Nutting v. Wilson

Where the right to recover under a contract contains a condition precedent, a petition seeking recovery under the contract must allege a compliance with the condition precedent or allege a legal excuse for non-compliance therewith.

DECIDED MAY 6, 1947. Frank A. Wilson filed a petition against J. F. Nutting Jr., and Nutting Realty Company, a partnership composed of J. F. Nutting and J. F. Nutting Jr., and Miss Eppie Nutting, for the recovery of $500, for money had and received. The defendants filed an answer denying the right of the plaintiff to recover and in addition filed a cross-action. The plaintiff demurred to the answer and cross-action, both generally and specially. The court sustained the general demurrer, did not pass upon the special demurrers, and struck the answer and cross-action of the defendants and marked the case in default. The defendants filed exceptions pendente lite on the judgment sustaining the demurrer. At the trial term, the case being in default, a judgment was entered in favor of the plaintiff for the amount for which the suit was brought. Error is assigned on the judgment of the court sustaining the demurrer and on the final judgment in favor of the plaintiff. The petition, omitting the formal parts, alleged that the defendants on the 26th day of June, 1926, through J. F. Nutting Jr., had and received from the plaintiff $500, which sum the plaintiff never intended that the defendants receive as a gift and the defendants did not intend to receive the sum as a gift, and that the demand for payment had been made by the plaintiff and refused by the defendants. The defendants in their answer admitted the residence of the defendants and the demand and refusal to pay but qualifiedly denied all the other allegations of the petition to the effect that they owed the plaintiff any amount. Further answering, the defendants in their cross-action, alleged that on the 25th day of June that they were real estate brokers and as such the plaintiff entered into a written contract wherein he agreed to buy the following described property: "Fulton County, Georgia, near the City of Atlanta, being improved property known as No. 1947 Ardmore Road, N.W., according to the present system of numbering houses in Atlanta."

The property was to be purchased at and for the price of $18,750, to be paid "cash upon closing of contract." The contract further provided: "Special Stipulations. . . This contract is subject to purchaser being able to secure a loan on this property of $10,000, at 4 and one-half percent interest per annum. Taxes and insurance premiums to be prorated. Possession of property to be given by September, 1, 1946. Included in this sale are: Gas heater in library, and all venetian blinds now in this residence."

The contract, a copy of which is attached to the cross-action, shows that the $500, in question was paid by the plaintiff on this date "as earnest money, to be applied as part payment of the purchase-price of said property at the consummation of this sale, and if sale due to buyer's default, is not consummated, then one-half of said earnest money shall be applied toward commissions owing agents hereunder, and agents shall pay the balance to seller to be applied toward seller's damages caused by buyer's default. In the event the sale is not consummated for reasons other than the default of buyer, said earnest money is to be refunded to buyer." The contract is signed by the plaintiff as buyer, the defendant as agents and Francis P. Parker as seller. It is further alleged in the cross-action that the $500 in question was paid $250 to the seller Parker and $250 was retained by the defendants as under the provisions of the contract. The cross-action further alleges that the default of the plaintiff in failing to consummate the contract, subjected himself to liability to the defendants for full five percent broker's commission of $762.50, and that this amount, less $250, which the defendants had received out of the $500, left plaintiff owing the defendants $512.50, for which the defendants sought judgment in their cross-action. The cross-action further alleges that the "plaintiff's stubborn litiguousness" in prosecuting the action against the defendants subjected the defendants to the payment of $300 attorney's fees. Judgment was sought for this sum also in the cross-action of the defendants against the plaintiff.

The defendants further allege in their cross-action that the plaintiff on July 11, 1946, modified the broker's contract by agreeing to consummate the trade through the medium of a loan at the rate of five percent instead of four and one-half percent, the rate expressed in the contract. The letter containing this alleged modification was addressed to the defendants and signed by the plaintiff. It reads: "This letter is written to give you my personal assurance that if loan of $10,000 cannot be made on the property located at 1947 Ardmore Road, N.W., at an interest rate of four and one-half per cent, that I will agree to consummate the loan on a basis of five percent."

