Higgins v. Kenney

• Decision Date: 18 February 1925
• Docket Number: 4270.
• Parties: HIGGINS ET AL. v. KENNEY.
• Court: Georgia Supreme Court

126 S.E. 827

159 Ga. 736

HIGGINS ET AL. v. KENNEY.

No. 4270.

Supreme Court of Georgia

February 18, 1925

Syllabus by the Court.

Where a vendor contracts to sell land for which he holds only an executory contract of purchase, and stipulates with his vendee to convey a merchantable title by a warranty deed during a specified day in the future, upon the strength of which he receives a part of the purchase price as earnest money, which the contract provides shall be retained as a forfeiture by the vendor in case of a breach of the contract by the purchaser, and is to be returned to the vendee if titles to the premises are not merchantable, such vendor cannot retain the earnest money after the day on which title was to pass, having himself failed to perfect his title so that he might convey to his vendee a merchantable title as provided by the contract. In the circumstances enumerated the vendee may, after the expiration of the time for making the deed, maintain an action for recovery of the earnest money without having paid or tendered payment of the balance of the purchase price.

Certiorari from Court of Appeals.

Action by Helen Higgins and another against F. J. Kenney. Judgment for plaintiffs was reversed by the Court of Appeals (31 Ga.App. 514, 121 S.E. 841), and plaintiffs bring certiorari. Reversed.

In a suit to recover $300, with interest thereon, alleged to have been paid as earnest money in a contract of sale of land, the trial judge directed a verdict for the plaintiffs. The defendant excepted to that judgment, carrying the case to the Court of Appeals. The errors assigned were that the evidence was contrary to the law and to the evidence, and specially that the evidence failed to show willingness or ability of the plaintiffs to comply with their contract. The division of the Court of Appeals to which the case was assigned reversed the judgment of the trial court; all three of the judges concurring. A motion for rehearing was granted, and after the rehearing the former decision was adhered to; one of the judges dissenting. The opinion as rendered by the Court of Appeals was as follows:

"The evidence being in conflict upon material issues and presenting questions for determination by the jury, the court erred in directing a verdict.

Luke, J. This case was commenced as a suit for the recovery of $300 earnest money paid on the purchase price of real property, the plaintiffs alleging that, because of the seller's fault, the sale was not completed. Annexed to their petition is a copy of the written contract in question which is referred to in the evidence as a 'sales ticket,' and which is in words and figures as follows 'Savannah, Ga. May 10th, 1921, I have this day sold subject to the existing leases thereon, as broker for myself, to Mrs. Helen Higgins and Mrs. J. P. Miller, for the sum of $7,000, the following property: 124-126 Waldburg Street E., being that 2 1/2-story frame dwelling located on the northerly side of Waldburg Street, about 30 feet west of the northwest corner of Abercorn Street. The terms of sale are as follows: Cash. The property is sold with the same reservations as contained in sales ticket to seller. Title to premises to be merchantable. Conveyance by seller is to be by warranty deed. Taxes, water rents, rents, and insurance are to be prorated between the parties as of date of the passing of the title, which is to take place within July 1, 1921. Time shall be of the essence of this contract, and earnest money may be retained in case of breach by purchaser. Sum of $300 has been paid on account of purchase-price; same to be returned if titles to premises are not merchantable. Frank J. Kenney, Broker. Accepted: Mrs. Helen Higgins. Mrs. J. P. Miller.'

In their petition the plaintiffs allege the making of the contract, the payment of the earnest money as therein recited, their own ability, readiness, and willingness to complete the purchase in accordance with the terms of the contract, and the defendant's refusal so to do. Plaintiffs further allege that defendant never owned or acquired any title to the property in question, so as to be able to comply with his obligations; that for several days prior to July 1, 1921, during the last days of the life of the contract, the defendant was on a drunken spree, unable to attend to any business, and so absented and concealed himself that they were unable to find him, tender the balance of the purchase price, or personally demand the conveyance; and that these things, rather than any express declaration on his part, constitute the defendant's refusal to abide by his obligations under the said contract. It is further alleged that, after the contract had been so breached by the defendant and had lapsed, they made demand upon him for a return of the $300 earnest money, and he refused to pay it. They prayed judgment against him for $300, with interest thereon at the rate of 7 per cent. per annum from July 1, 1921. In his answer the defendant admitted making the contract and receiving the $300 earnest money, but denied the remainder of the petition.

