Castagno v. Church

552 P.2d 1282, 1976 Utah LEXIS 898

• Court: Utah Supreme Court
• Decided: August 5, 1976
• Docket: 14412
• Status: Published

Opinions

MAUGHAN, Justice:

Defendants appeal from a judgment granting specific performance to plaintiffs, together with a rebate of the purchase price for 40 acres of land. We affirm and award costs to plaintiffs.

Plaintiffs, vendees, initiated this action seeking specific performance of a uniform real estate contract, wherein defendants, vendors, agreed to convey 40 acres of land, together with all water rights (including one second foot of water) in and to a well.

The parties executed the contract December 14, 1973. According to its terms, the total contract price was $32,000. Upon payment of $16,000, vendors conveyed 20 acres to plaintiffs. The remaining acreage and water rights were to be conveyed upon payment of the balance. At the time the contract was executed there was a well situated upon the property, and the vendees were granted the right to use the well. Plaintiffs commenced farming operations, and pumped water from the well. They were ordered to cease using the well by the State Engineer. Subsequently, plaintiffs tendered the balance owing under the contract demanding conveyance of the remaining 20 acres, and the one second foot of water. Defendants have been unable to procure water rights for the well.

The trial court found plaintiffs had fully performed their obligations under the contract; defendants had failed to perform that part of the contract requiring delivery of one second foot of water, and they were unable at the time of trial to do so. The real property in the contract had a value of $1500 per acre, provided one second foot of water was available. Without water, the reasonable value per acre was $500 per acre. The trial court ordered conveyance of the property with a rebate on the purchase price of $12,000.

On appeal, defendants contend that under the doctrine of frustration of performance, they were excused from performing, and specific performance should not have been imposed. The evidence indicated defendants acquired an assignment of certain water rights, but they have not been able to secure a change application, to divert one second foot of water to the well. No other water is available.

The doctrine of frustration is inappropriately invoked as a defense here. The applicability of this doctrine depends on the total or nearly total destruction of the purpose for which, in the contemplation of both parties, the transaction was made. Although performance remains possible, the expected value of performance to the party seeking to be excused has been destroyed, by a fortuitous event; which supervenes to cause an actual, but not literal failure of consideration.¹ Where the defense of frustration is proper, the issue is whether the equities, considered in the light of sound public policy, require placing the risk of destruction or disruption of the contract equilibrium on defendant or plaintiff,

. . . The purpose of a contract is to place the risks of performance upon the promisor, and the relation of the parties, terms of the contract, and circumstances surrounding its formation must be examined to determine whether it can be fairly inferred that the risk of the event that has supervened to cause the alleged frustration was not reasonably foreseeable. If it was foreseeable there should have been provision for it in the contract, and the absence of such a provision gives rise to the inference that the risk was assumed.

. The courts have required a promisor seeking to excuse himself from performance of his obligations to prove that the risk of the frustrating event was not reasonably foreseeable and that the value of counterperformance is totally or nearly totally destroyed, for frustration is no defense if it was foreseeable or controllable by the promisor, or if coun-terperformance remains valuable. [Citations] ²

At the time of the execution of the contract, defendants knew there was no existing water right to the well. They undertook thé duty to procure such a right, but they made ho provision in the contract to excuse them, if the State Engineer did not grant their change application to divert a water right to the well. Furthermore, the basis of the contract, the conveyance of 40 acres of land, may not be deemed frustrated merely because defendants were unable to convey the water right.³

The trial court did not err in granting plaintiffs specific performance of the contract. The rule has been long established that a vendee has the right to insist upon performance by the vendor to the extent the latter is able to perform with an abatement in the purchase price equal to the value of the deficiency or defect.⁴

HENRIOD, C. J., and TUCKETT, J., concur.

1 . Restatement, Contracts, § 288.

2 . Lloyd v. Murphy, 25 Cal.2d 48, 153 P.2d 47, 50 (1944).

3 . Tindula v. Bauman, Or., 532 P.2d 785 (1975).

4 . Murdock v. Pope, 156 Colo. 7, 396 P.2d 841 (1964) ; De Bauge Bros., Inc. v. Whitsitt, 212 Kan. 758, 512 P.2d 487 (1973) ; In Re Estate of Hayhurst, Okl., 478 P.2d 343 (1970) ; Levy v. Wolff, 46 Cal.2d 367, 294 P.2d 945 (1956) ; Caveny v. Asheim, 202 Or. 195, 274 P.2d 281 (1954).