Hamaker v. Bryan

WILBUR, J.

This is an action brought by the plaintiffs to recover damages for breach of contract to convey real estate, executed March 14, 1911. The code prescribes the ordinary measure of damages in such cases, and then makes this special provision, “but adding thereto, in case of bad faith, the difference between the price agreed to be paid and the value of the estate to be conveyed, ’ ’ etc. The price agreed to be paid in the instant case was thirty-three thousand five hundred dollars, of which $250 was paid and $4,750 agreed to be paid in cash, the balance by mortgage and trust deed on the property. The verdict was for $5,250. The principal question involved was whether or not there was bad faith in the refusal, if any, to convey. On this subject the court instructed the jury as follows:

“In order to charge the defendants with bad faith, it is not necessary that their conduct be shown to be fraudulent. It is sufficient to show that their conduct in failing to convey this property to the plaintiffs was by reason of any frivolous or unfounded refusal in law or in fact to comply with the terms of their agreement. Any unlawful or unjustifiable refusal on their part to comply with their agreement would be sufficient to constitute bad faith; and in determining whether or not the conduct of the defendants in this case was such as to show bad faith, you should take into consideration all of the facts and circumstances surrounding their failure to convey the property as disclosed by the evidence. ’ ’

The jury were thus instructed that “any unlawful or unjustifiable refusal on their [the vendors] part to comply with their agreement would be sufficient to constitute bad faith.” Every breach of a valid and subsisting contract for which damages may be recovered under section 3306 of the Civil Code is “unjustifiable,” and in a sense “unlawful,” for the law requires that a person fulfill his legal obligations. The instruction was therefore clearly erroneous and prejudicial. The bad faith of the vendors was a question of fact to be determined by the jury. Appellate courts have

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been' called upon to determine whether or not the evidence before the trial court was sufficient to justify a decision as to the fact of good faith or bad faith, but our attention has not been called to any case where a trial court, as a matter of law, has attempted to define “bad faith.” In