Wright v. Bryan

311 S.E.2d 776, 226 Va. 557, 1984 Va. LEXIS 295

• Court: Supreme Court of Virginia
• Decided: January 20, 1984
• Docket: Record 810792
• Status: Published

Opinions

COMPTON, J.,

delivered the opinion of the Court.

This is an appeal of an action at law for damages arising from a contract for the sale of real estate. The property was owned by husband and wife as tenants by the entireties with the right of survivorship. The sole question is whether the contract is void because only the husband executed the agreement.

On September 16, 1979, appellant Ray L. Wright by written contract agreed to sell to appellees James P. Bryan and Dorothy B. Bryan, his wife, a house and lot in Alleghany County for $67,000. The form contract was executed by Wright, as “Seller,” by Mr. Bryan, and by Don F. Gross, agent for the realtor, appellant Virginia Real Estate. Lois B. Wright, wife of the seller, did not sign the agreement.

The contract provided for settlement on or before November 19, 1979. Pursuant to the agreement, Bryan remitted to the realtor $3,350 as “deposit with contract.” The agreement specified that the balance of the purchase price was to be paid in “cash on delivery of deed.” In addition, the document provided that the purchasers were to have early possession “on a rental basis” at the rate of $400 per month, to be paid in advance and credited toward the purchase price.

Bryan paid rent for only one month, September 16 to October 16. Approximately one week before the scheduled closing, Bryan advised Wright that he had been discharged from his employment at a local hospital, that “there was no work in this area for him,” and that “he wanted to compromise this contract.” Wright responded that he “had a signed contract” and that he was ready to deliver the deed at closing. Bryan left the area the day after the conversation.

On November 13 and 27, the Bryans’ attorney wrote Gross, advising that the contract was “unenforceable” and demanding return of the sum of $3,350 held in escrow. In a December 3 letter to the Bryans’ attorney, Wright stated that the Bryans were one month in arrears in rent, that Gross had earned his six percent sales commission of $4,020, and that the Bryans thus owed a balance of $1,070. The contract provided: “If either Purchaser or Seller defaults under such Contract, such defaulting party shall be liable for the cash fee of Realtor and any expenses incurred by the non-defaulting party in connection with this transaction.” Noting that Bryan “tried to sell this property to another party the night before he left town,” Wright stated the Bryans could save “these expenses” should they be able to sell the property before December 15 “as I will hold my part of the contract open until that date.” There was no sale or closing by December 15 and, on January 7, 1980, Gross paid Wright the sum held in escrow, “minus percentage.”

On May 23, 1980, the Bryans filed a warrant in debt against Wright and Virginia Real Estate in the general district court. The warrant alleged that $3,550 was due “for refund of deposit paid on void sales contract.” The defendants removed the proceeding to the circuit court in June. In November, the Wrights sold the property for $68,000 to third parties.

Five days before the case was heard on December 12 by the trial court sitting without a jury, defendants filed a counterclaim for $1,401.50 seeking recovery of the balance of the realtor’s commission, one month’s rent, attorney’s fees and costs. The counterclaim was severed, continued, and is still pending.

Following the trial and submission of briefs, the court below in a written opinion ruled in favor of the Bryans, holding the case was controlled by the decision in Waskey v. Thomas, 218 Va. 109, 235 S.E.2d 346 (1977). On February 16, 1981, judgment was entered for $3,350 against Wright only. Both defendants filed a petition for appeal, which was granted.

The purchasers argue that the contract “was unquestionably void” for lack of mutuality. Therefore, they say, the parties should be returned to the positions they held prior to execution of the agreement. Thus, they contend, the trial court correctly ruled that the “deposit money” should be returned to them.

Elaborating on the mutuality argument, the purchasers argue that “neither side could compel the other to perform.” They argue that the “nature of the tenancy by the entireties made the signature of Louise [sic] B. Wright a prerequisite to any effort by Bryan to compel specific performance.” They contend “the fact that Wright could not be compelled to convey the property in question precluded any attempt by him to compel Bryan to perform.”

Wright and the realtor contend the trial court erroneously applied the rule of Waskey to the facts of this case. They contend the contract was not void, did not lack mutuality, and that the purchasers breached the contract. We' agree.

The general rule is that a contract for the sale of real estate is not void merely because the vendor does not have the capacity to convey good title at the time of contracting, provided the vendor acquires such capacity by the time fixed for his performance. Mundy v. Garland, 116 Va. 922, 936, 83 S.E. 491, 495 (1914). Accord Waskey v. Thomas, 218 Va. at 112, 235 S.E.2d at ; Jennings v. Realty Developers, Inc., 210 Va. 476, 479-80, 171 S.E.2d 829, 832 (1970).

“However, where the contract calls for purchase by installment payments and delivery of the deed upon final payment, and the vendor has misrepresented his capacity to convey what he has contracted to convey, or concealed defects in the title, the general rule is subject to exception.” Waskey v. Thomas, 218 Va. at 112, 235 S.E.2d at 348. If the Waskey circumstances exist, the exception applies and the purchasers have the right to rescind in advance of the time for performance.

In this case, the primary requirement of the Waskey exception is lacking; this was not a purchase by installments with the deed to be delivered upon final payment. Rather, this was a routine real estate sales transaction; there was an advance payment binding the parties which was to be applied to the purchase price upon the settlement date, fixed within a reasonable time. Accordingly, the general rule, not the Waskey exception, controls. The contract, therefore, was not void.

Furthermore, the contract did not lack mutuality merely because the seller’s wife did not sign it. See Jennings v. Realty Developers, Inc., 210 Va. at 479-80, 171 S.E.2d at 832. The document was in valid form, was dated, bore the signature of one of the purchasers, and was executed on behalf of the realtor by one of its agents. The property was accurately identified. The seller agreed to convey; the purchaser agreed to buy and pay for the property. The consideration was specified. The manner of payment was set forth. After the parties executed the contract, they had only to perform their promises. If either party failed to do so, this would have constituted a breach rendering the defaulting party liable to the other.

Certainly, specific performance was foreclosed, due to the nature of a tenancy by the entirety, because the seller’s wife did not sign the contract. See generally, Vasilion v. Vasilion, 192 Va. 735, 740-43, 66 S.E.2d 599, 602-04 (1951). But even though the contract cannot be so enforced and is void so far as it purports to affect the wife’s title to the property, it nevertheless retains its “validity between the parties as a foundation for an action at law to recover damages for breach of contract.” Ingram v. Lunsford, 216 Va. 785, 786, 224 S.E.2d 129, 130 (1976).

Accordingly, because the purchaser failed to carry out his promise to perform the contract, his conduct amounted to a repudiation of the agreement in advance of the date when the seller was required to perform. The purchaser, not the seller, defaulted. Consequently, the purchaser is liable under the contract for the “cash fee of the Realtor and any expenses of the non-defaulting party in connection with this transaction.”

Therefore, we will reverse the judgment in favor of the purchasers, enter final judgment here on the main claim for the seller and the realtor, and remand the case for further proceedings on the counterclaim.

Reversed, final judgment, and remanded.