Armstrong v. Pierson

Stockton, J. The decree of the district court, so far as it was in favor of the defendant, for the recision of the contract and cancellation of the note — for the extinguishment of complainant’s claim to the real estate and improvements, and for vesting in defendant the title and possession of the property — was rendered as upon the prayer of defendant for relief, upon cross-bill. In this instance, however, no relief was in any manner prayed by defendant, by cross-bill or otherwise. The powers of the court of chancery were not invoked by him; and although, when it has acquired cognizance of a suit, as for the purpose of discovery, it will, in order to prevent multiplicity of suits, entertain it for the purpose of relief, in most cases of fraud, account, accident or mistake, yet it will only administer relief where its aid is properly invoked, and its jurisdiction acquired in a regular manner. By the answer of defendant, it is prayed only that he may be dismissed with his costs. No relief is asked for by him. The practice is well settled in chancery, that the defendant cannot pray anything in his answer, except to be — 324 — dismissed the court; and if lie seeks any relief against complainant, lie must do so by cross-bill. Compton v. Comer, 4 Iowa, 577; 2 Harbour’s Ch’y Practice, 126; Daniels’ Ch’y Practice, Ch. 31; Morgan v. Tipton, 3 McLean, 339; McConnel v. Hodson, 2 Gilman, 640. In this case, if the court considered that the contract between the parties should be rescinded, and that defendant was entitled to a decree for the title and possession of the property, with the improvements placed upon it by the complainant, we see no way in which such relief could have been decreed in his favor, unless he had prayed the same; and he could not pray such relief, except by cross-bill, to which the complainant was entitled to make answer and defence. 'Without such cross-bill and prayer for relief, if no decree could be made in favor of complainant, all that the court could do, would be to dissolve the injunction, and dismiss the bill. It is time enough to grant relief to a defendant, when he prays for it: not before. The counsel on both sides, have given much of their labor in the argument, to the question whether or not time had, *by the .parties, been made of the essence of the contract, in such a sense, as that upon default by the complainant in making payment, without any just excuse, and without any waiver, afterwards by defendant, the court ought to interfere for his relief. Time is a circumstance of decisive importance, in contracts for the purchase of real estate, and is always to be regarded as of the essence of the contract, whore the parties have so stipulated in their agreement. In Benedict v. Lynch, 1 Johnson’s Chy. 570, the contract was, that if the vendee failed in the payments, or any of them, the agreement was to be void. In Scott v. Fields, 6-7 Ohio, 443, if the vendee failed to make the payments, he was to forfeit a payment made, and to have the agreement considered null and void. In these cases, it was held by the court, that the parties had expressly made time of the essence of the contract. In Davis v. Stevens, 3 Iowa, 185, the written agreement declared in so many words, that time was of the essence of — 325 — the contract, and a specific performance was refused. In Young v. Daniels, 2 Iowa, 126, the agreement was, that “in the event of non-payment of the said sum of money, or any part thereof, at the time limited, the vendor may elect to consider the contract at an end, and the vendee shall be considered the tenant, &c.;” and it was held that time had not been made of the essence of the contract, by the express stipulation of the parties. In the case now before us, the agreement was, that if the vendee failed to make any of the payments, pursuant to the agreements, or should otherwise break the same, the vendor was at liberty to consider the same forfeited, and had the right to enter upon the premises in a quiet and peaceable manner. The terms of the two contracts are identical in meaning, though not in language; and wé have no hesitation or difficulty in deciding, on the authority of Young v. Daniels, that the parties, in this instance, have not expressly made time of the essence of their agreement. Something more was required than mere non-payment by complainant,- to forfeit or put an end to the contract. In Canfield v. Wescott, 5 Cowen, 270, the contract contained a clause that if the vendee failed in performing any of the covenants, the contract should become void and of no effect; and it was held that this provision was for the benefit of the vendor, who might consider it void at his election; but that it was not absolutely void. Of the election to consider the contract void, some notice must be given by the vendor, to the vendee. To rescind a contract, the law requires some positive act by the party who would rescind, which shall manifest such intention, and put the opposite party on his guard, and it then gives him a reasonable time to comply. Higby v. Whittaker, 8 Ohio, 198. Unless