Loda v. H. K. Sargeant & Associates, Inc.

• Decision Date: 10 August 1982
• Citation: 448 A.2d 812,188 Conn. 69
• Parties: Frank LODA et al. v. H. K. SARGEANT & ASSOCIATES, INC., et al.
• Court: Connecticut Supreme Court

Page 812

448 A.2d 812

188 Conn. 69

Frank LODA et al. v. H. K. SARGEANT & ASSOCIATES, INC., et al.

Supreme Court of Connecticut.

Argued May 14, 1982.

Decided Aug. 10, 1982.

Joseph E. Sakal, Seymour, for appellants (plaintiffs).

James R. Healey, Waterbury, with whom was Kevin P. Thornton, Waterbury, for appellees (defendant John H. Yanzo et al.).

Joseph P. Flynn, Ansonia, for appellee (named defendant).

Before PETERS, HEALEY, PARSKEY, ARMENTANO and SHEA, JJ.

ARTHUR H. HEALEY, Associate Justice.

This action arises out of the nonperformance of a written contract for the sale of real estate. The plaintiff buyers brought an interpleader action to determine the respective parties' rights to the deposit of $7400. From a judgment of the trial court finding a breach of contract by the plaintiffs and awarding damages and attorney's fees to the defendants, the plaintiffs have appealed.

On February 25, 1979, the plaintiffs, Frank and Carmela Loda, made an offer to purchase a three-family house located at 96-98 Derby Avenue, Seymour, from the defendants John and Joan Yanzo. The Lodas wanted to purchase this house for investment purposes and also to provide housing for their daughter. The offer to purchase called for a purchase price of $73,000 conditioned upon the buyers' obtaining a conventional mortgage in the amount of $55,000 payable in not less than twenty-five years and at an annual percentage rate not to exceed 10 1/2 percent. ¹

On the next day, February 26, 1979, after further negotiations, the plaintiffs increased their offer to $74,000 and signed a purchase and sale agreement to that effect. The agreement was made contingent upon the buyers' obtaining a conventional mortgage of $59,000 for a term of twenty-five years at a rate not to exceed 11 percent. It also contained a clause which stated that the "[s]ale [is] contingent upon Buyer obtaining [a] mortgage commitment no later than March 12, 1979." The buyers wanted the tenants on the second floor of the house evicted prior to the May 1 closing date and the agreement provided that $400 of the deposit would be held in escrow to be used toward the payment of reasonable attorney's fees in evicting the second floor tenants if they were still in possession at the closing date. The defendants Yanzo signed the agreement but it was not returned to the plaintiffs until March 6 or 7.

A deposit of $7400 was paid by the plaintiffs to the Yanzos' real estate agent, H. K. Sargeant, of the defendant H. K. Sargeant & Associates (Sargeant). The plaintiff Frank Loda, a real estate agent with ten years' experience, had previously agreed with the defendant Sargeant to split evenly the commission for the sale. ²

On March 8, the plaintiffs applied to the Ansonia Savings Bank and the New Haven Savings Bank for a mortgage of $59,000 for a term of twenty-five years and at an interest rate of 10 1/4 percent. On March 12, the deadline specified in the agreement for obtaining a mortgage commitment, there was no indication by the plaintiffs to any of the defendants that they had not received a mortgage commitment. The plaintiffs learned from Peter Goumas of the Ansonia Savings Bank, on March 14, that their request for a $59,000 mortgage (80 percent of the sale price) was denied but that a $55,500 mortgage (75 percent of the sale price) over a term of twenty-five years and at an interest rate of 10 3/4 percent had been committed by the bank. ³ On that same day, the plaintiff Frank Loda telephoned H. K. Sargeant to tell him that he had a 75 percent mortgage commitment and to request assurance that the second floor tenants would be evicted before the closing date. ⁴ It was H. K. Sargeant's understanding after the March 14 telephone conversation with Loda that Loda, although desiring an 80 percent mortgage, would, if he did not get that, still proceed with the sale on the basis of the 75 percent mortgage already committed to him.

On March 15, the Lodas' attorney sent a letter to the attorney for defendants Yanzo requesting a copy of the notice to quit which the Lodas wanted served on the second floor tenants. The attorney for the defendants Yanzo, Lewis Whitehead, testified that he would not have sent such a notice to the tenants at this time if he had been aware that the Lodas did not intend to go through with the sale.

On March 26, Frank Loda signed the mortgage commitment papers at the Ansonia Savings Bank for $55,000 over twenty-five years at 10 3/4 percent. Carmela Loda signed on March 27. The Lodas never submitted an application for a mortgage at an interest rate of 11 percent. The plaintiffs maintain that they signed the mortgage commitment on Goumas' suggestion that to do so would hold the interest rate and so that he (Goumas) could resubmit the application to the mortgage committee at the Ansonia Savings Bank for a $3500 increase which would then total $59,000, i.e., the 80 percent financing which the Lodas originally desired. On Friday, March 30, or Monday, April 2, Goumas notified the Lodas that the requested increase in the mortgage commitment had been denied.

