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District Court of Appeal, Second District, Division 3, California.


Civ. 16797.

Decided: September 16, 1949

Frederick Brunner and Raymond A. Nelson, Los Angeles, for appellant. Sturzenacker & Isenberg, Hollywood, for respondents.

This is an action for money had and received to recover a $5,000 deposit paid under the following written contract entered into between plaintiff and defendants on July 15, 1946:

‘Received from William Baffa Address _____ the sum of $5000.00 being a part payment on the Cocktail Lounge, furniture and fixtures, liquor license and good will and also furniture in apartment, as per inventory. Property is located at 114 W. Whittier, Pico, Calif. (Subject to restrictions and reservations of record) At price of $93,000.00 payable $40,000. cash (including the within payment) balance payable as follows: A first Trust Deed on Property in the sum of $53,000., payable at $1000. per month or more at the rate of 5%— all assessments, and all encumbrances. It is understood that this offer is net to Mr. and Mrs. Johnson, the seller, and does not pay a real estate broker's commission. W.B. J.A.J. Upon opening of escrow, buyer will deposit an additional $15,000. When this offer is signed by buyer and sell [sic], it shall become good and binding. Balance of first payment, to-wit _____ dollars to be deposited in escrow within ___ days from above date and failing to make such payments, above amount paid is retained by and forfeited to _____ as liquidated damages. Purchaser agrees to purchase said property at above price and terms.

Dated this 15th day of July, 1946, at Los Angeles, California.

_____ Purchaser Agent Carl Larsen Co. /s/ William Baffa Purchaser Per _____ I accept above sale and agree to pay No Commission

Dated /s/ J. A. Johnson (Accepted)

Owner _____

/s/ Gladys H. Johnson

Owner _____'

(The italicized portions were added by the parties to a widely used printed form.)

On the reverse side of the above contract appears the following, which is in the handwriting of the broker acting for plaintiff, and is signed by the parties: Fixtures and Equipment to be Secured by Chattel mortgage. Stock to be Payd [sic] for in cash over and above selling Price. Escrow may be opened any time on or before 45 days from this date. /s/ William Baffa /s/ J. A. Johnson /s/ Gladys H. Johnson.'

The court found that defendants performed all that was required of them under the contract and that plaintiff failed and refused to open an escrow and abandoned the contract.

Plaintiff contends there was a mutual abandonment of the contract, which is tantamount to contending that the evidence does not support the findings.

It is firmly settled that in the absence of a mutual abandonment or rescission, a defaulting vendee under a contract to purchase real or personal property cannot recover from a vendor who is without fault any of the money paid to the vendor in accordance with the terms of the agreement. The vendor's right to retain the amounts paid on the purchase price exists independently of any express provisions in the contract for forfeiture of rights and for the retention of the purchase money as liquidated damages, such provisions being but declarations of what would have been the legal rights of the vendor without such provisions. Glock v. Howard & Wilson Colony Co., 123 Cal. 1, 10–12, 55 P. 713, 43 L.R.A. 199, 69 Am.St.Rep. 17; Tomboy Gold & Copper Co. v. Marks, 185 Cal. 336, 339, 197 P. 94; Barkis v. Scott, 34 Cal.2d 116, 208 P.2d 367.

There is no evidence in the record indicating a mutual abandonment of the contract. On the contrary there is evidence, and plaintiff so concedes in his brief, that plaintiff had given an indication that he was abandoning the contract. Defendant Johnnie Johnson (referred to as ‘defendant’) testified he was at all times ‘ready to go to escrow with Mr. Baffa.’ He explained the reason for striking out the sentence ‘This is to be a 45-day escrow’ on the face of the agreement and substituting the writing on the back of the agreement was because plaintiff needed extra time within which to obtain money tied up in another escrow to pay for the stock. The agreement was signed on a Monday and plaintiff stated he would go into escrow on the following Wednesday at 1:00 o'clock. On Wednesday morning defendant was called into the office of the real estate agent representing plaintiff, who stated plaintiff was having marital difficulties and wanted ‘a little more time, but if Mr. Baffa isn't willing to go through with it, why don't you give the $5,000 back and call it quits?’ Defendant said, ‘No * * * we have a deal.’ The real estate agent then replied, ‘Well * * * Mr. Baffa will never go into escrow.’ Thereafter defendant had a telephone conversation with plaintiff in which he was told that plaintiff was not going into escrow and wanted the return of his $5,000.

There is no provision in the agreement that the $5,000 deposit was to be, as plaintiff contends, a conditional down payment provided defendants furnished him with bills and invoices showing the property had cost defendants $84,000 plus the cost of an air conditioner, and defendants denied there was ever any agreement that they should furnish plaintiff with ‘anything like that.’ On September 12, 1946, defendants' attorney sent the following letter to plaintiffs: ‘You are hereby notified that the time given you under your contract of sale with Johnnie A. Johnson and Gladys H. Johnson, through Carl Larsen and Co. has passed. The original contract provided that on or before 45 days from the 15th of July you would open an escrow and deposit an additional $15,000. This you have failed to do and Mr. and Mrs. Johnson are retaining the $5,000.00 deposit as liquidated damages, as provided in the contract. Unless you do, within five days from the date of this notice, September 17, 1946, before the hour of five o'clock P.M. that day, and open an escrow in accordance with the terms of the contract, and deposit the funds, we will treat the contract as cancelled and your deposit forfeited. Mr. and Mrs. Johnson expect to offer the property for sale and if the property is sold for less than the balance due from you, suit will be instituted against you to recover the balance.’ No answer was ever made to this letter and on October 11, 1946, plaintiff commenced the instant action. The evidence supports the findings.

The other contentions made by plaintiff are without merit and require no comment.


VALLEE, Justice.

SHINN, P. J., and WOOD, J., concur.