Eastern Oregon Land Co. v. Moody ( 1912 )

GII/BKRT, Circuit Judge

(dissenting). There are certain salient facts in this case, which, it seems to me, present insuperable obstacles to the most inequitable -result which will follow from the conclusion reached by the majority of this court:

The contract, while it makes time of the essence thereof, contains no provision that failure to make' payments, either of principal or interest when due, shall work a forfeiture or be ground for rescission. All that is prescribed as the penalty for default is that, in case the purchaser shall make default in the payment of any one or more of the sums of money therein agreed to be paid “for a period of six months ,” the purchaser shall surrender the possession of the premises to the vendor, and the latter may take possession of the same and terminate the contract.

The delays in payments of principal and interest prior to August 11, 1906, have absolutely nothing to do with the decision of the case on its merits, further than to define the attitude of the parties to the contract on and after August 11th, for those delays were fully acquiesced in and waived by the vendor. It accepted all semiannual payments of interest, whether they were made before, at, or after the time when they fell due, and it accepted accrued interest on all delayed payments, and it assented to the request of the purchaser that the payment of installments of principal should be deferred until it should be convenient to him “to meet the obligations.” This is shown by the letter of August 25, 1904, written by Parr, the agent of the appellant, in which he said:

“The company wrote us a letter a few days since requesting to be advised regarding the arrangements made with you for extension of time on payments due on contract for the purchase of land. We replied that we had extended the time until it would be more convenient for yourself to meet the obligations. In replying to this letter the company sanctioned our actions in the matter, but stated that they preferred to have the interest paid semiannually as provided for in the agreement. We would therefore thank you to comply with this part of the contract, and we will carry the payments along until such times as the company demands that collections be made.”

“Whether time is or is not of the essence of the contract, if the vendor has waived strict compliance with its terms as regards time of payment, he cannot thereafter rescind or forfeit the contract without notifying the purchaser of his intention to do so unless payment is made, and allowing him a reasonable time for performance.” 39 Cyc. 1384; Maffett v. Or. & Cal. R. Co., 46 Or. 443, 456, 80 Pac. 489; Watson v. White, 152 Ill. 364, 38 N. E. 902; Monson v. Bragdon, 159 Ill. 61, 42 N. E. 383; Whiting v. Doughton, 31 Wash. 327, 71 Pac. 1026; Douglas v. Hanbury, 56 Wash. 63, 104 Pac. 1110, 134 Am. St. Rep. 1096; Boone v. Templeman, 158 Cal, 290, 110 Pac. 947, 139 Am. St. Rep. 126; Mo v. Bettner, 68 Minn. 179, 70 N. W. 1076; O’Connor v. Hughes, 35 Minn. 446, 29 N. W. 152.

The decision of the case on its merits depends, therefore, on what occurred on and after August 11, 1906. On that day the interest had been paid to January 2, 1906. The semiannual installment of interest due on July 2, 1906, was still unpaid, and there was unpaid on account of principal, $7,000. On that date, Huntington & Wilson, attorneys for the appellant, wrote to the appellee, demanding that he surrender possession of the lands described in the contract, and notifying him that the appellant—

“terminates this contract by reason of your failure to make the payments which by said contract you agreed to make. * * * We hereby notify you that unless you surrender possession of all of said premises on or before the 21st of August, 1906, or pay the entire amount now due upon said contract on or before said last-named date, we shall commence suit to foreclose your interest in and to said contract, and said premises. The Eastern Oregon Land Company is now ready and willing, and hereby offers to convey to you by warranty deed, all of said tracts of land described in said conveyance upon the payment of the amount due from you upon said contract.”

It is to be observed that this is not a notice of a rescission of the contract. It is notice that, unless payment is made on or before the date named, the appellant will sue to foreclose the appellee’s interest in the contract. It is well setted that a notice of a rescission must be absolute, and wholly inconsistent with a further recognition of the binding force of the contract.

