Case ID: la_116/html/0338-01.html
Source: Caselaw Access Project
Author: {"author": "MONROE, J. PROVOSTX, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

(40 South. 723.)
    No. 15,524.
    KAPLAN v. WHITWORTH.
    (May 8, 1905.
    On Rehearing Feb. 26, 1906.)
    1. Contract—Bond for Title—'Validity — Mutuality.
    An agreement whereby one of the parties binds himself to make to the other a bond for title, but the language of which imposes no obligation upon the other party, is not bilateral.
    [Ed. Note.—For cases in point, see vol. 11, Cent. Dig. Contracts, §§ 21, 24.]
    2.‘Vendor and Purchaser—Sale Distinguished from Agreement to Sell.
    An agreement whereby one of the parties obligates himself to make to the other a bond for title can be considered a promise to sell, within the meaning of Civ. Code, art. 2462, only by holding that an agreement to do that which amounts to a sale amounts to a promise to sell. The law in question is, however, exceptional, and its application must be confined to the cases provided for, and cannot properly be extended to what may be considered the equivalents of those cases.
    3. Same—Essentials of Contract.
    In the promise to sell, as in the contract of sale, the thing, the price, and the consent are essentials.
    4. Same—Action for Breach.
    Though an agreement, alleged to have been repudiated in bad faith, may not fall within the category of enforceable contracts, it does not follow that a petition alleging such repudiation and actual loss sustained thereby may not set forth a cause of action for the recovery of such loss.
    On Rehearing.
    5. Contracts—Rescission.
    It is well settled that, where the understanding of the parties is that their contract shall be reduced to writing, the reduction to writing stands as a condition precedent to the perfection of the contract, and either party is at liberty to retire from the contract so long as the reduction to writing has not taken place; but there is nothing in this which prevents a licit future contract, whereof all the terms are fixed, from being made the subject of a present contract.
    [Ed. Note.—For cases in point, see vol. 11, Cent. Dig. Contracts, §§ 57, 107, 109.]
    6. Vendor and Purchaser — Validity of Contract.
    Where, however, the future contract is to be a sale, or promise of sale, and the deferred payments on the price are to bear interest, and the rate of the interest is not fixed, the contract is null for want of a fixed price. The interest is a component part of the price, and unless its rate is fixed the price is not fixed. The fixing of this interest must be a matter of convention; hence the provisions of the Code fixing the rate of legal interest can have no application to such a case.
    7. Same—Action for Breach.
    The contract being null, no action in damages can arise from its nonexecution.
    (Syllabus by the Court.)
    Appeal from First Judicial District Court, Parish of Caddo; Thomas Fletcher Bell, Judge.
    Action by H. Kaplan against J. B. Whit-worth. Judgment for defendant, and plaintiff appeals.
    Affirmed.
    Sidney Levy Herold, for appellant. Alexander & Wilkinson, for appellee.
   Statement.

MONROE, J.

This is an action in damages for the alleged breach of the following agreement in writing, duly signed by the parties thereto, to wit:

“Julian E. Whitworth and H. Kaplan do hereby contract and agree as follows: The said Whitworth agrees and binds himself to make the said Kaplan a bond for title for the lands described as the W. % of Sec. 35, T. 22, R. 15 ; the E. °f Sec. 34, same township and range, less that portion sold by said Whitworth to J. B. Newby, containing 86.73 acres, as shown by deed duly recorded; and also N. É. % of N. E. Yi, Sec. 3, T. 21, R. 15—all situated in Caddo parish, La., as soon as the title to said lands can be examined by Wise, Randolph & Rendall, Attys. Said bond for title to recite the payment of $500 cash, and the further consideration of the payment of one note, due January 1st, 1905, for $2,000; one, for $1,500, due January 1st, 1906; one, for $1,500, due January 1st, 1907; and one, for $2,000, due January 1st, 1908—-making a total consideration of the sale of said land of $7,500 and interest. Said bond for title to cover the assignment or transfer of certain, lease or rent notes given said Whitworth by J. J. Robertson, as per lease of said property duly recorded. In testimony, witness our hands this. May 17th, 1904.”

