McGregor v. Echols

Hart, J. (after stating the facts). The court erred in instructing a verdict for the plaintiff. The plaintiff purchased the land for $40,000 and sold it to the defendant for $50,000. The defendant paid $500 at the time the written contract fox' the sale of the land was executed. There was about $1,600 or $1,700 of personal property that was to go with the land. By deducting the $500 paid when the contract was'executed and the value of the personal property in the sum of $1,700 from $10,000, the estimated profits of Echols, the court arrived at the sum of $7,800, for which the jury was directed to return a verdict in favor of the plaintiff. The court did not adopt the proper measure of damages. It is true that McGregor committed a breach of the contract by failing to accept the deed tendered by Echols and to carry out his part of the contract, but this left Echols in possession of the land and of the personal property. In such cases the rule as announced by this court, which is in accord with the weight of authority on the question, is to the effect that, upon the breach by the vendee of an executory contract for the sale of land, the vendor may have an action at law for damages, and his measure of damages is the difference between the contract price of the land and its market value at the time of the breach, less the portion of the purchase price already paid. Fears v. Merrill, 9 Ark. 559; Old Colony Railroad Corporation v. Evans, 6 Gray (Mass.) 25; Porter v. Travis, 40 Ind. 556; Hodges v. Kowing, 58 Conn. 12; Pritchard v. Mulhall (Iowa) 4 Ann. Cas. 789; Muenchow v. Roberts, 77 Wis. 520, and Hogan v. Kyle, (Wash.) 35 Pac. 399. In an action by the purchaser of land for a breach of the contract to convey, this court has also laid down the rule that the measure of damages is the difference between the contract price and the value of the land when the breach occurred, with interest on such difference. Kempner v. Cohn, 47 Ark. 519. In Old Colony Railroad Corp. v. Evans, (Mass.) 6 Gray, 25, 56 Am. Dec. 394, the rule of damages is clearly stated as follows: “In actions against a vendee on a contract for the purchase of real estate, we had supposed it to be a well settled rule that when a party agreed to purchase real estate at a certain stipulated price, and subsequently refuses to perform his contract, the loss in the bargain constitutes the measure of damages, and that is the difference between the price fixed in the contract and the salable value of the land at the time the contract was to be executed.’’ It follows that the court erred in excluding the testimony offered by the defendant 'as to the market or salable value of the land at the time he breached the contract and in directing a verdict for the plaintiff. It is also insisted by counsel for the defendant that the plaintiff is not entitled to recover, because Dr. James had a lien on the land for $30,000. The record showed that Dr. James executed an instrument in writing releasing his vendor’s lien for the unpaid purchase money upon the delivery to him of the notes to McGregor for a like sum. The general rule is that where a contract is entered into in good faith, it is not necessary that the vendor be actually in the situation to perform it at the time it is entered into, provided he be able at the proper time to place himself in that situation. Incumbrances on the land when the contract is made will form no ground of objection thereto if removed before the time of completing the purchase. 39 Cyc. 1931-1932; Townsend v. Goodfellow, (Minn.) 41 N. W. 1056. The record shows in the present case that the incumbrance was removed by the date that Echols was required to execute a deed to the land to McGregor. Therefore, the contention of the defendant on this point is not well taken. For the error in directing a verdict for the plaintiff, as indicated in the opinion, the judgment must be reversed and the cause remanded for a new trial.