Sheffield v. Paul T. Stone, Inc., 6967.

• Decision Date: 25 April 1938
• Docket Number: No. 6967.,6967.
• Citation: 98 F.2d 250,68 App. DC 378
• Parties: SHEFFIELD et al. v. PAUL T. STONE, Inc.
• Court: U.S. Court of Appeals — District of Columbia Circuit

68 App. DC 378, 98 F.2d 250 (1938)

SHEFFIELD et al. v. PAUL T. STONE, Inc.

No. 6967.

United States Court of Appeals for the District of Columbia.

Argued February 10, 1938.

Decided April 25, 1938.

W. Gwynn Gardiner and James M. Earnest, both of Washington, D. C., for plaintiffs in error.

Bolitha J. Laws and Julian I. Richards, both of Washington, D. C., for defendants in error.

Before GRONER, Chief Justice, and STEPHENS and EDGERTON, Associate Justices.

EDGERTON, Associate Justice.

The plaintiff purchasers sued in the Municipal Court to recover from the defendant builders and vendors a $500 deposit on a contract for the construction and sale of a house. The court, without a jury, found for the defendants. The plaintiffs do not complain of the court's finding that defendants did not, and plaintiffs did, break the contract; but plaintiffs contend that they are nevertheless entitled to a return of the deposit. They base this contention on a provision in the contract that on default by the purchaser "the deposit herein provided for may be forfeited at the option of the seller, in which event the purchaser shall be relieved from further liability hereunder, or, without forfeiting the said deposit, the seller may avail himself of any legal or equitable rights which he may have under this contract."

On October 19, 1935, plaintiffs notified defendants that plaintiffs would not complete the contract. On October 21, defendants replied "You will be expected to carry out the terms of your contract," and asked plaintiffs to select fixtures. On October 29, defendants wrote that if plaintiffs did not make selections, defendants would be compelled to do so "for the completion of your house, in accordance with the terms of our written contract." On November 14, defendants wrote: "I am proceeding to complete my performance of the contract with you and shall expect to hold you to the liabilities which you assumed in connection therewith." On December 20, they wrote: "We tender you herewith in accordance with your contract * * * deed and deed of trust to premises * *. Trusting * * * you will fulfill your contract without persuasion." On December 30, defendant Stone wrote: "I hereby notify you that I am offering the house for sale in the open market and will hold both of you liable to me for all costs incidental to said sale and all expenses that may be incurred by me, as well as damages resulting from your breach of this contract." In January, 1936, defendants sold the house to another person. On May 29, 1936, plaintiffs demanded return of the deposit and added, "We have expected a refund since the house was sold." On July 27, 1936, they commenced this suit to recover the deposit. Both parties testified that defendants never "declared a forfeiture" of the deposit.

Plaintiffs contend that defendants exercised their option to avail themselves of "legal or equitable rights * * * under this contract," and thereby deprived themselves of their right to forfeit the deposit. They contend also that defendants waived their right to forfeit the deposit by failing to exercise it promptly. Defendants contend that their retention of the deposit amounted to an election to forfeit it. The trial court based its finding in defendants' favor on Barnette v. Sayers, 53 App. D.C. 169, 171, 289 F. 567, which involved an option clause practically identical with the one now in suit. There a defaulting purchaser sued to recover her $500 deposit, which she contended was a penalty rather than liquidated damages. This court held that it was liquidated damages, and that the defendant was entitled to keep it. The defendant, the court said (page 569), had "sought no other relief, and by retaining the money may be considered as having exercised her right to keep it and regard it as forfeited. * * * By retaining it she has thereby deprived herself of any further relief, legal or equitable, and relieved Barnette from liability under the contract." We think the decision was right, though we question the dictum that the seller's mere retention of the money "forfeited" it in such a sense as to relieve the defaulting purchaser, by reason of the option clause, from other liability. We do not think the Barnette case controls this one.

The clause quoted above provides that if the seller exercises his ...