The petition alleges that the bond referred to in this instrument was to guaranty the making by defendant to plaintiff of a sale of the property mentioned at the price and upon the terms stated; that, relying upon said agreement, and in the execution thereof, plaintiff employed attorneys to examine the title, and, the examination having been made, notified defendant that he wished the bond to be executed, and that defendant assented thereto; that plaintiff thereupon entered into contracts for the clearing and leasing of the land in question, and, in order to meet his obligations to defendant, mortgaged his property and borrowed money at interest; that plaintiff was at all times willing to carry out said contract between himself and defendant; that defendant constantly expressed a like willingness; and that the execution of said contract was by mutual consent postponed a short time, in order that a small portion of the land which had never been transferred by the state to the Caddo levee district might be so transferred. The petition further alleges that, notwithstanding said agreement and promises, the defendant sold the land in question to Louis Liebman and Abe Meyer and thereby rendered it impossible for him to fulfill his obligation to plaintiff; that the sale so made by the defendant was an active breach of his contract with plaintiff, and was made in bad faith and with full knowledge of the purpose for which plaintiff had agreed to buy the land, and of the fact that he was ready to take it as agreed on and had entered into contracts for.the clearing and leasing thereof. The petition further alleges that by reason of the defendant’s said “fraudulent” breach of contract the plaintiff has been damaged (1) in the loss of the difference between the contract price of the land and its value, say $3,500; (2) in the expense incurred for attorney’s fees for examination of the titles, $25; (3) in the loss of interest on money borrowed by him for the purposes of said contract, $100; (4) in loss sustained by reason of his inability to comply with his contracts for clearing and renting the land, $400. Wherefore he prays, etc.

Defendant filed an exception of no cause and no right of action; and, the exception of no cause of action having been sustained, the-plaintiff has appealed.

Opinion.

Taking the allegations of the petition to be-true, the defendant agreed in writing to execute an instrument in writing whereby, as we interpret the agreement, he was to acknowledge the payment to him by the plaintiff of $500 cash, and the delivery to him by the plaintiff of the latter’s promissory notes, payable at different times, “with interest,” and amounting, in principal, to $7,000, and in consideration of such payment and delivery was to agree to bind himself to convey to the-plaintiff a title to certain described lands, and was to deliver to the plaintiff certain promissory notes, which had already been given by a third person, for the rental of said lands; it being within the contemplation of the parties that upon the execution of said instrument the plaintiff should enter into the possession and enjoyment of the lands, with-all the rights of otvner save the naked title.. And, still taking the facts to be as alleged in the petition, the defendant, after making the-contract mentioned, in bad faith and with full knowledge that the plaintiff would thereby be-injured and made to suffer loss, sold the land to other parties, thus rendering the fulfillment by him of said agreement impossible.

The defendant, in support of his exception, avers that the instrument annexed to the petition fails to disclose a bilateral contract, in that it imposes no obligations on the plaintiff,. and fails to disclose a unilateral contract or promise to sell, in that it contains only a promise to enter into an executory contract of sale, the terms of which are not definitely expressed.

The language of the instrument imposes no obligation upon plaintiff, but seems carefully to avoid doing so. The contract, if any there be, is therefore, not bilateral.

“A promise to sell amounts to a sale, when there exists a reciprocal consent of both parties as to the thing and the price thereof,” etc. Civ. Code, art. 2462. As applied to immovables, the promise must be vested with the formalities prescribed for sales. Civ. Code, arts. 2462, 2439, 2440.

This provision of the law is not always to be taken literally, but is to be construed in each ease with reference to the language used, considered in connection with the surrounding circumstances. Thus, where the promisee, knowing that possession could not be given for an indefinite period, accepted the promise in the following language, to wit: “I accept the foregoing sale, and am ready to comply on my part as soon as possession is given” —it was held that the promise did not amount to a sale, and that the promisee could not maintain a petitory action for the recovery of the property; Slidell, J., as the organ of the court, saying, inter alia:

‘‘The law would be censurable for a strange violation of the principles of reason and justice and for a short-sighted view of expediency if it deprived individuals of the right to make prospective agreements for a sale, or told them that if they make each other a reciprocal promise to buy or sell a thing a year hence, for example, they should be absolutely considered as having-made a present sale, with all the incidents of the shifting of the risk, revenues, accretion, etc., which pertain to a contract of sale.” Peck v. Bemiss, 10 La. Ann. 160.

In the case at bar'we are confronted, first, with the inquiry, does the instrument sued on contain a promise to sell? Clearly it does not, since by its terms the defendant merely agrees that he will make such a promise at a future time, and this agreement can be considered a promise to' sell only by holding that a promise to sell amounts to a sale, and that an agreement to do that which amounts to a sale amounts to a promise to sell. The law relied on, however, provides that a promise to sell, and not that which may be regarded as the equivalent of such a promise,, amounts to a sale, and the application of the law is confined by its terms to the particular case mentioned; there being no similar provision with reference to promises to enter into other contracts than those of sale. Beyond this, if the defendant had executed the bond called for by the agreement sued on, it cannot be said that the contract which it is assumed that the bond would have expressed would have amounted either to a sale or to a promise to sell, since it seems to be admitted that it could not at once have become operative as to a portion of the land, and the agreement provides that the defendant shall receive the plaintiff’s notes, ‘ vith interest,” in part payment of the price; but the rate of interest is not specified, and in the promise to sell, as in the contract of sale, the thing,, the price, and the consent are essentials. Civ. Code, arts. 2462, 2439, 2440. We therefore conclude that the agreement or convention expressed in the instrument annexed to-the plaintiff’s petition is neither a bilateral contract nor a unilateral contract susceptible of enforcement.

