McKinney v. Sargent

TYLER, J.,

pro

tem.

Action to recover the sum of $1,050 paid under an executory contract of sale of personal property.

The case was twice heard in the court below. The first judgment was in favor of plaintiff in the sum of $487.45. A new trial was granted and judgment then went in favor of defendants, respondents herein. This appeal is from the latter judgment and it is taken upon the judgment-roll alone. It appears therefrom that on July 6, 1927, defendants were the owners of the business known as the Latz Hotel, in the city of Modesto, together with the furniture and other personal property connected with the operation thereof, and a leasehold interest of the premises. On said last-mentioned day plaintiff, Ella E. McKinney, entered into negotiations with defendants for the purchase of the same. Pursuant to such negotiations the parties went to the office of one E. H. Zion, an attorney at law, and had him prepare a contract of sale which the parties signed. The agreement was left with the attorney in escrow, with instructions to deliver it to plaintiff when she had performed an act provided for by the terms of said agreement, which required that she clear the title to certain real property owned by her, and execute a mortgage thereon in favor of defendants as security for the payment of the balance of the purchase price, a small deposit being made at the time. Before the title to the real property was cleared and before either the mortgage or said instrument of sale was de

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livcred by the escrow-holder, the building in which the rooming-house was located was detroyed by fire and all of the property which was the subject matter of the sale, with the exception of some slight salvage of the value of $35, ceased to exist. Defendant vendors carried insurance on the property amounting to the sum of $2,540. The purchase price agreed upon by the parties for the business was the sum of $3,500, and at the time of its destruction plaintiff had paid on account thereof the sum of $1,050, the amount for which she here sues. The agreement of sale provided that the destruction of the property by fire or otherwise should not relieve plaintiff from liability to pay the purchase price agreed to be paid. It also provided, however, that the agreement was not a contract of sale, and that title to the property should remain in defendant vendors until full performance of the conditions thereof. It was plaintiff’s contention below, and is here, that title to the destroyed property never passed, for the reason that the written instrument was never delivered, and therefore never became effective, and that this being so, title to the destroyed property was at all times in defendants, and the loss followed the title and must therefore be borne by defendants who are bound to return to plaintiff all moneys paid under the contract. It is an elementary law of sales, in the absence of special agreement to the contrary, that under an executory contract of sale the loss falls on the vendor as the risk accompanies the title. In such case the vendor is excused from the performance of his contract by reason of the destruction of the thing, but he cannot retain money already paid on account of the proposed purchase, or recover the moneys remaining unpaid. Under such circumstances the buyer cannot be compelled to pay the price and if he has paid, it may be recovered. Although the purchaser is not liable to the vendor for the purchase price, he must account for profits made by him from a use of the property while in his possession under agreement of sale.