Holman v. Joslin

The opinion of the court was delivered by Mason, J.: On February 1, 1915, E. W. Joslin and Frank White entered into a written agreement for the sale of a quarter section of land by the former to the latter for $1,200, of which $250 was paid at the time, the remainder to be paid in ten annual installments bearing 7 per cent interest, the last one amounting to $50 and the others to $100 each. . On December 2, 1916, White assigned his rights under the.- contract to W. J. Holman. The installment due February 1, 1916, was paid on February 20, 1916;' that due February 1, 1917, was paid February 28, 1917. On March 29, 1918, Holman tendered the installment due February 1, 1918, which was refused, Joslin “pretending to have canceled” the contract on account of the. delay. Joslin died in the fall of 1918. On September 11, 1919, Holman brought this action against his heirs and administrator, asking specific performance of the contract. A demurrer to his petition stating these facts was sustained, and he appeals. The defendants assert that by the plaintiff’s failure to meet the 1918 installment promptly all his rights with reference to the land were lost. The plaintiff contends that there was a waiver of prompt payment, that the delay under the circumstances was not sufficient to forfeit his right to purchase the land, and that in view of all the circumstances, including the amount already paid and the extent — 675 — to which the land had been improved, a forfeiture would be inequitable. The contract contained these provisions: “And it'is hereby agreed and covenanted by the parties hereto, that time and punctuality are material and essential ingredients in this contract. And in case the purchaser shall fail to make the payments aforesaid or any of them punctually, as above mentioned, or shall fail to perform and complete each and all of the purchaser’s agreements and stipulations aforesaid, strictly and literally, without' failure or default, then this contract, so far as it may bind said grantor, shall become utterly null and void, and all rights and interests hereby created, or then existing in favor of, or derived from, the purchaser, shall utterly cease and determine, and the right of possession and all equitable and legal interests in said premises, shall revert to and revest in said grantor, without any declaration or forfeiture or act of re-entry, or any other act by said grantor to be performed, and without any right of said purchaser of reclamation or compensation for moneys paid or services performed, as absolutely, fully and perfectly, as if this contract had never been made. “And it is further agreed that the said grantor shall have the right immediately upon the failure of the purchaser to comply with the stipulations of this contract to enter upon the land and premises aforesaid, and take immediate -possession thereof, together with the improvements and appurtenances thereto belonging. And the said purchaser hereby covenants and agrees that the purchaser will thereupon surrender to said grantor the said land and premises and appurtenances without delay or hindrance, and that no court shall relieve the purchaser from the consequences of a failure to comply and literally with this contract.” The petition set out these facts among others: Upon the refusal of Joslin to accept the 1918 installment the plaintiff tendered full payment of the balance of the purchase price, which was refused. The plaintiff also offered to pay out in full at the time of the 1917 payment, but Joslin refused to accept'the money, saying, “This is a good contract; let it ride.” No objection was made by Joslin to accepting the 1916 and 1917 payments, although each was made 19 days or more after maturity. Plaintiff and Joslin were residents of Hugoton, a town of five or six hundred people, and met each other almost daily between the first days of February and of April, 1918, and during that period Joslin made no reference to the default and no request for payment. The plaintiff simply overlooked the date of payment, and as soon as it was recalled to his memory he made the tender. The land was- worth $1,200 when the contract was entered into. It was worth $2,500 when the assignment to the plaintiff was made. Thereafter and prior to February 29, 1918, the plaintiff made lasting and valuable improvements worth $2,500. .The plaintiff owned the other three quarters in the section and im — 676 — proved them partly because of his owning this one. By reason of the improvements referred to the tract in controversy was worth 15,000 at the time of the attempted forfeiture and $8,000 in September, 1920. There is a difference of opinion as to the strict enforceability of such a contract as that here involved — that is, whether equity will give relief against its provisions without other basis than their severity. In an extensive note on the subject it is said: “The true doctrine underlying relief from forfeitures under contacts for the sale of land where time is made of the essence, we believe, is this: If the contract is executory