Mitchell v. Mutch , 189 Iowa 1150 ( 1920 )

Evans, J.

1. Vendor and Porchaser : wrongful withholding of possession : damages. I. The defendant is the administrator of James Mutch, deceased, who was the original defendant. For convenience of discussion, the decedent will be referred to herein as the “defendant.” In April, 1913, James Mutch entered into a written contract of sale of his half-section farm to the plaintiff, Mitchell, for a consideration of $57,600. The contract called for a doAvn payment of $600, and for a further payment of $5,000 on March 1, 1914, and for a note of $52„000, secured by a purchase-money mortgage, and drawing 5 per cent interest, the same to be executed and delivered on such latter date. On the same date, Mutch was to execute and deliver to Mitchell a warranty deed, with full covenants, and to give him possession of the farm. Before the arrival of that date, Mutch had repented the sale, and later resisted performance of his contract. The vendee, Mitchell, made full tender of performance on his part, which was refused by the vendor, Mutch. Thereupon, vendee brought a suit for specific performance, which was prosecuted to a final decree. See Mitchell v. Mutch, 180 Iowa 1281. The case being remanded from this court, these supplemental proceedings were had in the district court. Pursuant to the decree of specific performance, the vendor Avas required to deliver a Avarranty deed to the vendee, and to surrender possession to him on March 1, 1918. During the four years of delay of performance, the noté for $52,000 executed and tendered by the vendee purported, on its face, to draw interest from March 1, 1914. During the same time, the vendor had received all the rents and profits of the farm. Instead of claiming as his damage the accrued rents and profits during such period of delay, the vendee, plaintiff, elected to ask a remission of interest for such period of four years upon his $52,000 note, and to ask an alloAvance of interest for the same period upon the $5,600 which he paid or tendered to the vendor.

The first and most important question in the case is whether the vendee has a right to make such election,, the contention of the vendor being that the vendee is limited in his measure of damages to a recovery of the rents and profits.

We deem it clear that the vendee’s right of election must he sustained. The vendor, having wrongfully delayed the performance of the contract, is not allowed to derive any advantage from his own fault. Since he has wrongfully withheld from the vendee the possession of the property, it would be clearly inequitable to permit him to collect interest upon the purchase-money note during the period of such wrongful delay, if the vendee elects to claim a remission of interest as his measure of damages. Only a few cases are to be found in the books where this direct question is involved, but these few are unanimous in sustaining the right of plaintiff’s election. Worrall v. Munn, 38 N. Y. 137; Worrall v. Munn, 53 N. Y. 185; Abrahamson v. Lamberson, 79 Minn. 135 (81 N. W. 768); Crockett v. Gray, 39 Kan. 659; Lynch v. Wright, 94 Fed. 703.

The rule of these cited cases is concisely stated by Sutherland as follows:

“A purchaser who obtains a decree for specific performance may elect to pay interest on the purchase price for the time elapsed since the conveyance should have been made, and take the rents and profits received by the. vendor, or allow the latter to retain these, and thereby relieve himself of liability for interest.” 2 Sutherland on Damages (3d Ed.) Section 588.

No authorities are cited to us to the contrary, and we find none. We hold that the trial coiirt properly permitted the plaintiff to elect to claim interest as his measure of damages, in lieu of rents and profits.

2-withholding of interest qn deposit. The decree below remitted all accrued interest upon the $52,000 note up to March 1„ 1918. It also allowed to the plaintiff 6 per cent interest upon $5,600, being the amount paid or tendered on March 1, 1914. Objeetion is made to the allowance of this latter üenL The plaintiff tendered the $5,000 payment on March 1, 1914, and kept his tender 1 good during the period of four years. The tender ivas the equivalent of payment, and the vendor is deemed to have the benefit of it as such. It appears affirmatively that the vendee had not made any use of the money thus tendered. We have no occasion, therefore, to consider whether account should be taken of the value of the use, if he had actually used the same. It is true, also, that the. vendor had no use of the money, but this was the result of his wrongful refusal to accept the same. He cannot, therefore, be compensated. The same reason that awards to the vendee a remission of the interest on his purchase-money note entitles him to an allowance of interest upon the money actually paid, or kept in tender.

3. Vendor and Purchaser : wrongful withholding: election to accept rent as damages. II. It is urged by the appellant that the appellee was estopped from making his present election, by reason of a former election to claim the rents and profits. It is made to appear that, at the time of the purchase and sale of the farm, it was in the possession of a tenant who held the same under lease expiring March 1, 1917. The lease, however, contained the proviso that it could be terminated by the lessor on the first day of March of any year, by giving notice of an election to terminate on or before October 1st preceding. Prior to October 1, 1913, and while the contract of purchase and sale was in force, the vendee, Mitchell, served upon the tenant a notice to terminate the lease as of March 1, 191.4. This was done for the purpose of enabling the vendee to obtain the actual possession for himself on such date. This is the fact upon which the appellant now bases his claim of former election. This was not an election at all. It was not a choice of remedies. The only right that the vendee had, at that time, was to do what he did. He was seeking no remedy, at that time, against the vendor. The vendor was not then in default. He was not liable to the vendee for any measure of damages. The default did not occur until after March 1, 1914. No remedy, as against him, accrued to the vendee, prior to such time. No election of remedies by the vendee was possible, until such right of remedy accrued to him. The contention of appellant at this point, therefore, cannot be sustained.

4- pdechasbk? payStaxes t0 III. A question is involved concerning the accruing taxes during the four-year period of delay. .The trial court adjudicated the question. The appellant insists that it had no jurisdiction to do so, because the question was outside the scope of the pleadúigs, a:a(i outside of the jurisdiction reserved to the court. We think the question was fairly within the scope of the pleadings, and within the jurisdiction of the court. So far as the taxes of 1913 are concerned, the vendor would have been .liable for the payment of these, under his contract and under his warranty deed, if the same had been delivered on March 1, 1914. That obligation has not been diminished by the delay of performance. During the four years of delay of performance, the taxes for such years accrued, and the vendor paid the same. The evidence indicates that the vendor had made some claim to recover from the vendee the taxes so paid, and this furnishes the occasion for the request of the vendee that the question be adjudicated.

It is undoubtedly the general rule that the person who is in possession of land, claiming ownership and receiving the rents and profits thereon, is primarily liable for the payment of taxes. Mohr v. Joslin, 162 Iowa 34; Nunngesser v. Hart, 122 Iowa 647. And this is so whether he holds the legal title or only an equitable title. In this case, the appellant held both the legal title and the possession, and received the rents and profits. Not only so, but, under his contract, he was bound to protect the legal title'which he had covenanted to convey. Equity Anil treat the covenants of Avarranty of his deed as Avarranting the title against all incumbrances resulting from the acts of the vendor up to the date of delivery of his deed. In paying the annual taxes, therefore, appellant performed his OAvn obligation, and that alone. The appellee was under no obligation to pay taxes, until he had obtained his title and his possession, pursuant to his contract. It cannot be said, therefore., that the appellant paid the taxes on behalf of the appellee. He paid them in discharge of his OAvn obligation, an obligation

which attached to the attitude chosen by himself in respect to the property.

We think the tidal court properly adjudicated the question of taxes. The decree beloiv is, accordingly, — Affirmed.

Weaver, C. J., Preston and Salinger, JJ., concur.