Appellant seller sought review of the decision of the Superior Court of Mendocino County (California), which found for appellee buyer on its breach of contract claim. The seller argued that (1) the buyer rescinded the contract by levying an attachment, (2) the buyer was estopped from its claim because it breached an assumption of seller’s contract to a third party, (3) the buyer breached first, and (4) the damages were excessive.
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Overview
Appellee buyer had a contract with appellant seller for the sale of land. Buyer had built a road, constructed a saw mill, and begun timber operations before discovering that the seller did not own the land, and that the seller had defaulted on its contract to buy the land from the true owner. The buyer brought an action for breach of contract and moneys had and received, and the lower court, after dismissing one claim, found for the buyer on the breach claim. The court affirmed on appeal, finding that (1) the buyer’s attachment did not constitute an irrevocable election to rescind the contract, (2) the buyer did not breach the assumption of the seller’s contract with the true owner because the seller failed to meet the buyer’s conditions, and (3) the buyer did not first breach by failing to make payments, as it was unable to continue cutting timber after discovery of the true owner. The court upheld damages for payments the buyer made for the land, for taxes and insurance paid to the true owner, and for appreciation of the timber. The court disallowed depreciation of the mill, which was an expected cost regardless of the breach, and disallowed the road-building cost.
Outcome
The court affirmed in part the judgment for appellee buyer. The attachment was not an election to rescind the contract that precluded suit. Nor did the buyer breach the assumption of appellant seller’s contract with the true owner or cause a breach first by failing to make payments. The court upheld damages for the payments made for the land, taxes, and insurance, and for appreciation of the timber, but not for mill depreciation or road building.