Roy F. Gold (Defendant) Appellant;
and
Charles C. Stover (Plaintiff). Respondent
1920: May 5; 1920: June 21.
Present:—Sir Louis Davies C.J. and Idington, Duff, Anglin, Brodeur and Mignault JJ.
AN APPEAL FROM THE APPELATE DIVISION OF THE SUPREME COURT OF ALBERTA.
Sale—Option—Time limit—Damages—Tender—Half-interest.
[Page 623]
G. gave S. an option to purchase certain land. G. however, on payment of $300, could withdraw the option and sell the property but without any advertisement or the services of an agent. S. could exercise his option before the 1st of March, 1917, and would then have to pay half of the purchase price. Before expiry of the time limit, G. advised S. that he had sold the property. Later on, S., having satisfied himself that the sale had been effected through an agent, filed a caveat and brought an action in damages.
Held, affirming the judgment of the Appellate Division, that S. had the right to claim immediately the damages suffered by him on account of the breach of the contract of option by G., without being obliged to make a tender to G., before the expiry of the time limit, of the amount payable in cash on account of the purchase price.
Held, also, reversing the judgment of the Appellate Division, that S., although he had agreed to assign to one M. a one-half interest in the option, was entitled to recover not only one-half, but the entire damages, the apportionment of the amount received being a question of settlement of account between S. and M.
Judgment of the Appellate Division ([1919] 3 W.W.R. 503), affirmed in part.
APPEAL from the judgment of the Appellate Division of the Supreme Court of Alberta reversing the judgment of the trial judge, Stuart J.and maintaining the respondent's action.
[Page 624]
The material facts of the case and the questions in issue are fully stated in the above head-note and in the judgments now reported.
A. H. Clarke K.C. for the appellant.
C. C. McCaul K.C. for the respondent.
THE CHIEF JUSTICE.—I concur in the reasons stated by my brother Mignault for dismissing the appeal with costs and the cross-appeal with costs, subject, however, as to the latter, to a reference as stated by him to determine respondent's damages if either party so desires.
IDINGTON J.—The appellant and respondent executed the following contract:
This agreement made and entered into this thirteenth day of November, A.D. 1916, by and between R. G. Gold of Minneapolis, Minnesota, party of the first part, and C. C. Stover of Milk River, Alberta, party of the second part, witnesseth:
The first party in consideration of one hundred dollars ($100) in hand paid by the second party, the receipt of which is hereby acknowledged, agrees and covenants with the second party to sell him the option to purchase the following described lands, the North West Quarter (N.W. ¼), of Section Four (4); all of section five (5); the north half (½), of section six (6), and the east half of section seven (7), all in township three (3), range fifteen (15), west of the fourth principal meridian, containing fourteen hundred and forty (1,440), acres more or less according to Government survey thereof for the sum of twenty-one thousand six hundred and ninety dollars ($21,690).
The second party shall have until March 1st, 1917, to pay the first half of the above, and in case he fails to do so shall forfeit all money paid down and this agreement shall become null and void.
The first party may have the right to sell the above property himself, without advertising same or through other agents, and in case he does sell at not less than sixteen dollars ($16), per acre, and in such case shall pay the second party three hundred dollars ($300), for such privilege.
(Sgd.) R. F. GOLD.
(Sgd.) C. C. STOVER.
[Page 625]
The appellant on the 11th January, 1917, wrote the respondent as follows:
Minneapolis, Minn.
Mr. C. C. Stover,
Milk River, Alberta.
Dear Mr. Stover:—
As per my telegram to you, I herewith enclose you my check for $300 to take up the option which I gave you on the Countryman property. I have sold it to a pretty good man, who expects to handle it himself. You will have to buy me a dinner on this. Please return option to me.
Yours very truly,
R. F. GOLD,
Treasurer.
Jan. 11th, 1917.
The foregoing contract though presenting some unusual features clearly was made for a valuable consideration and hence valid, and binding the appellant to the due observance of all its terms. He chose to disregard the due observance of the term contained in the last clause thereof by selling through another agent than the respondent, and to improperly announce to him by the foregoing letter the sale of the property, as if made within the literal terms of the right reserved.
Upon the receipt of the said letter there enured to the respondent a right of action for damages arising from said breach.
