Gray v. Pelton

Mr. Justice Bean delivered the opinion of the court. 1. Plaintiff maintains that the stipulation in the contract that time is of the essence thereof was waived by the parties, and that he is entitled to the deed. The defendants contend the reverse, and claim a forfeiture by reason of the nonpayment according to the express terms of the contract. The contract is with B. C. Gleason and his heirs or assigns. Gray stands in Gleason’s shoes, and is entitled to the same right as to the land that Gleason would have had if he had not conveyed to Gray; no more, no less. 2-5. The provisions of the contract in regard to the making of payments by the vendee or his assigns are very explicit and positive, to the effect that, if he failed to make such payments strictly in the manner and at or before the time specified, his right would be forfeited. Time was made of the essence of the contract. The case of Maffet v. Oregon & Cal. R. Co., 46 Or. 443, at page 454 (80 Pac. 489), is authority that, by the adjudications, both at law and in equity, the effect of [244] such a time essence stipulation, terminating the contract upon a failure to comply strictly and punctually with its conditions, is to entail a forfeiture by sheer force of the contract itself upon the mere default of the purchaser upon his failure to make payments at the times designated as he obligated himself to do, unless the vendor waives the default or subsequent forfeiture, which he has a right to do. This he may do by express agreement to that effect, or by unequivocal acts or demeanor affording reasonable and proper inducement for the purchaser in reliance thereon to alter his course as to strict and punctual compliance, either in advance of or after the prescribed time. The stipulation that time shall be of the essence of the contract is made solely for the benefit of the vendor. The conduct of such vendor will operate as a waiver when it is consistent only with a purpose on his part to regard the contract as still subsisting: Pomeroy, Contracts, §394; 2 Warvell, Vendors, §819; Boone v. Templeman, 158 Cal. 290, 295 (110 Pac. 947, 139 Am. St. Rep. 126); Smiley v. Barker, 83 Fed. 684 (28 C. C. A. 9). After a vendor waives a stipulation that time is of the essence of the contract, such stipulation cannot be insisted upon without notice and opportunity of compliance: Graham v. Merchant, 43 Or. 294, 306 (72 Pac. 1088). While a waiver of a default in one payment would not operate as a waiver of a subsequent failure, the court should consider all the circumstances and the conduct of the parties in their dealings and treatment of the contract. 6. The question arises in this case, Did Mrs. Pelton and the other grantors waive their right to insist on a strict compliance with the terms of the contract? From the beginning the parties to this contract appear to have treated the same as though the deed was simply held for Mrs. Pelton and her cograntors as security for the payment of the balance due upon the purchase [245] price. Her own testimony as to the letter to Mr. Gleason, and her statement to Mr. York, the real estate dealer, clearly indicate that she intended to he lenient in the matter. She had not, therefore, required a strict compliance with the terms of the contract in making either of the prior payments. The natural consequence would be to lull Gleason and Gray, his assignee, into a sense of security, and cause them to believe that payments upon the exact date named in the contract would not be required. The conduct of Mrs. Pelton and the other vendors was consistent only with a purpose on their part to regard the contract as still subsisting after the default in the payment due November 1, 1909. Her letter to Mr. Gleason, evidently written a short time before November 25, 1909, indicated that, if payment were then made, it would be accepted, and, if not, that leniency would be shown, clearly treating the contract as being then in force. The contract was in force at that time, or else Mrs. Pelton had no right to ask for a payment to be made. They failed to claim their right of forfeiture promptly, and for more than one year and two months after the nonpayment of the $90 due on the second payment, and for more than two months after the third payment was due. By such contract and failure the time clause in the contract was temporarily waived or suspended, and the grantees could not thereafter suddenly insist on a forfeiture. But they must, in order to avail themselves of the time clause, give Gray, the vendee, a reasonable, definite and specific notice to comply with his part of the agreement and make payment: Graham v. Merchant, 43 Or. 294 (72 Pac. 1088); Sehlbrede v. State Land Board, 46 Or. 615 (81 Pac. 702); Maffet v. Oregon & Gal. R. Co., 46 Or. 443 (80 Pac. 489). In the latter case, which was a law action, where a stricter rule is applied than in a suit in equity, Mr. Justice Wolverton, speaking for the court, said: “But if the [246] waiver was once accomplished, the vendor conld not again assume the original relations, and insist upon a forfeiture, unless upon a subsequent default, not within the purview of the waiver, without giving the purchasers proper notice of its intention so to do and a reasonable time in which to comply with the demand for payment” — citing Watson v. White, 152 Ill. 364 (38 N. E. 902); Monson v. Bragdon, 159 Ill. 61. In Miles v. Hemenway, 59 Or. 318, 339 (111 Pac. 696, 117 Pac. 273), this court held that the right to declare a forfeiture had been waived, and that the vendor could not afterward insist upon a forfeiture without giving reasonable notice to the vendee, and making a new demand for the payment of the balance due on the purchase price. Stevinson v. Joy, 164 Cal. 279 (128 Pac. 751), was a case where land was sold on payments of two dollars per week. The contract provided that: “Time and punctuality are hereby made material to and of the essence of this option. * * No waiver of times of payments for continuance of option shall be valid in favor of the first party unless reduced to writing and subscribed by the second party thereto.” No such written waiver was ever made. In 164 Cal. 285 (128 Pac. 753, 754), in the opinion, the court said: “The true rule is firmly established and recognized by all the authorities. Where time is made of the essence of the contract for the payment of rent or other payments of money, and this covenant has been waived by the acceptance of the rent or other moneys after they are due, and with knowledge of the facts, such conduct will be regarded as creating ‘such a temporary suspension of the right of forfeiture as could only be restored by giving a definite and specific notice of an intention to enforce it’ ”: See Barnett v. Sussman, 116 App. Div. (N. Y.) 859 (102 N. Y. Supp. 287). 1 Sugden, Vendors, page 417, states the rule quoted in Boone v. Templeman, 158 Cal. 290 (110 Pac. 947, 139 Am. St. [247] Rep. 126), as follows: “Although time be made of the essence of the contract, yet the condition may be waived, just as in an ordinary case; but, if the purchase money is to be paid by installments, each breach in nonpayment is a new breach of the agreement, and gives to the seller a right to rescind the contract, but that right should be asserted the moment the breach occurs.” In Monson v. Bragdon, 159 Ill. 61, 66 (42 N. E. 383, 385), upon a similar state of facts, the court said: “While * * not necessarily an absolute permanent waiver, yet in a court of equity there was at least such a temporary suspension of the right (of forfeiture) as could only be restored by his giving a definite and specific notice of an intention to that effect.” There is some contrariety of opinion as to when, and under what conditions, equity will relieve against a default in punctual payment, even though time may seem to be made of the essence of the contract: 1 Pomeroy, Eq. Jur. 454. The parties themselves in the case at bar have never construed the terms of the contract in question literally in their dealings. Mrs. Pelton has not insisted upon payments being made punctually at the times specified in the contract, and a court of equity should not treat the matter any more harshly than she did prior to the time she suddenly demanded a forfeiture. Mrs. Pelton and the other vendors wholly failed to give plaintiff the notice required. The decree of the lower court will therefore be reversed, and one entered here in accordance with the prayer of the complaint. Reversed: Decree Rendered. Mr. Chiee Justice McBride, Mr. Justice Eakin and Mr. Justice McNary concur.