§ 1792. Evidence of value-What in- 1793. Evidence of value-Continued admissible. -"Booms." - § 1727. Vendor's breach of contract-Generally.—The decisions are not in harmony as to the measure of damages for the vendor's breach of contract of or for the sale of land. There are many factors which enter into the determination of the question, some of which are rejected, or rather held as of no weight by some courts, but are considered material by other courts. It was declared in an early case that the amount of damages recoverable should depend upon the cause of the failure to convey with relation particularly to the good or bad faith or fraud of the vendor,' and that if the default of the defendant involves fraud, the measure of damages is enlarged. In New York it is asserted that the rule of damages which pertains to the sale of real property differs in scope and principle from that which applies to sales of personalty. But on the other hand the rule of damages is said to be the same in breach of contracts for the sale of land as in sales of personalty. Again, substantially similar rules are varied by elements existing in one case which do not exist in the other, so that the rule in either case cannot be strictly said to affirm or deny the rule in the other. In addition there are other matters in particular decisions affecting the deduction of any rule of value beyond that case. In the following sections, however, the different rules will be stated in accordance with the decided cases. § 1728. Vendor's breach of contract-English rule.-The English rule is that upon a contract for the sale of real estate, if the vendor without fraud is incapable of making a good title, the purchaser is not entitled to any compensation for the loss of the bargain. Expenses of investigating the title are, however, recoverable and also the deposit money. But the distinction made in these contracts as to good or bad faith, is declared not 1Sweem v. Steele, 5 Iowa, 352. 2 Eberz v. Heisler, 12 Pa. Super. Ct. 388. 3 Bensinger v. Erhardt, 74 App. Div. 169; 77 N. Y. Supp. 577, citing Van Brocklen v. Smeallie, 140 N. Y. 70, 74; 55 N. Y. St. R. 263; 35 N. E. 415. 4 Pittsburgh, C. & St. L. R. Co. v. Heck, 50 Ind. 303, 306; 19 Am. Rep. 713; Hopkins v. Lee, 6 Wheat. (U. S.) 109. See Wells v. Abernethy, 5 Conn. 222. to be explained or justified upon principle. If a person enters into a contract for the sale of real estate, knowing that he has no title to it, nor any means of acquiring it, the purchaser cannot recover damages beyond the expenses he has incurred, by an action for a breach of the contract. He can only obtain other damages by an action for deceit.5 loss of his bargain and it was said in this case: "These contracts are merely upon condition, frequently expressed, but always implied, that the vendor has a good title. If he has not, the return of the deposit with interest and costs is all that can be expected." (Per Blackstone, J.) About fifty years after this case was decided the question again arose in 5 Bain v. Fothergill, 43 L. J. Ex. 243; 7 L. R. H. L. 158; 31 L. T. 387, aff'g 6 L. R. Ex. 59; 40 L. J. Ex. 34; 23 L. T. 670; 19 W. R. 134; Rowe v. School Board, 36 Ch. D. 618, decided in 1887. Upon the question of departure from the ordinary rules governing a breach of contract, both these decisions quote Sedgwick on Dam. (4th ed.) p. 234, as follows: "To this general rule there undoubt- Hopkins v. Grazebrook (6 B. & C. 31; edly exists an important exception | 9 D. & R. 22; 5 L. J. [O. S.] K. B. 65), which has been introduced from the civil law in regard to damages recoverable against a vendor of real estate who fails to perform and complete the title. In these cases the line has repeatedly been drawn between parties acting in good faith and failing to perform because they could not make a title, and parties whose conduct is tainted with fraud and bad faith. In the former case, the plaintiff can only recover whatever money has been paid by him with interest and expenses. In the latter he is entitled to damages for the loss of his bargain. The exception cannot, I think, be justified or explained on principle, but it is well settled in practice." English decisions. One of the first English cases in which this question arose was Flureau v. Thornhill (2 Wm. Bl. 1078), in which it was decided that one who enters into a contract for the purchase of real estate to which the title proves defective without collusion is entitled to no satisfaction for the in which it was determined that one who had contracted for the purchase of land and put up the property at auction, before he had obtained a conveyance, agreeing to make a good title by a certain day, was liable to a purchaser, at such auction sale, not only for the expenses which he had incurred, but also in damages for such loss as had been sustained by reason of not having such contract carried into effect. In this case it was declared: "Upon the present occasion I will only say that if it is advanced as a general proposition that where a vendor cannot make a good title, the purchaser shall recover nothing more than nominal damages, I am by no means prepared to assert it. If it were necessary to decide that point, I should desire to have time for consideration. . . . The defendant had unfortunately put the estate up to auction before he got a conveyance. He should not have taken such a step without ascertaining that he would be in a situation to offer some title and having entered into § 1729. Vendor's breach of contract-Opinions of text writers-English and American rule.