Greenstone v. Claretian Theological Seminary, Claretville

Decision Date12 August 1959
Citation343 P.2d 161,173 Cal.App.2d 21
CourtCalifornia Court of Appeals Court of Appeals
PartiesHenry S. GREENSTONE, Plaintiff, Respondent and Cross-Appellant. v. CLARETIAN THEOLOGICAL SEMINARY, CLARETVILLE, California, a corporation, Defendant, Appellant and Cross-Respondent. Civ. 23798.

Marcus L. Roberts, Hollywood, for appellant and cross-respondent.

Kopald & Mark, Beverly Hills, for respondent and cross-appellant.

LILLIE, Justice.

On September 20, 1955, plaintiff sued appellant Claretian Theological Seminary and defendant Jacoba Buchenau. The first cause of action for specific performance of a written contract dated August 30, 1955, between plaintiff and the Seminary for the sale of an apartment house was directed against the Seminary, the second, for damages for interference with contractual relationship against Buchenau, and the third for declaratory relief against both defendants. The Seminary in its answer denied it 'breached' the contract and 'failed or refused to proceed with the sale'; alleged that defendant Buchenau, by asserting title to the property made completion of the sale impossible; reaffirmed the contract; and agreed to complete the same 'in the event (the) court so orders.' Mrs. Buchenau in a cross-complaint against both parties asked the court to quiet title to the property. This issue was tried first; the trial court found her claims to be without foundation and ordered title quieted against her. Plaintiff dismissed his second and third cause of action against defendant Buchenau and proceeded to trial on the first and third against the Seminary which then unsuccessfully moved to file an amended answer.

Without receiving any evidence at the trial, except the written contract, the lower court by interlocutory judgment ordered the parties to specifically perform the terms of the agreement in accord with certain instructions; provided that if plaintiff failed to comply judgment be entered against him and upon failure of the Seminary, plaintiff be permitted to amend his complaint to allege breach of contract and damages; ordered the court upon completion of the sale to take an accounting to determine the net rentals received by the Seminary from September 20, 1955, and enter judgment accordingly; and expressly retained jurisdiction to do everything necessary to a final and complete disposition of the obligations and rights of the parties under their agreement. A controversy arose under the terms of the interlocutory judgment and the Seminary unsuccessfully moved for a final judgment in its favor. Thereafter it appealed from the interlocutory judgment (No. 22720) and the order denying the motion for final judgment (No. 22721), both of which appeals were dismissed; and filed a Petition for Certiorari (No. 27863) which was denied.

Defendant Buchenau appealed from the judgment quieting title against her which was affirmed and is now final. A second time the Seminary moved for final judgment, the lower court denying the motion; and then unsuccessfully moved for leave to file a Supplemental Answer setting forth 'plaintiff's default' under the agreement. Thereafter, the trial court granted plaintiff's motion for a final judgment which was entered October 24, 1958; took evidence on the matter of accounting and ordered the parties to specifically perform the contract, crediting $34,011.20 net rentals to plaintiff against the purchase price and allowing the Seminary thereon $13,586.95 interest at 7% on the $65,000 cash price from September 20, 1955. Both parties appeal therefrom, the Seminary from the entire judgment; the plaintiff from that portion crediting the Seminary with interest on the unpaid cash purchase price.

Absent evidence received at the trial, we resort to the pleadings for a recitation of uncontroverted facts. The basis of this cause had its genesis in a written agreement dated August 30, 1955, signed by plaintiff and the Seminary, acknowledging receipt of a $5,000 deposit from plaintiff to apply on the purchase price of real property 'to be deposited in escrow' at the Hollywood State Bank; and reciting that the Seminary agreed to sell to plaintiff a 30-unit apartment house for $65,000 cash and plaintiff's assumption of a first trust deed in an amount not to exceed $72,000. Immediately prior to the execution of this agreement, plaintiff delivered the $5,000 deposit to a real estate broker, agent of the Seminary, who thereupon deposited it with the escrow department of the bank for the purpose of an escrow, where it is still held. Two days after execution of the agreement defendant Buchenau notified the parties and the bank that she was the owner and the Seminary had no title thereto. Thereafter, the Seminary advised plaintiff it would not proceed with the sale 'unless and until the claim of title to the property asserted by the defendant Buchenau is withdrawn' and did not consummate the sale. Plaintiff was nowise in default inder the agreement and ready, willing and able to complete the purchase. The within action resulted.

