Loveless v. Diehl
364 S.W.2d 317 (1962)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
Specific performance for a contract to convey real estate is awarded as a matter of course and is not defeated by the buyer's intent to immediately resell the property. When performance is concurrent, a valid tender requires only a showing of readiness, willingness, and present ability to perform, not the physical production of cash, especially when the other party repudiates the agreement.
Facts:
- J. E. Loveless and his wife leased a 79-acre farm to W. A. Diehl and his wife for a three-year term beginning December 15, 1956.
- The lease agreement contained an option allowing the Diehls to purchase the property for $21,000 at any time during the lease.
- The Diehls took possession of the farm and invested several thousand dollars in improvements.
- As the option period neared its end, the Diehls, unable to raise the funds themselves, entered into an agreement to sell the property to Dr. J. W. Hart for $22,000.
- Before the option expired, Diehl informed Loveless that he was exercising the option and had a buyer ready with the funds.
- Loveless initially agreed to provide the necessary documents but subsequently interfered with the Diehl-Hart transaction and disavowed any intention of selling the property.
Procedural Posture:
- W. A. Diehl and his wife sued J. E. Loveless and his wife in the Faulkner County Chancery Court (trial court) for specific performance, or in the alternative, damages.
- The Lovelesses filed a counterclaim for payment on a promissory note.
- The Chancery Court awarded specific performance and damages to the Diehls and awarded judgment on the note to the Lovelesses.
- The Lovelesses (appellants) appealed the decree to the Supreme Court of Arkansas.
- The Supreme Court of Arkansas initially issued an opinion on December 3, 1962, reversing the specific performance award and instead granting the Diehls $1,000 in damages.
- The Diehls (appellees) petitioned the court for a rehearing on that decision.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Is a buyer who has exercised an option to purchase real property entitled to the remedy of specific performance, even if their plan was to immediately resell the property and they did not make a physical tender of the cash payment to the seller who repudiated the contract?
Opinions:
Majority - George Rose Smith, J.
Yes, the buyer is entitled to specific performance. For contracts involving the conveyance of real estate, specific performance is not merely a discretionary remedy but is granted as a matter of course. The buyer's intent to immediately resell the property is of no concern to the seller and does not create a hardship or countervailing equity sufficient to deny this remedy; to hold otherwise would diminish the transferability of property. Denying specific performance here would unjustly enrich the sellers, who would retain the value of the buyers' substantial improvements after culpably refusing to perform. Furthermore, a physical tender of the purchase price was not required. In contracts with concurrent obligations, tender means only a readiness, willingness, and present ability to perform, coupled with notice to the other party. Loveless's repudiation of the contract made any further tender unnecessary.
Dissenting - Harris, C.J.
No, specific performance should not be granted. The evidence does not establish that the prospective purchaser, Dr. Hart, had the 'present ability' to pay the $21,000 in cash before the option expired. His testimony indicates he would have needed to arrange loans or sell other property, which does not constitute a valid tender of performance. The original decision to award $1,000 in damages—the exact amount the Diehls stood to gain—was a just result. Granting specific performance primarily benefits Dr. Hart, a non-party to the original contract who never made a proper tender.
Dissenting - McFaddin, J.
No, the court's original opinion awarding damages in lieu of specific performance was correct. A court of equity retains sound discretion to deny specific performance where the case is not clear or where considerable countervailing equities exist. Here, the sufficiency of the tender was unclear, and awarding the Diehls $1,000 in damages gave them all the benefit they would have received from the contract, providing a practical end to the litigation. Granting specific performance unnecessarily prolongs the matter.
Analysis:
This decision reinforces the principle that specific performance is the presumptive remedy for breaches of real estate contracts, treating land as unique and monetary damages as inherently inadequate. It clarifies that the right to specific performance is not contingent on the buyer's future plans for the property, thereby protecting the alienability of real estate. The court's application of a more lenient standard for 'tender' in bilateral contracts also has significant practical implications, preventing sellers from using a buyer's failure to physically present cash as a pretext for escaping a deal they have already repudiated.
Unlock the full brief for Loveless v. Diehl