Beck v. Staats

• Decision Date: 08 January 1908
• Docket Number: 14,972
• Citation: 114 N.W. 633,80 Neb. 482
• Parties: DORA BECK, APPELLEE, v. GEORGE F. STAATS, APPELLANT
• Court: Nebraska Supreme Court

114 N.W. 633

80 Neb. 482

DORA BECK, APPELLEE, v. GEORGE F. STAATS, APPELLANT

No. 14,972

Supreme Court of Nebraska

January 8, 1908

APPEAL from the district court for Dodge county: CONRAD HOLLENBECK JUDGE. Affirmed.

AFFIRMED.

F Dolezal, for appellant.

Grant G. Martin, contra.

EPPERSON C. DUFFIE and GOOD, CC., concur.

OPINION

EPPERSON, C. J.

In July, 1905, the parties hereto entered into a written contract wherein the defendant agreed to convey to plaintiff 80 acres of land in Saunders county on the 1st day of March, 1906. Plaintiff paid $ 100 in cash and agreed to assume $ 2,000 of an incumbrance and to pay a remainder of $ 2,460 upon maturity of the contract. When the contract was made, defendant owned but an undivided one-half interest in the land in controversy. He and one Harmon owned in equal shares this land and 80 acres adjoining it. In February, 1906, defendant sold and conveyed all of his interest in the land to Harmon. This action was brought to recover damages for the loss of plaintiff's bargain. She obtained judgment in the court below for $ 1,105.90, and defendant appeals.

Defendant contends that before the contract was executed he had his co-owner's verbal promise to convey his interest to defendant; that the contract was made upon the condition that Harmon would convey, but thereafter he refused, though defendant in good faith importuned him so to do. Evidence was introduced in support of this contention. In conflict therewith, plaintiff's evidence is to the effect that defendant represented to her that he had procured Harmon's interest in the land. It is the defendant's theory that the rule for the recovery of damages against a vendor acting in good faith is that nominal damages only may be recovered, together with the amount deposited, with interest. He asked for and was refused an instruction submitting this theory to the jury. We are met at the threshold of this investigation with a conflict in the decisions of this court. In Reed v. Beardsley, 6 Neb. 493, it was held: "On an agreement to exchange lands, if one of the parties performs the contract on his part by conveying, and the other neglects to do so, and finally puts it out of his power to perform, the true measure of damages is the value of the property conveyed." The measure of damages there was the value of the consideration given by the vendee, and not the value of the property he contracted to purchase. To the same effect is McPherson v. Wiswell, 19 Neb. 117, 26 N.W. 916. And in Eaton v. Redick, 1 Neb. 305, the vendee, upon rescission by his vendor, was permitted to recover the amount advanced by him upon the purchase price, although himself in default. These cases have never been expressly overruled; but, in view of the decisions following the contrary rule, they cannot be said to establish the law in this jurisdiction. In Wasson v. Palmer, 13 Neb. 376, 14 N.W. 171, it was said: "The proper measure of damages was the difference between the contract price and the actual value of the property at the time the contract was broken." There the question of good faith on the part of the grantor was no part of the case and was not considered by the court. The same rule prevailed in Carver v. Taylor, 35 Neb. 429, 53 N.W. 386; Seaver v. Hall, 50 Neb. 878, 70 N.W. 373; Nolde v. Gray, 73 Neb. 373, 102 N.W. 759. In Seaver v. Hall, supra, after reviewing the former decisions of this court, it is said by Mr. Commissioner IRVINE: "It would appear that this court has thereby placed itself on both sides of the much disputed question as to whether, when the vendor cannot make title, only nominal damages can be recovered, or whether the vendee is entitled to the benefit of his bargain. Some cases hold that the former rule applies where the vendor acted in good faith (Conger v. Weaver, 20 N.Y. 140), and that the latter applies when the vendor was guilty of fraud (Pumpelly v. Phelps, 40 N.Y. 59). * * * It may well be doubted, however, whether, in a state where exemplary damages are not permitted, the measure of recovery should depend on the good faith of the vendor. The object of the law is to afford compensation, and not to punish, in civil cases, and the actual damage is the same regardless of the motive of the vendor." In Violet v. Rose, 39 Neb. 660, 58 N.W. 216, it was held that a vendee was entitled to recover damages caused by delay of his vendor in making the conveyance, and the measure of damages was the difference between the value of the property when it should have been conveyed and its value at the time of the delayed conveyance. For a wilful refusal to convey, a vendor, in McMurtry v. Blake, 45 Neb. 213, 63 N.W. 467, was held liable to the full extent of his vendee's lost opportunity to sell to advantage.