And as an outcome thereof there seems to have arisen, I most respectfully submit, an unfortunate misapprehension of the legal results.
The learned trial judge, after reciting the salient facts in the story, seems to have overlooked the nature of the contract, and reached the conclusion that there could be no damages for such a breach of contract, unless and until the respondent had tendered the part of the purchase money, which was to have become payable on the 1st of March, 1917.
[Page 626]
The case of Hochster v. De la Tour, and many decisions in cases since, founded thereon, seem to have been overlooked.
The cause of action arose for breach of said contract within the principle upon which these cases proceeded, long before the 1st of March, 1917, and has been open to the respondent to pursue ever since.
The Appellate Division properly set aside the judgment of the learned trial judge but unfortunately seems to have approached the assessment of the damages which the respondent was entitled to, as if to be assessed upon the same basis as if the option had been effectively exercised.
And, in doing so, it allowed only the measure of damages which the respondent could have in fact received, because he had, before the breach, sold part of his chances of success to another party who had validly bargained with him for half the prospective profits and thus became entitled to half the fruits of the adventure, which, in the legal result, means, of course, though obviously not so intended, half the sum receivable herein by respondent under the assessment of damages allowed.
In so doing, in my opinion, the Court of Appeal erred gravely.
It is not what the personal results to the estate of the respondent alone or his personal profits might develop by reason of his calling in the assistance of partners but what, on such a contract, he was entitled to recover for the obvious breach thereof that should have been the guide to the assessment of damages.
[Page 627]
And that seems to have been proceeded upon by assuming that, as a certainty, the respondent could have reaped in profits the same sum as if he had in fact completed the anticipated contract of purchase.
Certainly that was an erroneous way of viewing the matter, for to complete the contract he must have raised half the purchase price named in the option and thereby, and in many other incidental ways, have incurred some expense of which he was relieved by the breach.
And again, he stood to have run the risk for two and a half months of the appellant selling by his own unaided efforts without advertising any price he was at liberty to receive, of not less than sixteen dollars an acre.
All these and the like considerations render it very difficult to say that the sum at which the damages were assessed is correct.
It may well be that even if the proper principles upon which the assessment of damages should have proceeded had been observed, the result would have been about the same, but how can we say so?
The misapprehension of the nature of the claim seemed to mislead also appellant's counsel into contending that, unless and until the respondent had tendered the price named in the option, he had no right to relief and no right to damages because he had not assented to the repudiation of the contract by the appellant.
I submit there is no foundation for such a contention and certainly nothing in Roots v. Carey, to uphold it.
[Page 628]
That was a case of specific performance in which this court held that as there had been no binding acceptance of the proposal, or option given, there could be no such relief granted, and all said therein by the majority so holding must be read in view of that aspect of the case.
Counsel for appellant relied upon the conduct of respondent in filing a caveat early in February, 1917, following the above quoted letter of the appellant.
No copy thereof appears in the case, but assuming it claimed an interest in the lands in question, how can that in law affect the actual outstanding liability of the appellant for breach of his contract? Or the rights of respondent resting thereon?
The respondent seems to have had the impression that the appellant had played him false in securing a purchaser by means against which he had contracted, and to have assumed that thereby the necessity for a tender was waived.
Certainly that would have been a contention much more arguable than many of the several misapprehensions of the nature of the contract, and the legal results flowing from the breach thereof, which have been presented.
The respondent also seems to have supposed that in some way, not very clear, he had by virtue of the breach become entitled to an interest in the land by way of recovering damages.
Are we to deprive a man of his legal rights because he has pursued an erroneous view of the method and means by which they are to be enforced? I submit not.
And the only result of all that so transpired which we ought to consider is that the parties, after pursuing such erroneous paths and contentions, agreed
[Page 629]
that the claims for specific performance should be abandoned, and respondent's claims and contention be reduced to the claim for damages and rely upon the bond of suretyship given to answer same.
In conclusion, if the parties wish, or either of them respectively think, that the amount awarded by the Appellate Division is too much or too little to be allowed for such a breach of contract as I have outlined, within the ordinary principles upon which damages are assessable for breach of contract, such as I have indicated this is, and desire a reference to proceed upon such principles instead of the erroneous basis upon which the Appellate Division proceeded, I would allow such a reference at the risk to either so contending of costs following the result.
