Beck v. Chambers

OPINION OP THE COURT. ROBERTS, C. J. — This is a suit’ in equity to forfeit and cancel a contract for the exchange of land, where the defendant in the court below, appellant here, in apparent good faith, entered into possession of the land, which he was to obtain title to under the contract, as was his right thereunder, and made valuable and lasting improvements. The general rule is that a court of equity will not enforce a forfeiture, if by any reasonable rule of construction it can avoid it. Where, however, time of performance is of the essence of the contract, and a forfeiture is provided for by the contract, either expressly . or by necessary implication, a default in performance within or at the time specified entitled the party for whose benefit the provision was inserted, to a forfeiture of the contract, in accordance with the terms of the contract. In this case, the trial court, by its finding of fact numbered 2, found that time was of the essence of the contract, and that, as the contract remained unperformed, on the first day of November, 1909, it was discharged. By its third finding it found “That the said contract became by operation of law and the exercise of the option of the said Larkin Beck, fully discharged, null and void, and that all rights and liabilities arising thereunder ceased and determined before the commencement of this action. It would appear that the above so-called findings are in reality mixed findings of fact and conclusions of law, and that there is an apparent conflict between them, because the first stated finds that time is of the essence of the contract, and, as said contract was not performed on the'1st day of November, 1909, it became ipso facto null and void, while the third finding or conclusion is, that the contract became null, void and discharged because of the exercise by appellee of his option to forfeit the same. It must be conceded, however, that if the conclusion drawn, in. either finding be correct, the judgment cancelling the contract must be sustained, for on either assumption the appellee would be entitled to recover. 1 Conceding, without deciding that time was of the essence of the contract, as stated in the second finding, does it follow that, because the contract remained unperformed on the 1st day of November, it was discharged? The contract did not provide for its nullification by the mere failure of performance on the part of appellee within the time stipulated. Its forfeiture was made optional with the. appellee, and if he did not see fit tc exercise his option and declare the forfeiture, the contract continued in full force and effect. Van Dyke and Drew v. Cole, 81 Vt. 379. 2 And a declaration of the fact that appellee had elected to exercise liis option should have been made to the appellant, and until it was made, the option was not exercised and the contract was not annulled, but continued in force. Coles v. Shepard, 30 Minn. 446. This being true, the contract was not terminated on the 1st day of November, by its own force, and as the appellee did not elect to declare a forfeiture until the 30th day of the month, it necessarily follows that during the intervening time the contract was valid and binding upon bof' parties. The undisputed evidence shows that prior to the 30th of the month the appellant deposited with the designated escrow holder the papers called for by the original contract, and having so deposited said papers, prior to the forfeiture of the contract, appellant had complied with his part of the contract. This being true, appellee could not forfeit the contract, but necessarily was required to comply on his part. It could hardly be contended that the conversation which occurred on the 1st of the month, even if appellee’s version of it be admittedly correct, would be sufficient to effect a forfeiture of the contract. He testified, "I told him I did not believe it would go through and he oughtn’t to go.” It would certainly require a positive and specific declaration that appellee did not intend to be further bound by the contract, and the language used could not 3’easonably be construed as the exercise of appellee’s option to declare the contract void; nor does appellee insist, as we understand his contention, that this language amounted to the exercise of his option, for his counsel say, in their brief, “It may be, and doubtless is true, that wüen appellant showed appellee his abstract of- title November 1st, and Beck called his attention to the defects in it, and Chambers admitted the defects and said he would have them corrected, that in some loose conversation between them, Beck may have given Chambers .to understand that if he deposited in the bank perfect abstracts of title and deeds conveying a fee simple title, he would still carry out the trade.” Another principle, supported by numerous adjudicated cases, might be invoked, were it necessary, in support of appellant’s insistence that the contract was valid and in full force and effect at the time he deposited his papers in escrow, viz: If the stipulation which makes the time of payment essential be not absolute that the contract shall be ipso facto void upon default in payment at the time, but its object and language are to give to the vendor his election and power to put an end to the agreement upon the vendee’s failure in paying or performing at the appointed day, their the vendor, if he intends to avail himself of the provision, must give the purchaser a timely and reasonable notice of his intention to avoid the contract, or must do some unequivocal act ..which unmistakably shows that intention, for the vendor can not treat the default alone as terminating the agreement. Pomeroy on Contracts, sec. 393. The principle is supported by adjudicated cases in Iowa, Minnesota and Illinois, which will be found cited in the note to the above section. Again, should we assume that the contract was to become ipso facto null and void, upon failure to perform within the time stated, it might reasonably be held that appellee had waived strict compliance as to time, by his repeated extensions and subsequent 'conduct. Boone v. Templeman, 158 Cal. 290, 110 Pac. 947; 139 Am. S. R. 126. And the right may be waived by extensions of time or indulgences granted the purchaser. Douglas v. Hanbury, 56 Wash. 63, 134, A. S. R. 1096. Appellee, according to his own testimony, on the 29th of November, went to the bank and examined the papers deposited there by appellant, and further said that he would have carried out the contract had he found the papers correct and in proper form. This conduct, coupled with appellant’s statement, that appellee told him to go to Pagosa Springs and secure the correction of his title papers, clearly evidences that appellee did not intend to rely upon the forfeiture of the contract because of appellant’s failure to perform on the 1st day of November. This being true, he could .not set up the delay or default as creating a forfeiture without giving appellant notice of his intention and allowing him a reasonable time within which to perform. Boone v. Templeman, supra; 39 Cyc. 1384. Therefore, upon either view it will be seen that .the findings of fact and conclusions of law were erroneous. Counsel for appellee suggest in their brief that the abstract of title presented by appellant and the deeds executed by him were deficient; that the abstracts failed to show a perfect title, in fee simple in appellant, and that he had failed to prepare the deed in conformity with the contract. It is a sufficient answer to this contention to point out that the findings do not show such facts. The facts found were that the contract remained unperformed on November 1st; that no further legal extension of the contract was made, and not that the abstract submitted and deeds tendered were deficient. The findings of fact made b}r the trial court “must be of the ultimate facts which the evidence is intended to establish, sufficient in themselves, without inference or comparison, or the weighing of evidence, to justify the application of legal principles which must determine the case.” Luna v. Coal R. R. Co.. 16 N. M. 71 and cases cited. Should this court consider the question suggested by appellee, as to the defects in tbe abstract of title and deeds of conveyance, we would be required to search the record and decide a question which was not considered by the trial court. . Other grounds for reversal are urged’ by appellant, but in the view we take of the case it is not necessary for us to consider them. For the reasons stated the judgment of the lower court is reversed and the cause is remanded, with directions to set aside the judgment and to proceed in accordance with this opinion, and it is so ordered.