Bishop v. Newton

Walker, J. This was a bill in chancery, filed by complainant against defendants, for ‘the specific performance of a contract entered into between complainant and defendant Newton, on the 29th day of September, 1855. By the agreement, Newton sold to Bishop several tracts of land, for the sum of twelve thousand dollars. Bishop, at the time of the sale and the entering into the written agreement, paid to Newton one thousand dollars, and agreed to pay him two thousand more on the first first day of January, 1856, and to assume and pay a mortgage on the lands for nine thousand dollars, except the interest, for the year 1855, which mortgage was given by Newton to one Leonidas Doty, on the 14th day of October, 1854. Newton on his part covenanted and agreed that upon the payment of the two thousand dollars at the time and in the manner specified, to make, execute and deliver to Bishop a good and sufficient deed of conveyance in fee simple, free from all incumbrance, with full and proper covenants of warranty for the premises, except the mortgage to Doty. It was further agreed, that in case Bishop should fail to make payment within fifteen days after the first day of January, 1856, he should forfeit what he had already paid, and all rights under the agreement. Bishop failed to make payment by the fifteenth day of January, 1856. Newton, without having paid the interest on the Doty mortgage for the year 1855, or having tendered a deed to Bishop, on the fifth day of February, 1856, sold and conveyed the same lands to William A. Goudy and Franklin J. Goudy, for twelve thousand seven hundred and fifty dollars, and on the same day, Bishop called on Newton and offered to pay the two thousand dollars due on the first of January, previous, when Newton informed him that he was too late, as he had sold to the Goudys. The contract for the sale by Newton to Bishop was duly recorded in the proper office on the day of its execution. These facts all appear from the bill and answer. The cause was tried in the Circuit Court on the bill, answers and replication, without evidence, when the bill was dismissed, and the cause is brought to this court by appeal, to reverse the decree of the Circuit Court. The first question presented for our consideration in this case is, whether Newton had the right to declare the forfeiture and sell the premises to the Goudys. Courts of equity always incline to relieve against penalties and hard bargains of this character, and will hold the party seeking such an advantage to a strict compliance with the contract on his part, before he will be permitted to enforce such a forfeiture. We are, then, to examine and see whether Newton had performed his part of the contract at the time and in the manner required by the agreement; and, if he has, then he had the right to insist upon enforcing the forfeiture when Bishop failed to make payment; but, if he was himself in default at that time, he had no such right. This court laid down this principle in the case of Brown v. Cannon, where it is said: One party to a contract cannot complain of the other until he has put his adversary in default by a substantial performance of the contract on his part; and a failure or refusal to perform by the other. 5 Gil. R. 174. By the terms of their agreement, Bishop was to pay the further sum of two thousand dollars on the first of January, 1856, and to assume the payment of the Doty mortgage, except the interest for the year 1855. This they had expressly provided he was not to pay. It was then left for Newton to discharge. Newton had covenanted that, upon the payment of the two thousand dollars at the time and in the manner specified, he would convey the lands to Bishop by good and sufficient deed in fee simple, free from all incumbrances except the Doty mortgage. The conveyance of the lands freed from such incumbrances was, by the contract, a concurrent act with the payment of the money. Newton was bound by the agreement to be in a condition to so convey, by the first day of January, 1856. This interest was undoubtedly a lien and incumbrance on the land to the amount of $630, which was then due, and for which Doty could subject the lands to its payment, by foreclosing the mortgage. This interest was not paid on the first of January, nor until after the sale to the Goudys. Newton was still in default, when Bishop offered to pay the money, and demanded the conveyance. But, if this was not the true construction of this contract, still the law would not compel Bishop to pay his money and receive the deed, while incumbrances existed against the property, when he had contracted for a title free from such incumbrances. This court, in the case of Brown v. Cannon, say, that a person who has bargained for a good title will not be compelled to take one subject to suspicion; the title must be free from suspicion. And in Sugden’s treatise on Vendors, the rule is stated to be that where an incumbrance is discovered to exist previously to the execution of the conveyance and payment of the purchase money, the vendor must discharge it, whether he has or has not agreed to