Kelly v. Simon

• Decision Date: 30 April 1924
• Docket Number: (No. 7153.)
• Citation: 262 S.W. 202
• Parties: KELLY v. SIMON et al.
• Court: Texas Court of Appeals

262 S.W. 202

KELLY v. SIMON et al.

(No. 7153.)

Court of Civil Appeals of Texas. San Antonio.

April 30, 1924.

Rehearing Denied May 22, 1924.

Appeal from District Court, Tarrant County; Bruce Young, Judge.

Suit by E. J. Kelly against U. M. Simon and others. Judgment for defendants, and plaintiff appeals. Affirmed.

E. E. Blake, of Oklahoma City, Okl., and Scott, Brelsford, Funderburk & Ferrell, of Eastland, for appellant.

W. A. Hanger, of Fort Worth, for appellees.

COBBS, J.

This suit was brought by appellant to recover $34,000, from appellees, as damages growing out of an alleged breach of a contract of sale of an undivided one-eighth of one-eighth interest in and to all of the oil, gas, and other minerals in, under, and that may be produced from, those certain described lands situated in Eastland county, and set out in the pleadings and the contract of sale.

The contract of sale, which is the basis of this suit, and which is necessary for an understanding of the real issues in the case, leaving out the formal portions and description of the lands, is as follows:

"The State of Texas, County of Eastland.

"This contract made and entered into this the 19th day of December, 1918, by and between U. M. Simon, of the county of Tarrant, state of Texas, hereinafter called seller (acting herein through his agents, McNeny & McNeny), and E. J. Kelly, of Jefferson county, Oklahoma, hereinafter called purchaser, witnesseth:

"That the seller hereby sells to purchaser and purchaser hereby purchases from seller, for the sum of thirty-three thousand five hundred ($33,500.00) dollars, the following described property. An undivided one-eighth of one-eighth interest in and to all of the oil, gas and other minerals in and under and that may be produced from the following described land situated in Eastland county, and more particularly described as follows:

"536 acres of land, more or less, situated in said county, about six miles northeast of the town of Eastland, being known as the R. A. Madding tract and described by metes and bounds as follows:

"In four (4) tracts as follows: (A full description of the land follows in the contract but is omitted here.) * * *

"Said consideration to be paid as follows: Fifteen hundred dollars in cash upon the execution of this contract and the remainder to be paid in cash upon the execution and delivery of a general warranty deed in and to an undivided one-eighth of one-eighth interest in the oil, gas and mineral rights in the above-described land.

"It is understood and agreed that seller is to deliver to purchaser an authentic abstract showing good and merchantable title in seller to the land to be conveyed, subject to approval of purchaser's attorney, and should said abstract show good title in seller purchaser hereby agrees within fifteen days from the delivery of said abstract to pay the remainder of said purchase price in cash upon the execution and delivery of deed as aforesaid.

"But should said abstract not show good title in seller, seller is to have a reasonable time in which to perfect said title, which seller agrees to do with all due diligence, and purchaser agrees at the end of fifteen days to place the entire amount in the First National Bank of Fort Worth, Texas, in escrow to be delivered to seller when seller has perfected title to satisfaction of purchaser's attorney.

"A copy of this contract, together with fifteen hundred dollars is this day deposited with the National Bank of Fort Worth, in escrow until the parties hereto have complied with the terms hereof, but it is distinctly understood that in event said purchaser fails to pay the remainder of said purchase price when title has been approved then the amount deposited herewith is to be delivered to the seller herein.

"Witness our hands in triplicate at Fort Worth, Texas, this the 18th day of December, 1918."

Appellant, in the petition, sought to recover damages, among other things, upon several distinct theories: First, damages to be measured by the difference in the contract price of the interest sold, and the market value of such interest at the date of the alleged breach of the contract of sale. Second, special damages, being the difference in the contract price and the price at which plaintiff had an opportunity to resell the same, with notice to defendants of such opportunity. Third, special damages, for expenses of attorney's fees necessary in examining the title to the interest contracted to be sold.

