## Facts

- Purchasers and vendors entered a written executory contract for the sale of land containing a pecan orchard.
- Purchasers paid $10,000 earnest money on December 23, 1963; the balance was due on or before February 1, 1964.
- The contract allowed vendors to retain possession until closing for the purpose of gathering pecans.
- The day after the contract was executed, an ice storm severely damaged the pecan trees, substantially reducing the property’s value.
- Purchasers notified vendors that they elected to rescind and demanded return of the earnest money.
- Vendors refused, asserted they were ready, willing, and able to perform, and insisted purchasers were obligated to close.
- Purchasers sued for rescission and return of the earnest money; vendors filed a cross-action seeking damages for purchasers’ refusal to close.
- The loss occurred after contract formation but before performance, without fault of either party, and the contract did not allocate the risk of loss.

## Issues

1. When a substantial part of real property is destroyed by an act of God after execution of a binding land sale contract but before conveyance and transfer of possession, and the contract is silent, which party bears the loss?

## Decision

- The appellate court reversed the trial court’s grant of summary judgment to purchasers rescinding the contract and ordering return of earnest money.
- The appellate court held the purchaser bears the risk of loss under Georgia’s equitable conversion doctrine when the vendor is able and willing to convey good title and is not in default.
- The appellate court also reversed the trial court’s ruling sustaining purchasers’ general demurrer to the vendors’ cross-action.

## Legal Principles

- Under equitable conversion, after a binding contract for the sale of land, the purchaser is treated in equity as the owner and ordinarily bears the risk of casualty loss occurring before closing when the contract does not provide otherwise.
- The risk-shifting effect of equitable conversion applies only if the vendor is able and willing to convey clear title and is not in default.
- Parties may allocate the risk of pre-closing destruction by contract; if they do not, the court applies the jurisdiction’s default rule.
- A minority rule places the risk on the vendor as a failure of consideration, but Georgia follows the majority equitable-conversion rule absent contrary controlling authority.

## Conclusion

Because the vendors were able and willing to convey good title and neither party caused the storm damage, the purchasers, as equitable owners under a binding contract, bore the act-of-God loss and were not entitled to rescission or return of the earnest money based solely on the pre-closing destruction.


Bleckley v. Langston, 143 S.E.2d 671 (Ga. Ct. App. 1965)