HOWARD P. HORTON, OWNER OF H & H CONSTRUCTION CO., AN UNINCORPORATED COMPANY, APPELLANT,
v.
THOMAS M. O'ROURKE, SR., ET UX., ET AL., APPELLEES

Fla. 2d DCA | 1975-11-07
Nos. 74-1267—74-1270
GRIMES and SCHEB, JJ., concur.
321 So. 2d 612 Florida District Court of Appeal, Second District (1975) Negative Treatment
Cited by 20 cases

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Synopsis

A builder appealed a judgment awarding compensatory damages to purchasers for breach of land sale contracts due to unmarketable title caused by a federal tax lien. The court reversed, holding that absent bad faith, damages for breach of an executory land contract are limited to purchase money paid, interest, and expenses, not the benefit of the bargain.


Holding

In the absence of bad faith, damages for vendor breach of an executory real estate contract are limited to purchase money paid plus interest and expenses of investigating title. The court added that cost of improvements made by purchasers with vendor approval that inure to the vendor's benefit should also be recoverable to prevent unjust enrichment.


Headnotes

[1] In the absence of bad faith, damages for a vendor's breach of an executory contract to convey real estate are limited to the purchase money paid, plus interest and title…

[2] The "English rule" limits damages for breach of a land sale contract to the return of purchase money, interest, and expenses, unless bad faith is shown.

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Key Quotes

“in the absence of bad faith the damages recoverable for breach by the vendor of an executory contract to convey title to real estate are the purchase money paid by the purchaser together with interest and expenses of investigating title”

Establishes the controlling legal standard for damages in unmarketable title cases absent bad faith

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Facts & Procedural History

Between March and May 1972, four families contracted with H & H Construction Company to purchase homes on land owned by Overlord Investments, Inc. Aft…

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Opinion of the Court
McNULTY, Chief Judge.

McNULTY, Chief Judge.

Appellant Howard P. Horton, individually and as owner of H & H Construction Company, appeals from a final judgment awarding compensatory damages for breach of four land sale contracts due to an unmarketable title. We reverse.

The operative facts are simply stated. Between March 3, 1972 and May 3, 1972, the four appellee families executed written contracts with H & H Construction Company to purchase homes being constructed on land owned by appellee Overlord Investments, Inc. Upon completion of the homes in the summer of 1972, the families took possession without closing, under rental agreements ranging from $90 to $135 per month. Closing was conditioned upon clearance of all outstanding title defects.

Upon taking possession, the purchasers-lessees received a notice of the existence of a Federal Tax Lien encumbering the property in excess of $94,000. After receiving several assurances that the lien would soon be removed, they made improvements and continued the rental agreement for 22 months. But on March 15, 1974, appellant notified the purchasers in writing that clearance of the defect was impossible. Appellant offered either to return the earnest money deposits or enter into new rental agreements at a higher rate.

Thereafter, on April 15, 1974, appellee Overlord Investments, Inc., record title holder of the land, brought suit to oust each purchaser. After answering, the purchasers-appellees filed individual suits for specific performance against both Overlord Investments and appellant, alleging a principal-agent relationship, which resulted in this appeal.

Following a non-jury trial on the four consolidated cases, a final judgment was rendered denying specific performance, exonerating Overlord from any obligation to purchasers-appellees and awarding the purchasers pecuniary damages against appellant. In arriving at the amount of such damages, the court applied the standard measure of contract damages whereby a purchaser ordinarily receives the benefit of his bargain, measured by the court in this case by the difference between the value of the land when it should have been conveyed less the contract price as yet unpaid.

In the one meritorious point on appeal, appellant contends that application of this standard measure of damages giving purchasers in a land sale contract the benefit of their bargain is error in the absence of a showing of bad faith. We agree.

In Florida1 and many other jurisdictions 2, the courts follow the English rule announced in Flureau v. Thornhill3 whereby in the absence of bad faith the damages recoverable for breach by the vendor of an executory contract to convey title to real estate are the purchase money paid by the purchaser together with interest and expenses of investigating title. Lest there be unjust enrichment, under the facts in this case, we would add to that here the cost of improvements made by purchasers in contemplation of the conveyance, with the express or implied approval of the vendor, which inure to the benefit of the vendor. Appellees’ reliance on A. J. Richey Corp. v. Garvey4 as authority to the contrary is misplaced in that, in that case, there was clearly a lack of good faith. Here, there is no suggestion of bad faith on appellant’s part. Indeed, the record reveals that he dealt above board, made every effort and went to considerable expense to clear the title defect and to consummate ultimately the contract to convey. In sum, there is not a scintilla of evidence to establish bad faith even if it were alleged or otherwise put in issue; the undisputed evidence is to the contrary.

Accordingly, the judgment appealed from should be, and it is hereby, reversed; and the cause is remanded for further proceedings not inconsistent herewith.

GRIMES and SCHEB, JJ., concur. . See Gassner v. Lockett (Fla.1958), 101 So. 2d 33; Liberis v. Carmeris (1933), 107 Fla. 352, 146 So. 220; Key v. Alexander (1926), 91 Fla. 975, 108 So. 883; Southern Realty and Utilities Corp. v. Gettleman (Fla.App.3d, 1967), 197 So. 2d 30; Resnick v. Goldman (Fla.App.3d, 1961), 133 So. 2d 770 ; 33 Fla. Jur. Vendor and Purchaser § 173 (1960).

. 77 Am.Jur.2d Vendor and Purchaser § 522 (1975) ; 5 A. Corbin Contracts § 1097 (1964).

. 2 W.B1.1078 (1776).

. (1938), 132 Fla. 602, 182 So. 216.


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Citator

Cited By

  • Coppola Enters., Inc. v. Alfone, 531 So. 2d 334 (Fla. 1988)
    …[*335] KOGAN, Justice. We review Coppola Enterprises, Inc. v. Alfone, 506 So. 2d 1180 (Fla. 4th DCA 1987), based upon apparent conflict with Horton v. O’Rourke, 321 So. 2d 612 (Fla. 2d DCA 1975), and Vogel v. VanDiver, 373 So. 2d 366 (Fla. 2d DCA 1979). We have jurisdiction. Art. V, § 3(b)(3), Fla. Const. On April 18,1978, Helen Alfone contracted with Coppola Enterprises, Inc. (Coppola) to purchase a residential lot and…
  • …r, where bad faith exists the purchaser may obtain loss of bargain damages which is the difference in value between the price the purchaser had agreed to pay and the value of the property on the contracted date for closing”). 7. Horton v. O’Rourke, 321 So. 2d 612, 613 (Fla. 2d DCA 1975) (“[I]n the absence of bad faith the damages recoverable for breach by the vendor of an executory contract to convey title to real estate are the purchase money paid by the purchaser together with interest and expenses of inve…
  • R. M. Vogel and R. v. Gisselbeck, 373 So. 2d 366 (Fla. 2d DCA 1979)
    …the contracted date for closing — as extended. We reverse on the ground that the “loss of bargain” damages awarded by the trial court were inappropriate in the absence of bad faith on the part of the vendor. The leading case is Horton v. O’Rourke, 321 So. 2d 612 (Fla. 2d DCA 1975). In Horton, the court set out the applicable rule: In Florida and many other jurisdictions, the courts follow the English rule announced in Flureau v. Thornhill, whereby in the absence of bad faith the damages recoverable for bre…

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