F. POSS FARMS v. MILLER

Full title: F. Poss Farms, Incorporated, a Colorado corporation v. Edna E. Miller…

Court: Colorado Court of Appeals. Division I

Date published: Dec 24, 1974

35 Colo. App. 152 (Colo. App. 1974)

529 P.2d 1343

Opinion

No. 74-137

Decided December 24, 1974.

In action for breach of a real estate purchase contract, judgment was entered awarding damages to seller. Buyers appealed.

Reversed

1. VENDOR AND PURCHASER — Real Estate Purchase Contract — Default — Principal Payments — Immaterial — Damages. In action for damages for breach of a real estate purchase contract, the fact that purchasers defaulted in making principal payments due under the terms of the purchase contract would be immaterial in determining the damages suffered by sellers because of the breach of contract by purchasers.

2. DAMAGES — Breach of Contract — Purchase of Real Estate — Defined. In case of a breach of contract by the purchaser of real estate, the vendor's damages are the full contract price minus the market value of the land at date of breach and also minus any payment received.

3. VENDOR AND PURCHASER — Damages — Seller — Circumstances — Interest on Unpaid Balance — Contract Price — Adjustments. In action to recover for breach of contract for purchase of real estate, because the buyers occupied the land for only a period of a few months, because of the large unpaid balance of the purchase price, and because during the buyer's occupancy of the premises they harvested a growing crop which the seller had planted, seller should receive as damages interest on the unpaid balance of the contract during the period of time buyers were in possession of the property as reasonable rental, and, in addition, plaintiff should receive the full contract price of the property less the down payment and less the value of the property on date of breach.

Appeal from the District Court of the County of Lincoln, Honorable William B. Naugle, Judge.

Robert J. Safranek, for plaintiff-appellee.

Henry, Cockrell, Quinn Creighton, Thomas E. Creighton, for defendants-appellants.

Opinion by JUDGE COYTE.

This is an appeal from a judgment entered against defendants (buyers) for damages for breach of a real estate purchase contract. We reverse.

The parties entered into a contract whereby buyers agreed to purchase a farm belonging to seller on which there was a planted wheat crop. The contract provided for a purchase price of $273,000; $15,000 to be paid on the signing of the agreement; $15,000 on July 1, 1971; $10,000 on December 10, 1971; and a like sum on each succeeding December 10th until the total was paid in full, together with interest at the rate of 5 3/4% on $243,000, or the unpaid balance. It provided for buyers to take possession of the property on January 1, 1971, and, as to the wheat crop, the contract provided that "second parties (buyers) specifically covenant and agree to apply any income received and derived from the 1971 wheat crop, but not exceeding $10,000 to the December, 1971 principal payment."

Buyers took possession of the property under the contract and paid the $15,000 down payment, but, on July 1, 1971, they did not make the payment due at that time and made no further payments. They did harvest the wheat crop but applied the proceeds to other debts. Shortly thereafter, seller filed a suit to foreclose buyers' interest in the contract and had a receiver appointed. Buyers vacated the premises and surrendered possession to sellers on August 24, 1971. After commencement of the trial, by agreement of the parties, buyers relinquished any interest that they had in the property including their right of redemption, and the action was converted into one for damages for breach of contract.

At the conclusion of the trial, the trial court found that the default of buyers in failing to make payments as required by the agreement was the sole cause of the damages sustained by the seller. It then entered judgment in favor of seller against buyers in the amount of $39,365.46 which consisted solely of delinquent principal and interest payments. Buyers contend that the court could not determine the amount of damages without knowing the value of the property at the time of the breach and that the court improperly computed damages. We agree.

[1] When buyers took possession of the property, they were entitled to possession of the entire farm including the growing crop and when the crop matured they were entitled to harvest the same. The fact that they defaulted in making principal payments due under the terms of the contract would be immaterial in determining the damages suffered by sellers because of the breach of contract by purchasers.

[2] The proper rule of damages is set forth in 5 A. Corbin, Contracts § 1098, as follows:

"In case of breach by the purchaser, the vendor's damages are the full contract price minus the market value of the land at date of breach and also minus any payment received."

Also, see Bunnell v. Bills, 13 Utah 2d 83, 368 P.2d 597; C. McCormick, Damages § 186.

[3] Under the terms of the contract, buyers had possession of the property from January 1, 1971, to August 24, 1971, at which time they surrendered it to the seller and a receiver was appointed. During buyers' occupancy of the premises they harvested the crop which the seller had planted in 1970. Because of this growing crop, the large unpaid balance of the purchase price, and the short period of buyers' occupancy, the seller should receive interest on the unpaid balance of the contract during the period of time buyers were in possession of the property as reasonable rental. Additionally, plaintiff should receive as damages, the full contract price of the property less the down payment, and less the value of the property on date of breach.

There was testimony that the wheat crop was partially harvested on July 1, 1971, and that negotiations were being carried on for a modification of the contract on that date. Defendants received the entire wheat crop. Therefore, upon remand, in order to simplify the determination of damages, the court should use the date of July 1, 1971, as the date of breach, but consider the wheat crop as totally harvested by that date.

Accordingly, judgment is reversed and the cause is remanded for further proceedings not inconsistent with this opinion.

JUDGE RULAND and JUDGE STERNBERG concur.