Lead Opinion
Plaintiff-seller brought an action against the defendant-buyer for an alleged breach of a real estate
The seller agreed to convey "a marketable fee simple title” with any issue of marketability to be determined "in accordance with Georgia law as supplemented by the Title Standards of the State Bar of Georgia.” See Code Ann. Ch. 85-2 Appendix, Title Standards. The seller would have until the date of closing to satisfy all valid objections with affidavits or other title papers to cure such defect. Purchaser and seller agreed to submit any dispute as to validity of title to the then existing Title Practices Committee of the State Bar of Georgia Real Property Law Section.
The purchaser was given until November 20, 1972, "to examine title and to advise Seller in writing of objections affecting the marketability of said title.” Any written notice required by the contract "shall be mailed by Registered or Certified United States Mail, return receipt requested, to the Seller at the following address: c/o James W. McRae; Troutman, Sanders, Lockerman & Ashmore...” Mr. McRae is an attorney at law in the firm of Troutman, Sanders, Lockerman & Ashmore. An affidavit of Mr. Frank W. Armstrong, attorney for défendant, in opposition to the plaintiffs motion for
On the final day for examination of title, November 20, 1972, Mr. Armstrong hand-carried a letter to Mr. Rowe in which he stated "we are having difficulty with the chain of title to land lot 71... We are going to endeavor to contact Mr. Pinson today regarding this problem, and we will let you know what he has to say. In the meantime, please let us know if you think we have incorrectly interpreted these deeds, and what action you think appropriate to remedy this difficulty.” Mr. Rowe responded on November 24, 1972 with his opinion as to the sufficiency of "evidence of marketability of the title” notwithstanding the points raised by the attorney of the defendant. In addition, he advised Mr. Armstrong that a named title insurance company had issued a policy insuring the land in question, without exception, and "will issue Owner’s Title Insurance, without exception to same, to your client.” On the appointed day for closing, defendant did not appear. Plaintiff sued, moved for and was granted summary judgment. Defendant’s motion for summary judgment and counterclaim for return of the earnest money were denied and overruled. Defendant appeals to this court enumerating as error the granting of summary judgment for plaintiff, and denial of summary judgment and counterclaim of defendant, alleging that there was an issue of material fact as to whether the contract provision relied upon to grant the motion for summary judgment was a penalty provision and void under Georgia law. Defendant further alleged that the plaintiff breached the contract and defaulted on his obligation to furnish marketable title or at least there was
1. This action portrays two corporate real estate entities, represented by attorneys at law, who entered into a very detailed contract which set forth explicitly the rights, liabilities, and acts to be performed by each of the parties. We do not find the letter from the attorney for the defendant to an associate of the law firm representing the plaintiff, to be in full compliance with the specific provisions of the contract. A hand-carried communication, to an associate of a designated representative, regarding "difficulty with the chain of title” to 70 acres of land of a total acreage of 3,613 — asking for an opinion of that associate, and indicating continuance of action by his office with a third party, does not qualify as notice of a defect of title, or objection, raising an issue of marketability of title which would defer a sale of realty of this magnitude. The letter was not mailed by registered or certified mail, or addressed to the person, specified by the contract. Neither did it place plaintiff on notice of a defect of title affecting marketability, nor request specific action of plaintiff to remedy such purported defect. Neither the word "objection” nor the phrase "marketability of title” was mentioned in the letter. No reference was made to compliance with the contract provisions as to notice of lack of marketability of title, nor did it request reference to the State Bar Title Practice Committee in the event plaintiff did not satisfy defendant’s objection to the "difficulty with the chain of title” to the 70 acres. The failure to comply with an essential condition in the contract and the failure to appear at the place and time designated for closing of the contract amounts to a breach, where — as here, these acts were without legal excuse on his part, and there was no fault of the opposite party. Douglas v. McNabb Realty Co.,
2. Defendant contends that the provisions for retention of the earnest money of $5,000 and the $45,000 promissory note were penalties, therefore void and unenforceable. They argue that for these provisions to
Does paragraph 13 of the contract here considered permit the seller to retain the sums certain, and also sue for damages, or specific performance as well? We think it does.
The primary definition of the word "and” contained in Webster’s New International Dictionary, Second Edition, reads as follows: "1. Expressing the general relation of connection or addition, esp. accompaniment, participation, combination, contiguity, continuance, simultaneity, sequence; thus: along or together with; added to or linked to; as well as; as without ceasing; as at the same time; then; in addition to being; not less truly; — used to conjoin word with word, phrase with phrase, clause with clause.” (Emphasis supplied.) A right to pursue any and all remedies available at law or equity including specific performance of the contract in addition to the sum certain payable as "partial liquidated damages” prevents the sum certain from being liquidated damages. As was stated in Foote & Davies Co. v. Malony,
"The designation of a conventional amount will not be held to liquidate the damages, where it is apparent that it was not the intention of the parties that the obligor could escape further liability by paying that sum.” City of Brunswick v. Aetna Indem. Co.,
We conclude, therefore, the trial judge erred in granting summary judgment to the plaintiff in the action on the note, and also in entering a final judgment for principal and interest and attorney fees on the note sued upon while defendant’s counterclaim, which alleged a right of recovery was still pending. See McDonald v. Parker,
Judgment reversed with direction.
Dissenting Opinion
dissenting.
I dissent from the majority opinion in Division 2. The majority relies principally upon Foote & Davies Co. v. Malony,
Our disagreement centers on the use by the complainant in the contract, in conjunction with the stipulated damages, of that time honored catchall phrase of lawyers: "and to pursue any and all remedies available to him at law or equity.” We find this phrase to be surplusage. The majority finds it to be a penalty clause. To me I do not find the addition of this phrase to render illegal that which was legal. The use of such a phrase should be moot in this case because it was not used — except that it can be argued that it was used in the sense that the complainant did bring a legal action to collect the liquidated damages. If this is true, then the majority opinion holds that in contracts in which both parties stipulate to liquidated damages, if they add the phrase
I cannot agree with that portion of the opinion which states that paragraph 13 of this contract permits the seller to retain the sums certain "and also sue for damages.” That portion of paragraph 13 which they say would permit this is: "and to pursue any and all remedies available to him at law or equity including, but not limited to, an action for specific performance of this contract.” Clearly, if Foote is applicable as the majority says it is, no action at law or equity would permit damages over and above the set sum agreed to be liquidated damages. The only reason for inclusion of a catchall phrase is for the seller to retain and hold open such options as the law may permit. If and when he attempts to exercise such option, at that time the court can determine if the latter action represents a penalty.
It is evident from the wording of the contract that both parties intended the sum of $5,000 to be liquidated damages if the purchaser defaulted on or before November 6, and thereafter the additional earnest money represented by the $45,000 note to represent additional liquidated damages for a later default. The two sums together represented fully liquidated damages. That amount is what the seller sued for and nothing additional was requested, alleged, or intimated.
I find no fault with the paragraph in issue, inasmuch as no additional sum was contemplated or sued for, nor was any additional action instituted.
I am authorized to state that Presiding Judge Deen and Judge Marshall concur in this dissent.