Court Opinion

ID: 9736497
Source: CourtListenerOpinion
Date Created: 2023-08-26 18:58:18.166319+00
Date Added: 2024-06-11T18:27:07.053809
License: Public Domain

*171FLEMING, J.
I concur in the reversal of a judgment which denies recovery of any part of the $20,000 down payment by the purchasers. The reversal is clearly compelled by the declaration in Freedman v. Rector etc. of St. Matthias Parish, 37 Cal.2d 16, 19-20 [230 P.2d 629, 31 A.L.R.2d 1], that retention of a down payment which does not reflect actual damages amounts to a penalty.
But in addition to reversing the judgment, I think we should instruct the trial court on the specific application of the law to the facts, particularly since this controversy has been pending since 1962.
The law is found in the Civil Code, in Freedman v. Rector etc. of St. Matthias Parish, 37 Cal.2d 16 [230 P.2d 629, 31 A.L.R.2d 1], and in Royer v. Carter, 37 Cal.2d 544 [233 P.2d 539], A vendor is entitled to damages for a purchaser’s breach of contract and may collect them from the amount of the deposit. A vendor may claim two elements of damages: (1) the excess of the contract price over the value of the property at the time of the breach (Civ. Code, § 3307; Royer v. Carter, at pp. 548, 549, 550; and (2) his actual expenses incurred in the performance of the contract (Civ. Code, § 3300; Royer v. Carter, at pp. 550, 551; Freedman v. Rector etc. of St. Matthias Parish, at p. 23).
Here, the purchasers contracted to buy the property for $412,500, paid a deposit of $10,000 to the vendor, and opened an escrow on 31 July to close the sale by 31 August. Subsequently they paid another $10,000 to the vendor, and obtained an extension of the escrow period to 30 September. Thereafter, the purchasers failed to pay the balance of the purchase price, the sale was not completed, and the vendor cancelled the escrow on 5 October. The vendor and the vendor’s broker acted in good faith throughout the transaction. The trial court found the value of the property had not changed during the period of escrow.
With respect to the first element of damages, the excess of the contract price over the value of the property at the time of breach, a finding that the value of the property had not changed during the period of escrow was not the equivalent of a finding that the vendor suffered no value damages. It seems obvious that a two-month delay in the right to receive $412,500 damaged the vendor—even though the value of the property did not change in the interim. $412,500 on 30 September is worth less than $412,500 on 31 July, and the right to realize $412,500 on 30 September is less valuable than the *172right to realize it on 31 July. I think the vendor in. this instance is entitled to -damages for the difference in these values. Using the legal rate of interest I would calculate these damages at 2/12ths of 7 percent of $412,500, or roughly $4,800.
The second element of damages consists of a vendor’s actual expenses incurred in the performance of the contract. In the present case such expenses were limited to $5,000 paid as a brokerage commission, and $369.30 paid for legal fees connected with the abortive sale. Because of the provisions of Civil Code, section 3307, other items of claimed damages, such as the expense of operating and maintaining the property, were • not allowable. Legally, the expense of operating and maintaining the property during the period of the escrow was offset by the value of its possession during the same period, and whether the balance of these items showed net gain or net loss to the vendor is wholly immaterial on the question of damages.
I would direct the trial court to credit the vendor with these specific items of damages and give judgment for the balance of the down payment in favor of the purchasers.
A petition for a rehearing was denied February 26,. 1969.