191 Ky. 559 | Ky. Ct. App. | 1921
Opinion of the Court by
Affirming.
On January 19, 1920, appellee and defendant below, I).- W. Williams, signed a contract agreeing to convey to the appellant and plaintiff below, J. W. Crenshaw, on March 1 thereafter, a tract of land in Scott county containing 398% acres, the consideration being $400.00 per acre, amounting in the aggregate to $159,400.00.'Ten per cent of the purchase price, or $15,940.00, was paid at the time and forty per cent of the consideration was to be paid at the date of the deed and the balance was to be divided into two equal payments, evidenced by notes of plaintiff, and payable in one and two years thereafter with interest from date and a lien upon the land. On the appointed day for the execution of the deed, or perhaps before that time, it was discovered by plaintiff that defendant could not convey a perfect title, and the executory contract for the sale of the land was not performed according to its terms. This suit was brought by plaintiff against defendant on April 22, 1920, seeking to recover damages for the failure of the latter to make the conveyance, which consisted of interest on the ten per cent payment at the time of the contract, and $310.00, alleged expenses incurred by plaintiff in surveying the land and in examining the title thereto. In the third paragraph of the petition it was alleged that the land at the time of the contract, as well as at the stipulated day for its. performance, was reasonably worth on the market $179,400.00, and that plaintiff had sustained damage because of the “loss of his bargain” in the sum of $'20,000.00. Besides alleging defendant’s failure to convey, it is also averred in the petition (but in paragraphs other than, the third) that defendant “fraudulently failed to disclose to this plaintiff at the time of the execution of said contract” his inability to convey a perfect fee simple title to the land. After-
It will thus be seen that the sole question for determination is, whether plaintiff may reeovernubstantial damages under the facts presented for what is known in the law as “the loss of his bargain,” i. e., the excess market value of the land above what he agreed to pay for it. If this question had been submitted to us without investigation we should have unhesitatingly said that plaintiff wasi entitled to recover such damages; but our investigation has shown that the courts generally,
Approaching the question in somewhat reverse order, and addressing ourselves for the moment to what we term an exactly analogous question, it may be confidently stated that this court, from its beginning, has uniformly held that the measure of damages upon a breach of warranty of title contained in a deed is the value of the land at the time of the conveyance, if the entire title failed, or the proportionate part of that value which the acreage of the land lost on account of the breach, bore to the entire acreage of the tract, and other items of expense resulting proximately from the breach; and that in the absence of some showing to the contrary, the value of the land entering into the measure of the damages in such cases was the consideration paid, or agreed to be paid. In no case has this court permitted the recovery in such cases of any increase in the market value of the land aibove that which was agreed to be and was actually paid. New Domain Oil & Gas Co. v. McKinney, 188 Ky. 183 (and cases therein referred to); Helton v. Asher, 135 Ky. 751; Sullivan v. Hill, 33 Ky. L. R. 962, and Robertson v. Lemon, 2 Bush 301. If 'no other value may be taken into consideration in estimating the damages to the covenantee in a suit by him upon the breach of warranty actually made, than that agreed upon by the parties as a consideration for the conveyance of the land, it is difficult to perceive the reason for the application of a different rule where the obligation sued on, instead of being an executed warranty, is only an agreement to execute one. It is the absence of any semblance of logioal distinction between the two cases that influenced the English courts in an early day, and the courts of most of the states of the Union, including this one, to adopt the rule first above stated, i. e.,. denying substantial damages because of increased market value of the land in a suit for the breach of a contract to convey it where the vendee was guiltless of active fraud and acted in good faith. The earliest English case coming under our observation, so holding, is Flureau v. Thornhill, 2 W. Bl. 1078. That case has since been followed by those of Pounsett v. Fuller, 17 C. B. 660; Walker v. Moore, 10 Barn. & C. 416; Sikes v. Wild, 1 Best & S. 587; same case, 4 Best & S. 421; Bain v. Fothergill, L. R. 6 Exch.
