## Facts

- Mobley (plaintiff) agreed to purchase real property from Kramer (defendant) through a real estate broker and paid a down payment toward the purchase price.
- After the agreement was executed, Mobley learned that an outstanding lien appeared of record against the property.
- Kramer contended the lien was disputed and asserted he had told the broker beforehand that the purchaser would be expected to take title subject to the lien, with Kramer providing protection against any loss if the lien proved valid.
- To complete the transaction, Kramer offered to deliver a deed and tender a check to Mobley in an amount exceeding the lien, coupled with a promise to file suit or otherwise take legal action to resolve the lien dispute.
- Mobley initially indicated Kramer’s proposed arrangement was acceptable, but then changed his position before closing and refused to proceed on those terms.
- Kramer later renewed the offer by tendering a warranty deed, again offering a check exceeding the lien amount, and again promising to take legal action to clear title.
- Mobley refused to consummate the sale, and Kramer returned Mobley’s down payment.
- Mobley sued for breach of contract, seeking (1) damages measured by the difference between the market value of the property and the contract price and (2) incidental expenses, including the cost of examining title.
- The trial court found for Mobley and awarded damages. Kramer appealed.

## Issues

1. When a land-sale contract fails because the seller cannot convey clear title, and the seller acted without fraud or bad faith, may the buyer recover benefit-of-the-bargain damages measured by market value minus contract price?
2. If not, what damages may the buyer recover in that situation?

## Decision

- The appellate court reversed the judgment awarding Mobley benefit-of-the-bargain damages.
- The court held that, absent proof of fraud or bad faith by Kramer, Mobley was not entitled to damages based on the property’s alleged increased market value.
- Mobley’s recovery was limited to restitutionary items: return of any consideration paid (with appropriate interest) and reimbursement of reasonable expenses incurred because of the transaction (such as title examination costs), if otherwise proven.

## Legal Principles

- Where a seller in good faith is unable to convey marketable title under an executory contract for the sale of land, the buyer’s damages are generally limited to restitution (amounts paid, with interest) and reasonable transaction-related expenses.
- Benefit-of-the-bargain (expectation) damages—such as the difference between market value at the time of breach and the contract price—are not recoverable against a good-faith seller who fails to convey good title without fraud or bad faith.
- A broader measure of damages may apply if the seller’s conduct involves fraud or bad faith; without such proof, the buyer is not awarded the profits of the uncompleted bargain.
- A seller’s efforts to tender performance while offering to protect the buyer from an outstanding claim (including an indemnity arrangement and a commitment to litigate title) do not, standing alone, establish fraud or bad faith that would justify expectation damages.

## Conclusion

Kramer v. Mobley holds that when a real-estate sale fails because of a title defect and the seller acted in good faith, the buyer may not recover loss-of-bargain damages based on the property’s market appreciation; the buyer’s remedy is limited to restitution of sums paid (with interest) and reasonable expenses incurred in reliance on the contract.


Kramer v. Mobley, 216 S.W.2d 930 (1949)