37

profit which he would have made had he been allowed to furnish the goods or services. In both cases it is necessary to value the performance which the debtor was to make. The two methods of valuation illustrate the difference between the standard of value which may be applied to the same performance, when it forms the basis for measuring the damages of one party or the other. 38 If the contract states a rate, at which the goods are to be taken, the natural measure of damages for a breach by the debtor would be based on the value of the goods or services at the time when performance was due.39 Many courts, however, have put an artificial construction on such contracts and have regarded them as amounting in legal effect to a contract to pay in money, with an option to the debtor if he pays promptly at maturity to furnish goods or services. 40

1399. Contracts for the sale of land.

There is no reason on principle why the measure of damages for breach of contracts for the sale of land should differ from that applied to contracts for the sale of personal property. Some courts, however, make a difference where the action is by

37 See Oldham V. Kerchner, 79 N. C. 106, 28 Am. Rep. 302, where, however, the rate was stated.

38 See supra, §§ 1342, 1343.

39 So it was held in Cole v. Ross, 9 B. Mon. 393, 50 Am. Dec. 517. 40 Brooks v. Hubbard, 3 Conn. 58, 8 Am. Dec. 154; McKinnie v. Lane, 230 Ill. 544, 82 N. E. 878, 120 Am. St. 338; Heywood v. Heywood, 42 Me. 229, 66 Am. Dec. 277; Gleason v. Pinney, 5 Cow; 152; Pinney v. Gleason, 5 Wend. 393, 21 Am. Dec. 223; Trowbridge v. Holcomb, 4 Oh. St. 38; Church v. Feterow, 2 Penn. 301; Fleming v. Potter, 7 Watts, 380; White v. Tompkins, 52 Pa. 362; Short v. Abernathy, 42 Tex. 94; Perry v. Smith, 22 Vt. 301. See also Plowman v. Riddle, 7 Ala. 775. In Goodwin v. Heckler, 252 Pa. 332, 97 Atl. 475, 476, the court said: "When the payment of a debt is to be made in a specific article of property, fail

ure to pay or offer to pay by delivery of the article, according to agreement, fixes the liability of a debtor to pay in money. Roberts v. Beatty, 2 Pen. & W. 63, 21 Am. Dec. 410; Stewart v. Morrow, 1 Grant Cas. 204; Santee v. Santee, 64 Pa. 473, 479; Moore v. Kiff, 78 Pa. 96. In delivering the opinion in the case last cited, Mr. Justice Paxson said (78 Pa., page 100):

the purchaser. It was established in an early leading case,11 that for breach of an agreement to convey a leasehold estate because of the vendor's lack of title, the purchaser was entitled to recover merely the amount of a deposit which he had made on account of the price. Blackstone, J., said: These contracts are merely upon condition frequently expressed, but always implied, that the vendor has a good title. If he has not, the return of the deposit, with interest and costs, is all that can be expected." This decision has been consistently followed in England and the chief point in dispute has been whether if the vendor knew or ought to have known that his title was defective his obligation even then remained merely to restore the purchaser to his original position. It has finally been settled that even in case the vendor knew he had no title or means of getting title his liability is limited to the restitution of any deposit made by the purchaser and any expenses incurred by him in examining the title; 42 and the opinion was expressed that if the vendor was guilty of fraud the appropriate remedy was an action for deceit. The English doctrine is followed with slight qualification in a few American States. 43 In most American cases, however, which purport to follow the English authorities, the rule restricting damages to those appropriate for rescission is limited to cases where the vendor has not been guilty of bad faith.44 Another exception to the English "Flureau v. Thornhill, 2 Wm. Bl.

1078.

42 Bain v. Fothergill, L. R. 7 H. L. 158; Rowe v. Schoolboard, 36 Ch. Div. 619, 622.

"Tyson v. Eyrick, 141 Pa. 296, 311, 21 Atl. 635, 23 Am. St. Rep. 287; Rineer v. Collins, 156 Pa. 342, 27 Atl. 28; Glasse v. Stewart, 32 Pa. Super. 385; Stuart v. Pennis, 100 Va. 612, 42 S. E. 667; Gerbert v. Trustees, 59 N. J. L. 160, 180, 35 Atl. 1121, 69 L. R. A. 764, 59 Am. St. Rep. 578 (but see Brown v. Honiss, 70 N. J. L. 260, 58 Atl. 86, 74 N. J. L. 501, 68 Atl. 150). In Pennsylvania in the case of actual fraud on the part of the vendor in the origin of the contract damages based on the value of the

land may be recovered. Thompson v. Sheplar, 72 Pa. 160. A subsequent fraudulent purpose is not enough. Stephens v. Barnes, 30 Pa. Super, 127.