“No particular form of notice is- necessary unless prescribed by the contract or by some statutory provision. However, the notice should be clear and unambiguous, and convey an unmistakable purpose to rescind or forfeit the contract.” 39 Oyc. 1386.

But assuming the communication to have been a distinct notice of rescission unless the contract were performed within the ten days therein limited, the facts show that it was never rescinded. On August 13, 1906, two days after the date of the notice, the appellee paid the installment of interest which fell due on July 2, 1906, and the appellant accepted and received the same. On August 17, 1906, the appellee’s agent had a conversation with Parr, the agent of the appellant, in which the latter said that he was satisfied that the company would be willing to accept a portion of the balance of the principal, but the appellee’s agent answered that, since the matter had been placed in the hands, of attorneys, he was afraid to make a partial payment; that he would let him know the following day whether he would pay a portion of the balance or pay it all. On the following day he told the appellant’s agent that he had decided to pay it all. The latter said it would be satisfactory, and that he would send for the deed.

In the transactions between the parties on and after August 11, 1906, there are to be found two sufficient reasons why in equity the decree of the court below should be affirmed. In the first place, the appellant, by its conduct and by the letter of its attorneys of August 11, 1906, waived all prior defaults in payment, whether of principal or of interest, and extended the time of the contract to and including August 21st, with an express offer to convey the land to the appellee on his payment of the balance due at that time. By the terms of the contract all the payments might be made to the appellant “at its agency at The Dalles,” and in pursuance of that provision, which was in no way altered by the notice of August 11th, Malcolm A. Moody, the son of the appellee, and acting as manager of his affairs, on August 21st addressed the agent, both orally and. in writing, informing him that the money was ready to be paid, and in answer thereto the agent, informed him that he would order the deed and would notify the .attorneys, and the agent made no objection to receiving the money due on the contract or to making the deed. The testimony of Malcolm A. Moody that on August 21, 1906, he had the money available with which to pay what was due on the land, should be accepted as true.' The objection is made that his testimony shows the availability of only $7,000, which was to be advanced by Dr. Ferguson, and that there is no proof that Moody had the additional $76.21. But it ought to be assumed that one who has $7,000 to pay on the purchase of land, and is himself engaged in business, has also at his command, as he testified that he had, the additional $76.21, just as it should be assumed that, if he proved that he had $7,076, he had also the additional sum of 21 cents.

No answer was made to the appellee’s offers to pay by the appellant, then or at any time, and, in fact, it is evident that it was not its intention to make a conveyance to the appellee at any time after the date of the letter of August 11th, and that the .offer of conveyance contained in that letter was not made in good faith. The appellant not being prepared to convey, any further tender by the, ap-pellee would have been futile.

“If for any reason, a tender would be only an idle or useless ceremony, no tender is necessary.” Ann. & Eng. Enel. (2d Ed.) 692.

The offer of the appellee to pay on August 21st was by the appellant’s agent accepted as sufficient, and he stated that he would procure the deed.

“Unless the objection to the sufficiency of the tender is made at the time of the tender, such objection is considered to be waived.” 39 Cyc. 1549.

“A tender of the purchase money, however, in connection with mutual and-concurrent promises by the vendor, means merely a readiness and willingness, accompanied by an ability to produce the money, provided the vendor will concurrently do the act which is required of him.” 39 Cyc. 1563; Scanlan v. Geddes, 112 Mass. 15; Miller v. Smith, 140 Mich. 524, 103 N. W. 872; Clark v. Weis, 87 Ill. 438, 29 Am. Rep. 60; Smoot et al. v. Rea & Andrews, 19 Md. 398; Warren v. Crew, 22 Iowa, 315; Comstock v. Lager, 78 Mo. App. 390.

