Patterson v. Meyerhofer

Brief Fact Summary. Patterson (Plaintiff) and Meyerhofer (Defendant) entered into a contract in which Plaintiff agreed to sell and the Defendant agreed to buy four parcels of land. Plaintiff appeals from a judgment of the Special Term and Appellate Division holding that the parties were free to act on their own interests.

Synopsis of Rule of Law. In every contract, there is an implied undertaking on each party that they will not intentionally and purposely do anything to prevent the other party from carrying out the agreement.

Facts. Plaintiff agreed to sell and Defendant agreed to buy four parcels of land including the houses on the land for $23,000.00 to be paid partly in cash and partly by taking title subject to certain mortgages on the property. At the time the contract was executed, the Defendant knew that the Plaintiff was not the owner of the premises he agreed to sell. He expected to acquire title by purchasing it at a foreclosure sale. Before the foreclosure sale took place, Defendant informed the Plaintiff that she would not perform under the contract and would buy the premises herself. She bought the four parcels of land for $5,595.00 each. The Plaintiff also attended the foreclosure sale ready to purchase the parcels of land but was out bid by the Defendant. Defendant acquired the four parcels of land for $620.00 less than she was obligated under the contract. The foreclosure sale also included a fifth house, which was not mentioned in the contract. The Plaintiff’s complaint indicated that the
re was parole agreement, which provided that Plaintiff should buy all five houses at the foreclosure sale and should convey four to the Defendant and keep one for himself. Plaintiff brought this action for a judgment that Defendant convey the fifth house to the Plaintiff and declare that Plaintiff had a lien upon the premises purchased by the Defendant at the foreclosure sale, and that Defendant holds the parcels in trust for the Plaintiff subject to the contract. Plaintiff also requests the sum of $620.00 in damages, the difference between the price, which the Defendant paid and the price she would have paid the Plaintiff. The Special Term rendered judgment in favor of the Defendant, holding that the parties were free to act for his own interests.

Issue. Whether a party who acquires the subject of a contract from means other than those, which the contract provides, remains liable to the other party to the contract?

Held. Yes. Judgment reversed and a new trial is granted.
In every contract there is an undertaking by each party that they will not intentionally and purposely do anything to prevent the other party from carrying out the contract. A party who causes the breach may not recover damages for non-performance on the contract.
By entering into a contract to purchase from the Plaintiff property, which she knew he would have to buy at a foreclosure sale in order to convey it to her, the Defendant agreed that she would do nothing to prevent Plaintiff from acquiring the property at such sale. There is no finding of a parole agreement between the parties with regard to the fifth house. Defendant violated the agreement by bidding for and buying the premises for himself. Even though it was the intention of the contract that the Defendant receive the parcels of land, the contract said that the Plaintiff should receive them first and then sell them to the Defendant.
Therefore, Defendant breached the contract and Plaintiff is entitled to recover $620.00 in damages, which represents the amount the he would have received from received.

Discussion. The court left the fifth house out of consideration because there was no parole agreement according to the court.