44 Clark v. Yocum, 116 Cal. 515, 48 Pac. 498; Sanford v. Cloud, 17 Fla. 532; Foley v. McKeegan, 4 Ia. 1, 66 Am. Dec. 107; Donner v. Redenbough, 61 Ia. 269, 16 N. W. 127; Tracy v. Gunn, 29 Kan. 508; Davis v. Lewis, 4 Bibb, 456; Rutledge v. Lawrence, 1 A. K. Marsh. 396; Baltimore, etc., Society v. Smith, 54 Md. 187, 39 Am. Rep. 374; Horner v. Beasley, 105 Md. 193, 65 Atl. 820, Northridge v. Moore, 118 N. Y. 419; 23 N. E. 570; Empire Realty Co. v. Sayre, 107 N. Y. App. D. 415, 422, 95 N. Y. S. 371; Dal v. Fischer, 20

rule is occasionally made where the vendor, though not guilty of bad faith since he expected, and perhaps reasonably, to be able to acquire title, nevertheless knew that he did not have title at the time of the contract.45 It also seems true even where the rule of restricted damages prevails that if the purchaser has paid in advance the consideration in a form which cannot be restored to him, he may recover the value of the land, and is not restricted to the value of what he has given, 46 and the same is held in Pennsylvania whatever the nature of the consideration, if it has been paid." If the defect in the vendor's title might be removed by him and he fails to perfect the title or voluntarily makes it impossible to do so, he is liable in England and in other jurisdictions where the English rule is followed, in substantial damages. 48 Under the rule generally prevailing in the United States, however, all these distinctions are unimportant, and the only rule defensible on principle, allowing the purchaser the difference between so much of the contract price as is unpaid and the market price of the land, is applied in every case where the vendor breaks his contract without legal excuse.49 This rule is one of general jurispru

S. Dak. 426, 107 N. W. 534; Johnson v. Hamilton, 36 Tex. 270; Clifton v. Charles, 53 Tex. Civ. App. 448, 116 S. W. 120; Hahl v. West (Tex. Civ. App.), 129 S. W. 876; Morgan v. Bell, 3 Wash. 554, 28 Pac. 925; Mullen v. Cook, 69 W. Va. 456, 71 S. E. 556; Arentsen v. Moreland, 122 Wis. 167, 99 N. W. 790, 66 L. R. A. 973, 106 Am. St. Rep. 951.

45 Cullumber v. Winter, 154 Ia. 263, 134 N. W. 601; Tulane &c. Adm's v. Baccich, 129 La. 469, 56 So. 371; Drake v. Baker, 34 N. J. L. 358 (but see later New Jersey decisions, infra, n. 48); Pumpelly v. Phelps, 40 N. Y. 59, 100 Am. Dec. 463. If the purchaser also knew the condition of the vendor's right, the exception allowing him substantial damages is not applied. Cullumber v. Winter, 154 Ia. 263, 277, 134 N. W. 601.

46 Wall v. London, etc., Co., L. R. 9 Q. B. 249. See also Case v. Wolcott,

33 Ind. 5; Doty's Adm. v. Doty's Guardian, 118 Ky. 204, 80 S. W. 803, 2 L. R. A. (N. S.) 713.

47 Cox v. Henry, 32 Pa. 18.

48 Williams v. Glenton, L. R. 1 Ch. 200; Engel v. Fitch, L. R. 3 Q. B. 314; L. R. 4 Q. B. 659; Bain v. Fothergill, L. R. 7 H. L. 158, 209; Clark v. Yocum, 116 Cal. 515, 48 Pac. 498; Brown v. Honiss, 70 N. J. L. 260, 58 Atl. 86, 74 N. J. L. 501, 68 Atl. 150; Noyes v. Phillips, 60 N. Y. 408.

49 Harten v. Löffler, 212 U. S. 397, 53 L. Ed. 568, 29 Sup. Ct. 351; Hampton Stave Co. v. Gardner, 154 Fed. 805, 83 C. C. A. 521; Hopkins v. Lee, 6 Wheat. 109, 118, 5 L. Ed. 218; Phelan v. Tomlin, 164 Ala. 383, 51 So. 382; Jamulewyez v. Quagliano, 88 Conn. 60, 89 Atl. 897; Irwin v. Askew, 74 Ga. 581;' Plummer Rigdon, 78 Ill. 222, 20 Am. Rep. 261; Dady v. Condit, 188 Ill. 234, 58 N. E. 900, 209 Ill. 488, 70 N. E. 1088;

V.

dence which the federal courts will apply, regardless of the rulings of state courts where the question arose. 50 Where the purchaser makes total default the general rule both in England and the United States allows recovery of the difference between the contract price and the market price as in the case of personal property.51 But, also following the analogy of actions for the price of goods, a few American courts in effect allow specific performance at law by permitting the recovery of the full price after a proper deed has been tendered. 52 The excuse for such recovery in the case of goods 53 does not however exist in the case of land. The vendor does not need such relief since he can unquestionably get specific performance in equity, and furthermore neither tender of the land nor judgment for the

