Vandeventer v. Dale Const. Co.
Decision Date | 17 April 1975 |
Citation | 271 Or. 691,534 P.2d 183 |
Parties | , 82 A.L.R.3d 1108 Gary T. VANDEVENTER and Patsy Vandeventer, husband and wife, Appellants, v. DALE CONSTRUCTION COMPANY, and Amfac Mortgage Corporation, formerly known as Commonwealth, Inc., Respondents. |
Court | Oregon Supreme Court |
Floyd Hinton, Portland, argued the cause for appellants. With him on the briefs were Deich, Deich & Hinton, Portland.
Mark S. Dodson, Portland, argued the cause for respondent Amfac Mortgage Corporation. With him on the brief were Dezendorf, Spears, Lubersky & Campbell, and Oglesby H. Young, Portland.
Ralph Bolliger of Myatt, Bolliger & Hampton, P.C., Beaverton, argued the cause and filed the brief for respondent Dale Construction Company.
Before McALLISTER, P.J., and DENECKE, TONGUE, HOWELL and BRYSON, JJ.
This is a suit for specific performance by the purchasers of a house and lot against both the seller of the house and the mortgage company which allegedly reneged upon a loan commitment to provide funds for the purchase of the house. Both defendants filed demurrers to the complaint, which were sustained. Plaintiffs appeal.
The complaint alleges that plaintiffs entered into an earnest money agreement with defendant Dale Construction Company for the purchase of a lot and house which Dale was to build. That agreement, dated January 2, 1973, provided for a purchase price of $31,500, of which $1,650 was paid down and the balance 'payable as follows: Transaction subject to purchaser qualifying for a Federal VA loan, in the amount of $29,850.'
The complaint then alleges that in February 1973 plaintiffs were qualified by the Veterans Administration for such a loan; that defendant Amfac Mortgage Corporation 'agreed to make said VA approved home mortgage loan to plaintiffs in the sum of $29,850.00 at 7% Per annum for 30 years, and agreed to hold said sum for the benefit of defendant, Dale Construction Company,' and that Dale, in reliance upon that loan commitment by Amfac, proceeded to build the house substantially completing it by June 8, 1973.
The complaint goes on to allege that plaintiffs, in reliance upon the Amfac commitment to make the loan and upon the agreement by Dale to execute a deed to the property, did the following: (1) 'surrendered' their former house and moved into the new house; (2) paid an additional $1,000 for carpeting and also, at additional cost, installed a built-in dishwasher and extra lighting fixtures; (3) had the property landscaped and built a sidewalk to the garage, and (4) executed and delivered to Amfac a trust deed note and trust deed and paid the sum of $1,075 for loan closing costs. Plaintiffs also allege that they 'performed all conditions previously required of them by defendants.' Finally, the complaint alleges that Amfac refused to 'conclude said loan as agreed upon,' and that Dale refused to convey title.
The prayer of the complaint is to require Amfac to provide the funds; to require Dale to convey title, and for 'Such other further relief as the Court may deem just and equitable.'
The demurrers were based upon the ground that the complaint failed to state a cause of suit against either defendant.
As contended by Amfac, it is the general rule that equity will not compel specific performance of an agreement to lend money, citing Pomeroy, Specific Performance of Contracts 131--32, § 48 (3d ed. 1926). The reason for that rule, according to Pomeroy, is that the breach of such a contract 'can always be fully compensated by damages.'
It has been recognized, however, that there may be cases in which the loss to the borrower resulting from the refusal by a lender to make good on an agreement to make a loan may be such as to be not 'fully' compensable by an award of money damages. Thus, in Columbus Club v. Simons, 110 Okl. 48, 236 P. 12, 41 A.L.R. 350 (1925), the plaintiff, in reliance upon an agreement by the defendant to loan $125,000 to build a new clubhouse, sold its existing clubhouse; purchased lots on which to build the new clubhouse; entered into a contract for the construction of the new clubhouse; and made purchases of personal property and other preparations. The court in Columbus, although recognizing the general rule, held (236 P. at 15) that there may be circumstances and conditions such as to require an exception to the rule, as when 'there is no basis on which a jury can estimate the damages,' and that the circumstances of that case were such as to come within an exception.
We believe that the circumstances of this case, although somewhat different that those in Columbus are also sufficient to come within that exception to the general rule. See Cuna Mutual Insurance Society v. Dominguez, 9 Ariz.App. 172, 450 P.2d 413 (1969), 5A Corbin on Contracts 167--68, § 1152 (1964). Cf. Kent v. Walter E. Heller & Company, 349 F.2d 480, 481, 483 n. 3 (5th Cir. (1965); Southhampton Wholesale F. Term. v. Providence P.W. Co., 129 F.Supp. 663, 664 (D.Mass.1955); and Steward v. Bounds, 167 Wash. 554, 9 P.2d 1112, 1116 (1932).
As stated in Coppock et al. v. Roberts, 116 Or. 253, 263, 240 P. 886, 889 (1925), although under different facts (quoting with approval from another case):
"The fact that a party can avail himself of a remedy in a court of law will not preclude him from obtaining relief in a court of equity unless the legal remedy in respect to the final relief and the mode of securing it is as efficient as the remedy which a court of equity can afford under the same circumstances: (citing other Oregon cases)."
