Court Opinion

ID: 9539719
Source: CourtListenerOpinion
Date Created: 2023-08-07 16:09:06.579837+00
Date Added: 2024-06-11T14:59:16.334699
License: Public Domain

SCHAUER, J., Dissenting.
The contract involved in this litigation was freely entered into by competent parties who negotiated at arms length and plainly knew what they were doing and understood the terms of the agreement concerning the $15,000 promissory note, its payment, and the specification of the items of consideration to each.
It is not a proper function of this court to remake the contract, amend it, or reevaluate the elements of consideration to the respective parties. The $15,000 mentioned represented the consideration demanded by defendants and agreed to be paid (and actually paid, with interest) by plaintiffs for the very act of defendants’ entering into an obligation which for a substantial period of time, among other things: (1) gave to plaintiffs a valuable right which they had not therefore possessed; (2) impaired defendants’ title and their right freely to use or dispose of their land; and (3) only on the terms specified, including compensation for the detriment so suffered by defendants, further obligated them to sell and convey their land to plaintiffs. On the undisputed facts, both in law and in justice, defendants are entitled to retain the money paid as consideration for that detriment. The mere fact that multiple items and elements are aggregated in the contract to constitute consideration to the respective parties does not authorize the trial court or this court to disregard or strike down any of these items or elements as inconsequential to either party.
Moreover, as conceded in the majority opinion {ante, p. 519-520), even if we regard the contract as providing for liquidated damages, it is presumptively valid and there is no showing of illegality. The amount of the note paid by plaintiffs and retained by defendants was less than 5 percent of the total purchase price and was negotiated in view of the length of the escrow. In addition to the hazard to defendants *523of keeping the land off the market for six months, there was evidence that at the time the agreement was made the parties knew that the value of the land might be affected by current exploration for oil, the selection of a location for a contemplated freeway, and the general trend from agricultural to commercial and residential uses of land in the area. Thus, not only was the amount to be retained by defendants shown to be reasonable, but it is also established that “it would be impracticable or extremely difficult to fix the actual damage.” (Civ. Code, § 1671.) The validity of a liquidated damage provision is, of course, to be determined as a matter of law in the light of the facts known and unknown at the time the agreement was made. (McCarthy v. Tally (1956), 46 Cal.2d 577, 586-587 [10, 12] [297 P.2d 981]; Chastain v. Belmont (1954), 43 Cal.2d 45, 58 [10] [271 P.2d 498]; Better Food Markets v. American Dist. Tel. Co. (1953), 40 Cal.2d 179, 185 [8] [253 P.2d 10, 42 A.L.R.2d 580].) So tested, the agreement here is valid on any reasonable view of the facts.
To require owners who receive a reasonable down payment pursuant to a valid contract to sell their land, to thereafter await the possibility of facing a court judgment that they refund the down payment upon the mere caprice of the buyer who changes his mind and breaches his contract—thus having extracted a valuable consideration but actually having given nothing of value in return—would seem also to mean that the down payment becomes of little value in the hands of sellers, who perforce must preserve it in the form of liquid money on pain of having other assets levied on and sold at execution on the judgment in favor of the defaulting buyer. This is plainly not justice, nor should it be the law; yet it appears but to accent a trend in decisional law. (See Freedman v. The Rector (1951), 37 Cal.2d 16, 18-19, 22-23 [230 P.2d 629, 31 A.L.R.2d 1]; see also Jordan v. Talbot (1961), 55 Cal.2d 597, 611 [12 Cal.Rptr. 488, 361 P.2d 20].) It would seem also that a further and more far reaching effect of the instant judgment may well be to encourage other persons to breach their obligations whenever it may appear profitable, convenient, or otherwise desirable to them so to do.
I would reverse the judgment.
McComb, J., concurred.
Appellants’ petition for a rehearing was denied September 20, 1961. Sehauer, J., and McComb, J., were of the opinion that the petition should be granted.