breach occurred, the breach was due to the absence of title in the vendor. The court said that the vendor was bound to know, before he made a contract of sale, that he had it in his power to make a title and put the vendee in possession. It is pointed out that the case was not one of a breach of warranty, where the measure of damage is the purchase money and interest, for none was paid, and the true question to be settled was simply, What did the vendee lose by the failure of the vendor to put him in possession of, and make the title to, the land he bargained to him? In Krepp v. St. Louis & S. F. R. Co. (1903) 99 Mo. App. 94, 72 S. W. 479, where the vendee was held entitled to recover the value of the land at the time of the breach, it appeared that the vendor had sold that portion of the land in question to another, prior to entering into the contract in question. A case of value upon this point, although involving a lease, is Wilkirson v. Yarbrough (1922) Tex. Civ. App. —, 238 S. W. 693, where the title was questionable because it did not clearly appear whether the vendor's children by a former marriage owned an interest in the land, it depending upon facts peculiarly within the vendor's knowledge, and it was held that where he failed to testify upon the trial, and failed to introduce any evidence from any other source upon this issue, his failure in this regard, coupled with his failure to furnish an abstract showing that the children owned no interest in the land, warranted a finding that his breach of contract was wilful and wanting in good faith, and hence entitled the lessee to recover the difference between the contract price of the lease and its actual value. In this case the contract contained a provision that the lessor was to furnish an abstract showing a good and marketable title. The fact that the vendor acted in good faith in entering into a contract for the sale of real estate and that it was only through unforeseen circumstances that it became difficult and expensive for him to perform the contract, does not relieve him from liability to the vendee

for damages for refusal to perform it, or prevent the damages from including the loss of the vendee's profits. Cornell v. Rodabaugh (1902) 117 Iowa, 287, 94 Am. St. Rep. 298, 90 N. W. 599.

But it is asserted in Vaughn v. Farmers & M. Nat. Bank (1910) 59 Tex. Civ. App. 380, 126 S. W. 690, that the rule is well settled that, where a vendor in a contract to convey land did not have title at the time the contract was made, the purchaser, upon the breach of the contract, is not entitled to recover the difference between the contract price and the market value of the land, but can only recover the amount of the purchase money paid upon the contract, with interest from the date of payment, together with such special damages, if any, as may have been incurred by reason of having been induced to enter into the contract. If he has not paid the purchase money, then he is confined to the special damages alone, which must be alleged and proven. So, in Crawford v. Smith (1923) 127 Wash. 77, 219 Pac. 855, where the vendee was held entitled to recover the amount paid upon the purchase price and the amount laid out in improvements of the property, it appeared that the vendor acted in good faith, but as a matter of fact did not have title to the premises. The court said that it was committed to the view that under such circumstances the proper measure of damages is the amount which has been paid on the contract, with interest, together with the enhancement of the value of the property caused by the improvements reasonably and necessarily made by the vendee while in possession.

d. Where breach is due to refusal of vendor's spouse to join in the convey

ance.

It has been held that, where the reason for the breach by the vendor of a contract to convey real estate is the refusal of his or her spouse to join in the conveyance, this breach constitutes such fraud upon the part of the vendor as to entitle the vendee to recover as an element of damage, com

pensation for the loss of his bargain. Greenberg v. Ray (1926) 214 Ala. 481, 108 So. 385; Key v. Alexander (1926) - Fla., 108 So. 883; Puterbaugh v. Puterbaugh (1893) 7 Ind. App. 280, 33 N. E. 808, 34 N. E. 611; McAdam v. Leak (1922) 111 Kan. 704, 208 Pac. 569; Cartin v. Hammond (1890) 10 Mont. 1, 24 Pac. 627; Drake v. Baker (1870) 34 N. J. L. 358, disapproved in Gerbert v. Sons of Abraham (1896) 59 N. J. L. 160, 69 L.R.A. 764, 59 Am. St. Rep. 578, 35 Atl. 1121; Stone v. Kaufman (1921) 88 W. Va. 588, 107 S. E. 295; Timby v. Kinsey (1879) 18 Hun (N. Y.) 255; Greer v. Doriot (1923) 137 Va. 589, 120 S. E. 291.

In Greenberg v. Ray (Ala.) supra, where the measure of damage was held to be the difference between the contract price and the value of the property at the time of the breach of the contract, the vendor's breach was due to the refusal of his wife to join with him in the deed so as to bar her dower.

