Gannaway v. Toler

Holden, J., delivered! the opinion of the court. This is a chancery suit for specific performance under a contract of purchase of ninety-one acres of land in Bolivar county. From a decree in favor of appellees Toler and Stone, complainants below, decreeing specific performance, this appeal is prosecuted by Gannaway, defendant in the lower court. The contract of purchase upon which the complainants grounded-their bill for specific performance is here set out in full, to wit: “Articles of agreement, made this 20th day of May, 1916, between it. J. Gannaway, party of the first part, and W. J. Toler, Jr., and T. A. Stone, parties of the second part, witnesseth: “That if the parties of the second part shall first malee the payments and perform the covenants hereinafter mentioned! on their part to be made and performed, the said party of the first part hereby covenants and agrees to convey and assure to the said' parties of the second part in fee simple clear of all incumbrances whatever, by a good and sufficient warranty deed, the lots, pieces, or parcels of land situated in the county of Bolivar and state of Mississippi, known and described as: ‘Lots thirty-eight and thirty-nine section 1, township' twenty-four, range five containing ninety-one acres more or less, subject to the conditions noted below. ’ And the said parties of the second part hereby covenant and agree to pay to the said party of the first part the sum of thirty-five hundred dollars, in the manner following: One thousand dollars cash the receipt, of which is hereby acknowledged, five hundred. dollars on May 20’, 1917, and one thousand dollars on May 20, 1918, and the remaining one thousand on May 20-, 1919. The said sum of three thousand five hundred not including the sum of two hundred and fifty dollars rent for 1916 for winch the party of the first part already holds the — 133 — note of Smith & Toler due November 1,1916, for which note parties of the second part agrees to be responsible, with interest at the rate of seven per cent., payable annually, on the whole sum remaining from time to time unpaid, and to pay all taxes, assessment or impositions that may be legally levied or imposed upon said land, subsequent to the year 1915. And in case of the failure of the said parties of the second part to make any of the payments or any part thereof or perform any of the covenants oh their part hereby made- and entered into this contract shall, at the option of the party of the first part be forfeited and determined, and the parties of the second part shall forfeit all payments made by them on this contract, and such payments shall be retained by the said party of the first part in full satisfaction and in liquidation of all damages by him sustained, and he shall have the right to re-enter and take possession of the premises aforesaid. ‘ ‘It is mutually agreed by and between the parties hereto that the time of payment shall be the essence of this contract; and that all the covenants and agreements herein contained shall extend to and be obligatory upon the heirs, executors, administrators, and assigns of the respective parties. “In witness whereof, the parties to these presents have hereunto set their hands and seals, the day and year first above written. ’ ’ After the execution of the above contract by all of the parties, the one thousand dollars was paid, and the appellees went into possession of the land and commenced to make valuable and permanent improvements thereon and to cultivate the same. The whole record reflects the fact that from the date of the execution of the contract the land began to increase in value, until at the final hearing of this cause in 1919 it had increased in value to the extent of more than one hundred dollars per acre. — 134 — On May 20, 1917, when the first payment of five hundred dollars and one hundred and seventy-five dollars interest on the whole amount of the balance of the purchase money became due, the appellees;, Toler and Stone, mailed their check for five hundred dollars to the appellant, Gannaway, at Mattoon, 111., his place of residence. This check was mailed on the 19th and received by the appellant on the 20th of May, 1917, the date the first deferred payment of five hundred dollars was due. The check was drawn on a Clarksdale bank in which there was sufficient funds to cover it. On the margin of this check was written the following: “To apply on purchase land contract due 5 — 20—17 of T. A. Stone and W. J. Toler, Jr.