Kaufman v. Hastings

JOHNS, J. The contract provides that “the deeds and other conveyances necessary to complete this transaction will be executed and exchanged within fifteen days from date,” and that “in the event the real estate agent or agents demand a commission in excess of two hundred ($200.00) dollars, it is hereby mutually agreed that if a satisfactory adjustment of such commission cannot be effected, this agreement may be declared canceled and of no effect.” Before the contract was executed a personal examination of the respective properties was made by each party. At that time the plaintiff, who was the owner of the Berkeley property, was a resident of Portland, Oregon, and Mrs. Kaufman, his wife, was then in Berkeley. The defendant, who owned the Portland property, was — 627 — then residing in Berkeley, where the broker Wiesenhaven had his place of business. It is apparent that the agreement was entered into in good faith by both parties and that each of them was then ready and willing to make the exchange when the amount of the commission could be amicably determined. Steps were at once taken to agree upon the amount. The broker first demanded $900 for his services, which both parties refused to pay. After a conference he reduced his claim to $600 and after a further talk with the plaintiff’s wife in his office he agreed to accept $400 in full for his services. Of this amount the plaintiff was to pay $200, leaving the remainder to be paid by the defendant under the terms of the contract. The broker assented to this and he and the plaintiff’s wife called at the defendant’s place of business and advised him of the arrangement. The broker testifies that this occurred about 3 o’clock in the afternoon of November 20th, and on that point he is corroborated by Mrs. Kaufman. It appears that on the same day, before that conversation, the defendant had notified the broker that the deal was off, but the latter testifies that he was not acting for or representing Hastings in the transaction. On that day, also, the defendant addressed a letter to the plaintiff at Portland, advising him that on accQunt of failure to adjust a commission the deal was off. This letter was postmarked “San Francisco, November 20, 1916, 4 p. m.” Assuming that the testimony of the broker is true, the letter was deposited in the postoffice one hour after the conversation between the defendant, the plaintiff’s wife and the broker regarding the arrangement as to the commission. It will be noted that the contract was dated November 6, 1916. On November 11th at Portland the — 628 — plaintiff executed and acknowledged Ms deed to the Berkeley property and forwarded it to his wife with instructions to sign and arrange for its delivery upon the receipt of the defendant’s deed to the Portland property. The evidence is not clear as to when she actually executed the deed, hut Joseph L. MacFarland testified that he was vice-president of the Alameda County Home Builders and that in such capacity he received the deed duly executed, on or about November 15,1916, with instructions that it should be held in escrow until a settlement was made between Mr. Kaufman and Mr. Hastings; that “when Mr. Hastings delivered Ms deed, the Kaufman deed was to be delivered to him,’land that “I gave Mr. Hastings the deed to read and he was evidently conversant with the conditions.” His evidence is corroborated by Arthur E. Weed, the bookkeeper of that company, who testifies that the tender was made “verbally, and about the thirteenth to the seventeenth of November, 1916,” and that “Mr. Hastings was told that the papers were here duly executed, ready for delivery to him.” It further appears that about November 25th the deed in question was placed in the Berkeley Bank of Savings & Trust Company with such instructions and that the bank gave the defendant written notice thereof. It is also shown that on November 20,1916, in Portland the plaintiff executed in favor of the defendant his promissory note for $959.73, in the usual form, payable on or before two years after date, with interest, and that to secure its payment he executed and acknowledged a certain mortgage on his Portland property, which was forwarded to his wife at Berkeley with proper instructions. Mrs. Kaufman duly executed the mortgage and it was placed in the bank about November 25, 1916, and two days later the bank notified the defendant of. — 629 — its receipt and of the instructions. Since that time the bank has held the deed, note and mortgage subject to the defendant’s order. 1, 2. While it is provided in the contract that “all deeds and conveyances necessary to complete this transaction will be executed and exchanged within fifteen days from date, ’ ’ there is no stipulation that time is of the essence of the contract. Neither is there any provision as to the time the agreement “may be declared canceled and of no effect” for the failure to make a “satisfactory adjustment of such commission.” As we construe it, the time within which the commission was to be adjusted was not fixed by the contract, but would be identical with the period named by the terms and provisions, within which the exchange of properties, should be made. In Wright v. Astoria Co., 45 Or. 224, 228 (77 Pac. 599), it is said: “There was no understanding or stipulation that the deed should not be delivered unless plaintiff paid the purchase price by a day certain. In equity the time of payment is not of the essence of a contract for the sale of real estate unless made so by express agreement of the parties, by the nature of the contract itself, or by the circumstances under which the contract was executed. “Specific performance of a contract for the sale of real estate will ordinarily be decreed, even though, the purchase money was not paid or tendered at the exact time fixed by the contract, when the party seeking the performance has acted in good faith, and with reasonable diligence, unless there has been .such a change of circumstances affecting the equities of the parties or the justice of the contract as to make it inequitable that it should be enforced.” (Citing