In Key v. Alexander (1926) Fla. 108 So. 883, in holding the vendor liable for loss of the vendee's profits, where his excuse for refusal to perform the contract was that his wife would not join in the deed, the court said: "This is the only just rule to be applied. If unscrupulous individuals could with impunity make contracts to sell and convey property, receive valuable consideration for such contracts, and then, seeing that the vendee would make a profit by reason of the advance in value of the property contracted to be sold, could, upon the mere statement and flimsy excuse that the wife refused to execute the deed of conveyance, avoid all liability except the return of the purchase price received, with legal interest thereon, much fraud would be constantly practised."

It is said in McAdam v. Leak (1922) 111 Kan. 704, 208 Pac. 569, that the English rule that where the vendor has acted in good faith, and the conveyance has been prevented by a defect in the title unknown to him at the time the contract was made, he is not required to compensate the purchaser for the loss of his bargain, does not

apply where the vendor owned the land in common with her husband, there being nothing to indicate that this fact was not known to her when she agreed to make the sale, and where the reason she gave for her refusal to carry out the contract was that the price agreed upon was too low.

In sustaining this rule it is said in Stone v. Kaufman (1921) 88 W. Va. 588, 107 S. E. 295, supra: "It is only where fraud or collusion is properly imputable to him that the vendor, as in the case of an agent exceeding his authority, or of a vendor, knowing of defects in his title or of his inability to comply with his contract, undertakes to sell and convey land, can be mulcted in damages beyond the actual damages sustained by the purchaser, that is, repayment of the purchase money, with interest, costs, etc. Within these rules and principles, nothing having been paid by the vendee, can the purchaser recover substantial or Kaufman compensatory damages?

knew, when he entered into the contract sued on in this case, that his ability to execute it depended on the contingency of his wife joining with him in the deed. It is said that the purchaser also knew this fact; but should a purchaser be denied the benefits of his bargain because he does not make inquiry of the wife, or demand evidence of her willingness to join in executing the contract? We think this burden should be placed on the husband, and that in such cases the exception to the general rule recognized and enforced in the English case of Flureau v. Thornhill (1776) 2 W. Bl. 1078, 96 Eng. Reprint, 635, supra, should be regarded as inapplicable."

In Greer v. Doriot (Va.) supra, the doctrine limiting the vendee's damage to the amount paid on the purchase price was held not to apply where the vendor was unable to convey a marketable title because his wife refused to join in the conveyance. The court said: "In the jurisdictions in which the doctrine of Flureau v. Thornhill prevails, the distinction seems to be well established, certainly by the great weight of authority, that if the

vendor, at the time he enters into the contract, knows that it will not be in his power to convey the title he contracts to convey, unless he obtains the consent or conveyance of a third person, which at the time of the contract the vendor has no enforceable right to compel, the case does not fall within such doctrine. In such case, if the vendor makes an unconditional contract to convey a marketable title, he cannot escape liability for compensatory damages for failure to perform, by showing that the lawful act of some third person prevented the performance of his contract."

In McCarty v. Lingham (1924) 111 Ohio St. 551, 146 N. E. 64, where the measure of damage was held to be the difference between the market value of the property at the time when the conveyance should have been made and the sale price, the vendor's husband refused to release his inchoate dower interest in the property, and it was subject to liens and encumbrances.

In Grosso v. Sporer (1924) 123 Misc. 796, 206 N. Y. Supp. 227, where the vendor refused to convey, giving as his reason the insufficiency of the purchase price fixed in the option which formed a part of a lease of the premises, and later gave as another reason that his wife refused to join him in the conveyance, the property being owned by himself and wife by entirety, it was held that he was liable to the vendee for compensation for the loss to the latter of his bargain. The court said: "Where a vendor has the title, and for any reason refuses to convey it, as required by his contract, he shall respond in law for the damages, and shall make good to the plaintiff the amount he has lost by reason of the breach of the contract. This gives the vendee the difference between the contract price and the value at the time of the breach, as profits or advantages which are the direct and immediate fruits of the contract. Where, however, the vendor contracts to sell and convey, in good faith, believing he has a good title, and afterwards discovers his title is defective, and for that reason, without any

fraud on his part, refuses to fulfil his contract, he is only liable to nominal damages for a breach of his contract. The rule is otherwise, however, where a party contracts to sell lands which he knows at the time he has not the power to sell and convey, and if he violates his contract [in the latter case] he should be held to make good to the vendee the loss of his bargain; it does not excuse the vendor that he may have acted in good faith, and believed, when he entered into the contract, that he would be able to procure a good title for his purchaser."

