Holscher v. James
Idaho Supreme Court
860 P.2d 646 (1993)
The Jameses (defendants) agreed to buy a cabin from the Holschers (plaintiffs) under a contract letting the Jameses void the deal if the property was materially damaged before the scheduled closing; after the Jameses insured the cabin and took possession, but before closing, a fire destroyed it, and the Jameses voided the agreement. The Holschers sued, arguing that under equitable conversion the risk of pre-closing loss should fall on the buyers regardless of the contract's void provision, and that they were entitled to insurance proceeds as intended beneficiaries; the trial court declined to apply equitable conversion but still ordered the Jameses to pay the Holschers insurance proceeds under an equitable rescission theory.
Whether the doctrine of equitable conversion can be used to shift the risk of pre-closing loss to the buyer when the sale contract explicitly places that risk, and the right to void the sale, on the seller instead.