Crabtree v. Board of Trustees , 1974 Ky. LEXIS 390 ( 1974 )

JONES, Justice

(concurring).

For the reasons stated in the majority opinion, I concur in the result, and for the same reason as is stated in the opinion. However, because of the significance of the issues raised, I think it is important to state in more detail, the facts, the relationship of the parties, and the issues presented.

This action was filed by appellant, R. W. Crabtree (Crabtree), a licensed real estate broker, against the Board of Trustees of Immanuel Baptist Church (Immanuel), to recover a broker’s commission. The property involved consists of a main church edifice and eight structures used for Sunday School purposes, located and fronting on Woodland Avenue, East High Street and Ransom Avenue in Lexington, Kentucky.

Appellant Crabtree contends that he is entitled to a commission of 5 per cent, amounting to $10,500, on the contract of sale of the entire above-mentioned property, at $210,000; or a commission of 5 per cent, amounting to $6,250, on the subsequent sale and conveyance of a portion of above-mentioned property.

Cross-Appellant, Board of Trustees of Immanuel Baptist Church, claims $21,000 in damages which is alleged it would be entitled to as liquidated damages.

Pursuant to the direction of the trial court this matter was referred to the Master Commissioner to hear and determine the issues. The Master Commissioner held extensive hearings and read voluminous depositions on behalf of the parties after which he made extensive and detailed findings of fact and conclusions of law. The trial court adopted the Master Commissioner’s findings and a judgment was entered dismissing the appellant’s complaint and the counterclaim of appellee.

The facts show that on July 19, 1961, Appellee Immanuel, as seller, Felix Martin, as purchaser, and Appellant Crabtree, as realtor, signed a contract for the sale of the before-mentioned land. A deposit of $21,000 was paid on July 25, 1961, to E. Clay Johns, agent for Crabtree, who deposited the money in Crabtree’s escrow account.

Immanuel agreed to execute and deliver a general warranty deed of merchantable title to Martin sixty days after execution of the contract, upon payment of the agreed consideration, $210,000, of which the deposit was a part. The contract provided that the deposit was to be liquidated damages to the seller if the purchaser violated the contract and if the seller was able to offer “good fee simple title.” The contract further provided that the seller would pay Crabtree 5 per cent of the purchase price “at the time the entire purchase price is paid to seller.”

When the deposit was paid, Martin made a contract to sell the same property to Woodland Avenue Baptist Church (Woodland) and with Crabtree as realtor, on July 25, 1961. The purchase price was $220,000, of which a deposit of $22,000 was to be paid to Crabtree, then to be paid to the seller, Martin, when the deed was delivered. The balance of the purchase price was due sixty days after the contract was signed. This second contract allowed no commission to Crabtree. The deposit of $22,000 was held by Crabtree in his escrow account.

At the time the second deposit ($22,000) was delivered to Crabtree, Johns returned to Felix Martin, purchaser, his deposit of $21,000, it being understood by Johns (as agent for Crabtree) and by Martin, that the second deposit would be held by Crab-tree in escrow for both contracts of sale. Appellee Immanuel had no knowledge of this return of the $21,000.

On September 19, 1961, Immanuel tendered a general warranty deed to Martin. The property contained a portion of a 20-foot alley; and the deed stated that the conveyance was “subject to all easements and restrictions [appearing] of record. . ” Martin declined to accept the deed and to pay the balance of the stipulated price because of alleged defects in the record title, including restrictions on alienation, and an easement for an alley. Martin’s attorney proposed an extension of time to cure defects; there was no absolute rejection of the tendered deed. All defects except general residential restrictions and the easement were subsequently cured. Immanuel explained to Martin and his attorney that parts of the alley had been closed for over fifteen years, that they had acquired title to all property abutting the only portion of the alley which remained open, and that, therefore, the easement had ceased to exist.

On October 17, 1961, Immanuel wrote to Martin that it would request payment of the $21,000 deposit as damages if the sale was not completed by November 6, 1961.

Immanuel signed an agreement on January 18, 1962, releasing Martin from all claims arising from the contract dated July 19, 1961. On January 17, 1962, Woodland released its seller Martin from all claims under the contract dated July 25, 1961. By a contract dated January 17, 1972, Martin similarly released Immanuel under the contract dated July 19, 1961.

On January 18, 1962, the newly formed Underwriters of Immanuel Baptist Church [Underwriters] contracted to sell a portion of the Immanuel property to Woodland for $125,000. The appellee Immanuel also was a party to the sale. In the agreement the two appellees (Underwriters and Imman-uel) expressly assumed full responsibility for all claims of Crabtree as to a commission arising from the contract of sale between Immanuel and Martin.

Thus Crabtree’s rights must be determined under the Immanuel-Martin contract. The ultimate question presented is whether the failure to consummate the contract was a result of Immanuel’s failure to offer a marketable title or whether the failure resulted from Crabtree’s return of the $21,000 deposit.

The trial court concluded, and I agree, that the return of the deposit to the purchaser Martin without the knowledge of the seller Immanuel constituted a breach of trust as to the seller, for whom he had held the first deposit. By the return of the first deposit, Johns removed from the purchaser Martin one of the principal motivations to consummate the contract and damaged the seller’s interests by reason of the contract provision that the deposit should constitute liquidated damages recoverable by the seller Immanuel in the event of the default of Martin.

I further agree with the trial court’s conclusions that the restrictions in the previous deeds were unenforceable, but that even if the restrictions were enforceable, they were only of such a nature as would be expected in residential neighborhoods and would not render the title unmarketable. The parties must be held to have realized at the signing of the contract that such restrictions would be encountered.

However the question as to the 20-foot alley is somewhat more serious. The deeds do not show easements as to the alley. Nowhere is a deed to be found wherein the description of a lot includes the alley. This court held, in Cohen v. Board of Trustees, Ky., 276 S.W.2d 26 (1955), that the alley in question was of “private nature” and was intended by the subdivider to be used only by and for the benefit of owners of lots abutting the alley. On September 19, 1961, date of the tender of deed pursuant to the first contract, Immanuel was owner of all land abutting that portion of the alley which is material.

This court held in Funk v. Whitaker, 314 Ky. 204, 235 S.W.2d 675 (1950) that closure of a road under adverse claim for more than fifteen years is sufficient to extinguish a private passway acquired by either grant or prescription.

When appellant, Crabtree, returned the first deposit of $21,000 any rights which he might have had to a commission were forfeited.

Crabtree further argues that he procured the purchaser Woodland and if he is not entitled to a fee of $10,500, he is entitled to receive a commission of 5 per cent of $125,000 ($6,250.00) which was the sale price of that portion of the property sold by Immanuel to Woodland. However, the record reveals that Immanuel Underwriters and Immanuel did not accept any offer through Crabtree or his agent but were contacted by Woodland directly, having had previous contacts with Woodland. Thus, there is no reason to allow Crab-tree’s claim.

The Cross-Appellant, Immanuel, argues that Crabtree, by his return of the $21,000 held in escrow to Martin, breached his contract and thereby damaged Immanuel’s interests to the extent of the loss of $21,000 in liquidated damages. I am of the opinion however, that the signing of the release- as to Martin, by Immanuel, estops this claim and constitutes a ratification of the default.