Kellogg v. Shushereba
82 A.3d 1121
Vt.2013Background
- Kellogg owned property on Christian Hill Road in Bethel and entered in roughly 1999 into a rent-to-own arrangement with Oren for $180,000 purchase later; Oren and defendant Shushereba then lived with Kellogg and later contemplated a co-ownership deal.
- In 2004, defendant paid $41,793 as a downpayment; Kellogg treated the $39,486 already paid by Oren as a credit toward the price, leaving about $98,721 due.
- The parties orally agreed in 2004 that the balance would be paid over 15 years at $833 per month with 6% interest; taxes and insurance were to be borne by Oren and defendant.
- A warranty deed was prepared in defendant’s name only, and no written purchase agreement or mortgage was executed; the deed was not recorded due to transfer tax issues, and Kellogg remained the mortgagee in practice.
- From 2004 to 2008, Oren made monthly payments and paid property taxes until late 2007; after Oren left and their relationship ended, Kellogg sought rent and taxes from defendant, while defendant claimed ownership or unjust enrichment.
- In 2008–2010, litigation ensued in which Kellogg sought back rent and taxes, and defendant claimed ownership or unjust enrichment along with improvements and other credits; the trial court mostly ruled for Kellogg on rent and taxes, and for defendant on a portion of the unjust enrichment and improvements, and the matter was appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Characterization of the contract as deed vs lease | Kellogg should be treated as landlord under a rental agreement | Agreement was for deed with equity accruing to defendant | Contract 1s a contract for deed (equitable mortgage), not a landlord-tenant lease |
| Unjust enrichment for downpayment and owner equity | Defendant retained benefit and should repay purchase funds | Statute of Frauds and lack of enforceability bar restitution | Defendant’s unjust-enrichment claim reversed; plaintiff may recover mesne profits and offset improvements on remand; downpayment treated as part of equitable mortgage recovery |
| Tax payments and mesne profits as damages | Taxes paid by Kellogg were recoverable as part of damages | Taxes were part of rental obligations not recoverable separate from mesne profits | Property taxes treated as part of mesne profits; offset possible; not awardable as separate rent |
| Preclusion / res judicata and ripeness of claims | Unjust enrichment claim ripe; not barred by prior suit | Claims barred by res judicata or not ripe | Unjust-enrichment claim not barred by res judicata; ripeness analyzed; remand for full mesne profits/offset considerations |
Key Cases Cited
- Prue v. Royer, 2013 VT 12 (VT 2013) (redefines contract-for-deed vs lease-purchase and equity)
- Cobb v. Hall, 29 Vt. 510 (Vt. 1857) (forfeiture/ restitution in oral contracts to convey)
- Bedell v. Tracy, 65 Vt. 494 (VT 1893) (statute-of-frauds does not bar restitution in unenforceable contracts)
- Shaw v. Shaw, 6 Vt. 69 (VT 1834) (parol contracts void for enforcement but not for restitution)
- Birkenhead v. Coombs, 143 Vt. 167 (VT 1983) (offsets for improvements; §4814 applied to mesne profits)
- Sabourin v. Woish, 117 Vt. 94 (VT 1952) (mesne profits concept in ejectment context)
- Town of Weston v. Town of Landgrove, 53 Vt. 375 (VT 1881) (equitable treatment of vendor-purchaser interests)