Broady v. Mitchell, 17169
| Decision Date | 31 August 1978 |
| Docket Number | No. 17169,17169 |
| Parties | Henry V. BROADY, Trustee, Appellant, v. John T. MITCHELL, Jr., Trustee, Appellee. (1st Dist.) |
| Court | Texas Court of Appeals |
DeLange, Hudspeth, Pitman & Katz, Eugene J. Pitman, Houston, for appellant.
Wood, Campbell, Moody & Gibbs, Robin C. Gibbs, Houston, for appellee.
This is an action to recover damages for breach of an earnest money contract executed by appellant, Henry V. Broady, Trustee, as seller, and by appellee, John T. Mitchell, Jr., Trustee, as purchaser.
The trial court entered judgment for the purchaser on the jury's verdict, awarding damages for the difference between the agreed purchase price and the market value of the property at the time of its sale by the seller to a third party. The seller has appealed from that judgment, raising 24 points of error.
The earnest money agreement is dated August 23, 1977, and covers a small apartment project in West University Place near the City of Houston. The contract stipulated a total purchase price of $150,000.00, of which amount the sum of $16,000.00 was to be paid in cash at time of closing and the deferred consideration was to be represented by the purchaser's conveyance being made "subject to" an existing first lien indebtedness of $61,000.00 and the purchaser's "no personal liability" second lien note for the balance.
The contract designated Lawyers Title Company in Houston as escrow agent and provided the seller would furnish within 30 days from the date of his acceptance of the contract an owner's title policy commitment with the standard clause pertaining to area, boundaries and encroachments deleted therefrom and an updated survey "in form and substance acceptable to the title company" which would serve as a basis for the deletion of the clause from the title policy.
The contract stipulated that "the offer" would remain open until August 24, 1974, that time was of the essence, and that the closing would take place at the office of the escrow agent on or before 60 days from the date of execution of the contract "at purchaser's option."
The contract reflects that it was executed by the parties on August 23, 1974, and that the earnest money deposit in the sum of $1,000.00 was deposited with the title company on that date. Following the execution of the contract and the deposit of the earnest money with the title company, the parties set out to accomplish the matters required to consummate the sale.
It appears that the purchaser worked actively to assist the seller in meeting this objective. On September 19, 1974, he wrote to the seller stating that he was concerned because some of the tenants in the apartment project claimed to own the appliances and air conditioners in their units and that he needed an accurate inventory of the appliances which were owned by the seller. He stated that there was a need for some adjustment in the down payment to compensate for the absence of those appliances which the seller did not own, and he listed a number of repairs which needed to be made. On September 24, he advised the seller that he had gone with the housing code inspector on the premises, and he listed a number of items requiring repair which the inspection had revealed. He suggested that an agreement be reached on a figure which would represent the cost of purchasing and installing good used appliances to compensate for those owned by tenants, and he stated that he wished to see a copy of the survey which the seller obtained when he first purchased the units to see if it had been updated and if it showed the location of any easements, rights-of-way, improvements or encroachments. He stated that he had listed all items which, in his opinion, required action prior to closing and asked that when such items had been accomplished, he be advised so that "we can schedule the closing." On October 14, 1974, he again wrote to the seller asking verification of the list which he had prepared from his notes indicating the appliances and air conditioner units not owned by the seller and stating his belief that he was due a $200.00 credit for each appliance not owned or not in proper working order at the time of closing. He again asked that when the listed items had been accomplished he be advised so that a closing might be scheduled and stated his view that since the stipulated closing date was October 22, 1974, "we may need to extend it for 30 days."
On October 16, 1974 the purchaser and the seller jointly executed a stipulation which recited that "due to delays and negotiations pertaining to the subject contract, we wish to extend the closing date until October 31, 1974."
Both parties testified that on or before October 31, 1974, the agreed time for closing was orally extended to November 1, 1974, and that at some point in their negotiation prior to November 1, 1974 they reached an agreement to reduce the amount of the purchase price by the sum of $2,500.00, as a credit to the purchaser for the aforementioned appliances and air conditioning units. Accordingly, it is undisputed that the parties agreed to close the transaction on November 1, 1974, and that the total purchase price for the property at that time was to be the sum of $102,500.00.
On November 1, 1974 both parties met at the title company for the purpose of closing the transaction. The purchaser testified that he was ready to close on that date and that he had the check for the cash down payment in his pocket. He testified that he did not tender the check because it became obvious "very early in the meeting" that the transaction could not be closed on that date. The seller was unable to furnish at that time an updated survey acceptable to the title company and thus was unable to provide the required title policy commitment. He was also unable to furnish an estoppel certificate, as required by the contract, which was to be executed by the mortgage company holding the first lien note. The purchaser testified that after November 1, 1974, he continued to regard the contract as being in full force and effect and that the purchaser indicated to him that he would obtain the necessary documents and would later meet with him to close the transaction. During the month of December the purchaser received "indications" from his attorney that the seller was willing to close in the early part of January, but no specific date was arranged. During the month of December he contacted the mortgage company several times to discover what procedural steps needed to be taken so that he could either take his conveyance subject to the first lien note or agree to assume the indebtedness. He testified that during the months of November and December he was ready, willing, and able to close the agreement and was working toward an early January closing.
On November 22, 1974, the purchaser's attorneys wrote to the seller and advised him that the purchaser was "ready to close" the contract and had complied with all his obligations thereunder. In this letter the purchaser's attorneys stated that the purchaser agreed to assume the mortgage, rather than take subject to it, and that the cash, note and deed of trust were escrowed at the title company awaiting closing. The letter stated that it was the purchaser's position that the seller had intentionally tried to breach the contract and that the seller was placed on notice that specific performance would be sought if he did not furnish the survey forthwith or agree to escrow the funds and proceed to close the transaction.
On January 9, 1975 the seller consummated a sale of the property to a third party for a purchase price of $115,000.00 and this action resulted.
The seller's testimony concerning the November 1 meeting does not differ materially from that of the purchaser. He admits that he was unable to furnish the four items needed to complete the closing at that time, but states that he left his deed with the title company on that date with the understanding that it would be returned to him on the following Friday if the matter was not closed by that time. He testified that after he received the purchaser's letter of November 22, 1974 he agreed to go through with the sale if the transaction was closed by January 2, 1975 upon the terms stipulated prior to the November 1 meeting. He stated that he had conveyed this information to the title closer and to the purchaser's attorney, but that he had not directly notified the purchaser of the January 2 closing date. He "just presumed" that they wanted to close and "if I had the survey there, that was it". He testified that he took the survey to the title company on January 2 and after being advised by the title closer that "they didn't have the money there" he considered the entire matter at an end. He stated that in extending the closing date to January 2, he did not believe he was doing so under the terms of the original contract because he "considered that contract out."
In response to special issues the jury found:
(1) That the parties had agreed to reduce the amount of the purchase price by the sum of $2,500.00;
(2) That the parties had reached an oral agreement to extend the date of closing to the early part of January 1975;
(3) That the seller had not terminated the contract prior to January 9, 1975, and;
(4) That prior to January 9, the purchaser had tendered substantial...
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