Opinion
April 2, 1974.
Editorial Note:
This case has been marked 'not for publication' by the court.
Hindry & Meyer, Charles F. Brega, Denver, for plaintiffs-appellees.
Ireland, Stapleton, Pryor & Holmes, Kenneth L. Starr, William C. Gorham, Denver, for defendants-appellants.
SMITH, Judge.
Defendants appeal from a judgment of $15,400 plus interest in plaintiffs' favor, which sum represents money paid by plaintiffs pursuant to a contract for the construction and sale of a condominium unit less damages incurred by defendants as a result of plaintiffs' breach of contract. We affirm.
I
On October 22, 1969, plaintiffs (Bergquists) entered into a contract with defendant partnership (Daly) for the construction and purchase of a condominium unit in Aspen, Colorado. Pursuant to its terms plaintiffs paid $5,800 upon execution of the contract. The contract provided that plaintiffs were to pay an additional $11,600 upon partial construction, and the balance of $40,600 in 120 monthly installments upon completion of the unit. The contract contained a forfeiture clause which provided that:
'Time is the essence hereof, and if any payment or any other condition hereof is not made, tendered, or performed by Purchaser(s) as herein provided then this Contract shall be void and of no effect, and both parties hereto released from all obligations hereunder, and all payments made hereon shall be retained by the Seller as liquidated damages.'
The contract required that construction be completed within four months of the execution of the contract. However, the trial court found that the real estate broker acting on behalf of the defendants had expressed to plaintiffs the view that the unit would in fact be completed by December, and that this representation of an earlier completion date was an influencing factor in plaintiffs' decision to enter the contract.
In November of 1969, it appeared doubtful that the unit would be completed in December, and upon receipt of a demand for payment of the additional $11,600 pursuant to the contract, Mr. Bergquist discussed the delay with defendant Daly. Although the court found that there was some discussion between the parties regarding the possibility of rescinding the agreement at that time and returning the deposit money, no agreement was reached and plaintiffs paid the additional $11,600.
In January of 1970, Mr. Bergquist communicated by letter his acceptance of Daly's November 'offer' to rescind the contract. The court found, however, that there had been no formal offer of rescission by Daly, and that the 'acceptance' was therefore ineffective. In February, Bergquist again wrote to Daly proposing that the contract be rescinded and the money be returned. Daly did not reply to this proposal.
By March 11, 1970, almost a month past the four-month completion schedule, the unit was still not completed. Bergquist telegraphed Daly declaring the contract null and void because of Daly's failure to complete construction within four months, and demanded return of his monies previously paid.
Between the first week of April, when the condominium was completed, and October 1970, the parties continued to communicate concerning the condominium unit. There was evidence adduced, and the court found, that Daly continued to urge Bergquist's performance under the contract and that Daly treated the contract as if it were still in effect. There was also evidence that on at least one occasion Daly offered to return the deposit upon sale of the unit to a third party. During this period Bergquist continued to maintain that the contract was null and void because of Daly's failure to complete per the agreement. The final communication between the parties occurred in October 1970, at which time Daly advised Bergquist that he was not going to get out of the agreement or get his money back. On November 9, 1970, without notice to plaintiffs, Daly sold the unit in controversy to a third party.
On the basis of the evidence, the trial court, before whom trial was held, concluded that the late completion of the condominium unit was not a material breach of contract. This conclusion is not challenged by the parties on appeal. The court also found and concluded that Bergquist's March telegram was an anticipatory repudiation which constituted a material breach of contract discharging Daly's duties under the contract. However, the trial court further concluded that Daly's course of conduct following the repudiation manifested an intent to keep the contract in force, and that his conduct had the legal effect of reviving his contractual duties.
Under the written agreement, defendants were required to notify Bergquists twenty days prior to closing. The trial court ruled that their failure to give notice of the sale of the unit to a third person violated that duty and constituted a breach of contract entitling Bergquists to rescind the contract and to recover the monies already paid. Defendants urge that the trial court erred in ruling that their failure to treat the repudiation as a breach of contract renewed the contractual obligation to give notice of the closing.
We agree with defendants that failure to accept an anticipatory repudiation should not revive the promisee's duties under the contract. Kammert Brothers Enterprises, Inc. v. Tanque Verde Plaza Co., 102 Ariz. 301, 428 P.2d 678; French v. Nabob Silver-Lead Co., 82 Idaho 120, 350 P.2d 206; See Restatement of Contracts s 320; A. Corbin, Contracts s 981. Nevertheless, we believe the result reached by the trial court, although based upon other grounds, was correct, and we therefore affirm the judgment. See Klipfel v. Neill, 30 Colo.App. 428, 494 P.2d 115.
Forfeitures, such as the one here at issue, are not favored by the courts, and the right thereto must clearly appear before a forfeiture will be upheld. See Grooms v. Rice, 163 Colo. 234, 429 P.2d 298; Moorman Mfg. Co. v. Rivera, 155 Colo. 413, 395 P.2d 4; Montgomery Ward & Co. v. Reich, 131 Colo. 407, 282 P.2d 1091. Courts take advantage of any circumstance indicating an intention to waive a forfeiture. Knights of the Maccabees of the World v. Pelton, 21 Colo.App. 185, 121 P. 949.
The trial court found that during a telephone conversation on April 20, 1970, defendant Daly stated that he would return the deposit upon resale of the unit to a third party. This position was reaffirmed by letter on June 18, 1970. From April until October, at which time defendant Daly refused to return the deposit, plaintiffs understood that the deposit would be returned and did not assume that their repudiation would result in forfeiture of the deposit. Defendant Daly's representation constitutes a waiver of his rights under the forfeiture clause. It would be grossly inequitable to permit defendants to retain the deposit after inducing plaintiffs into the false security that the deposit would be returned upon sale of the unit to another. Because of defendants' waiver, they have no legal right to retain the deposit, and the trial court properly ordered return of the same to plaintiffs.
II
Defendants urge that the trial court erred in computing damages resulting from plaintiffs' March 11, 1970, anticipatory breach. We disagree.
The proper measure of the vendor's damages upon the purchaser's breach of contract is the difference between the purchase price and the fair market value at the time of the breach. See Andreasen v. Hansen, 8 Utah 2d 370, 335 P.2d 404; C. McCormick, Handbook on the Law of Damages s 186. In the present case, the trial court determined that the ultimate sale price of the condominium was equivalent to its fair market value at the time of the breach, and assessed damages on the basis of the difference between the contract price of the agreement here in controversy and the ultimate sale price of the condominium.
Judgment affirmed.
SILVERSTEIN, C.J., and COYTE, J., concur.