Kakalik v. Bernardo

Citation184 Conn. 386,439 A.2d 1016
CourtSupreme Court of Connecticut
Decision Date09 June 1981
PartiesJohn KAKALIK v. Alfredo BERNARDO et al.

Stephen B. Alderman, with whom, on the brief, was Robert Ginsburg, West Haven, for appellants (defendants).

Charles L. Flynn, New Haven, for appellee (plaintiff).

Before BOGDANSKI, C. J., and PETERS, PARSKEY, AMENTANO and SHEA, JJ.

PETERS, Associate Justice.

This is an appeal from a judgment ordering specific performance of a contract for the sale of real estate between the plaintiff buyer, John Kakalik, and the defendant sellers, Alfredo and Rose Bernardo. The case was tried to the court when the defendants' claim for a jury trial was withdrawn in response to the plaintiff's withdrawal of his claim for monetary damages. 1 The defendants have appealed from the judgment of specific performance in favor of the plaintiff Kakalik.

The relevant facts found by the trial court in its memorandum of decision establish the following: The defendants executed, on January 18, 1975, a multiple-listing contract for the sale of their home at 11 Tillert Court, North Haven. The plaintiff and the defendants agreed, in writing, upon the terms of a contract of sale for this property. The terms were negotiated over several days in early April, 1975. The contract contained a standard mortgage contingency clause that conditioned the plaintiff's obligation to purchase the property upon his ability to obtain a conventional mortgage for thirty years at 8.75 percent interest plus one point. In that connection, the contract further provided that the mortgage commitment "shall be obtained not later than April 23, 1975 or this agreement shall become null and void and deposit money returned to Buyer." The date of April 23, 1975, was not separately negotiated but represented a real estate broker's estimate of the average period of time normally required to obtain a mortgage commitment. The contract also specified that a closing for the passage of title take place "on or before June 16, 1975."

The plaintiff promptly pursued the procurement of mortgage financing with the New Haven Savings Bank. The bank's mortgage committee approved the mortgage loan on April 23, 1975, and a letter of commitment was mailed to the plaintiff, then residing in Maine, on April 24, 1975. The defendant Rose Bernardo was informed of the approval of the mortgage loan on April 23, 1975, but then indicated her unwillingness to consummate the sale. The defendants took the position that the contract was not binding because they had received no written confirmation of the mortgage commitment from the plaintiff by April 23, 1975. The defendants had in fact changed their minds, for personal reasons, about the desirability of selling their home. The plaintiff, ready, willing and able to buy the home, repeatedly demanded, before the stipulated closing date, that the sale go forward, but the defendants refused.

The trial court concluded on these facts that the date stipulated for the procurement of the mortgage commitment was a date not intended by either party to the contract to be of the essence to performance. The court found that the defendants' insistence on strict compliance with this date resulted solely from the fact that they had changed their minds about selling their home and were seeking to avoid their contract obligation. Had the plaintiff been notified that strict compliance with this date was expected by the defendants, timely arrangements could have been made to deliver a written certification of commitment to the defendants on April 23, 1975. The court therefore concluded that the contract was fully binding and effective, that the plaintiff had met its preconditions, and that the sellers were in breach in failing to agree to a closing. The court determined that specific performance was an appropriate remedy for the plaintiff and not inequitable, despite the defendants' argument about the inflationary impact of the lapse of time between 1975, the date of the contract, and 1979, the date of the trial.

In their appeal from the judgment rendered against them, the defendants raise three issues. Did the trial court erroneously limit its discretion concerning the propriety of specific performance? Did the court err in its interpretation of the mortgage commitment clause in the contract of sale? Did the court, in light of the factual circumstances, err in decreeing specific performance?

I

The defendants' first claim of error arises out of a statement in the trial court's memorandum of decision. In discussing whether specific performance should be decreed, the court stated: "The defendants specifically and unequivocally insisted that the request for money damages be withdrawn if the case were to be tried to the Court, and this was done on the record and against the contrary suggestion on the part of the Court. They agreed that the remedy was to be specific performance or nothing." The defendants take two exceptions to this statement. In their brief, they argue that the trial court had inherent authority to award damages in lieu of specific performance under a general prayer for relief, and that the court therefore unduly restricted its own discretion when it limited its remedial options to "specific performance or nothing." At oral argument, the defendants' counsel 2 maintained that the court had misconstrued the record as to which party had insisted on the removal of damages from the case.