it is shown that such notice has been given, or unless there has been some affirmative act by the defendant, to indicate unmistakeably to the complainant, the vendor’s election to consider it forfeited, the contract, in this instance, is to be interpreted as an ordinary contract — 326 — " between the parties, in which it is not made to appear that they originally intended to provide, that the failure of the vendee to make payment at the appointed time, should terminate his rights. In such case, time will not be considered, in equity, as constituting so essential a feature of the contract, as that the mere failure of the complainant in point of time, will, without regard to other circumstances, deprive him of his right to enforce its specific performance. Cases are cited in which, although time has been made of the essence of the contract, a default at the day has been excused or waived. The circumstances of the case, and the conduct of the vendor, may afford just ground for inference, that he has acquiesced in the delay, or waived the default. The party seeking for specific performance, may show that he has used due diligence, or if not, that his negligence arose from some just cause, or has been acquiesced in by the vendor. Benedict v. Lynch, supra; Seton v. Slade, 7 Vesey, 265. Where time has not been made of the essence of the contract, or where the parties show by their subsequent conduct, that they do not regard the contract as terminated by the failure to pay; or that, notwithstanding the failure, they regard it as still continuing, and to be carried out according to its terms, except in regard to time, they will be held to that rule of good faith, which, in the absence of actual agreement, may be indicated by the circumstances of the case. Even where no sufficient cause or motive for the failure to pay is shown, or where the default has not been waived or acquiesced in by the vendor, the question with the chancellor will be, whether under the circumstances, the vendor, in good conscience, can refuse performance; and whether the vendee may not, in good conscience, require it. The cases are almost without number, in which the vendee of land, though partially or wholly in default in the payment of the price, has been allowed to enforce performance against the vendor. And so the vendor, after failure on his part, and after a suit commenced, or a judgment ob — 327 — tained against him on the contract, has been admitted to have an equity for its enforcement. Henry v. Grady 5 B. Monroe, 450. It is argued that the levy upon and sale of the lots by the sheriff, March 12th, 1853, and the suit to recover possession, commenced April 12th, 1853, were notice to the complainant of defendant’s election to consider the contract at an end. The sale of the lots under execution, so far from indicating that defendant considered the contract, or complainant’s rights under it, at an end, would seem to show rather, that defendant supposed complainant had still some right to the lots, which he wished to extinguish by the sale. If complainant had forfeited his right to the lots, and the title to them had become vested in defendant, by reason of complainant’s default in making payment, there was surely very little propriety in selling them on execution, to give defendant a better title. A suit by the vendor to recover possession, after default by the vendee to make payment according to contract, has been held to operate as notice of the vendor’s election to rescind the contract; and it may reasonably be allowed to amount to the positive act required, to manifest the .vendor’s intention to rescind, referred to in Higby v. Whittaker, supra. It will not, however, be considered of any greater efficacy in manifesting the vendor’s election or intention, than actual notice thereof to the vendee; and such notice, however given, without an offer to cancel dr deliver up the notes for the purchase money, and to place the vendee in as good condition as he was before the agreement, by refunding to him the purchase money paid, with interest, is clearly insufficient to rescind the contract and terminate the rights of the vendee in the property. In Gibbs v. Champion, 8 How, 335, after default in the first payment, a tender of the whole amount due was made, when the last payment fell due; and it was held that, as the vendor had never offered to return the notes, nor taken any step to exonerate the vendeefrom his liability thereon, the contract remained executory and in full force when — 328 — the tender was made, and the vendor was required to execute it. So in Young v. Daniels, supra, the fact that the vendor, while insisting that the contract was forfeited for non-payment, held on to the notes, was accounted a material circumstance in favor of the vendee, going to show that the contract was neither forfeited nor abandoned, and that he was entitled to demand its specific execution. The defendant in this case, did not offer to surrender the note of complainant, but retained it, and even in his answer, proffers to return it only on condition of his obtaining