Newman v. Baker

Mr. Justice McComas of the Supreme Court of the District of Columbia, who sat with the court in the hearing of this cause in the place of Mr. Justice Morris, delivered the opinion of the Court: The appellant, Edwin A. Newman, plaintiff below, in his declaration averred that in a writing under seal, dated May 4, 1879, the appellee, Cyrus A. Baker, defendant below, covenanted to convey land in Langdon Park and in the Clark Mills tract in this District, to the appellant, who agreed to pay therefor ten dollars cash, which was paid, and four cents a square foot, one-third of this price to be paid in cash and the balance in the stock of the Newman Anti-Freezing Water Pipe Company at six dollars a share; the terms and stipulations of the contract to be consummated and completed within two years from the date of this contract under seal; that the appellant was ready and willing to pay and deliver, and tendered the.purchase money and the stock, which was the consideration for the purchase; thatthe appellee refused to convey the lands; wherefore the appellant claimed damages. The appellee pleaded not guilty, and subsequently during the trial, under leave of the court, filed an additional plea, setting up as a. defence- that at the time of the execution of the sealed instrument declared on it was agreed between the parties that the appellant at his cost, within one year from its date, should erect a railroad station house at Langdon, and should build a factory for the manufacture of water-pipes, and that until the appellant should erect a depot and factory the sealed instrument should not take effect or be binding upon the appellee, and that the appellant did not erect either building. Issue was joined on the first plea, and after a demurrer thereto had been overruled issue was joined on the second plea. Evidence showing that the contract was executed with the condition above stated, and that the condition had never been performed, was offered at the trial, was admitted and excepted to; and the verdict was for the appellee. — 194 — There were very many exceptions to the rulings of the trial justice. The twenty-one assignments of error may be disposed of by considering three questions raised by this appeal. The overruling of the demurrer to the second plea, the exceptions to the admission ■ of parol proof in support of this plea, and the granting of the appellee’s first instruction, present the first question. Did the court err in admitting the plea, and parol proof that at the time of the execution and delivery of this writing under seal sued on, it was agreed and understood by both parties that this instrument should not take effect or be binding upon the appellee unless within one year from its date the appellant should erect the buildings mentioned? The rulings of the learned court affirm that in such an action, such a writing which is in form a complete contract under seal, and which has been delivered, may be proved to have been delivered upon a parol condition that it was not to become a binding contract upon one of the parties until the happening of some event or performance in the future, which event or performance never occurred. In actions at law, such testimony has. been admitted to show that a written contract sued on never went into effect; that the condition upon which it was to become operative never occurred, and it was held that the parol evidence did not contradict or vary the written instrument, but that such cases belonged to a class well recognized in the law by which an instrument, whether delivered to a third person as an escrow, or to the obligee in it, is made to depend as to its going into operation upon events to occur thereafter. Ware v. Allen, 128 U. S. 590; Pym v. Campbell, 6 Ell. & Bl. 370—373; Wallis v. Littell, 13 C. B., N. S., 369, 375. The distinction, in point of law, it is said, “is that evidence to vary the terms of an agreement in writing is not admissible, but evidence to show that there is not an agreement at all is admissible.” Ware v. Allen, supra. And again it is repeated thus: “ Parol evidence is admissible to show that — 195 — a written paper which, in form is a complete contract of which there had been a manual tradition, was nevertheless not to become a binding contract until the performance of some condition precedent resting in parol.” Burke v. Dulaney, 153 U. S. 236, 237. This principle was applied by the Supreme Court in the cases cited to completed contracts in writing not under seal. It is true that in Pawling et al. v. United States, 4 Cranch, 219, 223, the action was on a bond claimed to have been delivered as an escrow to the principal obligee by Pawling and three other sureties to be delivered on condition that two others named on the face of the bond should execute it as co-sureties. This bond was incomplete on its face, and it was held that parol evidence was admissible to show whether it was an escrow or a writing obligatory. In Pym v. Campbell, the leading English case, and in Wallis v. Littell, which were approved by the Supreme Court, the written agreements sued on were not under seal. It appears that in Wilson v. Powers, 131 Mass. 539, 540; Reynolds v. Robinson, 110 N. Y. 654, and indeed in all the cases cited by the Supreme Court, this doctrine was applied to promissory notes or other simple contracts in writing. In Burke v. DulaneyT Mr. Justice Harlan observes that “ in Benton v. Martin, 52 N. Y. 570, the principle is thus stated: Instruments not under seal may be delivered to the one to whom upon their face they are made payable or who by their terms is entitled to some interest or benefit under them upon conditions the observance of which is essential to their validity.” In Westman v. Krumweide, 30 Minn. 315, Gilfillan, C. J., concludes that “ the authorities are pretty uniform (though there are some to the contrary) to the effect that an instrument