We consider these two arguments in reverse order. Although the record before us is incomplete, the transcript does reveal that it was the defendants who claimed the case for the jury docket when the plaintiff's prayer for relief included monetary damages. Thereafter, evidently as a result of pretrial negotiations, the plaintiff withdrew the claim for money damages and the defendants withdrew their jury claim. Nothing in the record contradicts the trial court's assertion that the defendants were the moving party in narrowing the issues to exclude damages. We have no basis, therefore, to conclude that the trial court erred in its recollection of what had transpired.

The scope of the trial court's discretion to award specific performance was not erroneously limited by the withdrawal of the monetary claim. In the proper circumstances, a trial court has the authority to decree specific performance and to award monetary damages incidental thereto. Heyman v. CBS, Inc., 178 Conn. 215, 229, 423 A.2d 887 (1979); Schneidau v. Manley 131 Conn. 285, 289, 39 A.2d 885 (1944). The parties may, however, in their contract of sale, limit the right to specific performance or to damages in the event of breach. Lanna v. Greene, 175 Conn. 453, 458, 399 A.2d 837 (1978); Ritucci v. Brandt, 134 Conn. 364, 366, 57 A.2d 728 (1948). If the parties may validly negotiate a limitation of remedies clause at the time that they enter into a contract, we can perceive no reason why they may not, with equal validity, enter into such an agreement to narrow the issues at the time of the trial. Such an agreement has potential risks and benefits for each: the party seeking specific performance can foreclose evidence of damages as a distracting alternative, while the party defending against specific performance may emerge, despite its breach, owing nothing.

II

The defendants' second claim of error challenges the interpretation that the trial court placed upon the mortgage commitment clause in the contract of sale. The contract contained a typewritten provision describing the terms of the mortgage commitment upon which the plaintiff's obligation was conditioned. It also contained a printed provision, in which only the date had been completed by typewriter, that "(m)ortgage commitment stated above shall be obtained not later than April 23, 1975 or this agreement shall become null and void and deposit money returned to Buyer." The defendants rely on the language of "null and void" as releasing them from their contractual obligation to the plaintiff in the absence of completion of mortgage arrangements by the appointed date. The trial court held that full satisfaction of the mortgage commitment on the designated date was not a material term of the contract, that the date of the mortgage commitment was not "of the essence" and that the defendants were therefore not excused from performance. We agree.

In real estate contracts, "the fact that a specific time is fixed for payment or for conveyance does not make 'time of the essence'-at least, it does not make performance at the specified time of the essence. Failure to pay at that time is not per se sufficient to terminate the seller's duty to convey; and failure to convey on the exact date does not per se discharge the buyer." 3A Corbin, Contracts § 716, p. 365 (1960). See Ravitch v. Stollman Poultry Farms, Inc., 165 Conn. 135, 148, 328 A.2d 711 (1973); Kasten Construction Co. v. Maple Ridge Construction Co., 245 Md. 373, 377, 226 A.2d 341 (1967); Carsek Corporation v. Stephen Schifter, Inc., 431 Pa. 550, 554-55, 246 A.2d 365 (1968); Safeway System, Inc. v. Manuel Bros., Inc., 102 R.I. 136, 145, 228 A.2d 851 (1967); 6 Williston, Contracts (3d Ed. 1963) § 852. The rule that time is ordinarily not of the essence in transactions involving real property applies to the occurrence of a contractual condition as well as to the performance of a contractual duty. Restatement (Second), Contracts (Tent.Ed.1973) § 255.

The meaning properly to be ascribed to the mortgage commitment clause was therefore a question of the intent of the parties, to be determined, as a matter of fact, from the language of the contract, the circumstances attending its negotiation, and the conduct of the parties in relation thereto. Bead Chain Mfg. Co. v. Saxton Products, Inc., --- Conn. ---, ---, --- A.2d ---- (42 Conn.L.J., No. 36, pp. 5, 8) (1981); Hughes v. Contemporary Mission, Inc., 180 Conn. 150, 429 A.2d 827 (1980); Otto...

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