Borel v. Mead , 3 N.M. 84 ( 1884 )

Bristol, J.,

dissenting. This ease is here on a writ of error to the-district court for the Third district and county of Grant. Suit was instituted in the court below for the specific performance of what is claimed in the bill a contract to convey a certain mining claim. A demurrer was interposed to the sufficiency of the bill, which demurrer was sustained by the court below, and the suit dismissed without prejudice. The case having been argued and submitted before-this court and a majority thereof having reversed the judgment of the lower court, I hereby dissent therefrom, for the reasons specified in this opinion, in addition to the allegations of the bill in reference therein to what the complainants designate as a memorandum in writing of the contract sought to be performed, a copy of which is attached to the bill and made a part thereof. This writing is as follows:

“Know all men by these presents that I, William Mead, of Hills-borough, Dona Ana county, New Mexico, am hereby held and firmly bound unto Miller and Teal, of Lake Valley, Socorro county, New Mexico, in the sum of ten thousand ($10,000) dollars, lawful money of the United States of America, to be paid to the said Miller and Teal, their executors, administrators, or assigns, for which payment, well and truly to be made, I bind myself, my heirs, executors, and administrators, firmly by these presents.

“Sealed with my seal, and dated the fifteenth day of March, one-thousand eight hundred and eighty-one.

“The condition of the above obligation is such that if the above-bounden obligor shall, on the fifteenth day of June, one thousand eight ¡hundred and eighty-one, make, execute, and deliver unto the said Miller and Teal, or to their assigns, provided that said Miller and Teal, their heirs or assigns, shall, on or before that day, have paid to ■the said obligor the sum of three thousand and three hundred ($3,300) •dollars, lawful money of the United States of America, the price by said parties agreed to be paid therefor, a good and sufficient deed for •conveying and assuring to the said Miller and Teal, their heirs, or assigns, free from all incumbrances, all his right, title, and interest, estate, claim, and demand, both in law and equity, as well in possession as in expectancy of, in or to that certain portion, claim, and mining right, title, or property, on a certain vein or lode of rock containing precious metals of gold, silver, and other minerals, and situated in the Lake Valley mining district, county of Grant, Dona Ana, or Socorro, and territory of New Mexico, and described as follows, to-wit: All say one-third (£) interest in the Columbia mine, of the Lake Valley mining district of Grant, or Socorro, or Dona Ana county, New Mexico, then this obligation to be void, otherwise to remain in full force and virtue. William Mead. [Seal.J

“Signed, sealed, and delivered in the presence of “Marian Turner.”

The foregoing instrument in writing does not appear to have been acknowledged by Mr. Mead, the obligor, yet it was, without authority, filed for record, and recorded in the probate clerk’s office, March 22, 1881. This instrument in writing is something more than a mere memorandum, as styled in the bill. It must be taken and considered as embracing the actual terms of the transaction between the parties, and must necessarily control the allegations of the bill. Any •allegations in the bill that are outside of, or inconsistent with, the terms of this written instrument must be disregarded. There is no latent ambiguity about this writing that can lay the foundation for parol testimony to explain its meaning. The writing itself embodies the entire transaction. And what is its whole meaning and import ? As I understand it, it is simply a proposition on Mr. Mead’s part, without consideration, either received or promised, to give a three-months’ option to buy a mining claim for $3,300. He not having received that sum, or any part of it, nor accepted any promise to pay it, or any part of it, in consideration of executing the option bond, it could not, therefore, become a binding contract until something had been paid and accepted, or promised, and the promise accepted •on Mr. Mead’s part as a consideration ,* until such acceptance he was •at liberty to withdraw the option. An option contract can be made as binding as any other contract, but a valuable consideration is as ■necessary to the validity of this kind of a contract as it is to any •other. A contract of option to buy a piece of property is quite distinct from a contract of purchase of the same property. The usual «consideration of an option contract is a certain sum of money, or some designated property of value, that is put up ás a forfeit in case the proposed purchaser does not conclude to purchase the property constituting the subject of the option.

Can it be contended with any show of reason that the obligees named in this bond were in any way bound to purchase this mining property for the sum named, or any sum whatever ? Is it equitable-that these obligees shall secure, without consideration, the exclusive privilege of purchasing valuable mining property, keep it tied up, and out of market for months, and finally abandon all idea of purchasing it ? After placing themselves in this condition, can they reasonably ask a court of equity to enforce a gratuitous option thus obtained,, after the obligor has refused to accept their terms ? This species of bond, called mining bonds, are quite well known throughout the several mining states and territories. They are of comparative recent origin. They have been invented in the interest of mining speculators,, whereby they hope to acquire an undue advantage over the unwary prospector and miner, free of cost, and for such time as they may discover that the property is of much greater value than supposed,, when they will purchase, and if found otherwise as to value, they may refuse either to purchase, or to pay anything for the option,—a. scheme, I apprehend, that cannot well commend itself to the favor of a court of equity.