Coming now to the opinions in our court the first case directly in point seems to.be that of Allen v. Anderson, 2 Bibb 415, which was a suit on a contract similar in all respects to the one now under consideration. After referring to the case of Cox’s Heirs v. Strode, same report, page 276, which was a suit for breach of warranty of title, and in which it was first held that the value as fixed by the consideration agreed to be paid should measure the criterion of damages, the opinion says: “On a covenant to convey where the vendor is without fraud incapable of making a title, the. rule should be the same. In either case, the real damage the party has sustained is the purchase money, with interest from the time it was paid. In reason there exists no distinction between the two cases; a purchaser before the seller completes his engagement, is n°ot entitled to compensation for the fancied goodness of his bargain, which he may suppose he has lost, more than he is after it is completed. As to the damages that ought to be recovered on
The next case directly in point is that of Rutledge v. Lawrence, 1 A. K. M. 396, which was also a suit exactly similar to the one here and we insert this excerpt from the opinion: “It has been settled by a current of decisions in this court that where one contracts to convey land, and is without fraud, unable to make a title, the measure of damages, to which the vendee is entitled, is the value of the land at the time of the sale, to be ascertained by the consideration fixed, or other evidence. Where the inability of the vendor has been produced by fraud on his part, a different rule has prevailed; but a failure to convey has never been adjudged to be evidence of a fraudulent inability, and we think ought not to be so adjudged. For an inability to convey may, and frequently does, happen without fraud, and fraud is odious in law, and ought never to be presumed.” Other cases in point are: Kelly v. Bradford, 3 Bibb 317; Goff v. Hawks, 5 J. J. M. 341; Combs v. Tarlton, 2 Dana 464; Herndon v. Venable, 7 Dana 371; Triplett v. Gill, 7 J. J. M. 438, 12 Am. Dec. 431; Booker v. Bell, 3 Bibb 173, and Grundy v. Edwards, 7 J. J. Mar. 368. In the Goff case,. supra, which was also one on all fours with this one, the opinion says: “Since the decision in the case of Cox’s Heirs v. Strode, 2 Bibb 276, the criterion of damages upon a covenant to convey the land, which has been violated, but without fraud on the part of the covenantor, is the purchase money and interest thereon, or in the language of the case of Rutledge v. Lawrence, 1 Marshall 397, it is, the 'value of the land at the time of the sale, to be ascertained by the consideration fixed or other evidence.’ If, however, the covenantor has been guilty of fraud, a different rule may govern the case. Then he would be responsible for the increased value of the land, at the time his covenant should have been performed.” We deem it unnecessary to fortify this thoroughly established rule by reference to other authorities or cases, except to say that in the case of Freeman v. Falconer, 201 Fed. Rep. 785, 120 C. C. A. 32, the Federal Circuit Court of Appeals for the sixth circuit had before it for determination the exact- question here presented, and which arose out of an agreement to sell land situated in Kentucky. The court applied the above rule (usually denominated the “good faith rule”) and in doing so
Fortifying the reason for the rule, and as illustrating the views of this court upon the question involved, we refer to the unbroken line of cases decided by this court holding that in a suit for a deficit in the quantity of land agreed to be conveyed the plaintiff, where he is allowed to recover it all must do so on the basis of the value of the shortage as of the date of the conveyance, which- is that fixed by the parties as a consideration therefor. There has been no departure from that rule in those cases, some of the later .ones of which are: Moreland v. Henry, 156 Ksr. 712; Hunter v. Keightley, 184 Ky. 835, and Hartsfield v. Wray, 181 Ky. 836. So that, we not only find that this cop.rt has heretofore held (with one exception hereafter to be noticed) that on the precise facts we have here (conceding there was no fraud, this question hereafter
Tbe exception referred to and relied on by counsel for appellant is tbe case of Jenkins v. Hamilton, 153 Ky. 163; and it must be conceded that tbe opinion in that case, although tbe facts are somewhat different from those here involved, constitutes a departure- from tbe long line of cases preceding it. It may be that in that case tbe court concluded that defendant was guilty of bad faith disentitling him to tbe benefits of tbe “good faith rule,” above discussed, since be did not pretend to have my title at all, or any interest whatever in tbe premises which be contracted to convey; but whether so or not, it does appear that tbe question hereinbefore dealt with wasi not referred to or discussed in tbe opinion, nor was there any reference made to any of tbe numerous cases from this court, or elsewhere, applying tbe above rule. The foreign cases discussed in that opinion bear only» upon tbe question as to whether tbe knowledge of tbe plaintiff concerning tbe condition of tbe title, and tbe defendant’s inability to convey, are sufficient to constitute a defense to the -suit. None of them referred to the measurement of -damages, but only to tbe question as to whether the suit was maintainable. It may be, so far as we are capable of judging from tbe opinion, that tbe question was not made or argued in that case; but, be that as it may, we are convinced that tbe brief statement contained in it, announcing a different rule for tbe measurement of damages in cases like this, is so much out of harmony with tbe great preponderance of tbe law, ast we have herein shown, that tbe abstract announcement therein made should no longer be followed, and that it is our duty to return to tbe plainly marked and well beaten path theretofore travelled by us.
It has been wisely said, in substance, that it is not so material as to what tbe law is as that it be certain. It is, of course, tbe intent of tbe law, and the desire- of tbe -courts, that abstract justice should prevail in every case, and that judicial declarations should harmonize
If it should be asked why there, should be a different rule, governing the measurement of damages for failure to comply with a contract relating to real estate, than the one applying to a contract for the sale of personalty, we might find it difficult to give a satisfactory answer. The English courts put the distinction upon the ground of the intricate involvement of titles to real estate growing out of the variously worded deeds, wills, and other muniments of title, so that a vendor might innocently believe that he could convey a good title when a learned attorney or a court might determine otherwise. Another reason suggesting itself to us is that real property is the only character of property absolutely essential to human existence, and that it is the policy of the law for it to remain in the hands of home builders and home maintainers, and not to encourage speculative or chance bargaining in it, but to adjust the rights of the parties concerning itsi transfer, in the absence of fraud or bad faith, by placing them in statu quo, which in the absence of a contrary showing will be presumed to have been in their contemplation. Furthermore, land values oscillate, because of rapidly occurring events which the parties at the time of making the contract could not possibly contemplate; illustrations of which are, the discovery of minerals in the land or in the neighborhood of if, the existence of which were wholly unknown at the time of the contract, and perhaps other equally unanticipated developments. But, whatever the reason may be, it is our duty to administer the law as it is and not as we might have written it at the beginning.
But, it is insisted that plaintiff’s pleading brings this case within the exception to the rule discussed, and shows that defendant was guilty of fraud, such as to de
■ Of course, each case must be governed by its own peculiar facts, and looking to them as they appear in tbis case we have concluded that tbe court properly determined tbe case and its judgment is affirmed.