We have set out substantially all the material allegations in the petition and in the cross-action, and the general demurrer to the effect that the answer of the defendants set up no defense and the cross-action showed on its face that the defendants were not entitled to the relief sought. From the record which we have above set forth it will be discerned that the effectiveness of the answer and the cross-action must be determined in the light of the special stipulations, quoted hereinbefore from the contract. The answer and cross-action nowhere allege that the plaintiff was able to secure a loan of $10,000, on the property in question at the rate of four and one-half percent per annum. The broker's contract was specifically made subject to the purchaser being able to secure such a loan. Indeed, the letter of July 11, wherein the plaintiff agreed to a rate of five percent instead of four and one-half percent seems to imply that the defendants were seeking to assist the purchaser in negotiating this loan. Be this as it may, the answer and cross-action nowhere allege that the purchaser was ever able to secure a loan of $10,000, at either rate. These special stipulations create a condition precedent to the defendants being entitled to collect any commission as real-estate brokers. This being true, the defendants in the cross-action to the plaintiff's petition fail to show any right for the defendants to prevail. Under the terms of the contract it is stated that unless a sale was consummated under the terms of the brokerage contract, the $500 was to be returned to the plaintiff. The Code, § 20-902, reads: "Conditions not complied with as defense. — A condition, precedent or subsequent, not complied with, want or failure of consideration, or any act of the opposite party, by which the obligation of the contract has ceased, may be pleaded as a defense." Section 20-110, reads: "Conditions precedent or subsequent. — Conditions may be precedent or subsequent. In the former, the condition must be performed before the contract becomes absolute and obligatory upon the other party. In the latter, the breach of the condition may destroy the party's rights under the contract, or may give a right to damages to the other party, according to a true construction of the intention of the parties."

In applying the principals in these sections, it must be kept in mind that the cross-action envelops the general denial in the defendant's answer and affirmatively pleads the right to recover under the contract. Bedingfield Co. v. Bates AdvertisingCo., 2 Ga. App. 107 (58 S.E. 320); City of Moultrie v.Schofield's Sons Co., 6 Ga. App. 464 (65 S.E. 315). This being true, the defendants insofar as the cross-action is concerned became the plaintiff with the burden of alleging and proving the condition precedent, — that is, that the plaintiff was able to secure the loan in the contract and by his default the sale was not consummated The allegations of the cross-action failed in this regard and must fall under a general demurrer. In this connection, inMutual Benefit Health c. Assn. v. Hulme, 57 Ga. App. 876 (197 S.E. 85), this court said: "When a plaintiff's right to recover on a contract depends upon a condition precedent to be performed by him, he must allege and prove the performance of such condition precedent, or allege a sufficient legal excuse for its non-performance. Griswold v. Scott, 13 Ga. 210; LifeIns. Co. of Va. v. Proctor, 18 Ga. App. 517 (89 S.E. 1088);Williams Valve Co. v. Amorous, 19 Ga. App. 156 (91 S.E. 240); Baker v. Tillman, 84 Ga. 401 (11 S.E. 355);Herrington v. Jones, 132 Ga. 209 (63 S.E. 832); Daniel v. Dalton News Co., 48 Ga. App. 772 (173 S.E. 727)."

When we view the law applicable to the right to recover under a contract which involves a condition precedent to recovery, in view of the many decisions of this court and the Supreme Court, we find there is no legal efficacy in the contentions of the defendants that the broker was in the instant case a defendant and not a plaintiff and the condition precedent was not to be performed by the defendants. This is true for the reason that the defendants in their cross-action assume the burden of and did affirmatively plead the contract and thereby became to all intents and purposes, the plaintiff as to this phase. See, in this connection; Elmore v. Thaggard, 130 Ga. 701 (61 S.E. 726). See also Southern Manufacturing Co. v. Moss, 13 Ga. App. 847 (81 S.E. 263). See also LeSueur v. Crawford,23 Ga. App. 549 (99 S.E. 46); Stokes v. Walker, 21 Ga. App. 630 (94 S.E. 841). In such a situation as presented in the instant case, the answer and cross-action of the defendants was subject to be dismissed under a general demurrer. Hilton v.Taylor, 18 Ga. App. 647 (90 S.E. 223).

The defendants contended that their pleadings are sufficient under the provisions of the Code, § 81-114 going to the principle that pleadings should not be dismissed on the grounds of technical or formal objections where the allegations of the pleadings substantially conform to the requirements of the Code and set forth a legal cause of action. The defendants further in connection with the principles of that Code section call our attention to the case of Spurlock v. West, 80 Ga. 302 (4 S.E. 891). The principles of law thus called to our attention by the defendants have no saving application concerning the question before us. In our opinion the cases which we have discussed are controlling. We therefore enter into no discussion with reference to the sufficiency of the description of the property.

The court did not err in sustaining the general demurrer or in marking the case in default and entering final judgment in favor of the plaintiff.

Judgment affirmed. MacIntyre, P. J., and Townsend, J.,concur.