Case Title: Hawkins v. First Federal Savings and Loan Ass'n

Citation: 280 So. 2d 93

Docket Number: 

State: alabama

Court: Alabama Supreme Court

Date: 1973-02-22T00:00:00Z

Document:
280 So. 2d 93 (1973)
Frank L. HAWKINS
v.
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION.
SC 55.

Supreme Court of Alabama.
February 22, 1973.
Holberg & Tully and Ralph G. Holberg, III, Mobile, for appellant.
David R. Coley, III, Mobile, for appellee.
FAULKNER, Justice.
Frank Hawkins decided to build a Holiday Inn on property bounded by Church, Monroe, Jackson, and Joachim Streets in a downtown urban renewal area of Mobile. He contracted with First Federal Savings and Loan Association for a loan of $500,000, subject to several conditions, including the following:
In accordance with this provision, Hawkins paid $25,000 to First Federal. It is this sum which is now the subject of the litigation.
According to Hawkins' testimony, the City of Mobile, at the direction of the State Highway Department, refused to issue him a building permit because of the pending condemnation of all or part of his land. Later, when it became clear that only a small part of the tract was being taken, Hawkins received approval for a redesigned building, and construction commenced. However, in the meantime, the deadline embodied in the contract, which had already been extended once by agreement of the parties, expired. First Federal insisted that Hawkins had forfeited the $25,000 "stand by" fee by failing to close the loan within the agreed period. Hawkins brought an action to recover the money.
The cause was tried to a jury in the Circuit Court of Mobile County. At the close of the evidence plaintiff requested seventeen charges, of which sixteen were refused. A verdict was returned in favor of the defendant, First Federal. Plaintiff Hawkins now brings this appeal, arguing that denial of four of his requested charges, and his motion for a new trial, constituted reversible error.
All four of the charges in question relate to the issue of whether alleged impossibility of performance should excuse appellant Hawkins from his contractual obligations. All four were refused by the trial judge:
Charge No. 13 is improperly grouped with the others on appeal because it refers to impossibility caused by "Defendant's actions", not by governmental agencies. It is substantially the same as Plaintiff's Charge No. 11, relating to alleged alteration of contract terms by the defendant, which was given by the trial judge. The judge is empowered by statute to refuse redundant charges if the same rule of law was substantially and fairly given in another charge. Title 7, § 273, Code of Alabama 1940 (Recompiled 1958).
*95 Whether Charges No's. 12, 14, and 15 are good depends fundamentally upon the extent to which impossibility, arising without fault of the obligee, is recognized by our law as a defense to breach of contract by the obligor. There appears to be a major division among the authorities on the issue.
On the one hand, there is the view requiring strict adherence to the terms of a contract, regardless of any circumstances arising later. This rationale was classically expressed in Paradine v. Jane, 82 Eng. Rep. 897 (K.B.1647):
In contrast, there is the view expressed by the Restatement of Contracts (1932), § 457:
The difference between the views is aptly put by Williston:
In Alabama, it is generally the strict rule that has been upheld by our decisions. As this Court stated in Lee v. Cochran, 157 Ala. 311, 313, 47 So. 581, 582 (1908):
The same strict or literal view has been upheld in numerous other cases. Stone v. Dennis, 3 Port. 231 (1936); M'Gehee v. Hill, 4 Port. 170, 29 Am.Dec. 277 (1836); Marx v. Kilby Locomotive & Machine Works, 162 Ala. 295, 50 So. 136 (1909); Capital Fertilizer Co. v. Ashcraft-Wilkinson Co., 202 Ala. 92, 79 So. 484 (1918); Otinger v. Water Works and Sanitary Sewer Board, 278 Ala. 213, 177 So. 2d 320 (1965). See Case Note, "Impossibility of Performance in Action for Breach of Contract", 15 Ala.L.Rev. 582 (1963). The Fifth Circuit has correctly interpreted our law in this area in City of Albertville, Ala. v. United States Fidelity & Guaranty Company, 272 F.2d 594 (1959).
However, this court has recognized an exception to the strict rule. In the words *96 of Greil Brothers Co. v. Mabson, 179 Ala. 444, 450, 60 So. 876, 878 (1912):
It is indeed with that branch of the impossibility problem relating to governmental action that we are now specifically concerned. The answer to the respective contentions so ably propounded by both counsel in this case is to be found within the scope of the doctrine of Greil Brothers Co. v. Mabson, supra.
In Greil, the plaintiff leased premises in the City of Montgomery to the defendant, "`for occupation as a bar, and not otherwise.'" Thereafter, on November 23, 1907, the General Assembly of Alabama enacted a prohibition law, making it unlawful to sell liquor. The defendant abandoned the premises, and refused to pay rent. The plaintiff brought an action to collect on rent notes, and had judgment.
On appeal, this court reversed, holding that the bar operator was excused from performance of his contract because such performance had been prohibited by the Legislature.
Without more, this holding would support the contentions of the appellant. However, the court discussed two additional cases, Burgett v. Loeb, 43 Ind.App. 657, 88 N.E. 346 (1909), and Houston Ice Co. v. Keenan, 99 Tex. 79, 88 S.W. 197 (1905). In Burgett, denial of a liquor license, which made it impossible for the defendant to sell liquor, was held no excuse for breaching a lease for a place to sell it. In Keenan, prohibition by local option election did not excuse performance by a lessee. This court cited both cases with approval. Commenting on Burgett, we said:
Similarly, Keenan, supra, was approved with the following comment:
The distinction clearly established is between illegality created by change in the law subsequent to the contract, which serves as an excuse, and illegality due to an unfavorable exercise of discretion by governmental officials acting under existing law, which is no excuse.
The record in this case does not disclose that the Building Commissioner *97 was acting under any authority other than that vested in him by the Mobile Building Code, or that he did not have the authority to deny a permit as of the date of formation of the contract. Therefore, according to the doctrine of Greil Brothers v. Mabson, supra, the parties could have foreseen the possibility that a building permit would be denied and provided for that contingency in the terms of their contract.
Many cases in sister jurisdictions have endorsed the principle as stated by Corbin:
Among these cases are Security Sewage Equip. Co. v. McFerren, 14 Ohio St.2d 251, 237 N.E.2d 898 (1968); Smith v. Dixon, 238 Ark. 1018, 386 S.W.2d 244 (1965); Fischler v. Nicklin, 51 Wash. 2d 518, 319 P.2d 1098 (1958); Hein v. Fox, 126 Mont. 514, 254 P.2d 1076 (1953); Shore Inv. Co. v. Hotel Trinidad, 158 Fla. 682, 29 So. 2d 696 (1947); Burgett v. Loeb, supra.
In this view of the case it is not necessary to consider the technical defects assertedly present in the charges whose substantive merits are discussed in this opinion.
We hold that the charges requested by appellant were properly refused by the trial court. As a party binds himself, so shall he be bound.
The judgment of the trial court is affirmed.
Affirmed.
HEFLIN, C. J., and MERRILL, HARWOOD, and MADDOX, JJ., concur.