In Brown v. Honniss (1904) 70 N. J. L. 260, 58 Atl. 86, the vendor was held liable to the vendee for the loss of his bargain, where the former refused to convey upon an insufficient ground, although subsequently the claim was made that his wife refused to join in the deed. In Wolff v. Meyer (1907) 75 N. J. L. 181, 66 Atl. 959, affirmed in (1908) 76 N. J. L. 574, 70 Atl. 1103, where the vendor conveyed the land to another, the court said that these facts seemed to bring the case within the rule of Brown v. Honniss (N. J.) supra, rather than that of Gerbert v. Sons of Abraham (1896) 59 N. J. L. 160, 69 L.R.A. 764, 59 Am. St. Rep. 578, 35 Atl. 1121. The latter case disapproved of the holding in Drake v. Baker (1870) 34 N. J. L. 358, cited supra.

But in Bitner v. Brough (1849) 11 Pa. 127, the liability of the vendor for damages due to breach of contract to convey real estate, based upon the refusal of his wife to join in the conveyance, is held to depend upon his good faith. If he acted in good faith in the matter, he is liable only for damages based upon the amount paid on the purchase price and compensation for necessary expenses incurred by the vendee; whereas, if he acted in bad faith, colluding with his wife in her refusal to join in the conveyance, he is liable for damages based upon the difference between the contract price and the market value of the property. So, it is held in Burk v. Serrill (1876) 80 Pa. 413, 21 Am. Rep. 105, that, in the absence of specific evidence of fraud and collusion be

tween a husband and wife, the husband is not liable for damages for loss of his bargain, to a vendee in a land contract, where the vendor's wife refused to join in the conveyance. The measure of damages in such case is the amount paid on the purchase price and the cost, if any, of investigating the title. And the refusal of the wife to join in a conveyance is also held in Yates v. James (1891) 89 Cal. 474, 26 Pac. 1073, not to amount to bad faith on the part of the vendor, under the rule holding him liable to the vendee for the loss of the latter's bargain where he has been guilty of bad faith, the vendor, personally, being willing to convey.

In Way v. Root (1913) 174 Mich. 418, 140 N. W. 577, where the vendor could not convey a good title because he and his wife owned the land by entirety, and she would not join in the conveyance, it was held that he could not complain that the trial court submitted to the jury the question as to the allowance to the vendee of loss of profits, tested by his good faith in entering into the contract, knowing the condition of the title.

e. Effect of knowledge of vendor of defect in title.

But, by the weight of authority, if a vendor at the time of entering into a contract to sell land knows that he is unable to perform the contract because he has no title to the land, he is liable, upon his breach, to pay the difference between the contract price and the actual value of the land, and his belief that he could thereafter, before the time fixed for performance, acquire title, or otherwise render himself capable of performance, does not prevent the application of this rule of damage. (It will be noted that some of the cases cited in this group are from jurisdictions which, in general, support the good-faith rule stated in III. a, supra.)

Illinois. Posvic v. Harford (1918) 211 Ill. App. 273.

Kansas. McAdam v. Leak (1922) 111 Kan. 704, 208 Pac. 569.

Minnesota. Skaaraas v. Finnegan (1883) 31 Minn. 48, 16 N. W. 456; Erickson v. Bennet (1888) 39 Minn. 326, 40 N. W. 157.

New York. Pumpelly v. Phelps (1869) 40 N. Y. 59, 100 Am. Dec. 463; Burr v. Stenton (1871) 43 N. Y. 462; Mack v. Patchin (1870) 42 N. Y. 167, 1 Am. Rep. 506; Marsh v. Johnston (1908) 125 App. Div. 597, 109 N. Y. Supp. 1106, affirmed without opinion in (1909) 196 N. Y. 511, 89 N. E. 1104; Shapiro v. Benenson (1917) 181 App. Div. 19, 167 N. Y. Supp. 1004; Schwimmer v. Roth (1920) 111 Misc. 654, 182 N. Y. Supp. 12; Grosso v. Sporer (1924) 123 Misc. 796, 206 N. Y. Supp. 227. Compare with Blate v. Clarry, infra, also Northridge v. Moore, infra, VI. f.

Oregon. Neppach v. Oregon & C. R. Co. (1905) 46 Or. 374, 80 Pac. 482, 7 Ann. Cas. 1035.