covenant against incumbrances, before he can compel the payment of the purchase money. Sugden on Vendors, 553. We think these principles are decisive, that Newton had no right to insist upon the forfeiture while he was himself in default. Then has complainant a right to insist upon a specific performance of the agreement. This branch of equity jurisdiction is regulated, to a considerable extent, by a sound legal discretion. The rule governing courts was stated by Chief Justice Marshall to be, that when a bill is exhibited by a party who is himself in fault, the court will consider all the circumstances of the case, and decree according to those circumstances; and that a condition always entitled to great weight is, that the contract, though not fully executed, has been in part performed; 6 Wheaton R. 528. And, in a subsequent case, the same court lay down the rule that time may be of the essence of the contract for the sale of property. It may be made so by the express stipulations of the parties, or it may arise by implication, from the very nature of the property, or the avowed objects of the seller or the purchaser. And even when time is not thus either expressly or impliedly of the essence of the contract, if the party seeking a specific performance has been guilty of gross laches, or has been exceedingly negligent in performing the contract on his part, or if there has been, in the intermediate period, any material changes of circumstances, affecting the rights, interests or obligations of the parties ; in all such cases, a court of equity will refuse to decree a specific performance, upon the plain ground that it would be inequitable and unjust. But, except under circumstances of this nature, time is not treated by courts of equity as of the essence of the contract, and relief will be decreed to the party who seeks it, if he has not been grossly negligent, and comes within a reasonable time, although he has not strictly complied with the terms of the contract. Taylor v. Longworth et al., 14 Peters R. 172. The complainant has brought himself clearly within the principles of these rules. . He, in part performance of the contract, paid, on the purchase, one thousand dollars. It is true he did not pay or offer to pay the next installment on the day, but he did offer to pay twenty days afterwards. While this is not a strict compliance, it is not gross laches or unreasonable delay, when it is remembered that Newton was himself in default, and not in a position to require payment. And we are, therefore, of the opinion that his conduct was such .as entitles him to the relief sought. It was urged on the argument that complainant had, previously to filing his bill, brought a suit at law for the recovery of the purchase money paid on the agreement; and had thereby rescinded the contract, and barred his right to relief in this proceeding. In answer to this objection it is only necessary to remark, that, if this be true in point of fact, the record contains no such evidence. It only appears from Newton’s plea and unsworn answer. It is new affirmative matter, set up as a defense, and should have been proved to entitle it to consideration by the court. The contract was duly recorded in the proper office on the day it was executed, and became notice to all the world. And the G-oudys were chargeable with notice and took the property subject to all the equities with which it was charged. They acquired no other or better title than Newton then held, and cannot be heard to object to a specific performance of the agreement. From the circumstances of the case, then, in every point of view, we are satisfied that complainant is entitled to the relief sought. And the decree of the Circuit Court is reversed, and the cause remanded, with instructions to that court to enter a decree, for a specific performance of the contract, that complainant pay into court the two thousand dollars, with interest from the first day of January, 1856. That defendant Newton have leave to withdraw it upon delivering a deed of conveyance with the covenants stipulated for in the agreement conveying the premises to complainant, and upon filing a receipt from Doty for the interest on his mortgage for the year 1855; and if he shall fail or refuse to deliver such deed and to file such receipt within a reasonable time to be given for that purpose, that the master in chancery, or a commissioner, be appointed for that purpose, to be empowered and required, on behalf of the said defendants, to convey the premises to said complainant, with covenants by defendant Newton according to [his agreement, and with covenants by the said William A. Goudy and Franklin J. Goudy against their acts, and to pay the interest on the Doty mortgage for the year 1855 out of the deposit, unless the same has been already paid; and, that when such deeds of conveyance shall have been delivered, that Newton be allowed to receive the balance of the deposit, after paying the costs of the court below. And it is ordered that complainant pay one-half of the costs of this court and the defendants pay the other half. Decree reversed.