Albright v. Lay

• Decision Date: 18 November 1971
• Docket Number: No. 657,657
• Citation: 474 S.W.2d 287
• Parties: Gerry Phillip ALBRIGHT, Individually and d/b/a The Phillip Albright Company, Appellant, v. Vernon I. LAY, Jr., Appellee.
• Court: Texas Court of Appeals

Page 287

474 S.W.2d 287

Gerry Phillip ALBRIGHT, Individually and d/b/a The Phillip Albright Company, Appellant, v. Vernon I. LAY, Jr., Appellee.

No. 657.

Court of Civil Appeals of Texas,

Corpus Christi.

Nov. 18, 1971.

Rehearing Denied Dec. 9, 1971.

Sorrell, Anderson, Sorrell & Atwill, James R. Sorrell, Jr., Corpus Christi, for appellant.

Vernon I. Lay, Jr., pro se.

OPINION

BISSETT, Justice.

This is a suit for damages occasioned by the return of an earnest money check. Vernon I. Lay, Jr., sued Gerry Phillip Albright, for damages alleged to have been sustained by him when the defendant Albright returned the earnest money check to the prospective purchaser of realty owned by the plaintiff Lay.

Trial was to the court without a jury. Judgment was rendered for plaintiff in the sum of $500.00. The defendant has appealed that judgment. We affirm. The parties will be referred to as they were in the trial court.

On June 16, 1969, plaintiff and defendant entered into a contract, whereby a residential city lot, situated in Corpus Christi, Texas, owned by plaintiff, was listed for sale with defendant, a licensed real estate agent. On July 18, 1969, a contract of purchase and sale of the premises was entered into by and between plaintiff, as seller, and Lorenzo M. Ruscello, as purchaser. The purchase price agreed upon was payable partly in cash and 'purchaser to assume present loan in the approximate amount of $13,520.00'. The sale was to be consummated and closed on or before August 1, 1969. Paragraph 5 of the contract provided:

'5. The earnest money on deposit with the undersigned escrow agent is to be applied on the cash payment set out when the deal is closed, at which time the balance of cash consideration shall also be paid. Should Purchaser fail to consummate this contract as herein specified for any reason, except title defects, Seller shall be entitled to receive the earnest money above set out as liquidated damages for breach of this contract, or he may at his opinion enforce specific performance hereof. Should he elect to accept said earnest money as liquidated damages, he shall first pay therefrom a reasonable fee to the escrow agent for services performed in connection herewith, not to exceed, in any event, the amount that would have been owing had the deal closed. From the remainder he shall pay any commission due the real estate agent making this sale not to exceed, however, 50% Of such remainder .'

The contract named defendant as the real estate agent making the sale but did not name anyone as the escrow agent. The acceptance clause of the contract to be signed by the escrow agent was not executed by anyone purporting to act as escrow agent.

The purchaser issued a check in the amount of $500.00 and delivered it to defendant as earnest money. The check was not made out to defendant; the identity of the payee of the check is not revealed by the record. All parties to the contract of sale, seller, purchaser and real estate agent, treated the check as earnest money under the contract. We do likewise.

Defendant testified that within a very short time after the contract of sale was signed, he was informed that the mortgagee then owning the loan on the premises advised that the interest rate on such existing loan would be raised from 6% To 7% Per annum if Ruscello assumed the loan balance. From the record, we conclude that the mortgagee claimed that it had the power to raise the interest rate in an assumption sale under the mortgage that was in force against the premises on July 18, 1969, when the contract of sale was executed. Ruscello, upon learning of such proposed increase in the interest rate, refused to consummate the purchase of the premises and made demand that defendant return the earnest money check.

Plaintiff testified that when he learned of the intended increase in the interest rate he contacted a representative of the mortgagee, who agreed to allow the existing interest rate of 6% To remain at that rate in the event Ruscello assumed the loan. Plaintiff said that he told defendant that the interest rate would not be increased; defendant disputes plaintiff in this instance. This is the only area of conflict in the evidence. There is evidence that Ruscello did not want to complete the transaction regardless of whether the interest rate was raised or not, as he did not want to be faced with the same problem in the future in the event he desired to sell the premises. Be that as it may, defendant testified that the only reason that the sale was not closed was because of the problem with the interest rate on the loan.

Plaintiff, in the first letter to defendant, dated July 28, 1969, directed defendant to forward the $500.00 (less commission) to him as liquidated damages if the purchaser did not complete the purchase on August 1, 1969. Then, by a subsequent letter to defendant, dated August 4, 1969, plaintiff stated: 'I herewith elect to accept the $500.00 as liquidated damages, since Mr. Ruscello has not closed the purchase of the property 'on or before August 1, 1969". However, the defendant returned the $500.00 check to Ruscello after receipt of this last letter. Defendant made his own conscious decision not to deliver the money to a third party escrow agent because he was afraid that the problem of getting a release would cause difficulty in any subsequent sale of the premises. Defendant stated that he did not believe Ruscello owed any liquidated damages, and had he so believed, he would have cashed the check and 'tried to retain the funds'. In a letter to plaintiff, defendant said: 'Bob has advised me that in acting as an Escrow Agent and maintaining neutral in that capacity that I should deposit the funds with the Court so that the matter can be decided properly and legally'. This was not done. Defendant admitted that in spite of plaintiff's instructions not to return the money to Ruscello, he did return it to him, and that in doing so he acted contrary to instructions from plaintiff.

Defendant admits that plaintiff never refused to do anything required of him to close the sale. Defendant further testified that plaintiff never refused to deliver the deed called for in the contract of sale to Ruscello, and that plaintiff at all times expressed his wishes and desires 'to go forward with the deal and to close the deal according to the contract'. Defendant explained that the only reason why the sale to Ruscello was not closed on August 1, 1969, was because the contract called for the present loan to be assumed and it could not be assumed because of the stated raise in the rate of interest. He argues that the increase in the interest rate to 7% On the loan made it legally impossible to assume the present loan, which bore interest at 6%. The defendant, in substance, contends that any raise in the rate of interest on the outstanding loan balance as the same existed on the date the contract of sale was signed amounted to a title defect that excused performance on the part of Ruscello.

Defendant, in the main, contends that the trial court erred in rendering judgment for plaintiff because the trial court placed the burden of proof on defendant to show that there was not a forfeiture by the purchaser under the contract of sale, and that the plaintiff failed to prove that he was entitled to declare a forfeiture under such contract. He also raises 'no evidence', 'insufficient evidence' and 'against the great weight of the evidence' points. In view of both law and fact questions presented by these points we have reviewed the entire record in this case. In considering the law question of 'no evidence' we follow the rule set out in Garza v. Alviar,395 S.W.2d 821 (Tex.Sup.1965) and consider only the evidence and inference favorable to the fact findings of the trial court and disregard all evidence and inferences to the contrary. With respect to the contentions as stated in the statement and argument under the points that the evidence is factually insufficient to support the judgment and that the judgment is against the great weight of the evidence, we must review and consider all of the evidence adduced at the trial. In re King's Estate, ...