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August 25, 1981


From the Circuit Court of St. Louis County; Civil Appeal; Judge Robert G. J. Hoester.

Before Pudlowski, P.j., Gunn, Weier, JJ.

The opinion of the court was delivered by: Gunn

This appeal involves a breach of real estate contract and action for real estate commission. The plaintiffs-respondents (perkinsons), as sellers of certain residential property, brought suit against the defendant-appellant (Mrs. Burford) as buyer for allegedly reneging on her agreement to purchase the property. A jury verdict was in favor of the Perkinsons for $74,193.40, from which Mrs. Burford appeals, raising three points of alleged trial court error: (1) failing to instruct that the Perkinsons did not have title to the property; (2) failing to instruct on the definition of fair market value of the property; (3) failing to order a defendant's directed verdict or judgment N.O.V.

In a corollary action, Edward L. Bakewell, Inc. (Bakewell) filed a counterclaim for recovery of a real estate commission, but a motion for directed verdict against it was sustained, which forms the basis of Bakewell's appeal.

We find no error and affirm the judgment.

With Bakewell as plaintiff's agent, the Perkinsons and Mrs. Burford entered into a standard sales contract for the purchase of a house with 16 acres of land in St. Louis County. The purchase price was to be $500,000.00, with Mrs. Burford making a $2500.00 earnest money deposit. The day before closing, Mrs. Burford repudiated the sale. The Perkinsons ultimately sold the property for $350,000.00 and brought suit against Mrs. Burford for damages resulting from the breach.

At the time the sales contract was executed, the Perkinsons possessed title to only two of the sixteen acres of land, the remaining fourteen acres being held in the name of Linclay Development Corporation (Linclay). Mr. Perkinson was president and sole stock holder of Linclay. On the date of closing Linclay, through proper corporate procedures, transferred title to its 14 acres to the Perkinsons.

For her first point Mrs. Burford argues that she was entitled to rescind the transaction upon finding that the Perkinsons did not own the entire 16 acres of land on date of the contract, but, rather, a substantial portion was owned by Linclay, a corporation with an allegedly unstable financial structure. She argues that the jury should have been instructed that she was entitled to rescind for that reason. The theory of her case is based on Nance v. Sexton, 199 Mo. App. 461, 203 S.W. 649 (1918), which holds that one who fails to disclose his lack of title or bona fide claim of ownership cannot make a valid executory contract for the sale of land because of lack of mutuality, thereby permitting the proposed purchaser to repudiate the contract.

But Nance does not apply here, for the circumstances are substantially dissimilar. In Nance there was an apparent fraudulent concealment as the seller did not have the slightest wisp of title to the property to be sold with scarce prospect that he could deliver. The concern about mutuality is not applicable in this case. Though the Perkinsons had title to only two acres, Mr. Perkinson was president and sole stock holder of the company which owned the balance. Linclay was not bridled in any way from transferring the property, and its financial status offered no apparent impediment. Thus, the Perkinsons could readily provide specific performance of the contract and could ensure they would have sufficient title to convey the property on the closing date. As there was no evidence of fraud, misrepresentation or impossibility of correction of title or conveyance - necessary elements to allow contract rescission -- Mrs. Burford's complaint is too flimsy to warrant her repudiation of the contract. See Hellrung v. Hoechst, 384 S.W.2d 561, 564 (Mo. 1964), citing Annot., 109 A.L.R. 242, 244 (1937). Quite clearly the Perkinsons had the capacity and were in position to convey title according to the terms of the sales contract with Mrs. Burford. It was therefore not essential for them to have had some muniment in their names at the time the sales contract was executed. Schottenstein v. Devoe, 83 Ohio App. 193, 82 N.E.2d 552 (1948); 77 Am.Jur.2d Vendor and Purchaser § 235 (1975). There was therefore no reason for the trial court to give Mrs. Burford's instruction regarding rescission of the sales contract.

Next, Mrs. Burford argues that the trial court erred in failing to define fair market value as the measure of damages. She is correct in her assessment of the law that the appropriate measure of damages in a breach of an improved land sale contract is the difference between the contract price and the fair market value at the time of breach. Leonard v. American Walnut Co., 609 S.W.2d 452, 455 (Mo. App. 1980); Construction Enterprises, Inc. v. Schaeffer, 562 S.W.2d 799, 800 (Mo. App. 1978). Using that precept as a basis, she asserts that the jury should have been given MAI 16.02 which defines the term "fair market value". *fn1 Instead, the trial court submitted MAI 4.01 and allowed Mrs. Burford's attorney to define fair market value in closing argument. This was proper procedure.

The MAI 4.01 modification that was given in this case provides:

If you find the issues in favor of the plaintiffs on the plaintiffs' claim for damages, then you must award the plaintiffs such sum as you believe will fairly and justly compensate the plaintiffs for any damages you believe they sustained as a direct result of the occurrence mentioned in the evidence.

Though this instruction is primarily for tort actions, its use in breach of contract actions has been given judicial approbation and is congruent with current case law. Gottlieb v. Hyken, 448 S.W.2d 617, 621 (Mo. 1970); North County School District R-1 v. Fidelity & Deposit Co., 539 S.W.2d 469, 480 (Mo. App. 1976); McAtee v. Greenspon, 439 S.W.2d 187, 190 (Mo. App. 1969); Stamm v. Reuter, 432 S.W.2d 784, 786 (Mo. App. 1968).

A specific challenge to the use of MAI 4.01 in a breach of real estate contract action was raised in Boten v. Brecklein, 452 S.W.2d 86 (Mo. 1970). *fn2 The following from Boten provides ready answer to the issue of whether MAI 4.01 without a definition ...

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