Pacific Venture Corp. v. Huey

In Pacific Venture Corp. v. Huey (1940) 15 Cal.2d 711, a seller sold mining claims in Arizona. The terms of the sale were $1,891.90 up front, with another $2,500 to be paid from two specific sources: (1) royalties from the claims themselves, or, (2) if the claims were sold before the royalties yielded $2,500, from the proceeds of any sale, which would be due on the final payment of those proceeds. (Id. at pp. 712-713.) But the buyers got clever. They contrived to exchange their mining claims with a third party for his equities in an apartment house, with the third party agreeing to be the person obligated to pay the seller the $2,500. (See id. at pp. 713-714.) When the seller didn't get his $2,500 upon the consummation of the apartment house deal and sued the buyers (as well as the third party), the buyers argued they had no liability because "neither source" of the money had "materialized prior to the filing of plaintiff's complaint," so the condition precedent of paying that $2,500 hadn't been fulfilled. The trial court felt constrained to agree. (See id. at pp. 714-716.) The Supreme Court, however, rather emphatically did not. The high court pointed out that the buyers were, in effect, trying to avoid their liability to pay the $2,500 because of their own voluntary act, and contract law just doesn't allow such an easy evasion of one's performance. (Id. at pp. 716-717.)