Gunn v. Heggins
| Docket Number: | 2005-CA-01794-COA | |
| Oral Argument: | 05-17-2007 | |
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| Court of Appeals: |
Opinion Link Opinion Date: 09-04-2007 Opinion Author: BARNES, J. Holding: Affirmed in part; Reversed and Remanded in part |
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| Additional Case Information: |
Topic: Contract - Specific performance - Time of the essence - Damages - Recovery of earnest money Judge(s) Concurring: KING, C.J., LEE AND MYERS, P.JJ., IRVING, CHANDLER, GRIFFIS, ISHEE, ROBERTS AND CARLTON, JJ. Procedural History: Bench Trial Nature of the Case: CIVIL - REAL PROPERTY |
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| Trial Court: |
Date of Trial Judgment: 09-08-2005 Appealed from: WARREN COUNTY CHANCERY COURT Judge: Vicki Barnes Disposition: DENIED SPECIFIC PERFORMANCE, INJUNCTIVE RELIEF AND DAMAGES Case Number: 2005-046 PR |
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| Party Name: | Attorney Name: | |||
| Appellant: | SANDRA GUNN |
JOHNNIE MCDANIELS |
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| Appellee: | MIYO HEGGINS | KAY S. RECTOR |
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| Topic: | Contract - Specific performance - Time of the essence - Damages - Recovery of earnest money |
| Summary of the Facts: | Sandra Gunn, through her agent, Billy Drake, entered in a written agreement with Miyo Heggins, through her son and agent, John Heggins, to purchase a piece of land with building and contents. The record title owner of the land at the time was Heggins’s husband, Henry Heggins, according to a warranty deed. Henry Heggins had recently died with a will which devised his entire estate to his wife and named her as executrix. The total purchase price of the land was $185,000 with $5,000 in earnest money paid upon the signing of the agreement, and the remainder to be paid within forty-five days. The special provisions of the contract stated the sale was on an “as is” basis and closing was to be within forty-five days of the contract’s signing. Gunn was, however, unable to obtain financing by this date. Drake paid John an additional $5,000 to extend the contract closing another fifteen days, in order to give Gunn and Drake more time to obtain financing. John agreed to the extension, and it was recorded on the original contract under “Special Provisions.” Gunn was unable to complete the purchase of the property during the extension. At no time during the contract period did Heggins file a petition to probate Henry Heggins’s will. John then proceeded to negotiate with other buyers for the property. Also during this time, Fred Clark, a friend of Drake’s, contacted the Britton & Koontz Bank to help Gunn obtain financing to purchase the property. John told Drake that he would be willing to enter into a new agreement and sell the land for $185,000 with the contents being an extra $34,000. He offered to use the $10,000 already paid by Gunn as credit towards a new contract. The next day, Heggins, through her attorney, filed a petition with the chancery court to admit her husband’s will to probate. William Bost, attorney, faxed Heggins a letter stating that he represented Gunn in the property closing and that Gunn planned to convey the property to a third party, Mr. Clark. In the letter, Bost also requested signatures from John and Heggins to confirm another extension to the original agreement. This confirmation was never signed by either John or Heggins. Gunn filed a petition for preliminary and permanent injunction and TRO in chancery court. The chancellor granted an ex parte motion by Gunn which enjoined John from removing the contents of the building. Gunn then filed a motion to stay final judgment in order to prevent the Hegginses from selling the property to another buyer. The chancery court denied the motion. The chancellor denied Gunn any injunctive relief or damages and found there was no breach of the contract by Heggins, allowing her to retain Gunn’s $10,000 in earnest money. Gunn appeals. |
| Summary of Opinion Analysis: | Gunn argues that she tendered performance and, therefore, equity demands specific performance. A party cannot obtain a decree for specific performance, unless he shows a compliance, or readiness to comply with his part of the contract. Gunn did not tender performance during the term of the contract. After the extended date for closing had passed, Gunn obtained a loan approval which was contingent upon clear title being obtained; at no time did Gunn have the funds in hand to purchase the property. It was only after the extended date for closing had passed that title work on the loan was completed and Gunn learned that the property was titled to Henry Heggins. Gunn argues that the chancellor should have ordered Heggins to perform under the terms of the contract, even though Gunn had no financing in place to purchase the land and building. Neither party was able to perform on the closing dates, although Heggins disputes this in her brief. Although it may have been a simple judicial procedure to probate and cure title to the property, the fact remains that Heggins never did so during the contractual period. This failure constituted a defect in the title. There is no indication that a valid contract existed between the parties after the final closing date. Additionally, Gunn has never tendered performance under the contract, making specific performance an inappropriate remedy. Gunn also argues that there was no clear intent or notice by Heggins that time was of the essence in the performance of the contract. To regard a contract as “of the essence,” one of two conditions must be satisfied: either the contract must expressly state that time is of the essence or there must be a clear indication that the parties intended for time to be of the essence. In this case, time was not expressly stated to be of the essence. The attorney for Gunn, Bost, asked Heggins and her son, John, for signed confirmation to further extend the closing date of the contract. This fact demonstrates that Gunn and/or her representative, Drake, understood that time was an issue, and the contract had a time limitation for performance. The contract at issue had a clearly defined closing date, and both parties agreed that the additional monetary consideration was for the purpose of extending the original closing date so that Gunn could have more time to obtain financing. This is strong evidence that Gunn was aware that she needed to perform under the contract within the dates indicated. Gunn argues that Heggins’s failure to perform under the contract resulted in monetary damages, including the loss of financing in the amount of $157,250, the loan amount approved for Fred Clark. When a duty to render performance is conditioned on the other party’s performance or readiness to perform, the duty to pay damages is discharged by the failure of performance by the contract purchasers. In this case, neither of the parties was ready to perform under the contract and, therefore, neither is entitled to damages. Accordingly, Gunn is not entitled to compensatory damages from Heggins, nor is Heggins entitled to retain the earnest money paid by Gunn. However, while Gunn did not per se request the refund of the earnest money, Heggin’s lack of merchantable title warrants the return of the money based on the terms of the contract. The unwillingness or inability of the vendor to convey according to contract, or a mutual abandonment of the contract, are grounds for recovery of earnest money. Heggins was unable to perform under the contract as she did not have merchantable title to the property on either closing date. |
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