Haight v. Marin Municipal Water District

PRESTON, J. The judgment for plaintiff in the sum of $10,500 is hereby affirmed. Plaintiff Charles 0. Wellock, having died during pendency of the action and his administratrix having been substituted in his stead, the use of the word “plaintiff” herein will refer to said Charles O. Wellock, deceased. The defendant has appealed. The action is one to recover damages for the alleged breach by defendant of a contract to sell and convey to plaintiff a tract of land of 459 acres lying near Fairfax, Marin County, California. On April 3, 1925, defendant, upon payment to it by plaintiff of the sum of $500, executed to him a fifteen-day option to purchase said land for the price of $50,000. On the next day, April 4th, the option was confirmed, but amended to a certain extent, by a letter from defendant providing the terms of payment of the purchase price. On or about the same day a proposed draft of the contract of sale and purchase was drawn up by the attorney for defendant and delivered to plaintiff optionee. Evidently it was the belief of defendant that plaintiff would either subdivide said property and sell same himself or would sell the property outright to another, who would subdivide. On or about April 14th the board of directors of defendant District learned that it was the purpose of plaintiff to resell the lands in question to certain purchasers for the price of $60,000, whereupon a special meeting of the board of defendant was called on April 15th to consider the revocation of said option. Ten of the members of the board attended the meeting and it was pointed out to them that the optionee would enjoy a profit of $10,000 and would have a possible claim for a five per cent commission in addition thereto upon sale of the property. A resolution to cancel and revoke the option was then introduced, but failed of passage by a vote of five to five, at least eight votes being required for affirmative action. On this day the optionee expressly waived any commission which might accrue to him and stood upon his rights under the option, claiming that he was dealing in his own right as principal. *756 Theretofore, and on April 6, 1925, plaintiff had sought and found purchasers who had given a check for $22,500 and delivered same in escrow to1 be finally delivered upon assignment to them of said contract of sale signed by defendant District, they having approved the said form of contract submitted to them by plaintiff. With matters in this condition the optionee, on April 18th, gave notice in writing to the District of his acceptance of the offer contained in the previous letters of April 3d and 4th. The board again met on April 21st, at which time it reconsidered the whole subject matter, including the acceptance of the offer that had been made subsequent to its last meeting. Plaintiff and his attorney attended this meeting as did also the purchasers and their attorney. The meeting was thrown open to all present and, after a general .discussion by the parties and their attorneys, the board adopted a resolution by an eight to-five vote, expressly con- . firming said option and directing the executive committee to take up the matter of the agreement of sale between plaintiff and said purchasers and report at the next meeting three weeks later. Plaintiff and said purchasers, all being present, protested against adjournment without authorizing the execution of the said contract of sale. The board, however, adjourned for three weeks. On April 23d the .purchasers withdrew their check from escrow. This action followed. The complaint sets up in detail the successive steps had between the giving of the option on April 3d and the final adjournment of the board on April 21st and charges in a rather inapt but, we think, effective manner, that the market value of the property was at the date of breach $60,000. It also charges facts sufficient to bring it within the purview of that portion of section 3306 of the Civil Code, which reads as follows: ‘ ‘ ... But adding thereto, in case of bad faith, the difference between the price agreed to be paid and the value of the estate agreed to be conveyed, at the time of the breach, and the expenses properly incurred in preparing to enter upon the land.” This is true because the facts detailed in the complaint show that the breach of the contract by defendant was wilful and done in the light of all the facts; hence warranting the conclusion *757 that it was done in bad faith. (Johnson v. Schimpf, 197 Cal. 43, 48 [239 Pac. 401].) The court found that all the allegations of plaintiff’s complaint were true. This implies that the court found the market value of the property to have been $60,000 at the date of the breach and that the breach was committed in bad faith. The evidence supports these findings as appears from the above recital of what are really undisputed facts. This conclusion, either directly or impliedly, disposes of all the defenses urged by appellant, only a few of which need be specially noticed. First is the claim that at the inception of the negotiations plaintiff was the agent of defendant and was acting in a fiduciary relationship to it; hence he could not accept a secret profit. If this was true at that time, the contention is, nevertheless, of no avail against the two corporate acts, by resolution of the board, sustaining the option in the face of full knowledge on its part of all the claims of plaintiff. The further contention that defendant was without power to execute the option in the first instance is also disposed of by said two corporate acts. The claim that plaintiff was without ability or willingness to perform was waived by the deliberate failure of defendant to carry out the agreement on its part when concededly plaintiff was not in any respect in default. The further contention that plaintiff failed to show damage is answered first by the item of $500 paid out by him for the option, and second, by our conclusion above announced that the complaint plead bad faith on the part of defendant and also the market value of $60,000 of the property at the time of breach, and that the implied finding to this effect is supported by the evidence. Indeed, in defendant’s specifications of error there is no contention that the evidence was insufficient to prove this value for the property on the date of breach. The excess of the market value over the option price and the item of $500 comprise the amount given plaintiff by the judgment. Under our construction of the complaint and the issues, the so-called rule of consequential damages, commonly called the Baxendale rule (Hadley v. Baxendale, 9 Exch. 341), applied in Hunt Bros. v. San Lorenzo Water *758 Co., 150 Cal. 51 [7 L. R. A. (N. S.) 913, 87 Pac. 1093], and other cases is not involved. Further discussion is unnecessary. Richards, J., Seawell, J., and Curtis, J., concurred.