“” Toler testified that he wrote a letter to appellant and inclosed-it with the check asking appellant to let him know what amount would be acceptable at that time as full payment of the balance of the purchase money, to which appellant did not reply. The appellant, JGannaway, received this check and retained it in his possession for a period of three months without saying anything, when on August 23, 1917, he returned the check to the appellees'and in the same inclosure served written notice upon- appellees in the following language, after stating that the appellees had breached the contract biy failing to pay the one hundred and seventy-five dollars interest due on May 20, 1917, to wit: “Therefore you and each of you are hereby notified that on account of your failure to pay the interest of one hundred and seventy-five dollars ($175) the same being at the rate of seven per centum per annum on the whole sum. remaining unpaid, to wit, two thousand five hundred dollars ($2,500), which said interest is payable annually and was due on Mlay 20th, 1917, and under1 and by virtue of the said option given me in said articles of agreement, I have concluded to forfeit and determine the said con — 135 — tract, heretofore referred to as articles of agreement, and all your rights thereunder, and I am therefore herewith returning to you the check for five hundred dollars (500). “You are further hereby notified that on account of your failure to comply with said contract and to perform covenants heretofore made and entered into in this respect I have, under and by virtue of the said option given me in the said contract, have concluded to forfeit and do hereby forfeit all payments made by you and each of you on this contract and such payments shall bei retained by me as the said party of the first part in said contract in full satisfaction and in liquidation of all damiages by me sustained. And you are, therefore, hereby further notified to. vacate said premises without further notice or delay. “ [Signed] R. J. Gannaway.” The explanation given by appellees Toler and Stone as to why they failed to pay the one hundred and seventy-five dollars interest on May 20th, as provided by the contract, was that they inadvertently omitted to send the amount of interest along with the check for five hundred dollars. The appellant made no effort to explain or give any particular reason why he held the five hundred dollar check for three months, and said nothing before returning it to the appellees. Upon receiving the notice from appellant declaring the forfeiture under the contract, the appellees Toler and Stone filed their bill for specific performance, setting up all of the facts and their willingness and ability to perform their part of the contract or to respond in equity as the court should decree. No tender of the amount due by appellees to appellant, except the five hundred dollar check was made before filing the bill nor afterwards, until May, 1919, when the entire balance of the purchase money became due, which they tendered into court. — 136 — Stripping' the ease of minor details which are of but slight importance, and coming to the decisive question involved, we think the case hinges1 upon one point, and that is whether or not the right of forfeiture under the contract, which was at the option of the appellant, was seasonably exercised by appellant, or whether1 he waived this right by receiving the five hundred dollar -check from appellees and silently holding it for three months before exercising his option to cancel the contract.. Áfer a careful consideration of this question, and keeping in mind that equity does not view forfeiture with a favorable eye, and the rule that where the right to forfeit is invoked under the term|s of the contract in which the time of payment is the essence thereof the exercise of the option of forfeiture is required to be done promptly, we have come to the conclusion that the decree for specific performance of the lower court is correct in this case. . The rule seems to he well settled in all jurisdictions that the vendor, who has the whiphand in the optional contract of forfeiture, must exercise his option promptly after default is made by the vendee; otherwise his failure to do so is taken to' evidence his purpose of continuing the contract, which amounts to a waiver of his right to declare a forfeiture. In the case before us, the time of payment being the essence of the contract, we think it was as much incumbent upon the appellant to act promptly in giving notice of forfeiture as it was incumbent upon the appellees to pay the full amount due by them on the dates specified in the contract. Of course, courts of equity will uphold contracts as they are written and enforce forfeitures against the defaulting party; but, where the power of option is ¡placed in the hands of one of the parties to the agreement, the advantage over the other being so great, and so sus — 137 — ceptible of abuse, it is but right, and a court of equity will so hold, that the party with the advantage of power in the contract shall act with promptness in deciding whether he will terminate the contract, and must do so at the earliest reasonable time after the default of the helpless party. In the case at bar it appears convincingly to us that when the appellant, Gannaway, received! the five hundred dollar check from appellees, with notice written upon the margin that it was for the payment on the land mentioned in the contract, and the appellant silently held this check for three months, for