Cohen v. Krantz

Brief Fact Summary. Plaintiffs contracted with Defendants to purchase a home. Plaintiffs delayed the delivery date until December 15, without any indication that title could be rejected. After investigation, Plaintiff discovered that title was unmarketable.

Synopsis of Rule of Law. While a vendee can recover his money paid on a contract from a vendor who defaults on law day without a showing of tender or even of willingness and ability to perform where the vendor’s title is incurably defective, a tender and demand are required to put the vendor in default where his title could be cleared without difficulty in a reasonable time.

Facts. Plaintiffs contracted with Defendants to purchase a home for $40,000.00, with a down payment made of $4,000.00. The balance was due upon delivery of the deed in the form of $24,500.00 cash and assumption of an $11,500.00 mortgage. Plaintiffs delayed the delivery date until December 15, without any indication that title could be rejected. Thereafter, the Plaintiffs’ attorney sent a letter to Defendant’s attorney, which stated that an investigation had disclosed that the present structure of the Defendant’s property was not legal and that title was unmarketable and demanding return of the $4,000.00 down payment within five days, or legal action would be instituted. The Plaintiffs instituted this action for the $4,000.00 and for fees incidental to the title search. The Defendant counter-claimed for breach of contract. The Defendant sold the property to a third party for $6,000.00 less than the price agreed to by the Plaintiffs. The defects, which were not specified by the Plainti
ffs, consisted of a swimming pool that lacked a certificate of occupancy and a fence that went beyond the frontline of Defendant’s property. The trial court found for Plaintiffs. The intermediate appellate court reversed the trial court and found that the Defendant should prevail on the counter-claim in the amount of $1,500.00, and they could retain the deposit. The intermediate court found that the Plaintiffs’ attorney’s letter failed to specify the defects, and the specific objections to the title were not raised until after this suit was filed. The intermediate court found that the defects were easily cured and that the Plaintiffs never gave Defendant a chance to cure the objections. The Plaintiffs appealed.

Issue. Are the Plaintiffs entitled to a return of the deposit?

Held. No. Judgment affirmed.
While a vendee can recover his money paid on a contract from a vendor who defaults on law day without a showing of tender or even of willingness and ability to perform where the vendor’s title is incurably defective, a tender and demand are required to put the vendor in default when his title could be cleared without difficulty in a reasonable time. The vendor in such case is entitled to a reasonable time after law day to make his title good.
The advance rejection here by the Plaintiffs was unjustified and was an anticipatory breach of contract.
Plaintiffs are barred from recovering the deposit from a vendor whose title defects were curable and whose performance was never demanded on law day. The Plaintiffs were required to tender their performance on law day in order to put the vendor in breach, but if the defects were easily curable the Defendant would be entitled to an adjournment to clear the title.
A vendor with incurable defects, on the other hand, is automatically in default, whereas a vendor with curable title defects must be placed in default by a tender and demand, which was not done by Plaintiffs.
The Defendant is excused from performance by inability to cure defects when such inability is caused by a lack of advance notice from Plaintiffs of the specific defects.

Discussion. This type of case might arise when the Plaintiffs were looking for any reason to get out of the contract. Otherwise, a reasonable person who seeks the benefit of a bargain made in good faith would attempt to negotiate with the Defendant to ensure compliance with the requirements such that title is marketable.