Court Opinion

ID: 6384323
Source: CourtListenerOpinion
Date Created: 2022-06-25 00:04:22.019739+00
Date Added: 2024-06-11T15:50:29.051767
License: Public Domain

Dissenting Opinion

Crumlish, J.,
This matter is before Oliver P. J., and Crumlish, J., on preliminary objections.
By written agreement, plaintiffs contracted to sell a house and lot to defendants for the sum of $13,500. $1,000 was paid on account of the purchase price, and the balance was to be paid at the time of settlement, September 20, 1948, by defendants giving to plaintiffs a purchase money mortgage for $9,000 and $3,500 in in cash. The agreement provides, inter alia:
“Should the buyer fail to make settlement as herein provided, the sum or sums paid on account are to be retained by the seller, either on account of the purchase money, or as compensation for the damages and expenses he has been put to in this behalf, as the seller *222shall elect, and in the latter case this contract shall become null and void and all copies to be returned to seller for cancellation.”
The agreement also provides for a waiver of tender of deed.
According to the complaint, defendants paid to plaintiffs $1,000 on account of the purchase price; on or about September 17, 1948, the time for settlement was extended to October 5, 1948, and on or about October 2,1948, defendants informed plaintiffs that they were unable to comply with the terms of the contract. Thereupon plaintiffs placed the property on the market for resale. On or about April 20, 1949, plaintiffs sold the premises to a third person for $11,750. Plaintiffs bring this action for the recovery of the broker’s commission on the resale, advertising, apportioned taxes, water and sewer rent, and the deficiency in the sale price.
Defendants take the position that plaintiffs are limited to the sum paid on account as liquidated damages under the terms of the contract.
The question involved may be stated thus: Where a written contract for the sale of real estate gives the vendor, upon default of the vendee, an election to retain the money paid on account of the purchase price either as liquidated damages, or on account of the purchase price, is the vendor limited to the sum designated as liquidated damages or may he retain the same and sue the vendee for the damages sustained upon a resale of the property at a lower price? The question is apparently res nova. Counsel have not cited a written authority in point, and I have been unable to find any. Judge Ladner in his excellent work, Conveyancing in Pennsylvania, has furnished a helpful guide.
It is well settled that where a written agreement for the sale of real estate provides that the sum or sums paid on account of the purchase price may be retained *223by the vendor as liquidated damages in the event the vendee fails to make settlement, the vendor’s claim for damages is limited to the amount paid on account (Riling v. Idell, 291 Pa. 472 (1928); Lichetti v. Conway, 44 Pa. Superior Ct. 71 (1910)), unless, for example, the amount agreed upon constitutes so large a portion of the contract price as to be excessive and unreasonable and to amount to a penalty: Artzerounian v. Demetriades, 276 Pa. 303 (1923). However, in the instant case, the parties did not so limit the vendors. Here, the contract gave the vendors an election. The clause under consideration gave the vendors, therefore, three remedies: “(a) to ... sue for the balance of the purchase price, (b) to re-sell the property and sue for the loss, if any, and (c) to call the sale off and keep the deposit money as liquidated damages”: Ladner, Conveyancing in Pennsylvania, vol. I, sec. 45 (c), page 85. Defendants argue that plaintiffs are limited either to: (a) Sue for the balance of the purchase price, which is in the nature of a specific performance, or (b) acquiesce in defendant’s breach in disaffirmance of the contract, and claim and retain whatever sum the agreement stipulated may be forfeited as liquidated damages.” With this argument I do not agree. What defendants overlook is that the “presumption is that the forfeiture clause is for the benefit of the grantor and enforceable at his election”: Korman et al. v. Trainer et al., 258 Pa. 362, 365 (1917). If plaintiffs had been able to sell at the same price (Lichetti v. Conway, supra) or at an increased price (Sanders v. Brock, 230 Pa. 609 (1911)), they would have been entitled to pocket the sum paid on account as liquidated damages; but, where, as in the instant case, they sold at a lower price, they are entitled to be made whole, because, admittedly, the default was solely on the part of defendants. To agree with defendants’ argument would be, in effect, to allow defendants to take advantage of their *224own wrong. See Cape May Real Estate Co. v. Henderson, 231 Pa. 82, 85 (1911). However, after joinder of issue, the presumption in favor of plaintiffs may be overcome by facts thus showing that plaintiff elected and limited himself to the deposit money as liquidated damages. Summary judgment should be entered on pleadings only in clear cases: Kidder Elevator Interlock Co. v. Muckle, 198 Pa. 388 (1901); Moore v. Luzerne County, 262 Pa. 216 (1918); Commonwealth Finance Corp., Inc., v. Ferrero, 269 Pa. 264 (1921); Rhodes v. Terheyden et al., 272 Pa. 397 (1922).
Accordingly, I would overrule defendants’ preliminary objections with leave to file an answer to the merits within 20 days from the date hereof.