authorities.) In the instant case it appears that both parties used due diligence in trying to adjust the amount of the broker’s commission; that on November 20, 1916, the — 630 — amount which the defendant was to pay was ascertained and determined within the terms of the contract; that the plaintiff acted in good faith in executing and tendering the. deed, note and mortgage and that there has not been any such “change of circumstances affecting the equities of the parties or the justice of the contract, as to make it inequitable that it should be enforced.” The agreement provided that— “In said exchange of properties the said Herman S. Hastings will assume an encumbrance on the Berkeley property of not to exceed five thousand ($5,000.00) dollars, said Berkeley property to be free and clear of all other encumbrances of whatsoever nature.” There is no other provision as to the character or nature of plaintiff’s title; It appears that on February 1, 1912, the plaintiff executed a trust deed of his property to the Berkeley Bank of Savings & Trust Company to secure a debt to Walter H. Ratcliff, Jr., of $5,438.94 with interest at 7 per cent per annum, to be paid in graduated installments which on and after February 1, 1914, were to be at the rate of $75 per month with accrued interest. The deed recited that the plaintiff did “grant, bargain, sell, convey and confirm unto the party of the second part and unto its heirs and assigns all of that piece or parcel of land situate in the City of Berkeley, County of Alameda, State of California,” as the same is described in the complaint, “to have and to hold the same to the party of the second part, and to its heirs and assigns, (said party of the second part and its heirs or assigns being hereby expressly authorized to convey, subject to the trust herein expressed, the land above described) upon the trusts and confidences hereinafter expressed.” — 631 — 3. The defendant insists that under the laws of California this trust deed was an absolute conveyance and that at the time of the execution of the contract the plaintiff did not have any title to his property to convey. He cites a number of California decisions to support his contention. While there may have been a conflict in the early decisions of that state, as to the force and effect of such a deed, we think that the question was fully and finally settled in the case of MacLeod v. Moran, 153 Cal. 97 (94 Pac. 604), where in commenting upon the precedents the opinion says: “These decisions are based upon the fact that such a deed, though in form a grant, is really only a mortgage, and does not. convey the fee. A trust deed of the kind here involved differs from such a deed only in that it conveys the. legal title to the trustees so far as may be necessary to the execution of the trust. It carries none of the incidents of ownership of the property, other than the right to convey upon default on the part of the debtor in the payment of his debt. The nature of such an instrument has been extensively discussed by this court, and the sum and substance of such discussion is that while the legal title passes thereunder, and the trustees cannot be held to hold a mere ‘lien’ on the property, it is practically and substantially only a mortgage with power of sale. * * The legal title is conveyed solely for the purpose of security, leaving in the trustor or Ms successors a legal estate in the property as against all persons except the trustees and those lawfully claiming under them: Civ. Code, §§ 865, 866. Except as to the trustees and those holding under them, the trustor or his successor is treated by our law as the holder of the legal title. * * The legal estate thus left in the trustor or his successors entitles them to the possession of the property until after their rights have been fully divested by a conveyance made by the trustees in the lawful execution of their trust, and entitled them to exercise all the ordinary incidents of ownership in re — 632 — gard to the property, subject always, of course, to the execution of the trust. ” In the instant case the trust deed was executed to secure a specified existing debt. When that debt is discharged according to its terms the plaintiff or his successor in interest is ipso facto entitled to a reconveyance of his realty. The testimony shows that at the time the exchange contract was' executed the amount of that existing debt was less than $5,000 and that the plaintiff was not in default in any of his specified payments. According to the terms of the contract the defendant was to assume an encumbrance upon the plaintiff’s property of not to exceed $5,000, and under the authority of MacLeod v. Moran, 153 Cal. 97 (94 Pac. 604), we hold that the trust deed which the plaintiff executed to the bank was an encumbrance. It is shown by the record that the amount did not exceed $5,000' By the payment of that sum the defendant would acquire title to the property free and clear of any charge, lien or encumbrance. 4. The exchange contract was not executed by the wife of either party and it is contended that— “A contract for the1 sale of real estate in which the wife of the contractor is not joined cannot be specifically enforced.” The plaintiff does not seek a specific performance of the contract as against the wife of the defendant, and it is shown that the plaintiff’s wife has joined in the conveyance of his property, to the defendant and in the execution of the mortgage. 5. Complaint is made of the failure to assign policies of insurance. Prior to the exchange of properties such assignments would be void. ’ In any event they would be a matter of minor importance and are — 633 — now fully covered by the decree of the trial court. • No objection whatever was made to the form or substance of the deed, note and mortgage which were tendered. From a careful examination of the record we are convinced that the plaintiff acted in good faith, used due diligence to carry out the exchange contract and is entitled to specific performance. The decree of the Circuit Court is affirmed. Affirmed. Benson, Harris and Bennett, JJ., concur.