-As to the English rule Lord St. Leonards says: "If he declare on the common money the same to a third party without informing the owner of the fact that such third party was contemplating the purchase of the property. The owner had previously sold the property in question to another and was therefore unable to fulfill the contract and it was held in an action against him for nonperformance that no damages were recoverable for loss of the bargain. a contract to sell without the power | the owner of certain property to sell to confer even the shadow of a title, I think he may be responsible for the damage sustained by a breach of his contract." (Per Abbott, C. J.) Shortly after this case was decided a similar question was before the court for consideration in Walker v. Moore (10 B. & C. 416), in which it was held that only nominal damages were recoverable where the breach is due to inability to give title, and it was said: "Here the defendants undertook to make a good title and they might honestly think that they should be able to do so. It turned out that they could not and consequently the contract was broken, and they were liable to an action ... Again, in Robinson v. Harman (1 Exch. 850; 18 L. J. Ex. 202), a question arose as to the measure of damages recoverable against one who had agreed to grant a valid lease with knowledge, at the time he entered into such agreement, that he had no if there were mala fides in title and it was held that there might the original vendor (but not other- be a recovery for the loss of the barwise). I am not prepared to say that gain. In this case it was said that the purchaser might not recover the an exception was engrafted upon the profit which would have arisen from general rule of the common law by the resale. But if premises for the case of Flureau v. Thornhill (2 which a party has contracted are by Wm. Bl. 1078), and that “ upon that him offered for resale too soon, that exception the case of Hopkins v. is at his own peril, and the damage, Grazebrook (6 B. &. C. 31), engrafted if any, resulting from such offer, another exception." It was further arises from his own premature act, declared that "this case comes and not from the fault of the vendor." within the latter by which the old (Per Bayley, J.) And again in this common-law rule has been restored. same case it was declared that "when Therefore the defendant, having una contract for the purchase of lands dertaken to grant a valid lease, not is made each party cannot but know having any color of title, must pay that the title may prove defective the loss which the plaintiff has susand must be taken to proceed up-tained by not having that for which on that knowledge." (Per Little- he contracted." (Per Alderson, B. dale, J.) The case of Walker v. Moore (10 B. & C. 416), was followed by that of Tyrer v. King (2 Car. & K. 149). In this latter case it appeared that an auctioneer had agreed on behalf of See also Lock v. Furze, 19 C. B. [N. In Worthington v. Warrington (8 C. counts, he of course cannot obtain any damages for the loss of his bargain; and even if he affirm the agreement by bringing an action for nonperformance of it, he will obtain nominal damages a one taking possession of premises as | goes off by reason of the vendor's intenant with right to purchase ability to perform the condition, within a certain time, it was said: gets no damages beyond the mere "Every one who purchases land expense of investigating a title which knows that difficulties may exist as turns out to be bad." (Per Jervis, to the making a title which were not C. J.) anticipated at the time of entering into the contract. But if the purchaser thinks proper to enter into possession and to incur expenses in alterations before the title is ascertained, he does so at his own risk." (Per Coltman, J.) And it was held that he was only entitled to recover the value of the lease and not such expenses. A few years after this decision the case of Pounsett v. Fuller (17 C. B. 658) arose, in which it was held that there could be no recovery for loss of the bargain where there had been no fraud or misrepresentation on the part of the vendor. In this case it was declared that Walker v. Moore (10 | B. & C. 416) expressly determined that "where the party is not to blame but professes to sell that which he bona fide believes he can sell, though in fact he has no title, he is liable only for the expenses of investigating a title which turns out to be bad." (Per Jervis, C. J.) And it was also said in this