Glass v. Anderson
596 S.W.2d 507 (1980)
Rule of Law:
When a buyer repudiates a contract for the sale of real property after the time for performance has arrived and the non-defaulting party has made time of the essence, the contractual obligations of the non-defaulting party are ended, and the repudiating party cannot obtain specific performance of the contracts.
Facts:
- Anderson and Glass entered into six identical earnest money contracts, dated May 14, 1974, for the sale of six separate lots with houses in Houston.
- The contracts provided for a cash down payment, a note for the balance, and required Glass to furnish an owner's title policy within 15 days of acceptance and execute a general warranty deed within 5 days of title being shown in the seller.
- Around June 1, 1974, Anderson called the title company and told the closer he needed more time to secure funds, and also told Glass 'the deal was off,' allegedly calling Glass 'a crook' for keeping his earnest money.
- Anderson's attorney, Charles Herndon, sent a letter to the title company on June 13, 1974, stating that Anderson and Porter instructed the escrow funds to be held due to disagreements and directing the title company not to commence any title review.
- Glass's attorney, L. H. Lynch, sent a letter to Anderson on July 18, 1974, enclosing title reports showing good title in Glass and notifying Anderson that Glass would claim the earnest money as liquidated damages if Anderson did not consummate the transaction within a reasonable time.
- Anderson's attorney, Charles Herndon, replied on July 30, 1974, unequivocally repudiating all six contracts, citing unexecuted contracts for three and Anderson's inability to secure financing for the remaining three.
- Around August 10, 1974, Anderson informed Glass that he had secured the necessary financing and was ready to close, offering to reimburse Glass for certain expenses.
- Glass refused to go through with the closing, stating he needed to check with his accountant since he had sold other property in the interim.
Procedural Posture:
- Buyer Anderson sued seller Glass in the trial court (a non-jury trial) seeking specific performance of six earnest money contracts.
- The trial court ordered the contracts specifically performed.
- Glass appealed the trial court's decision.
- The court of civil appeals affirmed the trial court's judgment.
- Glass (petitioner) sought review from the Supreme Court of Texas.
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Issue:
Can a buyer obtain specific performance of a real estate contract after twice repudiating the contract, with the second repudiation occurring after the time for performance had arrived and the seller had made time of the essence by demanding performance?
Opinions:
Majority - Justice Spears
No, a buyer cannot obtain specific performance of a real estate contract after twice repudiating the contract, especially when the second repudiation occurs after the time for performance has arrived and the seller has made time of the essence. The court reasoned that Anderson's initial repudiation in early June, before the contractual time for performance had arrived, constituted an anticipatory breach, which discharged Glass's obligation to tender deeds and title policies. However, Glass subsequently made time of the essence in the contracts by demanding performance within a reasonable time through his attorney's July 18 letter, following the contractual time for performance having arguably arrived and title reports becoming available. Anderson's second repudiation on July 30, through his attorney, was an unequivocal refusal to perform after Glass had effectively made time of the essence. This constituted a material breach of the contracts. A repudiation occurring after the time for performance has arrived, coupled with total non-performance, terminates the contract without the necessity of any affirmative 'acceptance' by the non-repudiating party and excuses the non-repudiating party's performance. Therefore, Anderson's subsequent attempt to retract his repudiation and tender performance around August 10 was ineffectual because the contracts had already terminated due to his material breach. The court affirmed that specific performance, an equitable remedy, is not available to a party who has materially and totally breached their contract, particularly when they wait until the bargain becomes profitable to seek enforcement. The court adopted the rule from Restatement (Second) of Contracts § 383, stating that specific performance may be granted only if the breach by the party seeking relief is not serious enough to discharge the other party’s remaining duties of performance.
Analysis:
This case provides crucial clarification on the impact of repudiation in real estate contracts, particularly distinguishing between anticipatory breaches and material breaches after the time for performance has arrived. It establishes that once a non-breaching party makes time of the essence by demanding performance and the other party then unequivocally repudiates, that repudiation constitutes a material breach that automatically terminates the contract. This significantly limits the breaching party's ability to retract their repudiation and subsequently seek equitable remedies like specific performance, thereby protecting the non-breaching party from being forced to perform a contract after a clear and material breach. The ruling reinforces the principle that parties seeking equitable relief must come to the court with clean hands, having complied with their own contractual obligations.