Upon the trial the plaintiffs introduced evidence sufficient to make out their case prima facie as laid in the petition. With this statement, a further outline of their evidence here could serve no valid purpose. The defendant introduced in evidence another contract, or 'sales ticket,' evidently written upon one of the same printed forms as the contract in suit, and which differed from it in the following parts only: 'Savannah, Ga., May 9, 1921. I have this day sold, subject to the existing leases thereon, as broker for G. Brown, to A. F. Breckwoldt, for the sum of $14,000, the following property, being those two frame dwellings located at the northwest corner of Abercorn and Waldburg Streets in the city of Savannah, and being numbered 124, 126, 128 and 130 Waldburg Street East, said city. The lot having a frontage of about 60 feet on Waldburg Street, and a depth of about 55 feet on Abercorn Street. Reference is hereby made to deed to seller for better description of same. Subject to the reservations contained in deeds from Jacob E. Tussey to A. L. Harwood and Francis H. Gibbs, dated January 15, 1905. The terms of the sale are as follows: Cash. The seller or his daughter, Mrs. Ida Blumberg, is to have a lease of the upper apartment at 128 Waldburg Street East, for $40 a month for one year, commencing October 1, 1921. Sum of $200 has been paid on account of purchase price; same to be returned if titles to premises are not merchantable. The seller is to pay my commission of $500. Frank J. Kenney, Broker. Accepted: G. Brown. A. F. Breckwoldt.'

The defendant testified that this contract was transferred to him by Breckwoldt; that upon plaintiffs learning that he held it they wanted to buy an interest in it; that he bought it for the purpose of speculation, and they wanted an interest in it for the same purpose; that, prior to this transaction, they had taken similar 'sales tickets' from him as to other property, had listed the property with him for resale and in each instance he had sold the property at a profit to plaintiffs, this transaction being the first of their speculations to prove unprofitable. In the brief of evidence here his testimony appears in part in the following language: 'They would drop into my office from time to time to inquire, and finally, in the late spring of 1921, I heard of these two houses or apartments on Waldburg Street, owned by Mr. Brown, who was just on the stand. I closed the deal with them at $14,000 and signed the sales ticket--had the sales ticket drawn at $14,000. Mrs. Miller and Mrs. Higgins happened to drop into my office, I think, the next day. I told them about getting the sales ticket on this property, and they asked if I would let them have one of the houses. * * * After some discussion I agreed to let them in on it. * * * They paid a deposit of $300. I in the meantime had paid a deposit on the other. I gave them a sales ticket at $7,000. They immediately set a price on the property of $8,500, to try to make a profit of $1,500. I told them the price was a little steep; however, I would work on it. They had, as I recall, 45 or 60 days on the sales ticket; I forget which. But in a few days we found we could not sell it at that price, and the sales ticket was about to run out. In the meantime I had arranged to handle my part. I had retained the corner house. I had some money in the bank to pay my portion of it, and I had arranged to borrow $5,000 on the corner. I had hopes of arranging for them to get $2,000. I told them, "You realize, if you don't get the money before the sales ticket expires, you lose the $300?" They said, "The $300 we hate to lose, but we haven't got the money," and then they instructed me to sell the sales ticket for $500 profit. The time was short, and only a few days before the sales ticket would run out. I couldn't sell it for the $500 increase, and the result was that the sale fell through and both deposits were lost. The ladies came to my office a number of times after that, still looking for another speculation to get their money back. Things moved along, and no demand was made for the money. No letter was ever written to me, asking for the money. This thing dragged along for nearly a year; then Mrs. Kennedy and Mrs. Higgins had a little altercation. I don't know the details of it, but in any event the next thing I knew I was notified that the ladies had put their claim in the hands of Mr. Walsh to collect this $300 deposit. * * * In regard to my being away from my office and under the influence of liquor, I was not continually on a spree. I was drinking at the time. I was arrested twice for driving an automobile when under the influence of liquor, but I was at...