at the time of the default, and the purchase price or no considerable part of it has been paid, and valuable improvements have not been made on the premises, then the defaulting vendee has no claim to equitable relief. Performance on his part is a condition precedent to performance on the part of the vendor. But if the purchase of the property has been accompanied with a long enjoyment, and the expenditure of money on the premises, or the payment of a considerable portion of the purchase price, then a default in the time of performance by the vendee will not be permitted to work a forfeiture against him in equity, unless there has been such a delay as to show an abandonment, or to affect the circumstances of the parties, or the property involved.” (Note, 86 A. S. R. 51.) In a case cited in that note, involving a contract in which time was not in terms made essential, but in which it was provided that a forfeiture should result from a default in payment, a provision which has been held to make time of payment of the essence of the agreement (39 Cyc. 1369), this language was used: “The proposition which is maintained by the defendant’s counsel, is a bold and startling one. If that proposition be the law of the court of equity, then a purchaser and holder of lands, under such a contract a.s this, may have paid, upon purchasing a farm, $1,000 annually, for many years, may have expended thousands of dollars in improvements, may be in truth one of the wealthiest farmers and land-holders in the country, and may, from forgetfulness, or some other accidental cause, (which of course is not susceptible of other proof than his own assertion,) omit to pay the last installment of $1,000, by the exact hour prescribed by the contract; and although he may be ready with the money, an hour after the default, and offer it to his inexorable creditor, yet he may be doomed to see the whole of his estate, the reward of years of toil and industry, swept from him in a moment, by this unyielding rule of law; and may invoke in vain the benign powers of the court of chancery for his relief. This consideration gains strength immeasurably, when it is remembered that a large portion of the land contracts in the western section of this state, are framed with a provision similar to the one in the contract in this case; which clothes the holders of such contracts with power, (if the alleged construction of this contract be the true one,) to insist upon the forfeiture of every farm in that prosperous and wealthy region of the country, upon the — 677 — unexplained failure to pay merely a single dollar, upon the contract, at the exact time prescribed therein. It seems to me, that this is too monstrous a proposition to be maintained in the nineteenth century. For while the application of this rule to the case of a contract which is not executed, by the payment of any part of the purchase money, is strictly just and proper, it is clear that to apply it to cases such as I have supposed, or to the very case at bar, would work the greatest injustice; and would require the court of chancery to be the organ and instrument of every Shylock, who chose to insist upon the rigorous exaction of his pound of flesh. “It is said, that it is not the province of the court of chancery, any more than a court of law, to, make contracts for parties, but to enforce them. This is true, as a general proposition. But it is also true, that the court df chancery looks to the substance o} a contract; and when the substance of a contract is fulfilled, and the general intention of the parties carried into effect, the court relieves against any forfeiture or penalty, inserted for the purpose of enforcing the contract. (See Jeremy on Eq. Juris. 470; Fonbl. Eq. 130, 4th Am. ed.) It was upon this principle, that upon the forfeiture of the penalty of a penal bond, the court of chancery was accustomed to relieve against the penalty, upon the payment of the sum really due, and the interest thereon, before the statute had rendered a recourse to a court of equity necessary.” (Edgerton v. Peckham, 11 Paige [N. Y.] 352, 357.) On the other hand, the general rule has been thus stated: “Where by the terms of a contract of sale of land time is made of the essence of the contract, failure of the purchaser to pay the purchase-money, or any installment thereof, within the time specified, authorizes a rescission by the vendor, or a forfeiture if the contract provides for it, . . . In the absence of a statutory provision to the contrary, the contract may provide in express terms that a default in performance by the purchaser shall work a forfeiture of payments already made; and where the contract so provides it would of course be unnecessary to return or offer to return payments made as a condition precedent to a forfeiture of the contract for default by the purchaser.” (39 Cyc. 1369, 1381.) This court has said: “While contracts for the sale of land in which time is made of the essence of the contract are valid and enforceable at law or in equity, yet where the circumstances are such that it