On April 9, Frank Loda called H. K. Sargeant, expressed displeasure regarding the 75 percent financing and indicated that because he was unable to secure 80 percent financing, he would not go through with the purchase of the property. This was the first indication which H. K. Sargeant had that the Lodas would not be purchasing the property. On April 12, the plaintiffs' attorney notified the attorney for the defendants Yanzo by letter that the sales agreement was null and void due to the plaintiffs' inability to secure the specified financing. The Lodas purchased another house on April 16. ⁵

On May 1, 1979, the Yanzos closed on a second home which they had committed to buy in anticipation of selling their Derby Avenue property to the Lodas. They were required to take a leeway loan of $50,000 from the Ansonia Savings Bank to finance this purchase while a new buyer was found for their property. The Derby Avenue property was finally sold on July 26, 1979, for a price of $71,500, the proceeds of which were used to pay off the leeway loan.

The plaintiffs brought this action for interpleader claiming that they were entitled to a return of the deposit according to the terms of the purchase and sale agreement ⁶ because they were unable to obtain a mortgage at the terms specified in the agreement. The court found that the plaintiffs had breached their contract with the defendants Yanzo and that the plaintiffs had waived the mortgage contingency clause by their actions. The court awarded damages and attorney's fees to the defendants Yanzo and attorney's fees and costs to the defendant H. K. Sargeant & Associates. These awards exceeded the amount of the $7400 deposit but the court, pursuant to General Statutes § 52-484, limited the damages to the $7400 figure.

On appeal, the plaintiffs basically raise four claims of error. They claim that the court erred (1) in finding that the plaintiffs waived the mortgage contingency clause and did not give reasonable notice of termination of the agreement; (2) in the computation of the damages; (3) in allowing, in this interpleader action, contrary to law, "future" damages arising out of a breach of contract claim; and (4) in awarding excessive attorney's fees.

The plaintiffs first argue that the court erred in finding that the plaintiffs waived the mortgage contingency clause. In support of this, the plaintiffs also argue that they gave a reasonable termination notice, under the circumstances, because (1) the defendants, and not the plaintiffs, waived the March 12 mortgage contingency deadline; (2) the March 12 deadline was extended by a modification of the contract; and (3) there were, in reality, two contingency clauses, ⁷ one for the benefit of each party, which provided a different set of rights and obligations for each party. It is only necessary to discuss the first of these issues in connection with the trial court's conclusion that the plaintiffs' actions indicated a waiver of the mortgage contingency clause by them. Therefore, the primary issue which we must decide is whether the trial court's conclusion was clearly erroneous in light of the evidence and the record as a whole. Kakalik v. Bernardo, 184 Conn. ---, --- (42 CLJ 50, pp. 4, 6) 439 A.2d 1016 (1981), and cases cited therein. ⁸

In finding a waiver of the mortgage contingency clause, the trial court necessarily found that the contingencies relating to both the time and the terms of the mortgage commitment had been waived. Waiver is a question of fact for the trier. Multiplastics, Inc. v. Arch Industries, Inc., 166 Conn. 280, 286, 348 A.2d 618 (1974); Brauer v. Freccia, 159 Conn. 289, 295, 268 A.2d 645 (1970). "Waiver does not have to be express, but 'may consist of acts or conduct from which waiver may be implied. Andover v. Hartford Accident & Indemnity Co., 153 Conn. 439, 445, 217 A.2d 60 [1966]. In other words, waiver may be inferred from the circumstances if it is reasonable so to do. DiFrancesco v. Zurich General Accident & Liability Ins. Co., 105 Conn. 162, 168, 134 A. 789 [1926].' Breen v. Aetna Casualty & Surety Co., [153 Conn. 633, 646, 220 A.2d 254 (1966) ] (dissenting opinion)." Novella v. Hartford Accident & Indemnity Co., 163 Conn. 552, 562, 316 A.2d 394 (1972). "It is clear that the requirement of obtaining mortgage financing as a condition in a contract for the sale of realty must be given effect unless the condition has been altered by the parties or waived by the one for whose benefit the condition was made. Traylor v. Grafton, 273 Md. 649, 332 A.2d 651 (1975); Barnes v. Euster, 240 Md. 603, 214 A.2d 807 (1965)." Bushmiller v. Schiller, 35 Md.App. 1, 8, 368 A.2d 1044 (1977). See Koedding v. Slaughter, 634 F.2d 1095, 1097 (8th Cir. 1980); Lanna v. Greene, 175 Conn. 453, 458, 399 A.2d 837 (1978); Edwards v. McTyre, 246 Ga. 302, 303, 271 S.E.2d 205 (1980); Deal v. Dickson, 231 Ga. 366,...