Possibly the parties may shrink, as counsel seemed to do, from the suggestion when made by me in course of the argument, and feel that they have had enough of the game of chance involved in a lawsuit.
The assessment of damages upon such a repudiation of the contract by way of anticipatory breach has always been recognized as raising a difficult problem for those called upon to assess damages for such breach.
In the event of neither of the parties desiring such reference as suggested, the appeal should be dismissed with costs.
In the event of either, or both, of them desiring a reference, the costs of this appeal should await the result thereof. And, if resulting in a substantial increase or diminution of the amount found by the Appellate Division, costs thereof and of the appeal should be awarded accordingly.
[Page 630]
DUFF J.—I concur with Idington J.
ANGLIN J.—The defendant, appellant, comes into this court conceding the anticipatory breach or repudiation of contract alleged by the plaintiff, which he had stoutly contested in the provincial courts. He seeks to avoid consequential liability on a ground which appears not to have been taken below—viz., that the plaintiff elected not to treat the defendant's repudiation as a breach entitling him to bring action, but to maintain the contract—thus keeping it alive for both parties and for all purposes—and that he failed to take up the option before its expiry by effluxion of time and had therefore no ground of action for breach at that time.
I incline to think that such a volte face should not be permitted. But if it be open to the defendant to take that position, in my opinion it does not help him. Citing the judgment of Cockburn C. J., in Frost v. Knight, he treats the case as if it were one of breach of contract for sale and purchase. But it was not that. The defendant's contractual obligation was to keep an offer of sale open for a definite period, subject to its earlier termination on a condition which did not arise. He broke that contract and put it out of his power ever to fulfil it by selling the property to another. Thereupon a cause of action for damages—the only cause of action he ever would have, as I view the matter—vested in the plaintiff. He may have mistaken his rights and sought relief to which he was not entitled, but he did not forego the right to recover whatever damages the defendant's breach of contract entitled him to. That breach was permanent
[Page 631]
in its effects and, once committed, the contract was at an end and could not be revived at the election of the "optionee." The case was not one for election at all.
Moreover, pending the action, some arrangement was made whereby the claim for specific performance put forward by the plaintiff was abandoned and a caveat which he had lodged to protect any interest that he might have acquired in the property was vacated in consideration of the defendant giving security for such damages as the court might find the plaintiff entitled to recover. I rather incline to think that the basis of that arrangement must have been that the plaintiff's right to maintain his action for damages, if he could establish the breach of contract (which he averred and the defendant denied), should be recognized, and that if the defence now raised had been advanced at the trial that understanding would have been proved.
In any event the defendant's appeal in my opinion should not succeed and must be dismissed with costs.
The plaintiff cross-appeals claiming that the damages awarded should be increased from $3,335 to $6,910, The Appellate Division found that the damage caused by the defendant was the difference between the sale price mentioned in the plaintiff's option and the actual value of the land. That difference it found amounted to $7,110. But, because the plaintiff had agreed to assign a one-half interest in the option to one Madge, he was held entitled to recover only one-half of the amount of the damages so ascertained, less $200 which he had already received from the defendant. With great respect I think the plaintiff was entitled to recover the entire damages—whatever they were. The option held by him was not assign-
[Page 632]
able at law and no right of action against the defendant was vested in Madge. Whatever equitable interest he may have acquired in the option, or in the plaintiff's rights under it, and whatever right he may have as between himself and the plaintiff to require the latter to account for the proceeds of any judgment he may recover, the plaintiff alone was entitled to maintain an action for damages for the breach committed by Gold and is entitled in that action to recover the entire damages arising therefrom. The authorities cited by Mr. McCaul are conclusive on that point. From those damages, however, there should be deducted not merely the $200 for which credit was given by the Appellate Division, but $300, which was the sum actually received by the plaintiff from the defendant at the time of the repudiation of the option.
