Giddens Construction Co. v. Fickling & Walker Co.

On Motion for Rehearing.

The contract addendum extending the closing date of the sale and perforce creating the escrow pertinently provided that “[i]t is expressly understood . . . that, if for any reason this sale is not consummated by November 30, 1985 the $1,000.00 earnest money and the $400.00 security deposit shall be forfeited as liquidated damages and the sales contract shall become null and void. In such event purchaser shall vacate premises no later than December 10, 1985. Time is of the essence.” (Emphasis supplied.)

Appellee asserts that this court’s decision, if allowed to stand, “will seriously jeopardize the proper functioning of real estate escrow arrangements in this state.” In particular, appellee contests this court’s determination that the escrow agreement immediately terminated upon the purchaser’s failure to close by the extended closing date. We adhere to our decision.

In arriving at our decision, we do not hold that henceforth all escrows will so terminate. What we do hold is that this particular escrow, in light of the wording of the addendum drafted by the appellee itself, was terminated immediately following purchaser’s failure to close. Escrow can be established in any manner not prohibited by law or public policy. In the future, realtors can avoid the effects of this result by providing for a specific escrow termination date; by not making time of the essence without any limitations, that is, by making time of the essence only as to specific identified matters; or, by expressly providing the realtor with a grace period in which to tender the escrow funds, with or without an express requirement that the parties sign a release before the money will be tendered.

We also note that in its motion for rehearing, appellee admits that it is its duty in the event of non-closing “to continue to hold the money until the contract is at an end . . . and then to distribute it to the party entitled to it.” As we stated in the opinion, the unlimited time is of the essence clause operated to make the sales contract null and void immediately when closing was not held on the extended closing date; there never was any genuine doubt under the terms of the addendum written by the appellee as to who was entitled to the money. This is particularly true when that document is viewed in conjunction with the originad sales contract and the so-called Move-In Agreement. If any such doubt had existed, it would have been appellee’s duty as appellant’s fiduciary, at the time appellee drafted the then-proposed addendum, to duly warn his principal of the addendum’s deficiencies before the addendum was executed and the escrow created. See generally Larkins v. Boyd, 205 Ga. 69 (1) (52 SE2d 307); 1A EGL, Agency, § 92; 3 CJS, Agency, § 272; cf., Scott v. Lumpkin, 153 Ga. App. 17 (1) (264 SE2d 514).

Decided September 9, 1988 Rehearing denied September 26, 1988 E. Thomas Shaffer, for appellant. J. Ellsworth Hall III, for appellee.

We have reexamined the precedent cited by appellee, including Williams v. Northside Realty Assoc., 116 Ga. App. 253 (157 SE2d 166), and conclude that such precedent is distinguishable from the facts of this case.

Regarding appellee’s contention concerning punitive damages, the question of punitive damages is ordinarily for the jury. Caswell v. Jordan, 184 Ga. App. 755 (7) (362 SE2d 769), cert. den. And a breach of fiduciary duties generally is sufficient to support an award of punitive damages arising out of such tortious misconduct. Id.

Motion for rehearing denied.