The complainants cannot rightfully claim as innocent purchasers without notice. This option bond was assigned to them on the twenty-first day of May, 1881, by a brief indorsement on the bond. But before this assignment, and less than a month after executing the bond, Mead and his wife, by bargain and sale and deed of conveyance,, had conveyed the premises in controversy to the respondent, Crittendon. This deed was executed and duly acknowledged on the twelfth of April, 1881, and duly recorded on.the twenty-fifth day of the same month. This conveyance operated as a repudiation on Mead’s part of the gratuitous option contained in his bond of the fifteenth of March, 1881, to Miller and Teal; and the same having been recorded prior to the assignment to the complainants, it was notice to them of such repudiation.

It is true that the bill contains allegations that “it was agreed between the said William Mead and the said Miller and Teal, that the price of $3,300 should be paid by the said Miller and Teal, their heirs or assigns, to said William Mead, on or before the fifteenth day of Tune, 1881,” etc. But the said bond of the fifteenth of'March, 1881, which must be considered as embodying in its terms the entire transaction between the parties, contains no such agreement. This bond must be regarded as conclusively negativing such allegations. This bond is not signed by Miller and Teal, or by either of them, and it contains no stipulation on their part, or of either of them, to pay any sum of money, or to do or not to do any act whatever to the advantage of Mead or assigns. Had Mead not conveyed to Crittendon or any one else, so that on the fifteenth of June, 1881, it would have been in his power to execute a good and sufficient deed of conveyance, xio action at law even could have been maintained by him against Miller and Teal or their assigns upon tendering a deed and demanding said sum of $3,300, and a refusal on their part to pay it for the simple reason that the bond does not show that they ever promised to pay that or any other sum. For this want of mutuality between •the parties there was no such completed contract as equity will enforce by decree of specific performance. Smith v. Reynolds, supra.

It is contended in this suit that the seal affixed to the bond by Mead to Miller and Teal, imparts a consideration. This is true; but in suits for specific performance a mere seal is not a sufficient showing of the consideration to justify the chancellor in granting a decree to •specifically perform. In any action at law where the point was raised, the consideration imparted by a seal would be considered as prima facie sufficient. But this rule does not apply to suits in equityfor specific performance of contracts, though they be executed under'seal'. A mere seal may import no other consideration than moral duty and affection, and while that might be considered as sufficient to sustain a deed of conveyance, it is never so regarded for the purpose of comqielling a conveyance by a court of equity. Before decreeing specific performance the chancellor must be advised of what the consideration consists, that he may see that the contract sought to be enforced is just, equal, and fair as between the parties. A mere seal is not sufficient. Ad. Eq. 78; 6 Iowa, 279; 6 Mich. 364; 12 Ind. 539; 14 La. Ann. 606; 17 Tex. 397. Upon demurrer for insufficiency to a bill for specific performance, a failure to show a consideration other than that imported by a seal will be fatal to the bill. Upon demurrer, the bill in this class of cases to be sustained must allege ■all the facts, which, if true, would justify a final decree without further proof.

It is true, as claimed on behalf of plaintiffs in error, that courts of equity will regard the substance rather than the form of the contract. To support this view, authorities are cited showing that “if a bond, with a penalty, is made upon condition to convey certain lands upon payment of a certain price, it will be deemed in equity an agreement to convey the land at all events.” But that does not meet the objection in this ease. Such authorities only go to show that there was no controversy over the validity of the bond; but an effort merely to avoid a conveyance by paying the penalty specified in the bond. This course would be a direct acknowledgment of the validity of the contract.

In the case now under consideration there can be no doubt that the bond executed by Mead to Miller and Teal contains a stipulation to convey at all events; but the real question is, whether it is not a nudum pactum, there being no stipulation on the part of Miller and Teal to pay the price at all events. If the price, or any part of it, at any subsequent time even, bad been paid, and accepted, then the bond would have become a valid contract to convey, and equity would have enforced it by specific performance. Up to the time of such’acceptance, however, Mead had the right to withdraw from and repudiate the gratuitous option. It also would have been a valid contract to convey if Miller and Teal had paid, or promised to pay, anything for the option; or, in other words, if, upon a valuable consideration, they had purchased the exclusive right to purchase the mining interest in controversy, within the time specified, then, upon proof of tender of the price within the designated time, equity would have decreed specific performance. The complainants have not brought themselves within either of these categories. Decrees for ■specific performances of contracts can never be demanded as an ■absolute right. Bills for such decrees are always addressed to the sound discretion of the chancellor. Story, Eq. Jur. §§ 742, 749. A refusal to grant any such decree, in effect simply leaves the complainant to his remedy at law.

