Donovan v. Bachstadt

453 A.2d 160 (1982)

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Nature of the Case

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Facts

Lowden acquired a deed from a township for two lots of land. Bachstadt (D) advanced the funds for the purchase of the land. Lowden gave D a deed to the property that he never recorded. D constructed a house on the property and entered into a contract to sell the premises to the Donovans (P). The contract was a standard form contract; D had no attorney. The purchase price was $58,900, and a deposit of $5,890 was paid to and held by a broker. At closing, scheduled for May 1, 1980, P were to pay an additional $9,010 in cash and the balance due was to consist of a purchase money bond or note of $44,000 for 30 years at 10.5%. The conveyance was subject to easements and restrictions of record and facts disclosed in a survey provided that these would not render the title unmarketable. The title was to be marketable and insurable by any reputable title insurance company. There were no liquidated damages provisions. A title search revealed that the title was in Mettrich and neither in Middletown Township nor Lowden. The township had inadvertently failed to foreclose on the two lots which were sold to Lowden. P, knowing of the defects, filed a complaint for specific performance. The trial court decreed specific performance. When D could not obtain marketable title, Ps filed for compensatory and punitive damages. P's motion for summary judgment was granted; the only issue being left was damages. The court ruled that Ps were entitled to the money expended for the title search but not for the differences in the rates of financing on the mortgages; Ps had since bought another home. Ps had apparently obtained a mortgage loan bearing interest at the rate of 13 1/4% per annum. Ps sought the difference between 10 1/2% and 13 1/4% as compensatory damages, representing their loss of the benefit of the bargain. The trial court denied recovery because the contract was for the sale of the property and the financing 'was only incidental to the basic concept.' The appeals court reversed; the general law of damages for a breach of contract applied and the difference in the rates of interest could be the basis for the measure of damages. Reversed and modified.