Smith v. Allen

McCOMB, J. Plaintiffs appeal from a judgment of dismissal entered after a general demurrer was sustained to their amended complaint seeking damages for unjust enrichment in a transaction involving the sale of residential property to them by defendants, the latter having reacquired the property in foreclosure proceedings.

Facts: On August 15, 1963, plaintiffs and defendants executed an instrument labeled “Real Estate Option,” under which plaintiffs agreed to purchase, for a total consideration of $145,000, certain residential property owned by defendants. At the time of the execution of the agreement, plaintiffs paid $5,000 toward the purchase price and took possession of the property.

Defendants agreed to convey the property to plaintiffs on February 1, 1964, provided plaintiffs made certain additional payments on the purchase price, totaling $25,000 ($5,000 on October 1, 1963, $10,000 on November 1, 1963, $5,000 on December 1, 1963, and $5,000 on January 1, 1964), paid $4,193 (apparently interest) on February 1, 1964, and executed a promissory note for the balance of the purchase price ($115,000) and a first deed of trust on the property. By its terms, the promissory note was to bear interest at 7 percent and was payable at the rate of $900 per month, beginning March 1,1964.

On February 1, 1964, plaintiffs having fulfilled the conditions hereinabove set forth, defendants conveyed the property to them.

During the period in which they were in possession of the property (slightly over 21 months), plaintiffs allegedly made certain repairs at a cost of $2,239.421 and certain improvements at a cost of $17,439.74.2

[95]Plaintiffs paid the 1963-1964 taxes, in the sum of $989.38, and made the first nine of the $900 monthly payments due by the terms of the promissory note ($8,100). They then defaulted, allegedly being “without funds, assets or credit from which to make any further payment. ’ ’

Thereafter, defendants commenced foreclosure proceedings, which culminated in a trustee’s sale on May 6, 1965. At that time, the property was sold and conveyed to defendants, who obtained possession from plaintiffs on May 27,1965.

Plaintiffs allege that the value of the property at the time defendants reacquired it at the trustee’s sale was not less than the contract price plus the cost of the repairs and the improvements (a total of $164,679.16) ; that the reasonable rental value for the period of their occupancy was at the rate of $750 per month, or a total of $16,140; that the total amount of moneys expended by them was $62,961.54; and that they have been damaged, and defendants have been unjustly enriched, by the difference, or the amount of $46,821.14. They ask judgment in that amount.