Defendant relies upon Flureau v. Thornhill, 2 Wm. Bl. (Eng.) 1078, and the decisions of the American courts in accord therewith. It was there held that, on a contract for the purchase of real estate, if the title proves bad, and the vendor is without fraud unable to make a good one, the purchaser is not entitled to damages for the loss of his bargain. Relative to the contract, Blackstone, J., said: "These contracts are merely upon condition, frequently expressed, but always implied, that the vendor has a good title." In Hopkins v. Grazebrook, 6 B. & C. (Eng.) 31, the vendor, at the time he contracted to sell, had substantially no estate, and the conditions of sale provided for a good title. It was held that the vendee could recover for the loss of his bargain. Such recovery was allowed also in Robinson v. Harman, 1 Exch. (Eng.) 850, wherein it appears that the defendant had agreed to grant a valid lease, when he well knew that he had no power to do so. In Engel v. Fitch, 3 L. R. Q. B. (Eng.) 314, s. c. 4 L. R. Q. B. (Eng.) 659, damages were allowed because the defendant failed to take the necessary steps, which he could have taken, to put his vendee in possession. In Bain v. Fothergill, 7 H. L. Rep. (Eng.) 158 (see Sedgwick, Leading Cases on Measure of Damages, 45), Flureau v. Thornhill was adhered to and subsequent cases reviewed. It was there said that Flureau v. Thornhill, must be taken to be without exception. The value of the English rule, however, is weakened somewhat by the language of Mr. Baron Pollock in Bain v. Fothergill, supra. He there adheres to the rule of Flureau v. Thornhill, but indicates that the doctrine of stare decisis should govern such contracts. He says: "All that has been hitherto said leads to the conclusion that the case of Flureau v. Thornhill was rightly decided, at the time it was decided, on sufficient legal principles, but if it was a decision to which at the time I could not have acceded, I should, nevertheless, think that a contract of purchase and sale of real property made at this day must be construed to be made on the footing of that decision being correct. All persons who prepare such contracts know of that decision, and that it has been acquiesced in and acted on for a hundred years. The contracts which such persons prepare are, therefore, made with the understanding that, upon failure to make out a satisfactory title, the rule as to damages enunciated in that case will be applied. Then such rule is by intention and understanding of the parties a part of the contract."

The great weight of authority in this country is less liberal to the grantor, and holds him liable, not for mere nominal damages, but for his grantee's loss of profits, or, as commonly stated, his loss of the bargain. "In some jurisdictions there is no deviation from this rule on account of good faith and inability to perform resulting from an unsuspected defect in the vendor's title; there the symmetry of the law relating to sales is preserved." 2 Sutherland, Damages (3d ed.), sec. 579. Good faith on the part of the vendor was held in Matheny v Stewart, 108 Mo. 73, 17 S.W. 1014, not to excuse or protect him. In Hammond v. Hannin, 21 Mich. 374, it was said: "If a party enters into a contract to sell, knowing that he cannot make a title, he is remitted to his general liability, and the exception introduced by Flureau v. Thornhill does not apply. So if a person undertakes that a third party shall convey, and is unable to fulfil his contract, the authorities are that he...