Felton v. Stacey

Doerfler, J. In construing Exhibit 1 (defendants’ contract) it first becomes necessary to consider the objects and purposes the parties had in mind,when that portion of the contract was stricken out which obligated the party of the second part to pay the taxes. It is not disputed by the plaintiff that he was to pay the taxes on the property until the maturity of the contract and also the interest on the mortgage indebtedness of $8,000, but it is claimed by him that such payments were to be made out of the payments made by the party of the second part, and that such payments when so made constituted so much additional principal due him, which amount was to be added to the balance of the principal sum to be secured by the renewal of the chattel mortgage. — 476 — On the other hand, it is contended by the defendants that this portion of the contract was stricken out pursuant to an agreement between the parties that the taxes and interest referred to were to be paid by the plaintiff and were not to be charged back against the defendants. The testimony also shows that the defendants understood the contract to mean that, after the plaintiff had paid the taxes and the interest on the mortgage indebtedness, the balance of the payments were to be applied by way of reduction of the $2,000 to be secured by a renewal of the chattel mortgage. In view of the testimony heretofore detailed, the striking out of the provisions for the payment of taxes by the party of the second part is very significant and persuasively indicates that these taxes were to be assumed and paid by the plaintiff and not charged by him to the defendants as so much additional principal. If the plaintiff’s contention with respect to the taxes is correct, then the defendants would have to pay the same indirectly, the plaintiff merely acting as defendants’ agent in advancing the money for their benefit. Further, the striking out of the word “of” and the sum “$2,000” is indicative of an understanding between the parties that the balance after the payment of the first $2,000 would not be $2,000. Under the-theory advanced by the plaintiff the balance would be more than $2,000 and under that advanced by the defendants it would be less than $2,000. We now come to' a very material insertion in the contract after it had been prepared, which is the one immediately following the description of the premises, and which provides: “It is mutually agreed that the party of the first part pay all taxes and the interest on $8,000 out of the payments made by second party, and the balance of such payments made to be applied on principal.” The provision last referred to, standing alone, would strongly indicate that the balance of $2,000 of principal. — 477 — after the payment of the taxes and interest, would have to be applied to whatever principal there was still left and unpaid, exclusive of the amount due upon the mortgage indebtedness of $8,000. The trial court having construed the agreement to the effect that the plaintiff was to pay the taxes on the property and the interest on the mortgage indebtedness, and that the payment of such taxes and interest was not to be charged up against the defendants, and there being credible evidence to sustain such finding, this court is not prepared to hold that such finding is contrary to the clear preponderance of the evidence. Such finding of the trial court is also in harmony with the idea that the total amount to be paid by the defendants is the sum of $12,000, as is provided for by the contract. We have not arrived at this conclusion without considerable difficulty. A contract as in the instant case, ambiguous on its face, must be construed in the light of the surrounding facts and circumstances, the situation of the parties, and all of the material evidence in the case. The court has endeavored to place itself as nearly as possible in the situation of the parties at the time of the execution of the contract, and has considered the important fact that this contract was prepared by the plaintiff or at his instigation, and was revised by him after the objections had been interposed as heretofore detailed by the defendants. It was then incumbent upon the plaintiff to submit such an unambiguous contract for final execution as would substantially comply with the intentions of the parties in order that their wishes might be properly carried out. This the plaintiff has failed to do. On the contrary, he not only left with the defendants a contract ambiguous on its face, bpt has submitted his own contract, which contained material changes, differing substantially from the contract delivered to the defendants. Such a contract must be construed most strongly against the party — 478 — preparing it or employing the words concerning which doubt arises. 