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Luttinger v. Rosen

Supreme Court of Connecticut
Nov 1, 1972
164 Conn. 45 (Conn. 1972)

Summary

In Luttinger, the buyer was offered a mortgage at an interest rate that exceeded the maximum interest rate stated in the mortgage contingency clause.

Summary of this case from Mccoy v. Brown

Opinion

The plaintiffs contracted to purchase for $85,000 a single-family dwelling from the defendants and paid a deposit of $8500. The contract was subject to the plaintiffs' being able to obtain mortgage financing at an interest rate not to exceed 8 1/2 percent. The lending institution to which the plaintiffs applied made a mortgage commitment at a rate higher than 8 1/2 percent. The plaintiffs gave timely notice to the defendants and demanded return of their down payment. Thereafter, the defendants offered to make up the difference between the interest rate offered by the lending institution and the rate provided in the contract. The plaintiffs rejected the offer. Since the law does not require the performance of a futile act and since the plaintiffs' attorney knew that better mortgage terms could not be obtained elsewhere, the trial court correctly concluded that the plaintiffs, even though they applied to one institution only, used due diligence in seeking mortgage financing in accordance with the contract provisions. Therefore, the trial court could reasonably have determined that the mortgage contingency clause of the contract, a condition precedent, had not been met and that, notwithstanding the defendants' additional offer, the plaintiffs were entitled to a refund of their deposit.

Argued October 6, 1972

Decided November 1, 1972

Action to recover a deposit on the purchase price of a house, brought to the Court of Common Pleas in Fairfield County at Stamford, where the defendants filed a counterclaim and the issues were tried to the court, Tunick, J.; judgment for the plaintiffs on the complaint and on the counterclaim, from which the defendants appealed to this court. No error.

Samuel J. Bernstein, for the appellants (defendants).

Peter J. Weissman, for the appellees (plaintiffs).


The plaintiffs contracted to purchase for $85,000 premises in the city of Stamford owned by the defendants and paid a deposit of $8500. The contract was "subject to and conditional upon the buyers obtaining first mortgage financing on said premises from a bank or other lending institution in an amount of $45,000 for a term of not less than twenty (20) years and at an interest rate which does not exceed 8-1/2 per cent per annum." The plaintiffs agreed to use due diligence in attempting to obtain such financing. The parties further agreed that if the plaintiffs were unsuccessful in obtaining financing as provided in the contract, and notified the seller within a specific time, all sums paid on the contract would be refunded and the contract terminated without further obligation of either party.

In applying for a mortgage which would satisfy the contingency clause in the contract, the plaintiffs relied on their attorney who applied at a New Haven lending institution for a $45,000 loan at 8 1/4 percent per annum interest over a period of twenty-five years. The plaintiffs' attorney knew that this lending institution was the only one which at that time would lend as much as $45,000 on a mortgage for a single-family dwelling. A mortgage commitment was obtained for $45,000 with "interest at the prevailing rate at the time of closing but not less than 8-3/4%." Since this commitment failed to meet the contract requirement, timely notice was given to the defendants and demand was made for the return of the down payment. The defendants' counsel thereafter offered to make up the difference between the interest rate offered by the bank and the 8 1/2 percent rate provided in the contract for the entire twenty-five years by a funding arrangement, the exact terms of which were not defined. The plaintiffs did not accept this offer and on the defendants' refusal to return the deposit an action was brought. From a judgment rendered in favor of the plaintiffs the defendants have appealed.

The defendants claim that the plaintiffs did not use due diligence in seeking a mortgage within the terms specified in the contract. The unattacked findings by the court establish that the plaintiffs' attorney was fully informed as to the conditions and terms of mortgages being granted by various banks and lending institutions in and out of the area and that the application was made to the only bank which might satisfy the mortgage conditions of the contingency clause at that time. These findings adequately support the court's conclusion that due diligence was used in seeking mortgage financing in accordance with the contract provisions. Brauer v. Freccia, 159 Conn. 289, 293, 268 A.2d 645. The defendants assert that notwithstanding the plaintiffs' reliance on their counsel's knowledge of lending practices, applications should have been made to other lending institutions. This claim is not well taken. The law does not require the performance of a futile act. Vachon v. Tomascak, 155 Conn. 52, 57, 230 A.2d 5; Tracy v. O'Neill, 103 Conn. 693, 699, 131 A. 417; Janulewycz v. Quagliano, 88 Conn. 60, 64, 89 A. 897.

The remaining assignment of error briefed by the defendants is that the court erred in concluding that the mortgage contingency clause of the contract, a condition precedent, was not met and, therefore, the plaintiffs were entitled to recover their deposit. "A condition precedent is a fact or event which the parties intend must exist or take place before there is (a right to performance." Lach v. Cahill, 138 Conn. 418, 421, 85 A.2d 481. If the condition precedent is not fulfilled the contract is not enforceable. Lach v. Cahill, supra; Bialeck v. Hartford, 135 Conn. 551, 556, 66 A.2d 610. In this case the language of the contract is unambiguous and clearly indicates that the parties intended that the purchase of the defendants' premises he conditioned on the obtaining by the plaintiffs of a mortgage as specified in the contract. From the subordinate facts found the court could reasonably conclude that since the plaintiffs were unable to obtain a $45,000 mortgage at no more than 8 1/2 percent per annum interest "from a bank or other lending institution" the condition precedent to performance of the contract was not met and the plaintiffs were entitled to the refund of their deposit. Any additional offer by the defendants to fund the difference in interest payments could be rejected by the plaintiffs. See Lach v. Cahill, supra, 420. There was no error in the court's exclusion of testimony relating to the additional offer since the offer was obviously irrelevant.


Summaries of

Luttinger v. Rosen

Supreme Court of Connecticut
Nov 1, 1972
164 Conn. 45 (Conn. 1972)

In Luttinger, the buyer was offered a mortgage at an interest rate that exceeded the maximum interest rate stated in the mortgage contingency clause.

Summary of this case from Mccoy v. Brown

In Luttinger, the defendants, through counsel, offered to make up the difference between the interest rate offered by the bank and the 8.5 percent rate provided for in the contract by a "funding arrangement," which the plaintiffs did not accept.

Summary of this case from Barber v. Jacobs

In Luttinger, supra, 164 Conn. 45, the mortgage contingency clause placed a cap on the interest rate the buyer was obligated to accept, much as the clause in this case which the plaintiff might have negotiated, but did not.

Summary of this case from McCoy v. Brown

In Luttinger, the buyers applied for a loan and were rejected. An informal inquiry of just three banks, none of which was one of the banks suggested to the plaintiff is not a reasonable effort.

Summary of this case from Lipton v. Cleveland

In Luttinger v. Rosen, 164 Conn. 45, 316 A.2d 757 (1972), a would-be buyer applied for a mortgage at the one and only bank which at that time would give the sort of mortgage loan contemplated in the contract but failed to get a commitment meeting the contract requirement.

Summary of this case from Phillimore v. American Homes, Inc.
Case details for

Luttinger v. Rosen

Case Details

Full title:LIONEL LUTTINGER ET AL. v. CHARLES E. ROSEN ET AL

Court:Supreme Court of Connecticut

Date published: Nov 1, 1972

Citations

164 Conn. 45 (Conn. 1972)
316 A.2d 757

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