case that "The case of Flureau v. Thornhill (2 Wm. Bl. 1078), which has always been recognized as an exception to the general rule of law, held that where a man undertakes to sell an estate, the bargain is to be understood as being subject to this qualification or condition, viz., that he has a good title to convey; and in the judgment it is said that it results from that, that the vendee, where the bargain The rule established by Flureau v. Thornhill (2 Wm. Bl. 1078) was followed in Sikes v. Wild (1 B. & S. 587, Cockburn, C. J. dissenting) which was an action against a vendor of land who had sold the same knowing he had no clear title but who acted, on the oral promise of one who had a life annuity, secured by the property, that she would transfer the security to other property which she refused to do. It was said in this case: "The question therefore which was argued before us, was whether under the circumstances the plaintiff could claim damages for the loss of his bargain. I am of the opinion that there is nothing in this case to take it out of the general rule as to the assessment of damages for the breach of a contract to sell real property where the bargain goes off on account of a defect in the title. That rule which is an exception from the general rule of the common law, was first laid down in Flureau v. Thornhill (2 W. Bl. 1078) as long ago as 1776. It was constantly acted upon until Hopkins v. Grazebrook (6 B. & C. 31), which introduced an exception in cases where the vendor was not in possession." (Per Blackburn, J.) A consideration of this question again arose in the case of Engel v. Fitch (L. R. 3 Q. B. Cas. 314), in which it was determined that if the breach of contract arose from a re only for the loss of his bargain, because a purchaser is not entitled to any compensation for the fancied goodness of his bargain which he may suppose he has lost, where the vendor is, fusal to take the necessary steps to pears to us, that the Court of King's confer a good title and not from in- Bench proceeded in Hopkins v. ability there might be a recovery for Grazebrook (6 B. & C. 31). . . . By the loss of the bargain in addition to the law of England as a general rule a deposit and expenses of investigating vendor who, from whatever cause, the title. In this case the general fails to perform his contract is bound question is again discussed and the... to place the purchaser, so far following extract from the opinion as money will do it, in the position there given is of value. The court he would have been in if the contract said: "Now, however firmly settled had been performed. . . . There is the law as laid down in Flureau v. nothing in the nature of real propThornhill (2 Wm. Bl. 1078) may be, erty which, either on technical or it must be admitted that that case is general grounds, should take a conanything but satisfactory. . . The tract for the sale of real estate out case of Hopkins v. Grazebrook (6 B. of this general rule, with one single & C. 31) has been, it is true, more exception—namely that owing to the than once questioned by high author- nature of the law as to real property, ity as inconsistent with the decision the undoubted owner of an estate in Flureau v. Thornhill (2 Wm. Bl. often finds, unexpectedly, difficulty 1078), but with the utmost deference in making out a title which he canfor the opinions referred to if the not overcome; if, an obligation to case of Hopkins v. Grazebrook (6 B. make out title being implied on every & C. 31) is considered on its true such contract, the opposite party regrounds it appears plainly distin-jects the title and repudiates the guishable from Flureau v. Thornhill contract, it seems not altogether un(2 Wm. Bl. 1078), and stands upon a reasonable that he shall be entitled perfectly intelligible and sound to no more than the return of the defoundation. There is an obvious posit, if any, and the expense of indifference between the case of a man vestigating the title. In this excep who being in possession and the un- tional case he is put not in the doubted owner of real property, is condition in which he would have unable to make out a marketable been if the contract had been pertitle and that of one who not being formed, but in the condition in the owner but having only a contract which he would have been if the confor the purchase of real estate takes tract had not been made. He is upon himself to sell it to another as where he was before, without the eshis own and as if the title were his tate and benefits it would have to convey. The difficulty of making brought him if a title could have out title, which exists in the one case been made to it. But the limit of and forms the foundation of the rule exception is to be found in the reaand the justification of the excep- son on which it is based; the reason tional departure from ordinary prin- ceasing, the rule should also cease. ciples, is wholly wanting in the other. It can properly have no application It is upon this distinction, as it ap- where the nonperformance of the |