed to seek permission to appeal within ten days as
required by Rule 80.1(m).  Rule 80.1(m) applies only where “the permission
to appeal [is] required by law.”  As we state in the text, permission is
not required by law in this case.
 


[5]
 At the time of the decision, the statute read in relevant part: “A party
may by a written motion, filed at the term in which a final order or decree is
made, appeal therefrom to the supreme court,
except . . . when the decree is for foreclosure of a
mortgage, unless by permission of the court.”  V.S. § 981 (1894).
 


[6]
 Unlike Herrick, the appellants here are the party seeking to
construe the agreement as a contract for deed.  We are not convinced that
this difference is critical.  The important point is that that case was
not initiated with a pleading of foreclosure.  Furthermore, defendant has
filed a cross-appeal, and “notice of appeal from the decree brings the whole
case, including all questions litigated in the court below which affect the
final decree, if they are briefed, to this Court for review.”  Century
Indem. Co. v. Mead, 121 Vt. 434, 436, 159 A.2d 325, 327 (1960).
 


[7]  Besides
Rule 54(c), defendant also relies on Vermont Rule of Civil Procedure 15(b),
which provides that “[w]hen issues not raised by the pleadings are tried by
express or implied consent of the parties, they shall be treated in all
respects as if they had been raised in the pleadings.”  The court did not
rely on this rule, and we cannot conclude that the parties gave express or
implied consent to consideration of foreclosure.  


[8]
 In 2012, the Legislature repealed, effective July 1, 2012, the
preexisting foreclosure statute and substituted Chapter 172 of Title 12, 12
V.S.A. §§ 4931-4970, applicable to “any mortgage foreclosure proceeding
instituted after” the effective date.  2011, No. 102 (Adj. Sess.), § 6(1). 
The statutory cites in the text are to the statutes before the 2012 repeal.


[9] 
The damages were conditional in that defendant would receive them only if
plaintiffs did not redeem.  Since we have reversed and remanded the mortgage
foreclosure decree, the conditional award is not in effect.  We reach the
issues raised with respect to these damages because they are almost certain to
arise again on remand. 
 


[10]
 We recognize that the concept of waste may not fully cover the damages
for some of the items of personal property, particularly the liquor. 
Plaintiffs’ arguments have not, however, distinguished between the damage to
the building and fixtures and the taking of personal property.  As a
result, we have not addressed any differences in theory of recovery for the
latter items.


[11]  Defendant points out that his
contract with plaintiffs contained a clause referring to waste.  “[L]ike
many others, the obligation to prevent waste may be affected by
contract.”  King’s Court Racquetball v. Dawkins, 62 S.W.3d 229, 233
(Tex. Ct. App. 2001).  In this case, however, the clause serves merely to
clarify that the doctrine of waste, as described here, can appropriately be
applied to maintenance of equipment and to the property itself. 
 


[12]
 In response to plaintiffs’ contention that there was no evidence of the
condition of the premises when they first took possession, the trial court
appropriately took this into account when declining to award the full amount of
labor costs claimed by defendant.  
Defendant in his cross-appeal argues that the court
erred in failing to award the full amount of the labor costs.  We believe that
the court acted within its discretion and affirm its damage amount.



