## Facts

- Patterson and Meyerhofer executed a written contract for Patterson to sell and Meyerhofer to buy four improved parcels for $23,000, payable partly in cash and partly subject to existing mortgages.
- Both parties understood at contracting that Patterson did not yet own the parcels and planned to acquire title by purchasing them at an upcoming foreclosure sale.
- Before the foreclosure sale, Meyerhofer notified Patterson she would not perform and intended to buy the properties for her own account.
- At the foreclosure auction, Patterson attended ready and willing to buy, but Meyerhofer outbid him and bought the four parcels for $22,380, which was $620 less than the contract price.
- A fifth house was also sold at the foreclosure sale but was not included in the written contract; Patterson alleged a prior oral agreement that he would keep the fifth house.
- Patterson sued for (1) equitable relief declaring Meyerhofer held the properties in trust and compelling conveyance of the fifth house and (2) $620 in damages representing the difference between the contract price and Meyerhofer’s foreclosure purchase price.
- The trial court entered judgment for Meyerhofer, reasoning no confidential relationship existed between vendor and purchaser and each could act in self-interest; the Appellate Division affirmed.

## Issues

1. Whether a buyer who knows the seller must acquire title at a foreclosure sale to perform may purchase the property at that sale for herself, thereby preventing the seller’s performance, without breaching the contract.
2. Whether the alleged oral agreement regarding a fifth property justified imposing trust-based equitable relief requiring conveyance to the seller.

## Decision

- The Court of Appeals reversed and ordered a new trial.
- It held Meyerhofer breached the contract by intentionally preventing Patterson from performing when she outbid him at the foreclosure sale.
- It recognized Patterson’s right to recover damages measured by the $620 profit he would have realized under the contract.
- It did not grant the broad trust and conveyance relief sought, focusing instead on legal damages for breach of the implied obligation not to hinder performance.

## Legal Principles

- Every contract contains an implied undertaking that neither party will intentionally and purposely do anything to prevent the other party from carrying out the agreement.
- The implied non-interference obligation arises from contract law and does not require a fiduciary or confidential relationship.
- A party who causes the other’s nonperformance by deliberate interference cannot rely on that nonperformance to avoid liability.
- Expectation damages may be awarded to place the injured party in the position they would have occupied absent the interference, including lost profit measured by the bargain’s price differential.

## Conclusion

The court held that the buyer’s deliberate act of outbidding the seller at the contemplated foreclosure sale breached an implied contractual duty not to hinder performance, entitling the seller to expectancy damages equal to the contract profit lost due to the interference.


Patterson v. Meyerhofer, 204 N.Y. 96 (N.Y. 1912)