But, again with profound respect, there would seem to have been a misapprehension as to the measure of damages. The option was treated as unconditional and damages were assessed as for the breach of a firm contract of sale. Now the option was on its face subject to the condition that, at any time before Stover had taken it up, Gold might sell the property at a price not less than $16 per acre, provided he did so without the intervention of an agent and without advertising, on paying to Stover $300 as compensation for his loss in being deprived of the option. Since the property has been found to have been actually worth $20 an acre the chance of this condition being fulfilled was by no means negligible and an option subject to it was obviously of less value than an unconditional contract of sale. It may well be that the damages for loss of such an option would fall short of the $3,335 for which the plaintiff has judgment.
[Page 633]
But, inasmuch as the defendant has not appealed in regard to the quantum of the recovery, I would be disposed not to disturb the present judgment unless the plaintiff insists on our doing so. If he is satisfied to accept it, I would dismiss the cross-appeal without costs.
But, although I understand that two of my colleagues share this view we do not constitute a majority. With some reluctance, because the appellant will hereby obtain relief which he has not sought, in order that an effective judgment may be pronounced I concur in the following disposition of the appeal and cross-appeal which, as I understand it, will meet the approval of my brothers Idington and Brodeur.
The appeal will be dismissed with costs. Upon the cross-appeal the question of damages will be referred to the proper local officer should either party so desire and within one month file an election to take such reference. If a reference is not so taken the cross-appeal will be dismissed with costs. If a reference is taken and results in the damages being assessed at more than $3,335 the defendant will pay to the plaintiff his costs of the cross-appeal and of the reference; if the damages be assessed at $3,335 or less the plaintiff will pay to the defendant his costs of the cross-appeal and reference.
BRODEUR J.—This is an action in damages arising out of an option agreement by which Gold agreed to sell to Stover a property for a price of about $20,000. Gold, however, on the payment of $300 could withdraw this option and sell the property to some other person, provided he would not utilize the services of an agent. Stover could exercise his option on or before the 1st March, 1917, and would then have to pay half of the purchase price.
[Page 634]
But before Stover exercised his option, Gold advised him on the 11th January, 1917, that he had sold the property to another person and enclosed with the letter a cheque for $300 payable under the terms of the option agreement.
As Stover had satisfied himself later on that the sale had not been made in accordance with the terms of the option and that Gold had utilized the services of a real estate agent to carry it through, he filed a caveat to protect his interest in the lands in February, 1917, and in October, 1917, he instituted the present action in damages.
This action was dismissed by the trial judge on the ground, that Stover should have accepted the option and tendered the money.
This judgment was reversed by the Appellate Division. Gold now appeals.
There was some question as to the construction of the agreement but this point was not pressed before us. It seems to me very plain that the agreement means that Stover could not sell the property through agents; and it has been found by the two courts below that Gold sold the property through an agent, and in that respect the findings of this fact by two courts below should not be disturbed. The point which is now raised by Gold is that Stover, instead of considering the agreement as terminated by the repudiation, elected to have it specifically performed and filed a caveat.
This point has not been raised by the pleadings nor in the courts below. It may be that if this issue had been tried circumstances might have been adduced which would have set aside this contention.
[Page 635]
The respondent Stover cross appeals on the ground that he should receive not merely half of the damages found by the court below but all the damages. The damages seem to have been ascertained as if the contract was a contract of sale between the parties and not a contract of option agreement. Both parties are willing that this question of damages should be referred to the Master to be fully inquired into.
The appeal should be dismissed with costs with a proviso that the whole question of damages be referred to the Master.
MIGNAULT J.—In this case both courts were of opinion, on the construction of the option to purchase granted by Gold to Stover, that the former, during the interval of time given by him to the latter to pay the first half of the purchase price, to wit until March 1st, 1917, could sell the property provided he did so without any advertising and without the services of any agent, and for a price of not less than $16.00 per acre. I accept this construction of the contract of option which does not appear to be open to reasonable doubt.
I also agree with the two courts in holding that, under the circumstances disclosed by the evidence, Gold committed a breach of his contract by selling the farm to Ponsford, inasmuch as, although the price was for more than $16.00 per acre, the sale was effected through an agent.