In the case last cited the court said:

“The word ‘tender,’ as used in connection with mutual and concurrent promises, does not mean the same kind of an offer as when used in reference to the payment or offer to pay an ordinary debt due in money, when the money is offered to a creditor who is entitled to receive it, and nothing further remains to be done, and the transaction is completed and ended; but it only means a readiness and willingness, accompanied with the ability on the part of one of the parties, to do the acts which the agreement requires him to perform, provided the other will concurrently do the things which he is required by it to do, and a notice by the former to the latter of such readiness and ability implies an offer or tender in the sense in which these words are used in reference to mutual and concurrent undertakings. It is not an absolute and unconditional agreement to do or transfer anything at all events, but it is in its nature conditional only, and dependent on, and to be ■ performed only in case of, the readiness of the other party to perform his part of the agreement.”

Said the court in Smoot et al. v. Rea & Andrews;

“To entitle a purchaser to demand a deed, it is sufficient that he is ready, and offers to comply, with the contract on his part, and has the ability to perform it.”

On August 21, 1906/ after receiving the offers of the appellee to pay the purchase money in full, Parr wrote a letter to, the secretary of the appellant, which he signed “Eastern Oregon Land Company, by George T. Parr, Agent,” in which he said that he had met Mr. Moody at The Dalles, “and he informed me that he was ready and willing to pay the balance due on his contract upon delivery of a warranty deed covering the land embraced in the contract. I then conferred with Messrs. Huntington & Wilson, and they advised that under the laws of the state of Oregon we could not refuse deed if Mr. Moody was ready to pay over the balance due, with interest. They have no doubt already written you explaining the laws governing such matters in this state. We have, accordingly, in compliance with the request of Mr. Moody, prepared and herewith inclose warranty deed,” etc. It thus distinctly appears that the appellant’s agent made no question of the readiness and' ability of the appellee to make the payment. The offer of payment was not accepted for the sole reason that the appellant was not prepared to deliver the deed. I think there can be no question that the advice so given by the appellant’s attorneys to the appellants agent correctly stated the law of the case. The evidence is undisputed that the appellant never tendered the deed, or executed the same, and it was not until October 20, 1906, and after several letters hadl passed between the parties, that the appellant made ktiown to the appellee its' refusal to carry out the contract.

The conclusion which is reached by the majority of this court seems to be based mainly upon the decisions in Kelsey v. Crowther, 162 U. S. 404, 16 Sup. Ct. 808, 40 L. Ed. 1017; Kentucky Distillery & Warehouse Co. v. Warwick, 109 Fed. 280, 48 C. C. A. 363; and Loud v. Pomona Land & Water Co.. 153 U. S. 564, 14 Sup. Ct. 928, 38 L. Ed. 822. Kelsey v. Crowther goes no further than to hold that one who brings a suit for specific performance must allege an actual tender of the purchase price. That proposition is not involved in the present case, for it is not disputed that the appellee made a good and legal tender on October 22, 1906. The decision of the case wholly depends on the question whether, prior to that time, the contract had been rescinded, and it is the question whether, uptin the facts established, the appellant could rescind without tendering a deed, that we have to deal with. The conditions of the contract for conveyance and payment so extended by the letter of August 11th were concurrent and dependent, and there could be no rescission unless, upon the offer of the appellee to pay the purchase money within the time stipulated, the appellant tendered a conveyance in accordance with its notice. In that respect the case differs from Kentucky Distillery & Warehouse Co. v. Warwick and Loud v. Pomona Land & Water Co. In the first of those cases the conditions were held not concurrent for the reason that the contract required that the purchaser deposit the purchase price with a third party on a day certain as a condition to the conveyance. In the second case the conditions were held not concurrent for the reason that the contract provided that:

“After the making of the payment and full performance of the covenants hereafter to be made and performed by the party of the second .part, the party of the first part will, in consideration thereof, convey.”

And the court based its decision on the use of the word! “after,” which word is italicized in the opinion.

The provision of the contract in the case at bar is that:

“The party of the second part covenants and agrees that, upon the payment of said sums and interest, it will convey,” etc.