Appellees directed exceptions to all the allegations in plaintiff's pleading as the alleged basis for the recovery of damages, measured by the difference in the contract price and the market value at the time of the alleged breach, and further directed to allegations designed as the basis for the recovery of damages based on the difference in the contract price at which it is claimed plaintiff, with notice to defendants, before the breach, had opportunity to resell, and as to the nominal damages and attorney's fees.

The court sustained the exceptions to all allegations constituting the basis for claims for any damages, save and except the claim for nominal damages and attorney's fees incurred as expenses in examining the title.

Certain exceptions urged by appellant to portions of appellees' answer were overruled.

A jury being waived, the case was tried before the court, and a judgment was rendered against appellees for attorney's fees, for $400, but judgment in all other respects was for appellees.

The court made and filed findings of fact, and so much as is material for a better understanding of the case is here set out as follows:

"That at the time of the making of said contract, U. M. Simon had no title to any interest in the land described in the contract, except that by agreement between him and R. A. Madding and A. G. Fraser, said Simon succeed to the rights of said Fraser in the certain contract between him and the said R. A. Madding giving the said Fraser the right or option to acquire an interest in the land which was the thing, or the interest conveyed by Madding to Simon by deed dated December 19, 1918, the interest conveyed by said deed being one-fourth of the oil, gas and other minerals in the land described in the contract, subject to the terms and conditions of an oil and gas lease owned by Texas Pacific Coal & Oil Company, hereinafter mentioned; that said deed has not been delivered to said Simon up to the 18th day of January, 1919, but was held in escrow subject to the payment of about $53,000, the purchase price which Simon was ready, willing and able to pay and would have paid and procured delivery thereof had the plaintiff Kelly accepted the conveyance which Simon offered to make to him.

"That on the 7th day of January, 1919, abstracts were delivered and examined as provided in said contract, and plaintiff's attorneys objected to the title on the ground of a provision for the payment or delivery of the oil royalty in the lease which had theretofore been executed, covering said land and owned by the Texas & Pacific Coal & Oil Company, which was as follows: `In the event of the sale or marketing of petroleum the lessees shall deliver as royalty to the lessors near the mouth of the well or wells without cost to the lessors one-eighth of such products or pay the market price thereof, in cash at the option of the lessees and the remainder of such products shall belong to the lessees.'

"That on the 18th day of January, 1919, defendant Simon offered to convey to plaintiff in fulfillment of the contract one-eighth of one-eighth of the oil, gas and other minerals in and under and that may be produced from the land described in the contract, with the provision that same was subject to the mineral lease on the land therein described in favor of the Texas & Pacific Coal & Oil Company, which conveyance plaintiff Kelly refused to accept because of the provision hereinabove quoted in the lease of the Texas & Pacific Coal & Oil Company.

"That defendant Simon, claiming that he had offered to do all that was required of him under the contract, announced that he would do nothing more, but at the same time expressing his willingness to do all he could to meet the objections to the title, but stating that he could do nothing more than make the proposed conveyance; that he would not undertake to procure any release of the provision because he knew he could not do so; in all of which the said Simon acted in good faith and free from fraud, and at the time of making said contract said Simon had no actual knowledge of the provision in the T. & P. Coal & Oil Company lease above quoted.

"That plaintiff Kelly reasonably expended in investigation and examination of the title the sum of $400 for attorney's fees for which he is entitled to recover."

The general idea prevailing in the rule for damages for injuries growing out of the breach of a contract for the sale of land is to give adequate compensation for the injury suffered, such as ordinarily will secure the difference between the contract price and the market value at the time of the breach, and this would be adequate compensation for the failure of the seller to convey good title to the interest contracted to be sold.

Much has been said by the parties here in regard to the English rule, and the rule that prevails in Texas, for measuring damages for the breach of a contract to sell real estate when the owner had no title at the time of the contract, without any fraud, and...