Wisconsin.

Arensten v. Moreland (1904) 122 Wis. 167, 65 L.R.A. 973, 106 Am. St. Rep. 951, 99 N. W. 790, 2 Ann. Cas. 628; Lommen v. Danaher (1917) 165 Wis. 15, 161 N. W. 14.

In Marsh v. Johnston (1908) 125 App. Div. 597, 109 N. Y. Supp. 1106, affirmed without opinion in (1909) 196 N. Y. 511, 89 N. E. 1104, in holding that where the vendee in a contract for the purchase of real estate entered into a contract with another to sell the same, and he was unable to carry out this contract because his vendor refused to perform, this fact did not excuse him or relieve him from liability to his vendee for damages, including compensation for loss of the latter's bargain, the court said: "This is not a simple contract on the part of an owner of premises to sell the same. It is an absolute undertaking on the part of the defendant, Johnston, to convey, or to cause to be conveyed, certain described premises. It was not necessary that he should own the premises at the time, or that he should have any claim, either of a legal or equitable

nature. He would be fulfilling his contract if, on the 7th day of June, 1906, he presented a deed in proper form, executed by Van Dyke or anyone in whom the title was vested at the time. Suppose the contract had been simply that the defendant Johnston would cause the conveyance to be made on the 7th day of June, 1907, and that both the plaintiff and the defendant knew that Johnston did not have title; would that defeat the plaintiff's right to the value of her bargain? The defendant, Johnston, would have a perfect right to make such an engagement, and the plaintiff, knowing the facts, would have a right to make such a contract; and, it not being legally impossible of performance, the fact that the defendant was prevented from performing by the refusal of a third party to act would not defeat the plaintiff's right to all the benefits of her bargain."

In Posvic v. Harford (1918) 211 III. App. 273, where one joint owner of real estate undertook, without authority in that behalf, to contract for the sale of the entire interest in the real estate, and was unable to perform, he was held liable to the purchaser in damages, to be based upon the difference between the contract price and the sum for which the purchaser had subsequently contracted to sell the real estate.

In McAdam v. Leak (1922) 111 Kan. 704, 208 Pac. 569, it is held that the English rule would not, in any event, apply where the defendant did not have a full title to the land and there was nothing to indicate that the fact was not known to her when she agreed to make the sale, and the reason she gave for her refusal to convey was that the price agreed upon was too low.

In Hammond v. Hannin (1870) 21 Mich. 374, 4 Am. Rep. 490, it is said: "The principle underlying these cases is, that if a party enters into a contract to sell, knowing that he cannot make a title, he is remitted to a general liability. And the exception introduced by Flureau V. Thornhill (1776) 2 W. Bl. 1078, 96 Eng. Reprint, 635, does not apply. So, if a person

undertakes that a third party shall convey, and is unable to fulfil his contract, the authorities are that he shall pay full damages. Such contracts are speculative in character, and the party giving them understands the risk he assumes when the covenant is entered into. . There are also numerous cases which decide that, if the vendor acts in bad faith,-as, if, having title, he refuses to convey, or disables himself from conveying,—the proper measure of damages is the value of the land at the time of the breach; the rule in such case being the same in relation to real as to personal property. . . . On the other hand, if the contract of sale was made in good faith, and the vendor, for any reason, is unable to perform it, and is guilty of no fraud, the clear weight of authority is that the vendee is limited in his recovery to the consideration money and interest, with, perhaps, in addition, the costs of investigating the title."

In Skaaraas v. Finnegan (1883) 31 Minn. 48, 16 N. W. 456, where a person falsely assumed to act as agent for the owner of land and entered into a contract for its conveyance, the measure of the vendee's damage was held to be the difference between the value of the property at the time when the agreement was made, and the contract price. The court said that the case came within the rule entitling the vendee to compensation for the loss of his bargain when authority to sell had been falsely assumed.

In Pumpelly v. Phelps (1869) 40 N. Y. 59, 100 Am. Dec. 463, where the vendor was held liable to the vendee for compensation for the loss of his bargain as an element of damage, it appeared that the vendor had no title to the land at the time he contracted to sell it to the vendee, but entered into the contract in the expectation of obtaining a title in season to perform it. The court said that one who engages to convey on a mere expectation of obtaining title should be held to make good to his purchaser the loss of the bargain, if a conveyance is not made. That he had good grounds for such expectation makes no difference.