Such a covenant is concurrent with the covenant to pay the purchase price, and it is uniformly so held. Robinson v. Harbour, 42 Miss. 795, 97 Am. Dec. 501, 2 Am. Rep. 671; Shinn v. Roberts, 20 N. J. Law, 435, 43 Am. Dec. 636; Ink v. Rohrig, 23 S. D. 548, 122 N. W. 594; Stein v. Waddell, 37 Wash. 634, 80 Pac. 184. Such also have been the decisions of the Supreme Court of Oregon, the state within which lie the lands in controversy in this suit, and in which the contract was to be performed. Frink v. Thomas, 20 Or. 265, 25 Pac. 717, 12 L. R. A. 239; Ward v. Warren, 44 Or. 102, 74 Pac. 482; Scott v. Smith, 58 Or. 591, 115 Pac. 969. A contract precisely similar to that which is here involved was construed in Stein v. Waddell, 37 Wash. 634, 80 Pac. 184, in which Judge Rudkin for the court said:

“It is first claimed that the covenants in this agreement, are independent. A court will not readily presume that a vendor intends to part with his title without receiving the purchase price, or that the purchaser intends to part with his purchase money without receiving a deed. In other words, a covenant to convey and a covenant to pay the purchase price will be held to be concurrent- and 'be dependent unless tie' contrary clearly appears to have been tbe intention of the parties, and the use of the words ‘shall first pay,’ as in this case, has no particular significance.”

In Bank of Columbia v. Hagner, 1 Pet. 455, 7 L. Ed. 219, it was held that:

“In contracts for the sale df land by which one agrees to purchase, and the other to convey, the undertakings of the respective parties are always dependent unless a contrary intention clearly appears.”

“In order to enable the vendor to rescind on account of default of the purchaser, he must perform all precedent covenants on his part to be performed, and must be ready and willing to perform concurrent covenants, and must notify the purchaser that he is ready and willing to perform the concurrent covenants.” 39 Cyc. 1375.

“If the covenants of -the vendor to eonyey and the purchaser to pay purchase money * * * are mutual and dependent, the vendor must at law convey, or tender a proper conveyance before he can put the purchaser in default and thereby become entitled to rescind.” 39 Oye. 1537.

And the same rule applies to suits in equity. Scott v. Smith, 58 Or. 591, 115 Pac. 969; Lewis v. Wellard, 62 Wash. 590, 114 Pac. 455 Stein v. Waddell, 37 Wash. 634, 80 Pac. 184; Boone v. Templeman, 158 Cal. 290, 110 Pac. 947, 139 Am. St. Rep. 126; Roberts v. Braffett, 33 Utah, 51, 92 Pac. 789; Spolek v. Hatch, 21 S. D. 386, 113 N. W. 75. In Scott v. Smith, Mr. Justice Bean said:

“As a general rule, the party who asks for the rescission of a contract for the sale of real estate must be himself without fault, and when, as in this case, the payment of the purchase money and the making or tender of the deed are.to occur simultaneously, they are regarded as mutual and concurrent acts, which disable either party from putting an end to the contract without performance or a valid offer to perform on his part; and, so far as the question of time is concerned, both parties, after the day provided for •the consummation, may be considered equally in default, and neither can hold himself discharged from the obligation of complete performance until he has tendered performance on his own side and demanded it on the other.”

. In Lewis v. Wellard!, construing a contract between a vendor and a purchaser which provided, “This contract can be declared void by the first party (vendor) if second party violates any of the above agreements,” the Supreme Court of Washington said:

“The contract made the making of the last payment and the delivery of the deed mutual, concurrent, and dependent obligations, and brings the case within the rule uniformly adopted by this court that, where obligations of such a character exist, neither party can put the other in default or claim a forfeiture without first tendering performance- on his part.”

