Siler v. Marshall

Hammond, C. J., delivered the opinion of the Court. In May 1965 appellants, hereinafter called Siler, agreed in writing to sell to appellees, hereinafter called Marshall, some 17 acres of land in Montgomery County at $1.25 a square foot, or $916,905.33. A deposit of $25,000 was paid by the purchasers The contract provided as follows : “Settlement. Time is of the essence of this Contract and within sixty days from : (a) the date of acceptance hereof by the Seller or (b) or as soon thereafter as a report on the title can be secured if promptly ordered, ³⁴⁴ and an appointment can be made with the Title Company for settlement, the Seller and Purchaser are required and agree to make full settlement in accordance with the terms hereof.

If the Purchaser shall fail to do so, the deposit herein provided shall be forfeited as agreed as liquidated damages, and the Purchaser shall thereby be relieved from further liability hereunder. ^ ^ ^ “The entire deposit shall be held by Agent and Ball-man & McDonald Atty. as escrow agents until settlement hereunder is made and the party making settlement is hereby authorized and directed to deduct the aforesaid commission from the proceeds of sale and pay same to said Agent. If the sale is not closed because of the Purchaser’s default one-half of said forfeited deposit shall be paid to the Agent, and the balance of the forfeited deposit shall be paid one-half to Richard B. Thibadeau and Lena Dunkum [holders of overdue mortgages on the property] and one-half to Sellers.” Siler was under pressure because he was in default on mortgages on the property held by Thibadeau and Dunkum, and in late June urged Marshall to settle. A meeting was held on July 6, at which Marshall advised Siler that he could not then settle for lack of cash, having been unwilling or unable to obtain financing, and that he wanted a further extension of time. Marshall would not set a time when he would settle, but asked about a right-of-way of the telephone company which he said had shown up in the title report.

Siler offered on July 6 to provide a title policy protecting Marshall from the effect, if any, of the right-of-way, which, after the property had been resold by Siler to another, Marshall admitted was not on or over the property and would not adversely affect marketability or use of the property. On July 7 Siler wrote Marshall by registered mail that the time for settlement had expired on July 2 and that unless settlement were made by July 12, he, Siler, would consider the contract in default and terminated “and the deposit forfeited in accordance with the terms of said contract.” ³⁴⁵ Marshall requested a conference, which was held on August 5, attended by the principals, their lawyers and the real estate agent, at which Marshall announced that he would not settle at the contract price of $1.25 a square foot because the property was no longer desirable as zoned, that it should be rezoned to its best use and that if so rezoned, it would be worth no more than $1.00 a square foot. He said if Siler would agree to this newly offered price he would be prepared to settle within thirty days. As a persuasive suggestion that it would be best for Siler to accept this new offer, Marshall informed Siler that he now owned the mortgages formerly owned by Thibadeau and Dunkum and could institute foreclosures immediately unless Siler agreed to the proposed new contract.

Undaunted, Siler told Marshall that the contract had been breached and that a new and more attractive purchaser would be sought.'On September 9, Siler completed a resale of the property for $68,-447.13 less than the original contract price and suffered additional damage, claimed to be $6,723.54. The mortgages Marshall had bought from Thibadeau and Dunkum were paid from the proceeds of the resale. On September 13, Marshall attempted to lock the barn door after the horse had been stolen by writing Siler that the telephone easement was no longer of consequence and he was prepared to settle by October 15. On January 10, 1966, Siler sued Marshall at law for the actual damages he claimed Marshall had caused him by failing to consummate his contract to purchase the property.

The escrow agent holding the $25,000 deposit was not made a party. At about the time of this law suit, the escrow agent filed a bill of interpleader on the equity side of the Circuit Court for Montgomery County, naming as defendants all the possible claimants of the $25,000 deposit—Siler, Marshall, the real estate agent, and Thibadeau and Dunkum. The $25,000 was deposited in the registry of the Circuit Court where it now peacefully and patiently reposes. Jurge Shearin, at the close of Siler’s testimony in the law suit, granted a motion to dismiss and entered judgment for Marshall for costs.

His reasons were that Siler’s sole right to recover, “assuming without deciding, that [Marshall] in fact ³⁴⁶ breached the contract in question” was “an action for the agreed portion of the deposit,” and that the escrow agent, who had not been sued, was an indispensable party. He added: “The most appropriate vehicle for ultimate determination of the rights of all parties contending for the $25,000 deposit would appear to be the interpleader action already pending in this Court.” We agree with Judge Shearin that the most Siler can recover is his specified share of the $25,000 deposit. As long ago as the case of Geiger v. The Western Md. R. R. Co., 41 Md. 4, 15 , our predecessors said: “[W]here the parties have declared in clear and unambiguous terms that a certain sum shall be paid by way of compensation, upon a breach of the contract * * * the damages arising from the breach of which are uncertain, and incapable of being ascertained by any fixed pecuniary standard, and especially where the contract provides that the sum so claimed shall be paid as liquidated damages, the sum so fixed and agreed upon will be considered as compensation for damages resulting from the breach and not a penalty.” In Cowan v. Meyer, 125 Md. 450, 463 , the Court adopted the language of Judge Pattison for the Court in Baltimore Bridge Co. v. United Railways and Electric Co., 125 Md. 208, 214-215 , that: “ ‘From the authorities given above, it may be stated as a settled rule of law, that where the parties, at or before the