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Clay v. Landreth

    Brief Fact Summary. In this case Landreth (Defendant) entered into a contract with Clay (Plaintiff) to purchase a lot for the purpose of building a storage unit, however the land was later rezoned for residential use only.

    Synopsis of Rule of Law. When something has intervened which ought to prevent it, the doctrine of equitable conversion will not be applied. It does not exist as a matter of right and is not applicable to all circumstances.

    Facts. Defendant entered into a contract with Plaintiff to purchase lot for the purpose of building a storage unit thereon for ice cream and frozen fruits. Between the time of the contract and the delivery of the deed to the city of Roanoke, Virginia rezoned the lot for residential use only. The Plaintiff sued the Defendant for specific performance, which was denied in the trial court. Plaintiff appealed.

    Issue. Under the circumstances, should specific performance be ordered?

    Held. No. Affirmed.
    The Plaintiff urged the court to apply the rule of equitable conversion. The doctrine of conversion is based on the principle that equity regards things directed or agreed to be done as having been actually performed where nothing has intervened which ought to prevent a performance. Craig v. Leslie, 16 U.S. 563].
    When something has intervened which ought to prevent it, the doctrine of equitable conversion will not be applied. It does not exist as a matter of right and is not applicable to all circumstances.
    In this case, the court found that the legal fiction of equitable conversion should not be applied because to do so would frustrate the intent of the parties in making the contract and result in hardship and injustice to Defendant.
    If a restriction precludes use of the land for the purpose for which, as the vendor knows, it is bought, specific performance will not be granted. Williston on Contracts, Rev. Ed., Vol. 4, p. 2587.

    Discussion. This case is a fairly clear illustration of what can happen when unexpected circumstances intervene between the time of making a contract and performance.


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