. In Boone v. Templeman, the court said:

“Where, in a contract for the sale of land, the price is made payable in installments due at different times, and the deed is to be made when the whole is paid, the vendor may, upon failure to pay any intermediate installment, forthwith sue for its recovery. But if he allows the whole to become due, the payment of the price then becomes a dependent and concurrent condition. Nonpayment alone does not put the vendee in default The vendor must tender a deed as a condition to demanding payment of the price, and he cannot, without such tender, declare a forfeiture or maintain a suit either for the whole price or for an intermediate installment.”

In Roberts v. Braffett, it was said:

“So, too, when time is of the essence, yet if neither party has exercised his right to declare an end to the contract, or where the one party has remained silent and inactive, or has otherwise done something amounting to a waiver, or has treated the contract as still subsisting, he cannot, when the stipulations of the contract are mutually dependent and concurrent, legally place the other party in default until he himself has tendered performance or offer to perform. Tn such cases, in order that he may terminate the contract, the vendor must make tender or offer of a deed.”

In Spolek v. Hatch, in a suit in equity brought to declare a forfeiture of a contract for the sale of real estate, the court held that:

“Where a vendor, in a contract for the sale of real estate which made time of the essence, consents to an extension of time for the payment of the balance due, he can maintain no action thereon without tendering the deed or demanding payment.”

In the second place, I think the court below was correct in finding the equities to be with the appellee on the further and distinct ground that the acceptance and retention by the appellant of the installment of $280 interest which was paid on August 13th was a waiver of the notice which had been given on August 11th and that thereafter, before there could be a rescission of the contract, a further notice was necessary. It is no answer to this to say that Parr, who received the money as the agent of the appellant, was not authorized to receive it. Nor is it material that lie and the appellee were, on the d'ay that the money was paid, ignorant of the notice which had been given two days before. The controlling fact is that the money was forwarded to the appellant’s office at San Francisco, and that its officers knew of its receipt, and made no offer to return it to the appellee, and did not repudiate the action of their agent. That in fact their agent had, on August 13th, the authority to receive the payment, is implied in the dispatch which they thereafter sent him, of date August 20th, saying:

“Consult Huntington & Wilson before accepting principal or interest from Moody.”

The acceptance of a payment on account of interest was wholly inconsistent with an intention to rescind the contract under the notice of August 11th. It was an acknowledgment of the continued existence of the contract. It was the acceptance of a benefit thereunder — the acceptance of an installment, in disaffirmance of a prior notice that had called for the payment of the whole sum due.

“Although time is of the essence of the contract, continued recognition, of the contract by the vendor as still binding after default in respect of the provisions for payment of the purchase money is a waiver of the right to rescind or forfeit the contract on that ground.” 39 Cye. 1394.

“Where there are conditions in a contract for the sale of real estate, making time the essence of the contract and providing for a forfeiture in case of default, any acceptance of part payment on the contract is a waiver of the conditions as to all defaults then existing.” Paulman v. Cheny, 18 Neb. 392, 25 N. W. 495.

It is wholly immaterial whether or not the appellee so understood the legal effect of this payment, and its acceptance by the appellant, or thereafter regarded the notice of August 11th as still in force. The question is not what the appellee thought, but what was the legal effect of the act.

There was nothing therefore in the way to prevent a legal tender after August 21st, andl such a tender was made by the appellee on October 22, 1906, which was acknowledged by Huntington & Wilson in the letter which they wrote to the appellee, saying:

“Tour letter of October 22, 1906, has been handed to us by Mr. M. A. Moody, who has tendered us for you $1,171.15 as the amount due upon the contract between yourself and the Eastern Oregon Land Company of date January 2, 1902. We admit that Mr. M. A. Moody on your behalf has demanded from us a deed under the terms of that' contract. We are not in a position to deliver such deed. The above tender and demand were made on this date.”

As the court below correctly said:

“The equities are with .the complainant. The defendant has received its interest upon all deferred payments, and the entire balance due was tendered, so that it is losing nothing by its bargain. It is only just that the complainant should get the land.”