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McKenna v. Woods

Court of Appeals of Connecticut

May 15, 1990

Terrence G. McKENNA
v.
Steven WOODS.

Argued Feb. 6, 1990.

Jackson T. King, Jr., with whom, on the brief, was Jeffrey R. Godley, Norwich, for appellant (defendant).

Lloyd L. Langhammer, for appellee (plaintiff).

Before BORDEN, DALY and LAVERY, JJ.

[21 Conn.App. 529] BORDEN, Judge.

The plaintiff brought this action for specific performance and damages following the defendant's refusal to convey certain real property. The defendant appeals from the judgment of the trial court [21 Conn.App. 530] accepting an attorney trial referee's recommendation awarding damages in the amount of $30,500 to the plaintiff. The defendant claims that the court erred (1) in finding that there

Page 837

was an anticipatory breach, (2) in awarding damages even though the plaintiff was not ready, willing and able to perform, and (3) in improperly computing the amount of damages. We find no error.

The referee found the following facts. Pursuant to a written contract dated January 28, 1987, the plaintiff agreed to buy for $154,500, a two-family house under construction by the defendant on a lot in Stonington. [1] The contract called for the plaintiff to pay $15,000 at the date of execution, [2] and to pay the balance at the date of closing. The balance was to consist of a $40,000 cash payment and the proceeds from a $99,500 mortgage. With respect to the contemplated $40,000 payment, the plaintiff intended to pay only $27,725 because of setoffs based on certain contractual payment obligations of the defendant. By the spring of 1987, the plaintiff had accumulated approximately $24,000 in a bank account for the purchase, but never accumulated exactly $27,725. The contract further provided for a closing on or Before March 27, 1987, and required the [21 Conn.App. 531] house to be completed and a certificate of occupancy to be issued no later than that date. The contract did not specify that time was of the essence.

The referee further found that, because of construction delays, the defendant was unable to complete construction of the house by the closing date of March 27, 1987. The defendant substantially completed construction of the house in July, 1987, but did not receive the certificate of occupancy until October, 1987. On January 28, 1987, the date of execution of the contract, the value of the property was the contract price of $154,500, and in October, 1987, its value was $170,000. The referee found that in July, 1987, the defendant wilfully committed an anticipatory breach of the contract, informing the plaintiff that he would not sell him the house at the contract price. Between the contractual date of performance and the defendant's repudiation, the parties communicated with each other on a regular basis concerning the progress of the ongoing construction, and assumed and acted as though the contract was still in effect. The referee also found that in late July, 1987, [3] the plaintiff made a written demand for performance, stating that he was ready, willing and able to purchase the property. The plaintiff had discussed a mortgage application with a mortgage broker and was confident of securing a mortgage, but never formally applied for one. The house was not sufficiently complete for a mortgage appraisal until July, 1987.

The referee concluded that the plaintiff was not entitled to specific performance because he never received a mortgage commitment. The referee also concluded that, after the defendant's anticipatory breach, [21 Conn.App. 532] the plaintiff was excused from any obligation to apply for a mortgage or to accumulate the exact amount of cash required to close. The referee awarded the plaintiff damages in the amount of $30,500, plus interest, for the defendant's breach of contract.

The court accepted the referee's report and rendered judgment accordingly. This appeal followed.

Page 838

I

The defendant first claims that the court erred in concluding that he had anticipatorily breached the contract. He argues that once the March 27, 1987 contractual performance date passed, there was no contract for him to breach because the parties did not intend to modify the contract by extending the time for performance. This argument is based on the contentions that the referee did not explicitly find that the parties had modified the contract, that there was no oral or written agreement to modify the contract, and that the contract specifically required that modifications be in writing. We disagree.

An anticipatory breach of contract occurs when the breaching party repudiates his duty Before the time for performance has arrived. Martin v. Kavanewsky, 157 Conn. 514, 518-19, 255 A.2d 619 (1969); Koski v. Eyles, 37 Conn.Sup. 861, 862, 440 A.2d 317 (1981). Its effect is to allow the nonbreaching party to discharge his remaining duties of performance, and to initiate an action without having to await the time for performance. Martin v. Kavanewsky, supra. Furthermore, contract modification is a question of fact; Three S. Development Co. v. Santore, 193 Conn. 174, 177-78, 474 A.2d 795 (1984); and may be effectuated expressly by mutual promises; id., at 178, 474 A.2d 795; or may be implied in fact from the parties' conduct. Cf. Rahmati v. Mehri, 188 Conn. 583, 587, 452 A.2d 638 (1982) (manifestation of mutual assent may be found by the conduct of the parties).

[21 Conn.App. 533] In this case, the time for performance stated in the contract was March 27, 1987. The referee found that the defendant committed an anticipatory breach of the contract in July, 1987. The referee also found that the parties were in regular communication about the progress of the house through July, 1987, and that until the defendant repudiated the contract in July, 1987, they assumed and conducted themselves as if the contract was still in effect. Implicit in these findings is the finding that the contract was modified to extend the time for performance to October, 1987, when the defendant completed construction of the house and obtained a certificate of occupancy. This implied ...


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