Kasten Construction Co. v. Maple Ridge Construction Co.
245 Md. 373, 1967 Md. LEXIS 525, 226 A.2d 341 (1967)
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Rule of Law:
In a contract for the sale of land, a specified settlement date is considered formal rather than essential, and a party who misses the deadline may still be granted specific performance if they tender performance within a reasonable time, unless the contract expressly states that time is of the essence or such an intention can be clearly inferred from the circumstances and conduct of the parties.
Facts:
- On December 4, 1964, Maple Ridge Construction Company contracted to buy 34 'finished' lots from Kasten Construction Company, with settlement scheduled in sixty days.
- The contract did not state that time was of the essence.
- Due to financing difficulties, Maple Ridge secured a written extension of the settlement date to March 19, 1965, but Kasten refused any further extension requests.
- During this period, Kasten was slow in fulfilling its own obligations to complete the lots, including finalizing easements with the county and installing utilities, curbs, and gutters.
- Maple Ridge spent $12,000 on architectural plans and a site office trailer in anticipation of the development.
- The extended settlement date of March 19 passed without either party making a demand on the other.
- Five days later, Maple Ridge informed Kasten it had applied for a title examination that would take about three weeks to complete.
- In response, Kasten notified Maple Ridge that it considered the contract null and void because the extension had expired.
Procedural Posture:
- Maple Ridge Construction Company filed a suit for specific performance against Kasten Construction Company in a Maryland trial court (an equity court presided over by a chancellor).
- The chancellor found in favor of Maple Ridge, ruling that the buyer had tendered performance within a reasonable time and that time was not of the essence, and therefore decreed specific performance of the contract.
- Kasten Construction Company, as appellant, appealed the chancellor's decree to the Court of Appeals of Maryland.
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Issue:
Is a buyer entitled to specific performance of a land sale contract after failing to settle by the specified date, when the contract does not expressly state that time is of the essence?
Opinions:
Majority - Horney, J.
Yes, a buyer is entitled to specific performance under these circumstances. The general rule in contracts for the sale of land is that time is not of the essence unless the contract expressly states so, or such an intention can be inferred from the circumstances, the object of the execution, or the conduct of the parties. The mere inclusion of a settlement date is treated by courts of equity as formal rather than essential. Here, the buyer's delay was not unreasonable, particularly given that the seller was also 'lackadaisical' in performing its contractual obligations to prepare the lots for construction. The seller suffered no loss that could not be compensated by an award of interest for the delay.
Analysis:
This decision reaffirms the traditional equitable principle that courts disfavor forfeitures in land sale contracts and will not treat time as essential unless the parties clearly intended it. It underscores that a seller's own delay in performance can weaken their ability to terminate a contract based on the buyer's tardiness. The case serves as a crucial reminder for contract drafters: if a deadline must be strictly enforced, the contract must explicitly state that 'time is of the essence.' Without such language, courts will look to the reasonableness of the delay and the conduct of both parties.
