Huszar v. Certified Realty Co.

• Decision Date: 02 August 1973
• Citation: 512 P.2d 982,266 Or. 614
• Parties: Louis HUSZAR, Sr., Appellant, v. CERTIFIED REALTY COMPANY, an Oregon corporation, et al., Respondents.
• Court: Oregon Supreme Court

Page 982

512 P.2d 982

266 Or. 614

Louis HUSZAR, Sr., Appellant, v. CERTIFIED REALTY COMPANY, an Oregon corporation, et al., Respondents.

Supreme Court of Oregon, In Banc.

Argued and Submitted July 9, 1973.

Decided Aug. 2, 1973.

Donald C. Walker, Portland, argued the cause and filed a brief, for appellant.

J. Robert Jordan, Portland, argued the cause for respondent Certified Realty Company. On the brief with him were francis F. Yunker and Darrell E. Bewley, Portland. Also on the brief was Gordon H. Price, Molalla, for respondents Krupicka.

TONGUE, Justice.

This is an action by a purchaser of real property for return of a down payment which had been declared to have been forfeited for failure of the purchaser to complete the transaction. Plaintiff appeals from an adverse judgment, following the granting of a motion by the realtor for an involuntary nonsuit and a motion by the seller for a directed verdict. The trial court also denied plaintiff's motion for a directed verdict. We affirm.

Summary of the facts.

The facts are not complicated. Defendants Krupicka listed their farm near Molalla for sale by defendant Certified Realty Company (herein 'Certified'). Plaintiff, in response to a newspaper advertisement paid $1,000 to Certified and signed a standard form earnest money receipt, as prepared by Certified. Upon acceptance by defendants Krupicka of the earnest money agreement plaintiff paid an additional $4,000, as required by that agreement.

The earnest money agreement provided for the purchase of the farm by plaintiff for $70,000, with the $5,000 as earnest money, an additional $5,000 payable '(u)pon acceptance of title and delivery of contract,' and the balance of $60,000 payable in installments under a land sales contract naming plaintiff, his wife and his son as the purchasers.

The agreement also provided that:

'A title insurance policy from a reliable company insuring marketable title in seller is to be furnished purchaser in due course at seller's expense; preliminary to closing seller may furnish a title insurance company's title report showing its willingness to issue title insurance, which shall be conclusive evidence as to seller's record title.

'It is agreed that if seller does not approve this sale within the period allowed broker below in which to secure seller's acceptance, or if the title to the said premises is not insurable or marketable, or cannot be made so within thirty days after notice containing a written statement of defects is delivered to seller, the said earnest money shall be refunded. But if said sale is approved by seller and title to the said premises is insurable or marketable and purchaser neglects or refuses to comply with any of said conditions within ten days after the said evidence of title is furnished and to make payments promptly, as hereinabove set forth, then the earnest money herein receipted for (including said additional earnest money) shall be forfeited to seller as liquidated damages and this contract thereupon shall be of no further binding effect.'

Finally, the 'seller's closing instructions,' as also set forth in that same document, provided in part as follows:

'I agree to pay forthwith to the above named broker a commission amounting to $4,200 for services rendered in this transaction. In the event of a forfeiture of the deposit as above provided, the said deposit shall be paid to or retained by the broker to the extent of the agreed upon commission with residue to the seller. * * *'

Plaintiff had previous experience in purchasing real property and intended to subdivide and sell the property.

On July 14, 1971, a preliminary title report was issued by a title insurance company, showing that all taxes may not have been paid and that there was a mortgage on the property to secure payment of $5,200. Plaintiff admitted that he 'probably' received that report 'around the middle of July' and that at about the same time he applied to the bank for a loan to raise the additional $5,000 needed to complete the transaction. At that time, however, he was unable to borrow that money, either from the bank or from 'different loan companies.' He then reported this to Certified and 'asked them to attempt to give (him) as much time as possible to raise it.'

In early September plaintiff was 'probably' (as he testified) told by a representative of Certified that the Krupickas 'wouldn't wait any longer to complete the sale.' By letter dated September 9, 1971, plaintiff was notified in writing that 'this office has been prepared to close this transaction as we indicated to you some time ago' and that unless plaintiff paid the sum of $4,835.50 on or before September 19, 1971, the earnest money deposit of $5,000 'will be declared a forfeiture.' The letter also quoted from the forfeiture provision of the earnest money receipt and enclosed a statement showing computation of the $4,835.50, as well as a copy of the title report.

Upon receipt of that letter plaintiff went to an attorney for advice. He did not, however, raise or tender to Certified the $4,835.50 prior to September 19, 1971. Neither did he demand delivery of a contract for sale of the property, signed by the Krupickas, or give notice of any claimed defects in the title to the property. He testified, however, that Certified did not 'ever present (him) with a contract prior to that time with the Krupickas' signature on it' and that 'they' never did so.

Plaintiff also offered evidence, over defendants' objections, that subsequently, through another attorney, plaintiff attempted to negotiate a contract for purchase of the property in plaintiff's sole name--without participation by his wife and son--but were unable to agree on 'lot release' provisions. In the course of such negotiations, and on October 6, 1971, plaintiff paid the sum of $4,835.50 to Certified as a 'Tender,' subject to approval of the seller. Plaintiff testified that '(a)t that time Certified Realty Company told (him) that that transaction had been terminated and they would accept this only as a tender if the Krupickas would receive it.'

After some further negotiations defendants Krupicka, through their attorney, notified plaintiff's attorney by letter dated November 22, 1971, that the contract as proposed by plaintiff 'did not conform to the earnest money agreement and was not acceptable to Mr. Krupicka'; that the earnest money agreement had 'expired' and that 'Mr. Krupicka has no interest in Mr. Huszar's deposit with Certified Realty, according to the terms of the earnest money agreement.' ¹ Plaintiff's attorney responded with a letter stating that plaintiff 'has been and is ready, willing and able to execute a contract that conforms with the earnest money agreement.' Plaintiff also demanded return of the payments previously made by him.

In response, Certified, through its attorney, wrote a letter reviewing the transaction, rejecting plaintiff's tender, and stating that 'the forfeiture of September 20, 1971, remains in full force and effect * * *.' A subsequent tender by plaintiff to Certified was then returned.

After a further demand by plaintiff this action was filed, as well as a separate action by plaintiff against defendants Krupicka for $17,500, which related to 'the same transaction' and apparently was still pending at the time of the trial of this case.

1. Having failed to prove performance of the earnest money agreement on his part, plaintiff is not entitled to the return of his earnest money payment.

Plaintiff's primary contentions, as repeated in most of his assignments of error, are that upon payment by him of $5,000 as a down payment, 'the nest conditions prior to closing were upon the sellers, namely, to furnish clear title and delivery of a contract'; that defendants did not furnish clear title and admitted that they never prepared or signed a contract and that, accordingly, plaintiff is entitled to the return of the down payment.

Defendants contend, on the contrary, that they did furnish a clear title, as shown by a title report; that plaintiff made no contention prior to the trial of this case that plaintiff's title was defective, but that plaintiff was unable to raise the additional $5,000 required to close the transaction, which failed solely for that reason and not because of any failure by either defendant to perform any required condition. Accordingly, defendants contend that plaintiff cannot recover because he failed to plead and prove the performance required of him by the contract.

Ordinarily, of course, a party to a contract who complains that the other party has breached the terms of a contract must prove performance of the contract on his own part, or a valid tender of performance rejected by the other party. Anderson v. Wallowa National Bank, 100 Or. 679, 689, 198 P. 560 (1921).

The earnest money...