Addieg v. Tull

187 F. 101, 109 C.C.A. 24, 1911 U.S. App. LEXIS 4489

• Court: Court of Appeals for the Second Circuit
• Decided: April 17, 1911
• Docket: No. 149
• Status: Published

Opinion

NOYES, Circuit Judge

(after stating the facts as above). '[1] The verdict of the jury established that the terms of the letter of March 25, 1908, were accepted and approved by the plaintiffs, and no contention is made that it was not binding because not signed by them. This letter, then, constituted an agreement between the parties, conditioned. only upon the rebuilding of the structure by the defendant, within a reasonable time. It bound the plaintiffs to take a lease of the new premises upon the terms of the prior lease, if the defendant rebuilt within such time. It bound the defendant, in case he rebuilt, to give the plaintiffs such a lease. It was, in our opinion, a conditional contract, the validity of which was not impaired by the fact that the fulfillment of the condition was dependent upon the act of one of the parties. Furthermore, we think that the agreement, by reference to the terms of the prior lease, was complete, that it possessed mutuality, and that it was upon a valid consideration.

The jury, under the instructions of the court, necessarily found by their verdict, in addition to the fact that the agreement was entered into, that the defendant, within a reasonable time, decided to rebuild, and communicated his intention to the plaintiffs, before receiving notice of their attempted withdrawal, and that the plaintiffs repudiated such agreement, and, consequently, were fully warranted in finding the plaintiffs guilty of breach of contract. Had the proper measure of damages been applied in the case, we should have no reason for disturbing the judgment.

The agreement on the part of the plaintiffs was an agreement to take a lease, and the measure of damages in an action for the breach of such an agreement is the actual damage sustained — presumably the difference between the rent stipulated in the lease and the sum for which the premises were rented to other parties. But there was no evidence in this case to warrant the jury in finding the damages according to this measure, and the fact that the plaintiffs objected to the materiality of certain testimony tending to prove such damage did not preclude them from insisting that a verdict should be directed upon the ground of failure to prove any damage. Consequently, if the same measure of damages íhe applicable in this case — both with respect to the defense and counterclaim — as in an action for a breach of an agreement to lease there was error in denying the plaintiffs’ motion.

[2] It is our opinion that the same measure of damages is applicable here — in both aspects of the case — as in an action for breach of contract, and that the defendant can retain only so much of the $2,500 deposited as is necessary to compensate him for the actual damages sustained. We think it the better view that the deposit in this case was not a deposit on account of the rent due under the new lease, nor a payment for the purchase of an option.¹ The money had been held under the old lease as security for damages. In case of tlie breach of any of the terms of such lease, the lessor was authorized to apply so much of said deposit as might “be necessary to liquidate the damage or damages arising therefrom.” So that, when the ntuv agreement provided that the deposit under the old lease should remain as “an earnest of this agreement,” we think that it meant that it should be held by the defendant as security for any damage which he might sustain by reason of the breach of such agreement. This interpretation makes good to the defendant his actual loss. To give him more penalizes the plaintiffs, and a forfeiture either by way of the penalty or liquidated damages should only be inflicted when the language clearly requires it.

For these reasons, we think that there was error in the action of the trial court, and the judgment must be reversed.

1 As this case relates to real estate in the state of New York, the following decisions by the courts of this state are. especially in point:

In Rosenfeld v. Silver, 49 Misc. Rep. 117, 96 N. Y. Supp. 1027, it was held: "Where the receipt, given by defendant to plaintiff for a deposit at 1he time of making an agreement to lease, did not specify for what purpose it. was made, but, upon a fair interpretation, the deposit was to secure the execution of a lease by plaintiff, it is a security for the actual damage, if any, suffered by the defendant by reason of plaintiff's refusal to take the lease; and, where no such damage is pleaded or shown, plaintiff is entitled to a return of the deposit.”

In Weinberg v. Greenberger. 47 Misc. Rep. 117, 93 N. Y. Supp. 530, it was held: “'Where the receipt, given by the defendants to plaintiff for the amount of a deposit, at the time of the making of an agreement to lease a tenement house, did not specify for what purpose it. was made, but upon the most favorable view for the defendants it. was to secure plaintiff's fulfillment of his agreement to take the lease, and not as a penalty or liquidated damages, defendants are not authorized to relain the deposit merely because of plaintiff's refusal to take the lease: and, no actual damage having been pleaded or shown. It would he assumed that none was suffered, and upon the facts the plaintiff is entitled io a return of the deposit.”

The case of Abramowitz v. Gray, 50 Misc. Rep. 638, 98 N. Y. Supp. 1096, referred to by the defendant, is not in point, because in that case the. money in question was not deposited at all as security, hut was paid on account of the purchase price of certain land. The same is true with respect to the cases of Havens v. Patterson. 43 N. Y. 218, and Lawrence v. Miller, 86 N. Y. 131. where vendees of land had made payments on account of the purchase price, and, although defaulting, sued to recover them.