Clayton McLendon, Inc. v. McCarthy
Clayton McLendon, Inc. v. McCarthy
Opinion of the Court
The parties to these appeals entered into a real estate sales contract in which the appellant McLendon was the broker, the appellant The Bonny Corp. was the seller and the appellee McCarthy was the buyer. The appellee deposited $26,250 as earnest money with the broker. The broker brought suit against the purchaser and the seller for its commission alleging an anticipatory breach of the contract by the buyer. A counterclaim was filed by the buyer to recover the earnest money deposited. A cross claim and counterclaim was filed by the seller to recover one-half of the earnest money as liquidated damages. All parties filed motions for summary judgment. The trial court granted the appellee’s motion for summary judgment and denied the motions of the two appellants, who appealed to this court from these orders.
The sale contract is attached to the pleadings and its terms are not in dispute. It contains provisions for the payment of a commission to the broker McLendon upon a consummation of the sale, which commission is equivalent to the earnest money deposited at the time of the signing of the contract in the amount of $26,250. The contract provided that if the purchaser refuses or fails to perform, the purchaser shall pay the broker the full commission; with the provision that the broker may apply one-half of the earnest money towards payment of the full commission and may pay the balance thereof to the seller as the seller’s liquidated damages if the seller so claims. The contract had a specified closing date of June 21, 1970.
1. It was not error for the trial court to consider the affidavit of McCarthy which was served upon the other parties and filed on the day of the hearing of the motions for summary judgment. There is no showing in the record that any objection was made in the trial court on the grounds that it was not served and filed within the time provided by § 6 (d) of the Civil Practice Act (Code Ann. §81A-106 (d)). Wakefield v. A. R. Winter Co., 121 Ga. App. 259 (174 SE2d 178).
2. We need not reach the question as to whether there was any anticipatory breach of the contract, for the contract is unenforceable. By the express terms of the above quoted special condition, the purchaser was only bound to perform if in his uncontrolled judgment the cost of the sewers was "reasonable and economically feasible.” This shows that the contract is lacking in mutuality. The condition made the contract contingent upon the event which may or may not happen at the pleasure of the buyer. Until that contingency has occurred there is no obligation on the part of the purchaser to purchase or the seller to sell. F. & C. Investment Co. v. Jones, 210 Ga. 635 (81 SE2d 828); Wehunt v. Pritchett, 208 Ga. 441 (67 SE2d 233); Brady v. Poulos, 121 Ga. App. 35 (172 SE2d 437). Commercial Mortgage &c. Corp. v. Greenwich
3. It is not disputed that the total amount of the earnest money for which the appellee McCarthy obtained judgment in his favor in the lower court is $26,250. The appellee’s counterclaim for the earnest money demanded $26,500. We will affirm the grant of his motion for summary judgment and the denial of the appellants’ motions for summary judgment on the condition that appellee within 15 days from the date of issuance of this opinion write off so much of the judgment for the earnest money as exceeds $26,250; otherwise we reverse.
Judgment affirmed on condition.
Concurring Opinion
concurring specially. Commercial Mortgage &c. Corp. v. Greenwich Savings Bank, 112 Ga. App. 388, supra, states: "Contracts requiring that one party’s performance be 'satisfactory’ or 'acceptable’ to the other party in certain specified respects, are not illusory in character or void for lack of mutuality, but impose upon the party to be satisfied positive obligations conditioned upon his satisfaction in the exercise of an honest judgment.” 5 Williston on Contracts (3d Ed.) § 675A is quoted in part: "Since, however, such a promise is generally considered as requiring a
Thus it appears that a contract is not void or lacking in mutuality because it specifies that in connection therewith something must be done which one of the parties may accept or reject in his discretion. The contract is valid; the exercise of an honest judgment is the question at issue. Further, the discretionary acceptance may be phrased in either of two ways — as a condition precedent, in which case no rights arise on either side until the judgment is exercised one way or the other, or as a condition subsequent, in which case the contract is valid until the contracting party
The present case is a good example of a discretionary stipulation contained in a condition subsequent: the sale is contingent upon subject property being served by the necessary storm and sanitary sewers "at a cost to purchaser which purchaser considers reasonable and economically feasible. If it cannot be then this contract shall be null and void.” Obviously, all parties considered the contract viable, subject to its cancellation if, in the opinion of the purchaser honestly exercised, sewer connections were found not to be economically feasible.
The letter relied on as an anticipatory breach states: "My cost studies indicate that it would not be economically feasible to service this subject property with necessary storm and sanitary sewers . . . due solely to the fact that sewer service from Piedmont Avenue cannot be obtained . . . as it is not possible to attach the sewer line onto the sewer line serving Piedmont Avenue. Any other sewer service would involve an expenditure which would not be justified for this property.”
I think it is extremely important to keep a clear distinction between contracts which are void because lacking in mutuality and contracts which are valid although they may become unenforceable upon the failure of some contingency. All sorts of rights may arise under such contracts other than those relating particularly to the contingency. I can make no rational distinction between, say, a provision for installing sewers at a price satisfactory to the purchaser, which would be valid under the Commercial Mortgage case, 112 Ga. App. 388, supra, and a provision that the property be served by sewers at a price "which purchaser considers to be reasonable and economically feasible.” If anything, it seems to me that the latter phraseology is more definite than the former.
I therefore disagree with the second division of the opinion, holding the contract void for lack of mutuality. The
However, on this motion for summary judgment I think the appellee prima facie established (a) that he elected to rescind the contract because in his opinion the cost of sewer installation was not satisfactory to him because not economically feasible, and (b) a logical, objective reason for his having arrived at this opinion. Plaintiffs offer no evidence either that the defendant purchaser did not exercise his discretion in the matter or that it was arbitrarily and unfairly exercised so as to be fraudulent. For this reason alone I concur in the judgment.
Reference
- Full Case Name
- CLAYTON McLENDON, INC. v. McCARTHY Et Al.; THE BONNY CORPORATION v. McCARTHY Et Al.
- Cited By
- 17 cases
- Status
- Published