under seal cannot be delivered in escrow to the party in whose favor it runs, and that upon a voluntary delivery to such party by the one executing it, it takes effect abso — 196 — lutely, and parol evidence is inadmissible to show that it was intended to take effect only on the happening of some contingent event, when it is not so expressed by its terms. But the great majority of the cases make a distinction between instruments under seal and those not under seal, holding as to the latter that parol evidence is admissible to show that notwithstanding the delivery it was intended by the parties that such an instrument should become operative as a contract only upon the happening of a future contingent event.” Likewise Mr. Bishop says in his later work on Contracts : “ It is held that the delivery of a deed to the grantee in person gives it immediate force even though accompanied by an oral stipulation that it shall not take effect until a specified contingency has transpired. Such stipulation or condition is simply void. But it is otherwise of a simple contract not under seal. A parol condition that its operation shall commence only on the transpiring of a future event will be good. If at first impression this distinction seems technical, a minute examination will show it to be otherwise. In the case of a specialty there could be no incorporation into it of a parol condition postponing its effect without destroying its character as a sealed instrument, as the new part is not a specialty and what remains of the old part has ceased to be the complete agreement to which the seal was attached, and has become merged in the unsealed provisions; the whole is now to be treated as one parol contract. But oral and written parol contracts, being equally parol ones, the degree of this instrument is not reduced by the oral condition.” Bishop on Contracts, Secs. 355 and 133. In the leading case which favors the proof of such condition by parol, Pym v. Campbell, 6 Ell. & Bl. 374, Crompton, J., recognized this distinction. Said he: “When the instrument is under seal it cannot be a deed until there is a delivery, and when there is a delivery that estops the par — 197 — ties to the deed; that is a technical reason why a deed cannot be delivered as an escrow to the other party. But parol contracts, whether by word of mouth or in. writing, do not estop. There is no distinction between them except that, where there is a writing, it is the record of the contract.” The reason for the rule excluding parol evidence of a conditional delivery to the grantee applies to all cases where the delivery is designed to give effect to the deed in any event without the further act of the grantor. “ When the words are contrary to the act, which is the delivery, tfye words are of none effect (Co. Litt. 36a), because then a bare averment without any writing would make void every deed.” Cro. Eliz. 884. “ If I seal my deed and deliver it to the party himself to whom it is made as an escrow upon certain conditions, in this case let the form of the words be what it will the delivery is absolute and the deed shall take effect as his deed presentíy.” Sheph. Touchstone, 59; Cro. Eliz. 520; Braman v. Bingham, 26 N. Y. 492. The word deed was not used in these cases in its restricted sense, of a written instrument conveying lands or some interest therein, but in the sense that it was the equivalent of specialty or writing requiring sealing and delivery by the party, and hence his act or deed. ■ Therefore, the rule is that a deed or any other sealed instrument cannot be delivered to the grantee or obligee himself as an escrow to take effect upon a condition not appearing on the face of the deed or other sealed instrument. The delivery must be to a stranger; otherwise the deed or other sealed instrument becomes absolute'at law. McCann v. Atherton et al., 106 Ill. 35; Worrall v. Munn, 1 Seldon, 238; Foley v. Cowgill, 5 Blackf. 20; Jordan et al. v. Pollock, Admr., 14 Ga. 155. In Miller v. Fletcher, 27 Gratt. 403, 416, which was an action on a bond for the payment of money, the defendants pleaded that it was executed by them in satisfaction of a debt due the plaintiff by the firm of Brown, Miller & Co., — 198 — and delivered to the plaintiff as an escrow upon condition that it was to be likewise executed by the other members of the firm, but that in fact it had been executed only by one of them, and so the condition upon which the writing was to take effect had not been performed. After reviewing the case at great length, Staples, J., concluded that the parol evidence was inadmissible. “The result would be in effect that this most solemn deed of the parties is of no more value than the most informal parol promise to pay.” This case “exemplifies the observation in the case of Williams v. Green, Cro. Eliz. 884, that if such testimony is allowed, a bare averment without any writing would make void every deed. . . . For these reasons I am for adhering to the rule of the common law. . . . There are cases in which it has been held that you may show the agreement was signed by mistake, or that it was signed on the terms that it should not be an agreement till money was paid or something else was done. Pym v. Campbell is one of these. But these cases, whether rightly decided or not, have no application to deeds as to which delivery is the essence and constitutes the estoppel.” In Moss v. Riddle, 5 Cranch, 351, 357, on a writ of error to the Circuit Court for the District of Columbia, in an action of debt upon the joint bond of Welsh and Moss for the payment of money, the defendant Moss in his first plea averred that he delivered it to Joseph Riddle, one of the plaintiffs as an escrow, to be his act and deed on condition that the same should afterwards be signed, sealed, and delivered by some other friend of Welsh, the principal obligee, which was not done, and so the writing was