Brief Fact Summary.
This case involved a poorly drafted agreement between C. S. Price (Plaintiff) and V.J. Van Lint (Defendant). The Defendant was to deliver $1500 and a deed to the Plaintiff, in exchange for a mortgage deed. The Plaintiff was to use the funds to construct a building on the land.
Synopsis of Rule of Law.
. “Where a contract contains mutual promises to pay money or perform some other act, and the time for performance for one party is to, or may, arrive before the time for performance by the other, the latter promise is an independent obligation, and nonperformance thereof merely raises a cause of action in the promisee, and does not defeat the right of the party making it to recover for breach of the promise made to him.”
Thus, special damages may be recovered where the money is to be used for a particular purpose which is known at the time to the party agreeing to make the loan, provided, of course, that such damages are not speculative or remote.View Full Point of Law
The Defendant advanced $134 for the tract of the land. There was a delay before he was able to deliver the deed to the Plaintiff, so there was also a delay in the time in which the Plaintiff could deliver the mortgage as security for the loan.
The Plaintiff began construction of the building, and the Defendant went away for two months. The Defendant sought release from the contract, but the Plaintiff would not allow it.
The trial court found that Plaintiff suffered damages from a delay in the construction of the building, and rendered judgment for the Plaintiff in the amount of $543.55, representing the Plaintiff’s damages, less the $134 loan from the Defendant.
Were the Plaintiff’s promise to give a mortgage and Defendant’s promise to give a loan dependent or independent covenants of the contract?
The trial court correctly held that the covenants were independent.
· The facts supported a finding that the parties’ obligations were to be performed independent of each other.
· The trial court incorrectly awarded damages, however. The lost profits were too speculative for recovery. However, the awards for the rental value of the property and the travel expenses of the Plaintiff to secure another loan were proper.
· The covenants were independent, as the parties never expected performance to occur simultaneously.
· The Plaintiff knew that it would take some time for the deed to be delivered to him, and the Defendant knew that Plaintiff would begin construction right away, in reliance on his promise to deliver the loan.