Puterbaugh v. Puterbaugh, 7 Ind. App. 280; Doriocourt v. Lacroix, 29 La. Ann. 286; Doherty v. Dolan, 65 Me. 87, 20 Am. Rep. 677; Boyden v. Hill, 198 Mass. 477, 85 N. E. 413; Fleckten v. Spicer, 63 Minn. 454, 65 N. W. 926; Vallentyne v. Immigration Land Co., 95 Minn. 195, 103 N. W. 1028; Turner v. Lord, 92 Mo. 113, 4 S. W. 420; Cartin v. Hammond, 10 Mont. 1, 24 Pac. 627; Beck v. Staats, 80 Neb. 482, 114 N. W. 633, 16 L. R. A. (N. S.) 768; LeRoy v. Jacobsky, 136 N. C. 443, 48 S. E. 796, 67 L. R. A. 977; Mackey v. Olssen, 12 Ore. 429, 8 Pac. 357; Barbour v. Nichols, 3 R. I. 187; Shaw v. Wilkins, 8 Hump. 647, 653, 49 Am. Dec. 692; Dunshee v. Geoghegan, 7 Utah, 113, 25 Pac. 731; Cade v. Brown, 1 Wash. 401, 25 Pac. 457; Brink v. Mitchell, 125 Wis. 416, 116 N. W. 16.

50 Clark v. Belt, 223 Fed. 573, 138 C. C. A. 1, and cases cited.

́11 Laird v. Pim, 7 M. & W. 474; Eastern Counties Ry. Co. v. Hawkes, 5 H. L. C. 331, 376; Telfener v. Russ, 145 U. S. 522, 36 L. Ed. 802, 12 Sup. Ct. 930; Drew v. Pedlar, 87 Cal. 443, 25 Pac. 749, 22 Am. St. Rep. 257; Reed v. Dougherty, 94 Ga. 661, 20 S. E. 965; Cowdery v. Greenlee, 126

Ga. 786, 55 S. E. 918, 8 L. R. A. (N. S.) 137; Goodwine v. Kelley, 33 Ind. App. 57, 70 N. E. 832; Prichard v. Mulhall, 127 Ia. 545, 103 N. W. 774; Waters v. Pearson, 163 Ia. 391, 144 N. W. 1026; Allison v. Cocke's Ex'rs, 112 Ky. 212, 65 S. W. 342, 66 S. W. 392; Old Colony R. Co. v. Evans, 6 Gray, 25, 66 Am. Dec. 394; Stewart v. McLaughlin, 126 Mich. 1, 85 N. W. 266; Scudder v. Waddingham, 7 Mo. App. 26; Griswold v. Sabin, 51 N. H. 167, 12 Am. Rep. 76; Bensinger v. Erhardt, 74 N. Y. App. Div. 169, 77 N. Y. S. 577; Dayton &c. Co. v. Coy, 13 Ohio St. 84, 90; Hogan v. Kyle, 7 Wash. 595, 35 Pac. 399, 38 Am. St. Rep. 910.

52 Gray v. Meek, 199 Ill. 136, 64 N. E. 120; Goodpaster v. Porter, 11 Iowa, 161; Oatman v. Walker, 33 Me. 67; Curran v. Rogers, 35 Mich. 221; Granchot v. Leach, 5 Cow. 506; Shannon v. Comstock, 21 Wend. 457, 34 Am. Dec. 262; Richards v. Edick, 17 Bard. 260; Murray v. Ellis, 112 Pa. 485, 3 Atl. 845; Bailey v. Clay, 4 Rand. 346. The Iowa and New York decisions are in effect overruled by the cases cited in the previous note.

53 See supra, §§ 1365 et seq.

full price nor payment of the judgment can operate to transfer title to real estate, as it can of chattels.

§ 1400. Delay in performing contract for sale of land.

Where a vendor delays making a conveyance beyond the agreed time, it may be assumed that those jurisdictions which hold that a vendor acting in good faith is not liable in damages for loss of the bargain where he is unable to perform his contract owing to a defect of title, would apply a similar rule where for the same reason the vendor is unable to perform on the agreed day.54 Where the purchaser becomes liable for delay the normal rule of damages in an action at law would seem to be the rental value of the premises less any advantage which the buyer may have had by retaining the whole or part of the purchase money, 55 together with any foreseeable consequential damages. 56 Most of the decisions, however, are in equity where, as an adjunct to specific performance, damages for delay are allowed. 57 If the delay is due to the purchaser's fault he is liable for interest, though the vendor has received no rents and profits and can therefore credit him with none. 58

§ 1401. Breach of covenants in deeds.

The ordinary covenants in deeds of real estate are that the grantor is lawfully seised; that he has a right to convey; that the premises are free from encumbrances; that the grantee shall quietly enjoy; that the grantor will warrant the title against lawful claims, and sometimes that the grantor will execute any further assurances necessary to validate the title. Logically the covenants of seisin, of right to convey and of freedom from encumbrances are broken as soon as the conveyance is made if they are broken at all, since these covenants relate to a state of fact alleged to be existing at the time of conveyance. The other three covenants look to the future. Though it is generally admitted that the covenants of seisin and of right to convey

54 Jones v. Gardiner, [1902] 1 Ch. 191, 195.

55 See Sweeney v. Brow, 40 R. I. 281, 100 Atl. 593.

56 Jones v. Gardiner, [1902] 1 Ch. 191; Jaques v. Millar, 6 Ch. D. 753.

57 See infra, §§ 1430, 1436.

58 Prichard v. Mulhall, 140 Ia. 1, 118 N. W. 43.