Wheeler v. Gahan
| Decision Date | 19 December 1924 |
| Citation | 206 Ky. 366 |
| Parties | Wheeler v. Gahan. |
| Court | Kentucky Court of Appeals |
Appeal from Kenton Circuit Court.
S. D. ROUSE and B. J. KING for appellant.
STEPHENS L. BLAKELY and JOHN L. KLETTE for appellee.
This action for specific performance of a contract for the purchase of real property, near Covington, was commenced in the Kenton circuit court by appellee Gahan, the purchaser, against Mrs. Wheeler, the owner, to require her to convey to him a certain house, grounds and improvements known as "Cedars," mentioned and described in the contract, at the consideration of $12,000.00, subject to an abatement in price commensurate with the loss sustained by fire after the making of the contract but before the owner conveyed the property to the purchaser.
Appellee Gahan was operating the road house under a lease contract assigned to him by one Hickman, to which assignment Mrs. Wheeler, the owner, gave her consent. The lease contract, which was in writing, contained an option agreement whereby the lessee had the right, during the term of the lease or renewal thereof, to purchase the property at the price of $12,000.00. After operating the place for some months and making extensive improvements on the buildings, appellee Gahan called upon the owner, Mrs. Wheeler, and announced that he could and then did exercise his option to purchase the property and asked her to prepare a deed in accordance with the contract and have it ready by a certain time in the immediate future, and informed her that he had made arrangements to obtain the money with which to pay the purchase price and would be ready to take over the property. Mrs. Wheeler acknowledged the right of appellee to purchase the property at the price of $12,000.00, but insisted that the fixtures in the building were not included in the contract, and that appellant would have to buy and pay for those things in addition to the real estate. This he declined to do. While matters were in this situation fire broke out and destroyed the road house and nearly all improvements. Mrs. Wheeler collected the insurance amounting to $10,000.00 or more. This suit was then commenced by appellee Gahan against Mrs. Wheeler for specific performance of the contract with abatement of price. After hearing, the court decided that appellee Gahan was entitled to take the property under the contract with abatement of price, and so adjudged. It is from that judgment this appeal is prosecuted.
Having arrived at the conclusion that the judgment must be reversed upon the merits, we will refrain from a discussion of certain preliminary questions made by appellant. For the purposes of this opinion it may be conceded that appellee Gahan as assignee of Hickman, had an enforceable option contract and had elected to exercise his option by purchasing the property and had so notified appellant and had demanded a deed and tendered and offered to pay the purchase price, but before the conveyance could be effected fire destroyed the buildings.
With these facts assumed, the question is, may a vendee in such a situation have specific performance of a contract with suitable abatement of price after fire has swept away and destroyed all improvements on the ground, leaving none of the subject of the contract save the land? The courts are not in harmony upon this question. Those of Massachussetts, South Carolina, Georgia and some other states hold that a vendee cannot have specific performance where the improvements, the principal part of the real property, have been destroyed by fire. The courts of Illinois and some others, on like facts, hold that the vendee may have specific performance. Equity generally regards a contract of sale as immediately passing the beneficial interest in the property to the vendee, and lays upon him any loss that may occur to the premises between the execution of such contract and its consummation. The test is whether the terms of the contract operated to pass the equitable or beneficial ownership to the vendee; if they did, the loss is his; if they did not, the loss falls upon the vendor. It is said in 25 R. C. L. 246, that it is a general principle of law that where from the nature of the contract it appears that the parties must have contemplated the continued existence of some particular thing as the foundation of what was to be done, then, in the absence of any warranty that the thing shall exist, the contract is to be construed, not as a positive contract, but as subject to an implied condition that the parties shall be excused in case, before breach, performance becomes impossible from the accidental perishing of the thing to be sold without the fault of either party. Hawkes v. Kehoe, 193 Mass. 419, 10 L. R. A. (N. S.) 125; 6 R. C. L. 1005; Wilson v. Clark, 60 N. H. 352.
Pursuant to this line of cases specific performance has been refused in cases of contract to purchase real estate, with buildings located thereon, where, before the time...
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