Appellant Seminary assigns numerous errors for reversal but its main contention appears to be that the trial court erred in allowing to plaintiff the net rental income on the property. What we deem to be its first objection--that the pleadings framed an issue of breach of contract on which no evidence was taken, but on which the trial court made a finding and entered judgment adjudging it to have breached the contract and awarding damages, is without merit. An analysis of the pleadings discloses that no issue of breach was raised, nor would such an issue be material to this cause predicated entirely upon a request for specific performance in which no damages were alleged or sought. Although the answer denied breach of the agreement and refusal to proceed with the sale, it cannot be contradicted even by the Seminary that the pleadings reflect that, whatever it might call its noncompliance with the agreement sued upon, it did not proceed with the sale although plaintiff, not in default, was ready, willing and able to perform; would not comply until claim of title was withdrawn by Mrs. Buchenau, so advising plaintiff prior to suit; and continued to acknowledge the existence of a valid contract by reaffirming it and agreeing to perform. Even though the Seminary seeks to excuse the same, this lack of compliance, an admitted fact upon which it was unnecessary and improper to offer evidence (Lifton v. Harshman, 80 Cal.App.2d 422, 182 P.2d 222), is a sufficient basis upon which to predicate an action for specific performance of a valid existing contract. Whether such noncomplianceunder the circumstances at bar constitutes a 'breach,' or the trial court so found, is immaterial to the main issue of specific performance for neither cause is grounded on breach of contract. The cloud on the title to the property having theretofore been removed by the lower court, making transfer thereof possible, and both plaintiff and the Seminary having affirmed the contract agreeing to perform, thereby treating it as unbroken and still in effect subject to being specifically performed, not even an issue concerning the reason for the Seminary's noncompliance remained material to the cause. The way was clear for specific performance, which the court ordered. The Seminary also argues that the interlocutory judgment adjudged that it 'breached' the agreement. It is clear from a just reading of the judgment that this is untrue, for the reference therein to 'recovering damages for breach of contract' (Paragraph 5) relates solely to the alternate remedy open to plaintiff if the Seminary refuses to perform in the manner set forth in the judgment which even before it could be utilized required an amendment of plaintiff's complaint to allege breach and pray for damages. The 'breach' mentioned in the judgment referred only to the Seminary's future failure to comply with its terms, and not to its original noncompliance sued upon.

Through its query--whether Lifton v. Harshman, 80 Cal.App.2d 422, 182 P.2d 222, supports the judgments--appellant contends the trial court erred in awarding plaintiff $34,011.20 damages on a complaint which neither alleged nor prayed for them.

Manifest in its repeated references to 'damages' is appellant's basic misconception of what this credit actually consists. It is true, as plaintiff argues, that where a vendee is entitled to a decree of specific performance of a contract for the purchase or exchange of land, he is entitled to a judgment for the rents and profits thereon from the time conveyance should have been made (Lifton v. Harshman, 80 Cal.App.2d 422, 182 P.2d 222; 90 Cal.App.2d 180, 202 P.2d 858: Heinlen v. Martin, 53 Cal. 321; Coleman v. Dawson, 110 Cal.App. 201, 294 P. 13; 45 Cal.Jur.2d, Sec. 83, p. 374; 7 A.L.R.2d 1204); and that under this rule no 'damages' as such are awarded, the amount in reality being a form of compensation due the buyer for loss incurred because of the delay in receiving title, which amount may be ordered incident to the judgment of specific performance. This is awarded upon the theory that a court of equity, once it obtains jurisdiction of an action for specific performance, should adjust the rights of the parties and equalize any losses occasioned by the delay by offsetting them with money payments. Confusion in this area has existed because of the informal use of the term 'damages' in connection with such an award, but it is settled that such compensation neither constitutes damages as contemplated in an action for breach of contract, nor implies legal damages (7 A.L.R.2d 1204; 'Specific Performance: Compensation or Damages Awarded Purchaser for Delay in Conveyance of Land').

No one claims that plaintiff alleged or sought damages, and it is conceded that in the body of the pleading there exists no allegation charging the Seminary with liability for loss due...

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