Subsequent Events

• Author: Val Ricks
• Pages: 200-240

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4. Compare the definition of installment contract in section 2-612 with the test for

divisibility in Lowy. Certainly not all divisible contracts are installment contracts, but most

installment contracts are divisible.

II. Subsequent Events

Courts do not forget the exchange when examining events that happen after contract

formation. Sometimes events undercut the exchange in significant ways. The four doctrines

examined here—impracticability, frustration, failure of consideration, and risk of loss—

preserve the bargain by allowing excuses for non-performance when certain unanticipated

events render the bargain meaningless. The doctrines are contextual, however, and

carefully limited so that they do not undercut the parties’ exchange or the value of

exchanges generally.

A. Impracticability of Performance

WADDY v. RIGGLEMAN

W.V. (2004), 606 S.E.2d 222

DAVIS, Justice

[¶1] In this case Mr. William W. Waddy, IV, (hereinafter referred to as “Mr. Waddy”),

filed a law suit seeking specific performance of a contract for the sale of land. He now

appeals an order of the Circuit Court of Grant County granting judgment as a matter of law

in favor of the defendants, Denver L. Riggleman, III, and his wife Christine Riggleman

(hereinafter referred to as “the Rigglemans”). The circuit court's award of judgment as a

matter of law was based, in part, upon that court's conclusion that the Riggleman's

performance of their contractual obligation should be excused as impossible because they

were unable to secure certain releases to enable them to transfer clear title to Mr. Waddy

as required under the relevant contract. Additionally, the circuit court concluded that time

was of the essence of the contract. We find that the circuit court erred in granting judgment

as a matter of law. We herein adopt the doctrine of impracticability, and further conclude

that, based upon the facts established in the record at the close of Mr. Waddy's case, the

Rigglemans had not met their burden of establishing that their performance had been

rendered impracticable. * * * *

201

I.

FACTUAL AND PROCEDURAL HISTORY

[¶2] On July 5, 2002, Mr. Waddy, appellant herein and plaintiff below, entered into a

contract wherein he agreed to buy a certain thirty acre tract of land from the Rigglemans,

appellees herein and defendants below. It is established in the record that the Rigglemans

had encountered financial difficulties and desired to sell the property in a timely fashion in

order to alleviate their debt burden. Pursuant to the contract, Mr. Waddy was to pay $750

per acre for the tract of land, for a total purchase price of $22,500. The closing was to be

held on or before September 5, 2002. In addition, the contract expressly declared, inter alia,

that

3. Sellers agree to convey the subject real estate in fee simple, with covenants

of general warranty of title, free and clear of all liens and encumbrances. Buyers

(sic) shall have the opportunity to have a title examination done on the subject

property prior to closing, and any defects in title shall be cured by the Sellers prior

to closing.

4. Sellers agree to pay for any and all necessary costs of surveying, the

preparation of the deed of conveyance, the revenue stamps, the attorney fees for

any necessary releases, and all costs associated with eliminating any defects in title.

The balance of the closing expenses shall be the responsibility of the Buyer.

(Emphasis added). Mr. Waddy paid to the Rigglemans $2,000 at the time the foregoing

agreement was executed.

[¶3] The contract was prepared by Mr. John G. Ours, a lawyer in Petersburg, West

Virginia (hereinafter referred to as “Attorney Ours”), who Mr. Waddy had hired to

represent him in connection with this purchase of land from the Rigglemans. After

Attorney Ours had been retained by Mr. Waddy, Mr. Riggleman asked Attorney Ours to

also represent the Rigglemans in this regard, including taking steps necessary to obtain

releases of two deeds of trust under which the land was encumbered. Based upon

representations made by Mr. Riggleman, Attorney Ours believed he could easily obtain

releases or partial releases to clear title to the thirty acre tract of land. As a result, Attorney

Ours did not immediately endeavor to obtain the releases.

[¶4] [The parties made two more agreements, each time to add more land. The second

agreement was executed July 29, adding ten acres at the same price per acre and on nearly

identical other terms. Waddy paid another $2,000 in downpayment and agreed to pay half

the cost of the survey. The third agreement added eight more acres on nearly the same

terms and extended the closing date to on or before September 20.]

[¶5] Thereafter, Mr. Riggleman requested that the closing be held on September 16,

2002. Mr. Waddy explained that the funds he planned to use for the purchase would not be

available until September 17, 2002. Mr. Riggleman then learned that Attorney Ours had

not yet obtained the releases that were necessary to clear the title to the land. Based upon

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his earlier conversation with Mr. Riggleman, Attorney Ours incorrectly believed that

obtaining the releases would be uncomplicated and quick to achieve.

*

On the contrary,

there were specific requirements that had to be fulfilled before any releases would be issued

by the lien holders. Attorney Ours had not secured the releases by the September 20, 2002,

closing date.

[¶6] On or about September 27, 2002, after the contractually set closing date had passed,

Mr. Riggleman notified Attorney Ours by letter that he would not proceed with the sale of

the land to Mr. Waddy.

†

On October 1, 2002, Attorney Ours advised Mr. Waddy and the

Rigglemans that he could no longer represent any of them.

[¶7] On November 14, 2002, Mr. Waddy instituted the civil suit underlying this appeal.

Mr. Waddy sought specific performance of the contract dated September 6, 2002, for the

sale of the forty-eight acres. He also sought other damages and named as party defendants

the lien holders of record, who [included] * * * Chase Manhattan Mortgage Corporation *

* * .

[¶8] Subsequent to the filing of Mr. Waddy's complaint, the Rigglemans conveyed a

tract of real estate containing ninety-six acres to C. Fred Ours and Carol A. Ours. This

conveyance purported to sever or eliminate, by failure to reserve, a right of way to the

forty-eight acres that is the subject of this dispute. Consequently, Mr. Waddy filed an

amended complaint naming C. Fred Ours and Carol A. Ours as party defendants. * * * *

[¶9] A bench trial was held. After Mr. Waddy presented the testimony of several

witnesses and rested his case, the Rigglemans moved the circuit court to order a directed

verdict. By order rendered July 7, 2003, the circuit court granted the motion for directed

verdict in favor of the Rigglemans. The circuit court found that, because the dates set for

closing were clearly important to the parties to the contract, the closing dates were “of the

essence” with respect to the contract.

‡

The circuit court also found that Mr. Waddy's ability

to obtain a clear title to the real estate was a key element of the respective contracts.

Observing that obtaining releases of the deeds of trust on the property by the time of closing

was necessary in order to transfer clear title as contemplated by both parties, the circuit

court further found that the transfer of the real estate was an impossibility.

[¶10] The circuit court dismissed the case with prejudice and ordered the Rigglemans to

refund to Mr. Waddy the $4,000 deposit made by him and $1,200 Mr. Waddy contributed

to the cost of surveying the property. The circuit court also dismissed with prejudice Mr.

*

Attorney Ours testified that he did not believe that Mr. Riggleman had in any way attempted to purposefully

mislead him regarding the complexity of the liens on the property. Attorney Ours also conceded that he

should have begun the process of obtaining the releases at an earlier point in time.

†

Mr. Riggleman apparently stated that he had obtained financial assistance from a rela tive and no longer

needed to sell the property.

‡

The court then observed that Attorney Ours could have been more diligent in his representation of the issues

of the contracts between Mr. Waddy and the Rigglemans.