Jackson v. Richard’s 5 & 10 Inc.

Richard’s 5 & 10 Inc. (Richard’s) (defendant) owned multiple stores operating under the name REO Discount Stores (REO). Herbert Jackson (plaintiff), who managed two stores, reached an oral agreement to purchase the inventory, fixtures, and goodwill of those stores from Richard’s. The parties memorialized their agreement on January 30, 1975, setting February 18 as the closing date. One of Jackson’s two down-payment checks bounced, and Jackson failed to appear at closing. On February 28, 1975, the parties entered a second written agreement setting March 31 as the new closing date. As a down payment, the new contract required Jackson to pay $2,000 in cash and execute a deed to his house that Richard’s would file if Jackson defaulted on the contract. The contract also contained some express conditions that required Jackson to submit proof that he paid off certain relatively minor debts and filed for a Small Business Administration loan. Jackson never submitted such proof, and Richard’s ultimately seized the stores, sold merchandise, and recorded the deed to Jackson’s house. Jackson filed a suit in equity against Richard’s, seeking an injunction preventing the transfer or encumbrance of Jackson’s home. Jackson argued that his breach of the contract was not material and the forfeiture of his home was therefore unjust. The trial court disagreed, denying Jackson’s requested injunction and ordering him to pay Richard’s $10,000 in damages. Jackson appealed.