no apparent good reason, and then returned' the check to the appellees, and at the same time declared the contract forfeited without giving the appellees any opportunity whatsoever to comply with the contract by paying the one hundred and seventy-five dollars interest, it was such eondiuct on the part of the appellant as to amount to1 a waiver of his right to declare the contract forfeited. There was nothing to prevent appellant from acting at once, insead of waiting for a timle of advantage. We are led to believe from the whole record that the land here involved! was daily increasing in value from the date of the contract until the! final decree in the case. It therefore was increasing in value between May and August, 1917, during the time that the five hundred dollar check was held by appellant. The land had been permanently improved by clearing, cultivating, and in other ways after the appellees took possession of it. We think it would be manifestly inequitable to say that the vendor in this case could receive the check for five hundred dollars with notice that it was to cover the first deferred payment, hold it for three months while he could observe the increase or decrease in the value of the land, and1 then return the check accompanied with the declaration and notice of forfeiture, before giving the vendees, who were — 138 — at his mercy, an opportunity to correct the mistake which was made in good faith, and pay the full amount due under the contract. The delay of three months in declaring the forfeiture was unreasonable. Such conduct does not square wholly with good conscience in dealings between man and man. The cases cited by appellant are not in point on the question of waiver of option. Therefore the decision of the chancellor holding that the appellant by his conduct had waived the option of cancellation was equitable and correct. 39 Cyc. 1608; Gaughen v. Kerr, 99 Iowa, 214, 68 N. W., 694; Fargusson v. Talcott, 7 N. D. 183, 73 N. W. 207; Burroughs v. Jones, 79 Miss. 214, 30 So. 605; Cheney v Libby, 134 U. S. 68, 10 Sup. Ct. 498, 33 L. Ed. 823, Ann. Cas. 1913D, p. 930; Mound Mines Co. v. Hawthorne, 173 Fed. 882, 97 C. C. A. 394, 6 R. C. L. section 383. But it is urged by the appellant that, even if it is held that the appellant waived his optional right on account of the three months7 delay in his notice, still the decree of the chancellor mfnst be reversed because the bill is not maintainable for the reason that no tender of the correct amount due by the appellees under the contract was made to appellant before filing the suit or afterwards. It is argued that, before the appellees could maintain their bill for specific performance, they should have first put the appellant in default by tendering the proper amount due under the contract, and, as this was not done, they had no right to the enforcement of the contract. We think the point advanced is untenable for the reason that the notice of the forfeiture and termination of the contract by the appellant precluded the necessity of the appellees making any tender because to have done so would have been a useless formality. The notice of cancellation and to vacate the premises was sufficient to war-rent the appellees in assuming that any further tender would be rejected. In fact, the notice amounts to a — 139 — declaration on the part of the appellant that any tender or further negotiation with reference to the purchase under the contract would he rejected. Under these circumlstances equity does not require a tender, and it would have been a vain and useless thing in this case. If the appellant had not abruptly terminated the whole contract, and had he offered the appellees an opportunity to pay the full amount due, and the appellees had then refused to make tender, or pay the full amount due, they might possibly have been in default, and it would have been a different proposition. But the waiver by the appellant of the exercise of his option of forfeiture, thus continuing the contract, and the abrupt cancellation of the contract without notice, put the appellant, in a measure, in default under the terms of the contract, and no tender on the part of the appellees was necessary or required under the law. 36 Cyc. 705; Cheney v. Libby, 134 U. S. 68, 10 Sup. Ct. 498, 33 L. Ed. 824; 38 Cyc. 136; Byers v. McDonald, 99 Miss. 42, 54 So. 664; 6 R. C. L. 328. Whether the appellant waived his right by not objecting to the amount of the five hundred dollar tender, we do not decide, although there is respectable authority so holding. We think under the facts and circumstances of this ease the appellees were not required to make a tender of the amount due appellant before filing their bill for specific performance. The offer in their bill to pay whatever amiount that might be due the appellant and to perform any other thing that might be decreed by the court was sufficient for the purpose of maintaining the bill for specific performance under the contract. The decree of the lower court must be affirmed. Affirmed