possession of the lots, or in such manner as the court may direct. It further appeared in evidence, that the complainant took possession of the property at the date of the contract, and that he made permanent and valuable improvements thereon, estimated, by one of the witnesses, to have cost, in March, 1855, twenty-two hundred dollars, and by another witness, as worth, in April, 1856, thirty-two hundred dolíais. The complainant, after taking possession, had made the improvements with the knowledge of defendant, before default. "Where such is the case, and the improvements are lasting and valuable, without deciding, at present, the question whether the defendant must make compensation for them, before he can forfeit or rescind the contract, it would, nevertheless, seem to us nothing more than equitable, that he should have such compensation; and where the value of the property has been thus increased, in good faith, this fact, in our opinion, greatly strengthens the claim of the vendee to a decree for specific performance. In Remington v. Kelly, 6-7 Ohio, 447, the court gave it as their opinion, that if a vendee takes possession, with the consent and acquiescence of the vendor, and makes lasting and valuable improvements, it would seem to be equitable that the vendor, before he should be permitted to rescind the contract, should make compensation for such improvements.11 This was in a case where there had been notice of forfeiture for non-payment, and a tender of the notes, which being refused, were deposited in the — 329 — hands of a third person, for. the use of the vendee. So, it has been held by the Court of Appeals of Kentucky, that for improvements made by a vendee, under the faith of a contract of purchase, while the premises are in his possession, as well as for the purchase money paid, he has a lien upon ,the property improved, and ought not to be compelled to part with his possession, until he is paid and indemnified. In the case of the recision of a contract, it is well settled, (say the court), that the court ought to place the parties back, in statu quo as near as can be equitably done. Griffith v. Depew, 3 A. K. Marshall, 177. This view of the law, is sustained by the ruling of the court in Brink v. Morton, 2 Iowa, 411, in which it is held, that where time had not been made of the essence of the contract, the vendor, in order to rescind, upon default of payment, must place the vendee in statu quo, by refunding the money paid, delivering up the unpaid note, and making reasonable compensation for improvements put upon the premises, with the acquiescence of the vendor. See Putnam, v. Ritchie, 6 Paige, 390. The case of Gillett v. Maynard, 5 Johnson, 85, cited by defendant, we do not consider applicable to the present case. That was a suit at law, to recover back money paid upon a parol contract for the purchase of land, which had never been fully executed, and to recover compensation for improvements made by the vendee while in possession of the land. The cornt held, that the contract having been rescinded, the vendee was entitled to recover for the purchase money paid, but that if he voluntarily abandoned his contract, without any stipulation as to the improvements, he must be deemed to have waived all claim to any compensation for them. See also, Frear v. Hardenburg, 5 Johnson, 272; Hollis v. Edwards, &c., 1 Vernon, 159 ; Willard’s Equity, 308, 312. It is urged by defendant, against complainant’s right to have any compensation for the improvements upon the — 330 — premises, and against the propriety of holding that such improvements strengthen the equitable claim of complainant to a decree: 1. That the improvements were not made by complainant, but were made with the money of defendant, and were paid for by himself, and not by complainant; and 2. That defendant had caused execution on the judgment in his favor against complainant, to be levied on said improvements, and had purchased the same at sheriff’s sale; that by virtue of the sheriff’s deed, he had acquired the title to said improvements, and held the same; and that complainant has no claim upon or for the same, or the value thereof. To these positions of defendant, it may be replied: First, That the evidence shows conclusively, that the improvements upon the premises, were placed there by complainant. There was no attempt by defendant to show,, that any of them were made by him, or paid for by him; except that the judgment of Rand & Co., against complainant, for three hundred and twenty-nine dollars and fifty-three cents, for building materials, used in the erection of the dwelling house on the premises,' which, to the amount of three hundred and sixteen dollars and fifty-eight cents, was declared a lien on all the right, title and interest of both complainant and defendant, in two of the six lots, the subject of the present suit, was paid by defendant to Rand & Co. Secondly. One of the purposes of complainant’s bill, and the prayer thereof, is, among other things, to have the court set aside, and declare null and void, the sheriff’s sale and conveyance