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Keywords

contracttrialspecific performance
contractplaintiffdefendantequitytrialwillleasespecific performance

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Skelly Oil Co. v. Ashmore, 365 S.W.2d 582

Facts

Skelly Oil Company entered into a contract with the Ashmores to purchase a property in Joplin, Missouri, which included a building that was destroyed by fire before the closing of the sale. The Ashmores had previously operated a grocery store on the property and had a fire insurance policy on the building. After the fire, Skelly sought to enforce the contract and claimed the insurance proceeds to be applied to the purchase price. The Ashmores contested this claim, leading to the legal dispute.

The vendors acquired this property about 1953, and operated a grocery store in the concrete block building, with fixtures and furniture, and a one story frame ‘smoke house’ thereon.

Issue

Whether Skelly Oil Company is entitled to specific performance of the contract to purchase the property and to an abatement in the purchase price due to the insurance proceeds received by the vendors after the destruction of the building.

The vendors say that the letter and option were prepared by the purchaser and ambiguities and doubts therein are to be resolved in favor of the vendors; that the purchaser paid no consideration for the option or the three extensions; that specific performance will result in inequity, hardship or loss to vendors.

Rule

The court applied the principle that a purchaser may be entitled to specific performance of a contract even when the subject matter has been partially destroyed, provided that the contract can still be performed in a manner that is equitable to both parties.

We do not agree that we should adopt the arbitrary rule of Paine v. Meller, supra, and Standard Oil Co. v. Dye, supra, that there is equitable conversion from the time of making a contract for sale and purchase of land and that the risk of loss from destruction of buildings or other substantial part of the property is from that moment on the purchaser.

Analysis

The court analyzed the terms of the contract and the circumstances surrounding the fire. It determined that the building had value to Skelly Oil Company, despite their intention to remove it for a service station. The court found that the insurance proceeds were relevant to the purchase price and that the vendors could not claim the full price without accounting for the loss of the building.

The short of the matter is that defendants will get all they bargained for; but without the building or its value plaintiff will not.

Conclusion

The court affirmed the trial court's judgment, granting specific performance and allowing the insurance proceeds to be applied to the purchase price, thus reducing the amount owed by Skelly Oil Company.

We therefore affirm the judgment and decree of the trial court.

Who won?

Skelly Oil Company prevailed in the case because the court found that they were entitled to specific performance and an adjustment in the purchase price based on the insurance proceeds.

Skelly Oil Company was buying the lot as a site for a service station and that in so using it they not only wanted the Jones's lease terminated but intended to tear down and remove the building in question.

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