would be grossly inequitable to enforce a forfeiture, courts of equity will, upon slight ground therefor, relieve a party therefrom, and enforce the contract as merely one of sale.” (National Land Co. v. Perry, 23 Kan. 140.) “It is well settled that contracts for the sale of land, when time is made of the essence of the contract, are binding, and should be enforced by the court, when there are no intervening circufhstances that would make the enforcement inequitable; . . . But while time is made of the essence, yet if there have been such things done between the parties in relation to the contract as to lead one party to believe, and act upon the belief, that time had been waived and that no forfeiture would be taken, since the doing — 678 — of said things under such belief would make it inequitable to allow a party to take a forfeiture, it has been held, that under such circumstances the contract ought to be so modified as to make it one of sale merely.” (Lumber Co. v. Horrigan, 36 Kan. 387, 389.) “It is needless to repeat and enlarge upon what this court has said so frequently to the effect that penalties and forfeitures are obnoxious to judicial minds, and that slight circumstances are eagerly seized to avoid their enforcement when the substantial rights of the parties insisting thereon can otherwise be adequately protected.”. (Geffert v. Geffert, 98 Kan. 57, 59.) It is well settled that where in a land contract time of payment is made essential the acceptance by the'vendor out of time of a single deferred payment or even of more than one does not necessarily in and of itself waive the prompt mailing of future installments. (Note, 9 A. L. R. 1001; Kliesen v. Mercantile Association, 101 Kan. 138, 165 Pac. 650.) In the Kansas case just cited, however, the buyer returned the amount already paid so that the question involved was his right of rescission and not of forfeiture. The rule stated, however, is subject to a qualification which in the note already referred to (p. 1002) is thus expressed: “If the vendor in a contract for the sale of land, whereby time is made of-the essence, repeatedly receives payments after the date when they are due, and thereby establishes a course of dealing inconsistent with insistence on the strict performance of the contract, he cannot thereafter declare a forfeiture for a failure to make a payment promptly, unless he has given notice to the vendee of his intention to require prompt payment in the future.” How many instances of the acceptance of payments after maturity may be required to establish a course of dealing must depend upon the particular circumstances of each case. “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.” (Gray v. Pelton, 67 Ore. 239, 244.) While here but two installments were accepted after maturity they were not only consecutive but they included all the deferred payments that had accrued before the one refused, and the only one after the assignment to the plaintiff. The fact that the only deferred payments yet made had been offered and accepted without objection nineteen and twenty-seven days respectively after the time fixed, was in our judgment sufficient, in the absence of anything to suggest a purpose on the part of the seller to insist upon a more literal compliance with the terms of the contract in the future, to establish a course of dealing on the basis of a substantial meeting of the re — 679 — quirement as to the time of payment, especially in view of the unconscionable profit that would accrue to the defendants and the corresponding loss that would be inflicted upon the plaintiff by allowing his rights to be forfeited for a delay in his third payment not different in kind from that in the case of the other two. It cannot be said as a matter of law that two consecutive instances of the acceptance of overdue payments, or any other definite number, will always preclude the seller from insisting upon a forfeiture on account of a failure to meet the next payment when due; but neither can it be said as a matter of law that such result can never follow from so few as two instances of the kind. We hold the fact recited in the petition to be sufficient if proved to justify a finding of fact that strict compliance with the time requirement had been waived (until notice to the contrary should be given) by the course of dealing adopted. (Filed March 11, 1922.) SYLLABUS BY THE COURT. Contract — Sale of Land — Default in Payments — Petition for Specific Performance by Vendee Not Demurrable. Where the vendor declares a land contract (in which time is made essential) forfeited for failure to meet a deferred payment promptly, a petition in an action by the purchaser for specific performance brought eighteen months later is not demurrable because not filed sooner, where it contains allegations inconsistent with the theory that the delay indicated acquiescence or abandonment. And it is held that allegations of that character were made in the petition in this case. The judgment is reversed, and the cause is remanded with directions to overrule the demurrer.