Illingworth v. Bushong, No. 80-108-L
| Court | Court of Appeals of Oregon |
| Writing for the Court | Before GILLETTE, P.J., JOSEPH; GILLETTE |
| Citation | 656 P.2d 370,61 Or.App. 152 |
| Parties | Robert A. ILLINGWORTH, Respondent-Cross-Appellant, v. Charles R. BUSHONG, Ruby Bushong and George Chick Iverson, Appellants-Cross-Respondents. ; CA A20104. |
| Decision Date | 22 March 1983 |
| Docket Number | No. 80-108-L |
Page 370
v.
Charles R. BUSHONG, Ruby Bushong and George Chick Iverson,
Appellants-Cross-Respondents.
Decided Dec. 29, 1982.
Reconsideration Denied Feb. 17, 1983.
Review Allowed March 22, 1983.
[61 Or.App. 153]
Page 371
Walter L. Cauble, Grants Pass, argued the cause for appellants-cross-respondents. With him on the briefs was Schultz, Salisbury & Cauble, Grants Pass.Page 372
Patrick G. Huycke, Medford, argued the cause and filed the brief for respondent-cross-appellant.
Before GILLETTE, P.J., JOSEPH, C.J., * and YOUNG, J.
[61 Or.App. 154] GILLETTE, Presiding Judge.
Plaintiff brought this action to recover his earnest money deposit, which defendants had retained after plaintiff had defaulted on a contract to purchase their ranch. Plaintiff contends that the liquidated damages provision is unenforceable as a penalty. The trial court agreed and awarded plaintiff judgment for the amount of his deposit ($50,000), less defendants' actual damages of $6,500. Defendants appeal the court's ruling that the liquidated damages clause is invalid. Plaintiff cross-appeals, contending that the court erred in failing to award him attorney fees and in setting the rate of interest on his judgment. We affirm the trial court's ruling as to the penal nature of the forfeiture, but we reverse and remand on the attorney fees and rate of interest matters.
Defendants were, at the time of this dispute, co-owners of a 373-acre ranch in Josephine County, which they listed for sale in July, 1978. Plaintiff viewed the property in August and, on September 8, entered into an earnest money contract to purchase the ranch for $490,000. The agreement contained a forfeiture clause, providing that if the purchaser failed to go through with the sale, he would forfeit his earnest money deposit. 1 The amount of the deposit was $50,000; the closing date was December 12, 1978. Plaintiff understood, however, that the deposit would not be forfeited on his breach if there were "back-up buyers" willing and able to purchase the ranch. Subsequent to the signing of the earnest money contract, two back-up buyers submitted offers to purchase the ranch, but both withdrew their offers before the scheduled closing date.
On the scheduled closing date, December 12, plaintiff failed to perform, because he did not have sufficient funds to close the transaction. On December 13, one of the former back-up buyers presented a new earnest money contract for purchase of the ranch to defendants' real estate agent. On January 25, 1979, that sale was closed for the [61 Or.App. 155] same total price plaintiff had offered, but with a higher down payment.
This action, which plaintiff brought after defendants had refused his demand for the return of the deposit, was tried to the court. After determining that the forfeiture clause was invalid, the court found that defendants had incurred $6,500 in actual damages as a result of plaintiff's breach and therefore awarded plaintiff judgment of $43,500, setting interest at 6 percent from May 29, 1979, the date of demand. The court declined to award attorney fees.
A contract provision for liquidated damages is valid if it is designed to provide just compensation for the injured party in the event of a breach; if it goes beyond just compensation, however, it is unenforceable as a penalty. Wright v. Schutt Construction, 262 Or. 619, 623, 500 P.2d 1045 (1972). The test is whether:
" '(a) the amount so fixed is a reasonable forecast of just compensation for the harm that is caused by the breach, and
'(b) the harm that is caused by the breach is one that is incapable or very difficult of accurate estimation.' " 262 Or at 623 [500 P.2d 1045], quoting Restatement of Contracts § 339(1) (1932).