to the defendant, of the property in controversy, for reasons set forth in his petition; or, if the court cannot grant him such relief, that he may be, at least, by decree of the court, allowed to redeem the property from the sale by the sheriff, by virtue of his tender and offer to redeem, made to defendant, March 11, 1851. The question as to the irregularity of the sale of the premises by the sheriff, and the right of complainant to have the same vacated and set aside, we do not consider — 331 — at present, but proceed to inquire into the sufficiency of the tender, and the right of complainant to redeem the property from the purchase made by defendant at sheriff’s sale. The objection taken in the argument to this tender is, that it was not made in the manner prescribed by statute, by paying the money into the clerk’s office, for the use of defendant. "We think this objection is not well taken, and that the tender of money to the defendant, was sufficient for the purpose for which it was intended. The clerk, in receiving the money, is only the agent of the party entitled thereto. The execution plaintiff is the principal. Whenever a payment to the clerk would be good, a payment or tender to the party entitled to receive the money, is equally valid. The provision of the statute, allowing payment to be made to the clerk, is intended for the benefit of the debtor, and he may make redemption in that mode, if he prefers it.. We know of no reason or principle, however, which should render the payment or tender of the money to the judgment plaintiff, invalid— especially, where it is not refused on the ground that it ought to be paid into the clerk’s office for his use. The money tendered, was for the double purpose of redeeming the property from the sale made by the sheriff, and to discharge the note given to defendant, for the purchase money of the lots. This fact, in our view of it, furnishes a further illustration of the propriety of the money for the redemption of the lots, being tendered to the defendant, and not paid to the clerk. The defendant refused to receive it, when offered to him, but it was a qualified and partial refusal, and not an absolute one. He undertook to reserve to himself the privilege of refusing the money absolutely, if his attorney so advised; or of taking it, if the tender was good, and any advantage was to accrue to him by so taking it. He said something about not knowing what amount was due to him ; that his attorney had the papers, and had been computing it, and he could not tell what to do about receiving it, until he should see him, which he agreed he — 332 — ■would do on. the following Monday, or in two or three days, and would then let complainant know; and that he did not know whether it was right that he should receive it, but if his attorney said he should, he supposed he should have to receive it. Here was no refusal to receive the money for the redemption of the property, for the reason that it should have been paid into the clerk’s office, for his use. There was no refusal to receive payment of the promissory note for the purchase money, on the ground that the contract was forfeited, or had been rescinded. It is, perhaps, a party’s misfortune, that he cannot have an attorney at all times, at hand to advise him as to his acts. But if defendant was ignorant of his legal rights, or did not know the exact amount of money due him from complainant, he knew, at least, whether or not he was willing that complainant should redeem the lots from the sale made by the sheriff; and whether he elected to consider the contract forfeited, by reason of the non-payment, and whether he had, in any manner, undertaken to rescind the same. Unless, then, he intended that his attorney should think, and speak, and act for him, it was necessary that he should decide for himself, when the money was tendered, whether he would receive it or not; and if he alleged any reason for refusing it, that he should be ready and willing to abide by that reason and decision. If he placed his refusal upon any such ground, it was easy for him to say, that he refused the money tendered for the redemption of the lots, because it should have been paid into the clerk’s office for his use; or, that he refused the money tendered in payment of the note, on the ground that the contract of sale was forfeited, and was no longer in force. He was not bound to give any reason for declining to receive it, and a simple refusal, without any reason, would have covered the jvhole ground. When, however, he declines to receive it, for the alleged reason that he does not know the exact amount due, — that his attorney had the pa — 333 — pers, and was computing the amount, &c., — that he did not know whether it was right that he should receive it, without consulting him, — and, especially, when he promised to see his attorney, and then let the other party know whether or not he would accept the tender, — the complainant was authorized to infer, that he would have received the money, if so advised by his attorney, if the exact amount due had been