443 P.3d 219
Idaho2019Background
- McGimpsey (buyer/tenant) entered a combined lease/Buy‑Sell Agreement with D&L (Nevada corporation) for an Eagle, Idaho residence with closing set for Sept. 13, 2017; contract required D&L to convey by warranty deed and certified it was "qualified to own or transfer real property in the State of Idaho."
- McGimpsey discovered D&L had not registered to do business in Idaho and refused to close, asserting Idaho Code § 30‑21‑502 barred D&L from conveying marketable title.
- Neither party attended the scheduled closing; D&L later declared the buy‑sell provisions terminated, sought return of earnest money, and requested McGimpsey vacate; D&L registered in Idaho about a month after the missed closing.
- McGimpsey sued for breach and sought specific performance or damages; D&L counterclaimed and sought unpaid rent; both sides filed cross motions for summary judgment.
- The district court granted summary judgment to D&L in part, holding D&L could legally convey via warranty deed, McGimpsey breached by failing to close, awarded D&L restitution (unpaid rent) and possession, and dismissed McGimpsey’s claims with prejudice; McGimpsey appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Effect of D&L’s failure to register under Idaho Code § 30‑21‑502 on contract validity and ability to convey title | McGimpsey: Unregistered foreign corporation could not lawfully do business or convey marketable title; breach excused | D&L: § 30‑21‑502 does not impair contract validity; registration affects ability to sue, not enforce contracts | Court: Held § 30‑21‑502(c) preserves contract validity; failure to register did not prevent conveyance or excuse buyer’s non‑performance |
| Potential unpaid taxes / tax lien clouding title | McGimpsey: Unpaid corporate taxes could create a lien or cloud title preventing a warranty deed | D&L: Tax liens arise only upon assessment; no evidence of assessment or lien before closing date | Court: Held no evidence of assessed tax lien; speculative unpaid taxes did not create a title defect justifying refusal to close |
| Ability to promise/ deliver a warranty deed though seller held a trustee deed without warranties | McGimpsey: D&L could not convey better title than it received (trustee deed) and never produced a warranty deed | D&L: A grantor may convey by warranty deed; receipt of a trustee deed does not permanently bar later warranty covenants | Court: Held seller could validly contract to deliver a warranty deed; chain‑of‑title form earlier in chain does not forbid later warranty covenants |
| Procedural issues: admissions by failure to plead, right to jury trial, damages and judicial estoppel, and entitlement to appellate fees | McGimpsey: D&L’s pleadings admitted material facts; summary judgment deprived jury right; D&L judicially estopped from seeking damages; appeal meritorious | D&L: Proper general denial; cross motions fully presented issues; sought unpaid rent not sale damages; appeal not frivolous | Court: D&L’s general denial was proper (no admission); summary judgment appropriate (no genuine issue); no judicial estoppel; restitution award for unpaid rent upheld; appellate fees denied |
Key Cases Cited
- Burley Newspapers, Inc. v. Mist Publishing Co., 414 P.2d 460 (Idaho 1966) (statute requiring foreign corporations to qualify does not void contracts and primarily protects citizens’ ability to sue)
- Katz v. Herrick, 86 P. 873 (Idaho 1906) (historic rationale: qualification statutes aimed at ensuring service of process and remedies, not voiding contracts)
- Cooper v. Boise Church of Christ of Boise, Idaho, Inc., 524 P.2d 173 (Idaho 1974) (failure to register does not void instruments like quitclaim deeds or cloud title)
- Ketterling v. Burger King Corp., 272 P.3d 527 (Idaho 2012) (failure to register as foreign entity does not necessarily prejudice counter‑party when identity/contact info is available)
- Borah v. McCandless, 205 P.3d 1209 (Idaho 2009) (definition and effect of a material breach allowing rescission)