To satisfy the first requirement, there must be a genuine pre-estimate of the injury; that is, the parties must make an honest and good faith effort to arrive at an accurate
Page 373
estimate. Dean Vincent, Inc. v. McDonough, 281 Or. 239, 246, 574 P.2d 1096 (1978). A showing that the liquidated damages are "grossly...To continue reading
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Mattvidi Associates Ltd. Partnership v. NationsBank of Virginia, N.A., No. 1327
...599 A.2d 132, 138 (1991); P.J. Carlin Constr. Co. v. City of New York, 59 A.D.2d 847, 399 N.Y.S.2d 13, 14 (1977); Illingworth v. Bushong, 61 Or.App. 152, 656 P.2d 370, 373 (1982), aff'd, 297 Or. 675, 688 P.2d 379 (1984); Baker v. International Record Syndicate, 812 S.W.2d 53, 55 (Tex.Ct.App......
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Dennis I. Spencer Contractor, Inc. v. City of Aurora, No. 93SC529
...if the plaintiff also breached the contract and if the defendant recovers more in damages than the plaintiff. In Illingworth v. Bushong, 61 Or.App. 152, 656 P.2d 370 (1982), aff'd, 297 Or. 675, 688 P.2d 379 (1984), the court awarded fees to a plaintiff who prevailed on an equitable claim fo......
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Illingworth v. Bushong
...as to the facts and the conclusions to be drawn from them. Foster v. Peterson, 42 Or App 249, 258, 600 P2d 490 (1979)." 61 Or.App. at 155, 656 P.2d 370. The Court of Appeals then found there was substantial evidence to support the trial court's findings of fact resulting in the trial court'......
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Employers' Fire Ins. Co. v. Love It Ice Cream Co., No. A7906-02629
...1979, and 9 percent per year from July 25, 1979, until the date of the judgment. See Graham v. Merchant, supra; Illingworth v. Bushong, 61 Or.App. 152, 157, 656 P.2d 370 (1982), rev. allowed 294 Or. 613, 661 P.2d 549 Page 164 In its cross-appeal, defendant asserts that the trial court erred......
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Mattvidi Associates Ltd. Partnership v. NationsBank of Virginia, N.A., No. 1327
...599 A.2d 132, 138 (1991); P.J. Carlin Constr. Co. v. City of New York, 59 A.D.2d 847, 399 N.Y.S.2d 13, 14 (1977); Illingworth v. Bushong, 61 Or.App. 152, 656 P.2d 370, 373 (1982), aff'd, 297 Or. 675, 688 P.2d 379 (1984); Baker v. International Record Syndicate, 812 S.W.2d 53, 55 (Tex.Ct.App......
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Dennis I. Spencer Contractor, Inc. v. City of Aurora, No. 93SC529
...if the plaintiff also breached the contract and if the defendant recovers more in damages than the plaintiff. In Illingworth v. Bushong, 61 Or.App. 152, 656 P.2d 370 (1982), aff'd, 297 Or. 675, 688 P.2d 379 (1984), the court awarded fees to a plaintiff who prevailed on an equitable claim fo......
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Illingworth v. Bushong
...as to the facts and the conclusions to be drawn from them. Foster v. Peterson, 42 Or App 249, 258, 600 P2d 490 (1979)." 61 Or.App. at 155, 656 P.2d 370. The Court of Appeals then found there was substantial evidence to support the trial court's findings of fact resulting in the trial court'......
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Employers' Fire Ins. Co. v. Love It Ice Cream Co., No. A7906-02629
...1979, and 9 percent per year from July 25, 1979, until the date of the judgment. See Graham v. Merchant, supra; Illingworth v. Bushong, 61 Or.App. 152, 157, 656 P.2d 370 (1982), rev. allowed 294 Or. 613, 661 P.2d 549 Page 164 In its cross-appeal, defendant asserts that the trial court erred......