All the facts and circumstances considered, I am unable to dis-cover wherein there was an abuse of discretion on the part of the lower court in refusing specific performance on the facts stated in •the bill, by sustaining the demurrer thereto; and I am still of the •opinion that the judgment below ought to have been affirmed.

NOTE.

Equity—Specific Pereormahoe — Mutuality— Consideration. The conclusion reached by the majority of the court in the case to which this note is attached is supported by the great weight of American authority. It is now well settled that these •optional contracts are capable of being specifically enforced. The question of their mutuality is no longer discussed by the courts. If the contract is itself fair, and supported by a consideration, the holder of the option will be entitled to specific performance, if he elects to accept the offer within the time specified. In Johnston v. Trippe, 33 Fed. Rep. 530, it was decided that one who had secured an option on some lots for a year, in consideration of S50, which was to be applied to the purchase price in case the land was bought, or to be forfeited if it was not, was entitled to a specific performance of the contract to convey, and that it was immaterial, as a matter of defense, that the lots increased greatly in value after the contract of option was made. In Tennessee, it has been decided that an option, good for two years, is a binding contract, and that the holder is entitled to a conveyance if he signifies his intention to take the land at anytime before the expiration of the option. Bradford v. Foster, 9 S. W. Rep. 195. In California and Alabama, optional contracts are declared to be specifically enforceable. Morrill v. Everson, (Cal.) 19 Pac. Rep. 190; Moses v. McClain, (Ala.) 2 South. Rep. 741. So in Indiana, it is held that a lessee who has an option to purchase the premises at the expiration of his lease may compel a specific performance on the part of the lessor. Herman v. Babcock, 3 N. E. Rep. 142. In Michigan, however, it is said that an optional contract will not be specifically enforced; but the case in which this doctrine was announced really went off on another point,—that the contract was within the statute of frauds. Maynard v. Brown, 3 N. W. Rep. 30. A contract to convey, entered into by the husband and wife in a common-law state, where the wife’s contracts are invalid, will not be specifically enforced at the suit of the husband and wife; for the contract, not being binding on the wife, cannot be enforced against her, and hence is not mutual. Railway Co. v. Dunlop, (Va.) 10 S. E. Rep. 239.

Where there is an actual contract of sale, signed only by the vendor, and to be consummated within a given time by the performance of the conditions 'on his part by the ■vendee, otherwise the earnest money generally paid with such contracts to be forfeited, it is held that the vendee may compel a specific performance, even though he fails to perform the conditions within the time specified; for time is not of the essence of the contract, unless expressly made so, and the want of mutuality is overcome by the action of the vendee in seeking to enforce the contract, so that he then becomes bound. Appeal of Born, (Pa.) 19 Atl. Rep. 337; Austin v. Wacks, (Minn.) 15 N. W. Rep. 409. The mere fact that a contract is unilatei’al seems to he no longer an obstacle to its specific enforcement, if it ever was. Thus a unilateral covenant in a deed, that the grantor shall have the right to repurchase the estate after the death of the grantee, will be specifically enforced, though clearly the grantor could not be compelled to repurchase unless he elected to do so. Woodruff v. Woodruff, (N. J.) 16 Atl. Rep. 4. And so a unilateral contract to purchase may be specifically enforced by the vendor. Miller v. Cameron, (N. J.) 15 Atl. Rep. 842.

Although it is frequently said that in order to entitle one to the relief of specific performance the contract must be mutual in its inception, yet this is not always the case, for it has been held that, where a father agreed to give his daughter a tract of land if' she and her husband would live on it, he would be compelled to convey after the daughter and her husband had lived there, in pursuance of the agreement, for 15 years, though the daughter could not be compelled to continue to live there, nor could she have been compelled to live there at all when the contract was entered into. Welch v. Whelpley, (Mich.) 28 N. W. Rep. 744. A railway company which has erected its depot at a particular place, in pursuance of a contract with the owner of the land to convey it in consideration of the maintenance of a depot thereon, and of $1,000, may compel a specific performance of the contract. Railway Co. v. Cox, (Iowa,) 41 N. W. Rep. 24.

Although the contract may be legal, and held to -be binding in law, yet, if it appears-in a suit for specific performance that there was a bona fide misapprehension on the part of one of the parties, which yet did not amount to such a mistake as would entitle the party to positive relief had the contract been carried out, specific performance will not be decreed. Hamlin v. Wistar, (Minn.) 18 N. W. Rep. 145; Burkhalter v. Jones, (Kan.) 3 Pac. Rep. 559.