Berman v. Rife, 2-82-046-CV
| Decision Date | 30 December 1982 |
| Docket Number | No. 2-82-046-CV,2-82-046-CV |
| Citation | 644 S.W.2d 574 |
| Parties | Herbert BERMAN and wife, Sally Berman, Blaine McLaughlin and wife, Regina McLaughlin, Appellants, v. M.O. RIFE, III and Spencer Taylor, Appellees. |
| Court | Texas Court of Appeals |
Lane-Ray-Getchell and Donald H. Ray, Fort Worth, for appellants.
Bishop, Lamsens & Brown and Thomas J. Williams, Fort Worth, for appellees.
Before HUGHES, BROWN and JORDAN, JJ.
Prospective purchasers under a contract for the sale of real estate sued their prospective sellers for the return of $5,000.00 earnest money. The decision of the trial court was that a condition precedent in the contract, one making obligations thereunder subject to the purchasers obtaining third party conventional financing, had been satisfied by an offer of the sellers to finance the purchase on the same terms expressed in the contract. From a judgment holding the sellers to be entitled to retain the earnest money, the purchasers have appealed.
We reverse; judgment rendered for appellants.
The facts were stipulated. On June 29, 1979, Herbert Berman, his wife, Sally Berman, Blaine McLaughlin and his wife, Regina McLaughlin (hereinafter referred to as "purchasers"), entered into a contract by which M.O. Rife, III and Spencer Taylor ("sellers") were to sell, and the purchasers were to buy, certain residential real estate located in Fort Worth. In consideration for the execution of the contract, the purchasers deposited five thousand dollars ($5,000.00) earnest money in an escrow account with a real estate firm.
Paragraph four of the contract provided that "This contract is subject to approval for Buyer of a Conventional ... third party loan (the loan) of not less than the amount of the Note, amortizable monthly for not less than 30 years, with interest not to exceed 11 1/2% percent per annum ...". [Emphasis ours.] The principal amount of the note was $264,000.00.
Paragraph 16 of the contract provided that if the purchasers should fail to comply with its provisions, "[s]eller may either enforce specific performance or terminate this contract and receive the Earnest Money as liquidated damages, ...". Further provision was made for the prevailing signatories in any litigation to be entitled to recover costs and attorney's fees.
After the contract was executed, the purchasers attempted to secure financing from lending institutions, but were unsuccessful in their efforts. (Sellers stipulated in the Agreed Statement of Facts that the purchasers made diligent efforts to obtain financing from third party institutions.) On or about August 21, 1979, the sellers notified the purchasers that they would themselves provide for financing for the purchasers to buy the property in accordance with the terms and provisions of the contract. They declined to accept the seller's offer, refused to close the transaction, and requested that their earnest money be returned. The sellers refuse to return the $5,000.00 deposited in escrow.
The case was submitted as an agreed case pursuant to Tex.R.Civ.P. 263. The purchasers contended that the condition precedent concerning third party conventional financing had not occurred by the offer of the sellers to provide financing; the sellers contended that the condition had been satisfied. All other conditions precedent to the performance, other than that at issue here, were stipulated to have been satisfied. Finally, the parties agreed that five hundred dollars ($500.00) would be reasonable attorney's fees for the prevailing party.
Judgment was rendered in favor of the sellers for the earnest money, attorney's fees, interest, and costs of court. The Agreed Statement of Facts was certified as correct.
The purchasers filed a motion for new trial in which they offered testimony of their financial advisor concerning their reasons for refusing to accept seller financing. The trial court's refusal to entertain the proferred testimony, having been raised by the purchasers in a point of error on appeal, was correct, for there was no showing that the testimony was newly discovered evidence, or that it could not, in the exercise of due diligence, have been presented to the trial court before it entered judgment.
The condition precedent found in the subject contract was inserted for the benefit of the purchasers. It makes little difference to a seller where funds to be used for a purchase are ultimately obtained from by a purchaser. A seller is simply interested in receiving money for property in an amount bargained for; on the other hand, a buyer may insert into a contract a "subject to financing" clause (in various forms) in order to avoid penalty, forfeiture, or loss for acts which would constitute breach in the absence of such a provision. Thus, it is clear that the clause in this contract was one which ran in favor of the purchasers. The different twist to this case is the fact that the sellers were willing to forego receipt of the entire consideration for their property until the end of the term of the note. Given this, can it then be said that the financing clause runs any less in favor of the purchasers?
It is fundamental contract law that, under ordinary circumstances, if one's promise is conditioned on the happening or occurrence of a future event, that condition must be fulfilled in the exact manner expressed in the contract before the promisor can be forced to perform his obligations. Redman v. Whitney, 541 S.W.2d 889 (Tex.Civ.App.--Austin 1976, writ ref'd n.r.e.); City of Fort Worth v. Rosedale Park Apartments, Inc., 276 S.W.2d 395 (Tex.Civ.App.--Fort Worth 1955, writ ref'd). The clear language of the contract may not be rewritten by the courts after the parties have taken pains to bargain for and draft language which suits their specific purposes. We must, therefore, simply look to the specific language to see if a condition precedent has been satisfied.
The term "third parties", as used in the subject clause, is one "used to include all persons who are not parties to the contract, agreement, or instrument of writing ..." Black's Law Dictionary, p. 1278 (4th Ed.1968). Clearly, the sellers in this case were parties to the contract for sale. (A definition of the term "conventional", as also found in the clause under scrutiny, has not been deemed material to our discussion.)
In Kitten v. Vaughn, 397 S.W.2d 530 (Tex.Civ.App.--Austin 1966, no writ), venders of real estate brought an action on a promissory note executed in...
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