void as to Moss. The plea was held bad on demurrer. Marshall, C. J., said: “It is admitted by the counsel in this case that a bond cannot be delivered to the obligee as an escrow. But it is contended that where there are several obligees constituting a co-partnership, it may be delivered as an escrow to one of the firm. The court is of opinion that a delivery to — 199 — one is a delivery to all.” The judgment was affirmed. Thus early the Supreme Court appears to have determined that a bond cannot be delivered to one of the obligees as an escrow. In other words, the delivery of the bond must be to a stranger, else the bond becomes absolute at law, for delivery is the essence and constitutes the estoppel. It is argued in the present case that the agreement sued on was executory; that the appellee agreed to execute the deed, and that the appellant agreed to pay the purchase money, and that therefore a delivery was not essential to its validity. But there was a delivery. The pleading and the evidence admit it. The appellee relinquished his power over the writing by passing, or suffering it to pass, directly to the appellant in person, who assented thereto. We hold that, in this action at law, such a delivery and acceptance of such a complete instrument under seal gave it immediate effect, even if the delivery were preceded by or accompanied with the oral stipulations and conditions admitted in evidence at the trial tending to show that it was agreed and understood by both parties that this instrument should not take effect unless within one year from its date the appellant should erect a station house and a facknw. We conclude that the learned justice erred in overruling the demurrer to the second plea, in admitting such parol evidence, and in granting the first instruction asked for by the appellee, which instruction asserts that such parol condition, if believed, and subsequent failure to perform it, entitled the defendant to a verdict. Therefore the judgment in this case must be reversed. Ferguson v. Rafferty, 128 Pa. St. 337, 356, which is relied upon by the appellee’s counsel, departs from the rule of the common* law. It is one of a class of cases in which the Supreme Court of Pennsylvania holds that parol evidence is admissible to establish |a contemporaneous oral agreement which induced the execution of a written contract, though it may change, vary or reform the instrument. — 200 — Baird v. Baird, 145 N. Y. 665, is a case wherein the majority of the court concurred in the ruling, but not in the opinion delivered. In Blewitt v. Boorman, 142 N. Y. 363, 364, the court held that the rule to which we adhere is not applicable to an instrument not in any way affecting real estate, either deeds conveying real estate or an interest therein, or agreements for the sale thereof, and which does not require a seal for its validity, Peckham, J., saying : “I think myself the rule should not extend beyond what seems to be the settled law in this State in regard to deeds or writings conveying or relating to the conveyance of'real estate or some interest therein.” This qualification of the rule, which is required by the Statute of Frauds, would seem to include the writing sued on in the present case. By certain assignments of error, it is argued that the court erred in admitting such parol testimony to contradict or vary the written contract under seal. Having already said such testimony was not admissible to show that this writing under seal was not an agreement at all, by reason of the alleged parol ■ condition accompanying or preceding its delivery, it is scarce^ necessary to say that this testimony which would nullify the instrument was inadmissible to .contradict or vary the terms of the same instrument. This parol evidence, which we have discussed, sets up a collateral parol agreement, which interferes with the terms of the written contract under seal and renders it a nullity. This remark disposes of the assignments of error involving this point: Certain assignments of error involve the question whether by the terms of this contract tender of the purchase price by the appellant within two years from the date of the contract was necessary to enable the appellant to maintain this action. By this instrument the appellee “agreed to sell and convey by a good and sufficient deed ” real estate of which ■he “is the owner,” and lands which “he has contracted to purchase from one Nesbitt;” and the appellant “ agreed to — 201 — purchase” the same “for the sum of four cents per square foot, one-third to be paid in cash or its equivalent when conveyance of said real estate is made to him as above stated, and the balance to be paid in stock, said conveyance of stock to' be likewise made when property is so conveyed.” It is provided that this real estate shall not be conveyed “ until” the appellee shall make settlement with and procure the release from one Allen of all “ his claims” on this real estate, and in this connection it is stipulated “that the appellant shall not be bounden to make any payments on said sale until the said parcels of real estate shall be conveyed to him free from any and all encumbrances whatsoever.” This instrument concludes with the proviso “ that the terms and stipulations of this contract shall be consummated and completed within two years from the date hereof.” No time was fixed for the payment of the purchase money or delivery of a conveyance of the land. The record discloses some evidence to show that within eighteen months the appellee could reasonably expect to be released from “the claims” of Allen, and that within a less time he had reason to expect a conveyance from Nesbitt of one part of one parcel. It was not practicable for the parties to this contract to state therein a day for mutual performance, but it was practicable to limit the time within which each party should perform; and this contract limited and