Hall v. Delaplaine , 5 Wis. 206 ( 1856 )

By the Court,

Whitoh, 0. J.

Before proceeding to discuss the rights of the parties to the original contract for the sale of the land in disput^, we will dispose of the case so far as the defendant Dewey is concerned.

It will be seen that he claims to be a purchaser of the land in good faith, having no knowledge of the contract which Deiaplaine and Burdick entered into to sell the land.

We are of opinion that this is established by the testimony. This being the case, there can be no doubt that he obtained a good title to the land, and that the complainants therefore cannot obtain a decree for the specific performance of their contract. The doctrine that a bona fide purchaser of land, under the circumstances which this case presents, obtains a good title, is so well established that it has not been seriously questioned by the counsel for the complainants; the fact contested being only whether Dewey had succeeded in showing that he was such a purchaser. Dewey being thus out of the case, we will proceed to examine the matters presented by the pleadings and testimony so far as they affect the other parties to the suit.

It is contended by the defendants Delaplaine and Burdick, that by the failure of the purchasers of the land to pay the stipulated price at the time agreed upon, they forfeited all their rights as purchasers, and could not obtain a decree for' the specific performance of the contract, even if the title to the land had remained in the bargainors.

It appears that at the time when the contract of sale was entered into, the bargainees made two notes to the bargainors, each for the sum of $1,150, one payable in thirty days, and the other payable in four months from date. These notes were given for the sum agreed to be paid for the land, and the contract provides that upon the punctual payment of the notes, the .bargainors would convey the premises to the bargainees, “with covenants of general warranty and covenants to indemnify them in case of failure of title, for increase of value of said real estate, as well as for all improvements which may thereafter be made thereon.” It appears that the first note was not paid at maturity, but that some time afterwards the money due upon it was paid at the State Bank, where it had been placed by the payees, and the note was surrendered to the makers. Burdick says, in his answer, that this was done without his knowledge or consent; but we suppose that the officers of the bank were the agents of the payees for the purpose of collecting the note, and that their acts, performed in the discharge of their duty as such agents, must be held to'be the acts of the bargainors of the land and the payees of the note. If Delaplaine and Burdick did not intend to receive the money due upon the note after the time of payment had elapsed, they should have withdrawn it from the bank at which it was made payable. But by leaving it there and permitting the officers of the bank to receive the money due upon it, they must be considered as receiving it themselves.

It appears that the note which last arrived at maturity was not paid at the time it became due, but that on the 30th of March, 1854, the money due upon it was tendered to Delaplaine, one of the defendants, by the complainant Hall, at the State Bank, which money Delaplaine refused to receive. It also appears that previous to this, on the 20th day of March, 1854, the defendants Delaplaine and Burdick conveyed the land to Dewey, and on the 14th of March, 1854, the said Delaplaine and Bur-dick addressed a letter to the bargainees of the land, in which the said bargainees were informed that in consequence of the failure to pay the purchase money for the land, the contract of purchase was declared forfeited, and no longer binding. The letter also contained an offer to refund the money which had been paid on the contract, with interest, and also to return the note which remained in the .hands of the said Delaplaine and Burdick. It is contended by the counsel for Delaplaine and Burdick, that these facts showed the complainants could have no right, to insist upon a conveyance of the land, even if the title was still in the bargainors; and that, consequently,- they can have no claim for damages on account of the failure of the title in consequence of the conveyance to Dewey.

Before we consider this question, we will call attention to a clause of the contract for the sale of the land, upon which the counsel for Delaplaine and Burdick place great reliance. It is as follows : “ And it is further agreed that in case the said Hall and Waggoner fail to pay both of said notes, that then, and in that case, the said Burdick and Deiaplaine shall have the option of declaring this contract void, and returning said notes to be canceled.”

The general doctrine which governs courts of equity in cases where a bill is filed for the specific performance of a contract to convey land, and the payments have not all been made at the time fixed upon in the contract, appears to be well settled by the authorities. And this doctrine we.suppose to be, that when the parties do not appear to have made the time for the .payment of the purchase money essential, courts will hold the bargainor to the contract, and compel him to convey, although the purchase money was not paid or tendered at the exact time fixed in the contract for the payment; provided that compensation can be made to him for the delay, it appearing also to be conscientious that the conveyance should be made.

When, however, the parties have made payment of the money at the time fixed in the contract, a material and essential part of the contract, the rule is quite different; and unless in such case, the money is paid at the time stipulated, the obligation of the bargainor to convey is at an end. See 2 White & Tudor's Leading Gases in Equity, 3. To this general doctrine there are many exceptions and qualifications ; but it will not be necessary to notice them, in order to dispose of this case. We do not perceive that the parties to this agreement, made the payment of the purchase money, at the time fixed in the contract, material or essential.

The contract provides that upon the punctual payment of the notes, the bargainors will convey the land. There is nothing in the contract, nor in the circumstances of the case, to show that payment at the particular day named by the parties, was deemed essential, and so understood. Nor do we see that any circumstances exist which will prevent a court of equity from making-perfect compensation to the bargainors for the delay in the payment of the notes.

W e, however, shall not rely upon this general doctrine for disposing of the case, because the parties themselves appear to have prescribed what their rights and liabilities should be in case of a failure to pay the purchase money at the time fixed in the contract. This provision is contained in the clause of the contract last above quoted. By that, the bargainors, in case the notes were not paid, had the “ option ” to declare the contract void, and return the notes to be canceled. The parties having made this contract, we think that it must be the measure of their rights, duties and liabilities. We do not see how the bargainors can insist that the right of the bargainees to the land is gone, in consequence of their failure to pay the purchase money at the exact day fixed in the contract, unless the bargainors availed themselves of their right to declare the contract void, and return the notes. It becomes a material question, therefore, to inquire whether this has been done. It will be seen that the money due upon the first note was received after it became due, and that the declaration of forfeiture was1 not made till the 14th of March, 1854.