In addition to giving up their home, moving into the new house and incurring additional expenses, plaintiffs also point out, and ask this court to take judicial notice, that during 1973 interest rates on home loans were increasing rapidly. Therefore, plaintiffs argue, not only would they have suffered additional loss if required to seek another loan at an increased rate of interest, if they could afford to do so, but they might well have found it necessary to sell the house before the 30-year loan was paid and the value and resale price of the house would be substantially greater if sold subject to a trust deed or mortgage at an interest rate of seven percent, as agreed upon with Amfac, than if subject to a trust deed or mortgage at a higher rate of interest. In addition, plaintiffs point out that this is not a case involving specific performance of a wholly unexecuted contract, but that plaintiffs partially performed their contract with Amfac by payment of $1,075 in loan closing costs and by the execution of the note and trust deed. See Fry on Specific Performance 24--25, § 54 (6th ed. 1921).
Defendant Amfac concedes that interest rates on home loans were rising rapidly during 1973. Indeed, it appears that this was the reason for its refusal to proceed with its agreement to make the loan at an interest rate of seven percent. Amfac contends, however, that it is unfair to confer that benefit upon plaintiffs and to require Amfac to make a loan at a lower rate of interest than the rate prevailing at the time when the house was completed. In our judgment, however, that was a risk which was assumed by Amfac when it agreed to make the loan at an interest rate of seven percent. 1
We agree with plaintiffs that under the facts and circumstances as alleged in this case it would be extremely difficult, if not impossible, for a jury to estimate with any substantial accuracy the amount of the loss sustained by plaintiffs if they were required to either move out of the house and seek another house, or to secure another loan, at a higher rate of interest, and subsequently sell the house subject to a loan at a higher rate of interest.
For these reasons we hold that plaintiffs' complaint alleged facts sufficient to entitle them to a decree of specific performance against defendant Amfac and that it was error for the trial court to sustain the demurrer of Amfac.
Defendant Dale contends that its demurrer upon the ground that the complaint did not state sufficient facts to constitute a cause of suit against Dale was properly sustained on that ground because plaintiffs are not entitled to specific performance of the earnest money agreement to sell the house for the reason that the complaint does not allege that plaintiffs either paid or tendered payment of the purchase price, citing Bloech v. Hyland Homes Co. et al., 128 Or. 292, 274 P. 318 (1929); Hawkins v. Rogers, 91 Or. 483, 179 P. 563, 179 P. 905 (1919); and Guthrie v. Thompson, 1 Or. 353 (1861).
We agree that this position by defendant Dale is well taken and that the trial court did not err in sustaining the defendant Dale's demurrer to the complaint on the ground that the complaint fails to state facts sufficient to constitute a cause of suit against defendant Dale for specific performance of the earnest money agreement. ORS 16.260(6).
It does not necessarily follow, however, that defendant Dale cannot properly be named by plaintiffs as a party to this case.
ORS 13.110 provides:
ORS 13.160 provides:
...
To continue reading
Request your trial-
Bregman v. Meehan
...147 Misc. 9, 262 N.Y.S. 197 (Sup.Ct.Bronx Co.1931); Columbus Club v. Simons, 110 Okl. 48, 236 P. 12 (1925); Vandeventer v. Dale Constr. Co., 271 Or. 691, 534 P.2d 183 (1975) app. following remand, 277 Or. 817, 562 P.2d 196 (1977); Steward v. Bounds, 167 Wash. 554, 9 P.2d 1112 (1932); Gideon......
-
First Nat. State Bank of New Jersey v. Com. Federal Sav. and Loan Ass'n of Norristown
...98 (1971); Selective Builders, Inc. v. Hudson City Sav. Bank, 137 N.J.Super. 500, 349 A.2d 564 (Ch.Div.1975); Vandeventer v. Dale Constr. Co., 271 Or. 691, 534 P.2d 183 (1975).17 See Draper, supra note 12; Groot, Specific Performance of Contracts to Provide Permanent Financing, 60 Cornell L......
-
McErlean v. Union Nat. Bank of Chicago
...the initial agreement contemplates the terms upon which future agreements will be consummated. (See, e. g., Vandeventer v. Dale Construction Co. (1975), 271 Or. 691, 534 P.2d 183: agreement to make VA approved loan in the sum of $29,850 at 7% per annum for thirty years; Leben v. Nassau Savi......
-
Pipkin v. Thomas & Hill, Inc.
...99 S.E. 345, 346 (1919).3 See Columbus Club v. Simons, 110 Okl. 48, 236 P. 12; Annot., 41 A.L.R. 350 (1925); Vandeventer v. Dale Construction Co., 271 Or. 691, 534 P.2d 183 (1975); Cuna Mutual Insurance Society v. Dominguez, 9 Ariz.App. 172, 175, 450 P.2d 413, 416 (1969); Cohen v. Leaman an......
-
§ 6.3 Joinder of Parties
...Supreme Court implied that the plaintiffs could join both defendants in a single action. Vandeventer v. Dale Constr. Co., 271 Or 691, 699, 534 P2d 183 (1975). § 6.3-2(f)(2)(iii) Other Situations The issue whether the two requirements for permissive joinder of parties have been satisfied in ......