tendered; or, at any rate, the amount found to be due by the attorney’s computation. Whether he consulted his attorney or not, does not appear, but he failed to comply with his promise to inform complainant whether he would accept the money tendered or not; and, instead of so informing him, he procures the sheriff to make him a conveyance of the lots. Under these circumstances, al- ■ though some show was made by him of standing upon all his legal rights, in refusing the money, the defendant cannot object to the inference, that he did not consider the con tract forfeited, and that he refused the money, because ho did not know whether the amount tendered was the exact amount due him. We are thus brought back to the question with which we started out: Is complainant, in good conscience, entitled to claim, against defendant, a decree for the specific execution of the agreement to convey these lots? The considerations upon which this question is to be decided, are numerous and important; and while we admit that our minds are not free from doubt and difficulty, we have not been able to arrive at the conclusion, that the contract between the parties was forfeited or rescinded, or that it was notin fulTforce on the 11th of March, 1854, when the tender was made. We are reminded of the principles on which the relief prayed, is administered in courts of equity: That a specific performance is not a matter of right in either party, but is granted or withheld, according to the circumstance of the case, in the sound discretion of the chancellor, guided and controlled by the general rules and principles of equity jurisprudence, (Young v. Daniels, supra); that compensation, not forfeiture, is the doctrine of courts of equi — 334 — ty; that a loose administration of the law, is nothing.hnore nor less than a loose morality, which should not begin with courts of justice, where the law is designed to be administered as a help to morality, and as an example to the community ; and that one seeking a specific performance, must show that he himself has been ready, desirous, prompt and 'eager to discharge his part of the obligation. The complainant has not shown himself ready and prompt to fulfil his part of the agreement. The payments were not made at the day, and no such excuse for the delay and omission, has been shown, as under other circumstances, might be required of him. In the absence of such excuse and show of diligence, the circumstances of the case, and the conduct of defendant, furnish the only ground of equitable relief in favor of complainant. While the contract was still in force, neither abandoned, forfeited nor rescinded, the complainant tenders to defendant the money, sufficient in amount, not only to redeem the property from the purchase at sheriff’s sale, and to pay the consideration money and interest, but to pay and satisfy, also, the judgment of Rand & Co., assigned to defendant, and which was a lien on the property. The defendant had not, at the time this tender was made, tajeen the necessary steps to rescind the agreement, by divesting himself of its fruits, and offering to indemnify the complainant against any loss to be incurred by him in its rescisión. If the premises had remained without improvements, or if defendant, on failure of complainant to pay, had offered to deliver up the note, and to pay him for his improvements, thus rescind-the contract, and placing the parties back, in statu quo, as near as possible, there would be no ground on which complainant could base his claim for a specific performance. We remark, in conclusion, that it does not appear that defendant has, in any manner, disabled himself from making the conveyance; nor that complainant has abandoned the contract, or in any manner assented to i'ts rescisión; it does not appear that complainant intended to lie by,until he should see whether the contract would prove a gaining or — 335 — losing-bargain, and, according to tbe event, either abandon it or considering the lapse of time as nothing, claim a specific performance, notwitstanding the default. He had built his house upon the lots, and occupied it as his homestead, increasing the value of the property some three thousand dollars. We must take the tender of the consideration money, to have been made by him in good faith ; andaré constrained to place some stress upon the fact, that defendant, though he expressed his desire to consult his attorney before receiving it, manifested some disposition or intention to stand upon his legal rights, yet he did not decline to receive it, on the ground that the contract was rescinded and at an end, and by his language and conduct, gave to complainant reason to suppose, that he considered it still in force, and that the money tendered was refused, only because he did not know whether it was the exact amount that was due him on the contract. Eor the reasons we have endeavored to set forth above, the decree will be reversed, and the cause remanded to the district court, with directions to enter a -decree in favor of complainant, in conformity to this opinion. Decree reversed.