So far I am in agreement with the learned trial judge and with the learned Chief Justice of Alberta. I respectfully however differ from the former as to the effect of the breach by Gold of the contract of option he had given to Stover. The learned trial judge
[Page 636]
dismissed Stover's action because he had not, on or before March 1st, tendered to Gold the amount payable in cash on account of the purchase of the farm. In my opinion no such obligation was incumbent on Stover, for Gold, by his sale to Ponsford, had put it out of his power to sell to Stover, or, to the same effect, had definitely repudiated his obligation to sell to Stover if the latter carried out the conditions of the option. It does not appear to be open to Gold to answer that before he had actually made a transfer of the land to Ponsford in the land titles office, Stover had ample time to take proceedings under his option to force a sale to him and to file, as he actually did, a caveat to protect his right to a transfer of the land. The breach by Gold of the option and his sale to a third party gave Stover the right to claim immediately the damages suffered by him in consequence of this breach, and, in my opinion, he was not obliged to make a tender to Gold, when the latter had sold the property to a stranger. (Anson, Law of contract, 14th ed., p. 350).
There is therefore only a question of damages at issue, and although Stover unnecessarily alleged that he was still ready to carry out the option and to fulfil all its conditions, his action against Gold was for damages. It is true that Stover asked for a lien against the land for the amount of the damages, but, at least since a bond was furnished him, the question is reduced to one of damages, and no such lien has been granted him.
The Appellate Division found that Stover could have sold the land for $20 per acre, making a profit of $7,110, but inasmuch as one Madge had promised to furnish him the money to purchase the land on condition of obtaining a half interest therein,
[Page 637]
Stover only obtained a judgment for one half of the above sum, to wit, $3,355, as being the amount of his share in the profit to be made on a resale, and now Stover demands the whole $7,110 by his cross-appeal.
Very respectfully, I cannot agree with the view adopted by the Appellate Division, It may well be that Stover would have had to pay Madge one half of the profit made by a resale, or of any damages recovered by him from Gold, but this is on account of an agreement between him and Madge, to which Gold was no party. As between Stover and Gold, I think the latter is not entitled to any deduction by reason of the agreement between Stover and Madge. I dis-discussed a somewhat similar situation recently in Bainton v. John Hallam, Limited.
This however does not mean that Stover is entitled to the same amount of damages as if he had made with Gold an agreement of sale which Gold had refused to carry out. He had only an option, under which Gold could sell if he obtained an offer of at least $16 per acre, without any advertising or the services of any agent, and then Stover was only entitled to $300 which Gold actually paid to him and which he has not returned.
The acceptance by Stover of Gold's cheque for $300 does not prevent the former from claiming full damages for the breach of the option, for this acceptance was induced by Gold's assurance that the sale to Ponsford had not been made through an agent, but clearly the only damages which Stover can obtain is for the breach of an option which reserved a right
[Page 638]
of sale to Gold until Stover took up the option by paying on or before March 1st half of the purchase price. Under these circumstances the measure of damages is the value of Stover's right to purchase, qualified as it was by Gold's right to sell to a stranger, provided the sale was not advertised or made through an agent. On the construction of the option, it looks as though Stover himself had in view the sale of the property as agent for Gold, his commission being the excess of the sale price over and above the price mentioned in the option, and this construction is fortified by the words "or through other agents" in the last paragraph of the option, but be that as it may, the right of Gold to sell himself must be regarded as substantially diminishing the value of the option acquired by Stover and of which he was deprived by the latter's sale to Ponsford.
In this view of the case, the position taken by the parties before this court must be considered. Gold contended that Stover by his caveat and subsequent conduct had insisted on the agreement being specifically performed, and was deprived of any right of recovery inasmuch as he had not tendered half of the purchase price before March 1st. Stover considered the measure of his damages as being the same as if he had obtained a firm contract for the purchase of the property instead of a restricted and qualified option. Both parties have therefore misconceived their legal position. Under these circumstances, I think Gold's appeal is clearly unfounded and should be dismissed with costs.
Stover's cross-appeal involves the question whether, having been deprived of a restricted and qualified right of purchase—which he might have lost in case of a sale by Gold in accordance with the option, and
[Page 639]
then his damages were fixed at $300—he is really entitled to more than he obtained in the appellate division on a basis which I respectfully think was erroneous. After full consideration, I have come to the conclusion that, if either party desires, there should be a reference to the proper local officer to determine the amount of damages to which Stover is entitled, the whole as stated in the judgment of my brother Anglin.
Appeal dismissed with costs.
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