We are not, however, prepared to say that, because the convention, such as it is, does not fall wijhin the category of enforceable contracts, the petition discloses no cause of action. If the allegations of the plaintiff be true, he was led by the conduct and assurances of the defendant to believe that the latter would sell him certain land, and, acting on the belief so induced, he incurred expenses which he would not otherwise have incurred. Thereupon the defendant, in bad faith, repudiated his assurances and declined to fulfill the promises that he had made, and the expenses which the plaintiff had incurred: by reason of his reliance thereon became losses. These actual losses, we think, he may be entitled to recover, provided, of ■course, the allegations of his petition are made good by proof. It is therefore ordered, adjudged, and decreed that the judgment appealed from be annulled, avoided, and reversed, and that this case be remanded to be proceeded with according to law; the defendant to pay the costs of the appeal, and those of the district court to await the final judgment in this case.

On Rehearing.

PROVOSTX, J.

Plaintiff alleges that he and defendant entered into the following contract:

“State of Louisiana, Parish of Caddo.

“Know all men by these presents, that we, Julian E. Whitworth and H. Kaplan, do hereby contract and agree as follows:

“The said Whitworth hereby agrees and binds himself to make the said Kaplan a bond for title for the lands describen as the west half ■of section thirty-five (35), township two (2), range fifteen (15); the east half of the east half (E. y2 of E. y2) of section thirty-four (34), same township and range, less that portion- sold by said Whitworth to J. B. Newby, containing eighty-six and ?3/ioo acres (86.73), as shown by deed duly recorded; and also the northeast ■quarter of the northeast quarter (N. E. % of N. E. 14), section three (3), township twenty-one (21), range fifteen (15)—all situated in Caddo parish, La., as soon as the title to said lands can be examined by Wise, Randolph & Rendall, attorneys.
“Said bond for title to recite the payment of five hundred dollars ($500.00) cash, and the further consideration of the payment of one note due January 1st, 1905, for two thousand dollars ($2,000.00) ; one for fifteen hundred •dollars ($1,500.00) due January 1st, 1906; one for fifteen hundred dollars ($1,500.00) due January 1st, 1907; and one for two thousand dollars, due January 1st, 1908—making a total consideration for the sale of said lands seven thousand five hundred dollars ($7,500.00) and interest.
“Said bond for title to cover the assignment ■or transfer of certain lease or rent notes given said Whitworth by J. J. Robertson, as per lease -of said property duly recorded.
“In testimony whereof, witness our hands on this, the 18th day of May, A. D. 1904.
“J. E. Whitworth.
“H. Kaplan.”

Plaintiff alleges that after the title had ‘been examined by the attorneys named—

“He called on said Whitworth and notified him that he was ready to carry out his agreement, and that he wished the bond of title executed as agreed upon, and that defendant assented thereto and agreed to same;” but that “the execution of the contract was, by mutual consent, postponed for a short time in order that a small portion of the land, which had never been transferred by the State to the Caddo Levee Board, might be so transferred.”

Plaintiff further alleges that defendant sold said land to others, thereby breaking said, contract, to his (plaintiff’s) damage $3,500 difference between $7,500, the said contract price, and $11,000, the value of said land at the date of the said breach of contract plus $25, amount paid to the attorneys for examining the title to said land, $100, interest paid on money borrowed for meeting the payments under said contract, and $400, amount he was compelled to pay to divers persons for obtaining from them his release from contracts into which he had entered with them for the clearing and renting of said lands.

Defendant contended successfully below and contends here that the petition shows no cause of action.

His first argument is that the instrument sued on does not evidence a promise of sale, but at most an agreement to reduce a contract to writing in the future, and that, where the understanding of the parties is that their contract shall be reduced to writing, the reduction to writing stands as a condition precedent to the formation of the contract, the contract is not complete, and neither party is bound until the reduction to writing has taken place.

