Eastern China Court Rules on Unauthorized Retention of Land Purchase Deposit by Intermediary

Eastern China Court Rules on Unauthorized Retention of Land Purchase Deposit by Intermediary

Case Overview

The Eastern China Intermediate People’s Court upheld a lower court ruling ordering an intermediary to return a 100,000 yuan deposit to a buyer after a land pre-purchase agreement failed. The court found the intermediary had no legal basis to retain the funds and had failed to prove the money was properly transferred to the village committee.

Case Background and Facts

Mr. Sun, together with individuals including Mr. Jin and Mr. Chen, sought to acquire approximately 30 mu of hillside land for factory use. The defendant, Mr. Ren, acted as an intermediary introducing the buyers to village officials. On May 6, 2007, Mr. Jin signed a land pre-purchase agreement with the village committee, setting the price at 45,000 yuan per mu. The agreement included payment terms and a requirement to obtain land approval procedures.

On May 12, 2007, Mr. Sun transferred 100,000 yuan by bank to Mr. Ren. Mr. Ren issued a receipt stating: “Received from Mr. Sun 100,000 yuan as prepayment for land purchase in Xian Village, May 12, 2007.” The land pre-purchase agreement was never fulfilled because the required land approval procedures could not be completed.

On April 29, 2009, Mr. Sun and others met with village officials to resolve the land issue but reached no agreement. Mr. Sun then demanded that Mr. Ren return the money.

Court Proceedings and Evidence

The parties disputed the purpose of the 100,000 yuan payment. Mr. Sun claimed the money was a prepayment for land purchase that Mr. Ren was supposed to forward to the village committee. Mr. Ren argued Mr. Sun voluntarily paid the money to cover land approval processing fees.

Mr. Ren claimed he had already transferred 70,000 yuan to a former village official and spent 30,000 yuan on land approval procedures. He presented a faxed receipt for 20,000 yuan and a photocopy of a 50,000 yuan receipt. However, Mr. Sun disputed the authenticity of these documents.

The trial court noted that Mr. Ren did not apply for forensic handwriting examination on the disputed receipts, nor could he produce the original documents. Mr. Jin confirmed in court that the 100,000 yuan belonged solely to Mr. Sun and that any rights or obligations belonged to Mr. Sun alone.

Court Findings and Judgment

The appellate court rejected Mr. Ren’s appeal and affirmed the lower court’s decision. The court found that the receipt clearly identified the payment as a “land purchase prepayment,” not a fee for processing land approvals. The court characterized the relationship as a mandate or agency agreement, where Mr. Sun entrusted Mr. Ren to forward the deposit to the village committee.

The court held that Mr. Ren failed to prove he had transferred any portion of the money to the village committee. The faxed receipt could not be verified against the original and therefore could not serve as sole evidence. Mr. Ren’s failure to request a handwriting examination on the 50,000 yuan receipt further weakened his claim.

The court ordered Mr. Ren to return the full 100,000 yuan plus interest calculated at the benchmark bank lending rate from May 12, 2007, until the date of payment. The court also noted that if Mr. Ren had evidence of transferring funds to others, he could pursue separate claims against those individuals.

Key Legal Principles

The court applied the principle that a party claiming a fact bears the burden of proof. Under the Supreme Peoples Court Evidence Rules, faxed copies cannot serve as sole evidence when originals are unavailable. The court also applied the Contract Law principle that an agent who exceeds authority or fails to properly execute instructions must compensate the principal for losses.

Practical Insights

This case illustrates the importance of documenting the purpose of payments with clear written receipts. Intermediaries who receive funds for specific purposes must ensure the money reaches its intended recipient and maintain verifiable proof of transfer. Courts will strictly scrutinize claims that funds were used for unauthorized purposes or transferred to third parties without proper documentation.

Legal References

Supreme Peoples Court Provisions on Evidence in Civil Proceedings, Articles 2 and 19
Contract Law of the Peoples Republic of China, Article 406
Civil Procedure Law of the Peoples Republic of China, Article 153

Disclaimer
This article is for informational purposes only and does not constitute legal advice. Consult a qualified attorney for specific legal matters.