Notice of this was given to the bargainees in a letter dated on that day, and forwarded to them in Ohio. Could this declaration, made on the 14th day of March, avail the bargainors ? We are strongly inclined to believe that this “ option ” should have been made at the time of the failure to pay the money.

It appears to us, that it would be inequitable to allow the bargainors to wait after the time fixed for the payment of the money had elapsed, and then make their option, or not make it, as the land should increase or decrease in value.

But however this may be, we think that the bargainees had a right, upon this declaration being made, immediately to pay the money, and thus prevent the forfeiture. Courts of equity never enforce forfeitures, and always mitigate them, or relieve against them, when this can be done without doing violence to the contract, of tbe parties ; and it appears to us that it is not an unreasonable construction of this clause of the contract, to hold, that the bargainees had the right to pay the money at the time the forfeiture was declared. It will be seen that the letter to the bargainees, which informed them that the bargainors intended to rely ujion this clause of the contract, was written on the 14th of March, and that the money due upon the contract was tendered to Delaplaine on the 80th of the same month. It is to be observed that the bargainees resided in Ohio: without stopping to inquire whether it was not the duty of the bargain-ors to seek the bargainees, and return, or offer to return, the money which they had paid on the contract, and also the note which still remained due, we think that the tender of the money to Delaplaine on the 30th of March, was in time to prevent the forfeiture. It was undoubtedly made as soon as it could be, after the notice of the intention of the bargainors to declare the contract void, reached the bargainees. Delaplaine and Burdick both state in their answers, that the letter dated on the 14th of March, containing the notice, was mailed on the 19th of the same month. The tender was therefore made in eleven days after the notice was mailed at Madison. There could have been no delay on the part of the bargainees after they received the notice.

They must have left Ohio immediately and come to Wisconsin to make the tender, and this was all that could reasonably be required of them. We are therefore forced to conclude, that if it was possible for the bargainors to make a good title .to the premises, it would be the duty of the court to enter a depree compelling them to convey the land according to the contract. But as this is impossible on account of the sale to Dewey, who is a bona fide purchaser, the question is, whether the bill should be dismissed and the bargainees be left to an action at law to recover their damages, or whether the court should retain the case for the purpose of ascertaining the compensation and damages which the complainants should receive. The authorities upon this point are very conflicting. See Denton vs. Stewart, 1 Cox R. 258 ; also, Story’s Equity Jur. § 19, and the cases there referred to.

But we think that to save a multiplicity of suits, tbe better opinion is in favor of tbe jurisdiction of tbe court in wbicb tbe proceedings were bad to enforce .tbe specific performance of tbe' contract, when, as in tbis case, tbe court bas been prevented from enforcing tbe contract specifically by tbe act of tbe defendants. But however tbis may be, we feel compelled to retain tbe case for another reason; and that is, that there is now in tbis state, no court of law, distinct from a court of equity, to wbicb tbe complainants can resort for tbe purpose of having their damages and compensation ascertained. Since tbe act to establish tbe Code of Procedure went into effect, it bas become impossible to send a party from a court of equity to a court of law; and there seems to be no reason for not retaining tbe case where it now is.

Tbe decree of tbe Circuit Court1 dismissing tbe bill must therefore be affirmed ás to tbe defendant Dewey, and reversed as to tbe other defendants. Tbe cause must be remanded to tbe Circuit Court, with directions to ascertain tbe damages and compensation which tbe complainants are entitled to receive from tbe defendants Delaplaine and Burdick.

It bas been contended by the counsel for tbe defendants, that tbe defendants can only be compelled to return tbe money' wbicb they bave received from tbe complainants, and interest. We are inclined to think that tbis would be tbe measure of damages if tbe title of tbe defendants Delaplaine and Burdick, bad failed without their own fault, and possibly tbis court would be unable to award more, even in a case like tbe present, where tbe title of tbe complainants bas been defeated by tbe act of tbe defendants themselves, if tbe deed wbicb they agreed to execute was to contain only the ordinary covenants. Baldwin vs. Munn, 2 Wend. R. 399 ; 3 Dana R. 415.

But upon tbis subject we give no opinion, because tbe covenants’which the bargainors agreed to insert in their conveyance of tbe land show that tbe parties bave themselves agreed on a different rule of damages. In tbe contract for tbe sale of tbe land tbe bargainors agreed that they would convey tbe premises “ with covenants of general warranty, and covenants to indemnify them, [the bargainors,] in case, of failure of .title, for increase of value of the said real estate, as ■■well,.as. .for all- improvements ■which- may [might] thereafter be made thereon.” • • ■. .

, It will be seen that the bargainors could not fulfill the agreement without executing- a deed with covenants to indemnify the bargainees, in case of failure oftitle, -for the increase of the value of the land which they -agreed to sell. It follows conclusively, that for the refusal of the bargainors-to execute such; a deed, the measure of damages will be the. difference in the value of the land at the time when the bargainees became entitled to their deed by the tender of the purchase: money on the 30th-of March, 1854, and the sum. agreed to be paid for the land in the ■ com. tract, if the value of the -land -at the ' time: of the ¡ tender was: greater than the price fixed in the contract; to this must be added:the .payment .made by th« complainants,-and interest from the time of payment. As the agreement for the sale-of the land, provided that the rents -arising .from leases of portions of the property-should be paid to the bargainees, the complainants, are entitled to receive ■ whatever rents accrued, between the ■ time of executing the contract of sale and-the tender of the money on.-' the.:30,th of -March, 1854,: and .which -came to -the. hands of Delaplaine and Eurdick, and also interest on the,same from the time of payment.

Ordered accordingly.