fixed the time within which it was to be completed at two years from its date. The great rule of construction is to ascertain the intention of the parties as signified in the language of the contract. The parties have clearly expressed their intent that time should be an essential part of this contract. It dealt with speculative ventures in real estate and inventions. Time should be limited in fairness to both parties. It w7as limited in terms by this proviso. The time limited or fixed for performance is at law deemed of the essence of the contract. On a contract where time does not constitute its essence — 202 — there can be no recovery at law on the agreement where the performance was not within the time limited by the terms of the agreement. To sustain an action at law performance must be averted according to the very terms of the contract. Bank of Columbia v. Hagner, 1 Pet. 465, 467. Whether the covenants of the respective parties to this contract are to be considered independent or dependent, was much discussed at the bar. The inclination of courts'has strongly favored the latter construction as being obviously most just. We must hold the covenants dependent, in this contract sued on. “The seller ought not to be compelled to part with his property without receiving the consideration, nor the purchaser to part with his money without an equivalent in return.” Hence, in such cases, if either a .vendor or a vendee wish to compel the other to fulfil his contract, he must make his part of the agreement precedent, and cannot proceed against the other without an actual performance of the agreement on his part or a tender and refusal. And an averment to that effect is always made in the declaration upon contracts containing dependent undertakings, and that averment must be supported by proof. Bank of Columbia v. Hagner, 1 Peters, 465; Gazley v. Price, 16 Johnson, 267; Northrop v. Northrop, 6 Cowen, 296; 1 Sugden on Vendors, 305-6 (7th Amer. Ed.); Johnson v. Weygant, 11 Wend. 48; Shinn v. Roberts, 1 Spencer (N. J.), 435, in 43 Amer. Dec. 640. The record contains some evidence.that before the two years expired, the appellant was ready and willing to carry out the contract on his part; that the appellant took measures to have the appellee meet him at the office of Mr. White, the appellant’s attorney on the 4th day of May, 1891, to afford the appellant the opportunity of making a tender of the purchase price; but such tender was not made, as the appellant testified, until a week or ten days after, or, as the appellee testified, about sixty days áfter the two years had expired. The undisputed fact is, that the — 203 — tender was not made within the two years from the date of the written contract, as required by the contract. The appellant in this case averred a tender in his declaration and introduced proof of it. Says Butler, J., in Douglass, 695, “if a party plead a tender he must prove it.” In the present case the appellant’s failure to prove a tender within the two years to which he was limited by his contract prevents him from maintaining the action unless he was discharged by the refusal of the appellee to accept performance or tender, or unless the appellee prevented performance or tender by his own neglect or default. There is in this record some evidence that the appellee expected to meet the appellant on the 4th day of May, A. D. 1891; some evidence indicating a purpose on the part of the appellee to refuse to accept a tender; some evidence tending to show the appellee had put it out of his own power to perform within the two years. The evidence is, however, upon these points wanting in legal sufficiency. The appellant could have averred that he was ready and willing and •offered to perform his part, but was discharged by the appellee, and could then have maintained his action without proving a tender; but there was no proof legally sufficient to go to the jury that before the time expired the appellee had declared he would not receive the purchase price or that he intended to abandon the contract so as to have dispensed with the necessity of a tender. The defendant’s conduct subsequent to that time is not in this action material, for that rule can never apply except in cases where the act which is construed into a waiver occurs previous to the time fixed for performance. Bank of Columbia v. Hagner, 1 Pet. 468. It was urged that the legal title to the land sold was not in the appellee. It is denied that the equitable title to the land was in the appellee, and insisted that he had put it out of his power to perform, and that therefore a tender within two years was unnecessary. — 204 — The pleadings do not make such a case. The evidence in the record is too meagre to predicate anything of it on this point. The appellee speaks of a sale at some time of a half interest in some of the land to his brother, but at what time does not clearly appear. There is some evidence of a preparation on that brother’s part to build a house, or a beginning to build, a few weeks before the expiration of the two years. - The appellee testified that on the 4th of May, 1891, "he could have conveyed to the appellant a good title to the property. If the appellee had the ability to convey a good title, it may have been sufficient, under the circumstances of this case, wherein the agreement of sale shows that the vendee had knowledge that the vendor did not have the legal title to two of the parcels at the date the writing was executed. • The inability of the appellee to convey might of course enable the appellant to maintain the action without tendering the purchase money. The record does not, a new trial may, disclose sufficient testimony upon this point. At present it profits little to further discuss this third and last question raised upon this appeal. Judgment reversed, with costs to appellant in this court, and cause remanded for new trial.