Defendant is correct in saying that the instrument sued on does not evidence a promise of sale; but he is blind to the facts when he says that the parties did not reduce their contract to writing. Such as the agreement of the parties was, they sat down and reduced it to writing, and the above instrument is the result. Because they did not agree to a sale, or even a promise of sale, is no reason for saying that they did not agree to anything. They could bind themselves by a present contract to enter into another contract in the future. That the execution of a licit future contract, whereof all the terms are fixed, may be the subject of a present contract, has been expressly ruled in other jurisdictions. 9 Cyc. 282; A. & E. E. of Law, vol. 7, p. 140; Drummond v. Crane (Mass.) 35 N. E. 90, 23 L. R. A. 714, 38 Am. St. Rep. 460; Vicksburg W. Works Co. v. Guffy Petro Co. (Miss.) 38 South. 302; Sanders v. Fruit Co., 144 N. Y. 209, 39 N. E. 75, 29 L. R. A. 431, 43 Am. St. Rep. 757. Under our Code the question could hardly arise, in view of the following provisions:

“Art. 1764. All things that are not forbidden by law, may legally become subject of, or the motive for contracts.”
“Art. 1885. All things in the most extensive sense of the expression, corporeal or incorporeal, movable or immovable, to which rights can legally be acquired, may become the object of contracts.”

Plainly, under these articles, the obligation of Whitworth to execute a bond for title, and the obligation of Kaplan to pay or agree to pay the price for same, could be the object of a valid contract between these parties.

Defendant next says that by the instrument sued on Kaplan does not bind himself to accept the bond of title, or to pay the $500 and deliver the notes, or, in fact, to anything; that Whitworth alone is bound, and that consequently there is no mutuality of obligation and no consideration, and therefore no contract; that there is not even a unilateral contract, because, in the first place, even a unilateral contract must be supported by a consideration of some kind, past or present; and, in the second place, there cannot be under our Code a unilateral promise of sale; that plaintiff’s alleged subsequent acceptance can be of no avail, because it was verbal, and as such not susceptible of proof—parol evidence not being admissible to prove, in whole or in part, a contract involving Title to real estate; finally, that there cannot be said to be a valid agreement to execute a future contract of sale, or of promise of sale, because the rate of interest which the notes are to bear is left uncertain. ■

We shall come at once to the last of these grounds, expressing no opinion as to the others. It appears to us to be fatal to plaintiff’s ease. If parties agree that they shall make a sale, or a promise of sale, in the future, but fail to agree either as to the thing that is to be sold or as to the price at which the sale is to be made, they evidently fail to make any agreement at all. And it is equally plain that, if the rate of the interest which the deferred part of the price is,to bear is not fixed, the price is not fixed; this interest being a component part of the price. The law could not undertake to fix the rate of this interest. To do so would be to fix the price of the sale; and as well might the law undertake to determine what thing is to be sold as undertake to fix the price of the sale.

The articles of the Code (2924, 1935, 1936, 1937, 1938, and 1940) fixing the rate of legal interest can have no application to such a case. In such a case the interest must needs be conventional, since it constitutes the price of a sale, and the price of a sale must necessarily be a matter of convention. When learned counsel for plaintiff argues that the interest in question is legal interest, and as such is fixed by the law at 5 per cent., he loses sight of the fact that this interest constitutes, in part, the price of a sale, and that the price of a sale is necessarily a matter of convention, and cannot be a matter of law.

In our original opinion we reached the same conclusion of the instrument sued on not evidencing a contract, but we thought that Whitworth might nevertheless be held in damages. Further consideration has convinced us that if there was no contract—that is to say, if Whitworth was not bound to sell the property to plaintiff—he did not incur any liability by not doing so. Plaintiff’s ■suit is not ex delicto, but strictly ex contractu. Take away the contract, and the suit remains without foundation and falls. ■“Sublato fundamento cadit opus.”

Differently from the majority of the court the writer of this opinion thinks that plaintiff, has a cause of action ex quasi contractu for one-half of the cost of the examination of title. There was a distinct agreement that the title should be examined, and there was no agreement as to who should pay for the work. Had the sale taken place the expense would have fallen on the buyer, under article 2466, Civ. Code, as part of the ■costs of the sale; but the sale did not take place, and hence there is neither law nor contract fixing the responsibility of this expense upon any one. Under these circumstances, the responsibility must be determined according to equity, and that means that each must pay one half, since the work was done in pursuance of the agreement that it should be done, and as much in the interest of one as of the other, that is to say, as a thing necessary to be done in order that the sale they contemplated, which was for their joint and equal benefit, should take place.

Judgment affirmed.

The CHIEF JUSTICE and MONROE and LAND, JJ., concur in the decree.