Hanson v. Fox

Defendant entered into separate contracts for the sale of two lots of land. The contracts were similar in terms. One was made with plaintiff, the other with plaintiff's assignor. In each case a part of the purchase price was paid at the execution of the contract, and the remainder of the purchase price was to be paid at the rate of ten dollars per month. The unpaid part of the purchase price was evidenced by thirty-five promissory notes, each for ten dollars, bearing interest at seven per cent after the dates when respectively they became due. Plaintiff made a tender of the total sum due under these contracts, and upon defendant's refusal to accept the tender he brought this action, treating the refusal as a breach and asking for a rescission. In addition to the matters above set forth, he charged that defendant does not and never has owned the lots which he contracted to sell, and has no title to them other than that evidenced by a tax title, which he charges to be void. The findings of the trial court adopted plaintiff's view and gave judgment accordingly, from which judgment and from the order denying his motion for a new trial, defendant appeals.

It is shown by the contracts that plaintiff was not entitled to demand his deed until final payment. In other words, defendant had contracted to convey title to plaintiff thirty-five months after the execution of the contract. The plaintiff's offer of a lump sum, under conditions at variance with the terms of the contract, was not a legal tender under the contract and could not operate to place defendant in default. In strictness, plaintiff had no more right to offer the total sum and claim rescission because of defendant's refusal to accept it, than defendant would have had to have demanded the lump sum and claim a rescission because of plaintiff's refusal to pay it. The rights of each are prescribed by the contract, and neither party can be put in default by insisting upon a compliance with the terms of the contract, or by refusing to accede to a demand not contemplated by those terms.

Nor does the fact which the court found, — namely, that defendant had no title to the lots, afford any reason for the interposition of equity. In a case such as this it is permissible for one to contract to convey title to land which he does not own, and he is in default under such contract only when the vendee has performed his part of the contract and made demand for a title which the vendor is unable to furnish. Such is, and always has been, the settled rule in this state. Thus, in Joyce v. Shaffer, 97 Cal. 335, [32 P. 320], the vendors, under contract of sale had actually conveyed the land to a third person, and rescission was sought. This court said: "The conveyance by the vendors was not a breach of the contract. One may sell land which he does not own, and yet be able, when the time of performance arrives to furnish a good title. In the meantime the purchaser would not be at liberty to disaffirm the contract on the ground that then the vendor was unable to make a good title. It would be incumbent on him to offer to perform, or to show that at the time of performance the vendor could not furnish the title."

So in Shively v. Semi-Tropic Land Water Co., 99 Cal. 259, [33 P. 848], this court, declaring that a transfer of land to third parties during the existence of an executory contract of sale does not constitute abandonment or remission of the executory contract, said: "Defendant as yet has not defaulted, and might not suffer default when the balance of the purchase price was tendered and a deed demanded, and the plaintiff is not entitled to recover the money paid until he shows the default of the defendant." The same principle is announced and rule laid down inGarberino v. Roberts, 109 Cal. 126, [41 P. 857], and it is further said: "In order to put the defendant (vendor) in the wrong, it is incumbent upon him (the vendee) to await the time of performance provided in the contract, and thereupon make his tender of performance and demand his deed." So here, whatever may have been the condition of defendant's title, under the contract he had thirty-five months in which to perfect it, and could not be placed in default until at the expiration of thirty-five months, payments having been duly made by the vendee and demand by the vendee made for the deed, defendant was able to comply with such demand. The effort to place defendant in default by a tender made in advance of the time, and under circumstances not contemplated by the contract, and to claim the right of rescission because then the vendor could not convey merchantable title, was unavailing and nugatory.

The judgment and order appealed from are reversed and the cause remanded.

Lorigan, J., and Melvin, J., concurred.