13 Corp. Jur. p. 545, § 516; 8 Elliott, Contracts, § 1528. “As a general rule the language of a contract, in case of ambiguity, should be interpreted in the sense that the prom-isor knew, or had reason to know, that the promisee understood it.” 13 Corp. Jur. p. 523, § 484. It is to be regretted that the parties, in the drafting and revision of a contract involving a large sum of money and substantially making disposition of a large' part if not all of their earthly possessions, did not see fit to secure the advice and assistance of legal counsel. The drafting and revising of a land contract involves clearly a matter within the field of the practice of the law. In fact, the drafting of such a document for pay, by one not licensed to practice the profession, constitutes a serious infraction upon the provisions of the statutes. Had these parties seen fit to expend a small sum of money to obtain legal assistance, the deplorable condition presented by the contract in question, in all reasonable probability, would not have arisen. The efforts of laymen in this regard frequently result not only in a great economic waste, but in considerable ill-feeling, trouble, and worry on the part of litigants. Under the- views heretofore expressed, we hold that the contract as above detailed was properly construed by the trial court. It is contended by plaintiff’s counsel that the service of the notice aforesaid, after defendants’ default, constituted a sufficient declaration of notice of election of option as provided for by the contract, and that pursuant to such service the total amount of unpaid principal, exclusive of the mortgage indebtedness, immediately thereafter became due and payable. On the part of the defendants it is claimed that such notice merely declares due the notes given for the initial payment. Such notice also contains the provision: “It is not Mr. Felton’s intention in doing this to commence — 479 — a foreclosure proceeding at all, providing this note is paid within a short, time, and a substantial amount is paid upon the principal The provision of the notice last referred to is strongly indicative that what was intended by the plaintiff was a declaration of election of option,-not only to declare due the last instalment of the first series of notes, but also the entire principal, exclusive of the two mortgages. That it was so understood by the defendants is clearly shown by the testimony of Frank Stacey. With reference to a contract like the one in question, it is held in Julien v. Model B., L. & I. Asso. 116 Wis. 79, 92 N. W. 561, that: “This court stands alone, or nearly so, in holding that notice of election should be given the debtor as a condition of treating the contract as fully matured; but its decision in that regard is not based upon a construction of the contract. 2 Pingrey,-Mortg. § 1539; Jones, Mortg. § 1182a, and cases cited.” The rule requiring the service of such a notice is not based upon judicial or other authority, but was declared “as a rule of equity, to be applied where a person seeks its jurisdiction to enforce his mortgage to the full extent, under an option so to do, by reason of some default in the terms thereof.” In Basse v. Gallegger, 7 Wis. 442, it is held: “It seems to us 'but just and proper to require the mortgagee, in cases like the present, to exercise his election, and give notice thereof to the mortgagor, before bringing suit.” In view of the fact that the notice above set forth was duly served, and the message it conveyed to the defendants, and the understanding they derived therefrom, we are of the opinion that the equitable rule above set forth has been fairly complied with. The right of a vendor, in a land contract, and of a mort'gagor under a mortgage containing provisions similar to the one contained in the contract in question, to declare the whole.amount due upon default, is too well established by — 480 — authority to require any further comment. See 27 Cyc. 152, 153; 2 Jones, Mortgages, §§ 1184-1186. Under the authorities cited, in case of default the whole amount of principal and interest becomes due upon the declaration of election of option and the service of proper notice, as much so as though the instrument itself in express terms provided for the amounts becoming due at that time. The last of the first series of notes having been paid after the service of the notice of election of option, and no substantial portion of the remaining principal having been paid, in accordance with the requirements of such notice; the plaintiff is clearly entitled to a judgment of foreclosure of the land contract in question. In accordance with what has been heretofore said, there was due and unpaid on the 3d day of November, 1920, in addition to the last instalment due upon the first series of notes, the sum of $2,000 of principal. The plaintiff, therefore, is entitled to the usual and ordinary judgment of foreclosure of land contract for the amount due as indicated herein, which amount became due on November 3, 1920, and such judgment must also provide that unless the defendants, within such time as the trial court shall find reasonable and just under all the facts and circumstances in the case, shall pay to the plaintiff the sum of $2,000 and interest thereon from November 3, 1920, at the rate of six per cent, per annum, together with the costs and disbursements of the action, the defendants and all persons claiming by, through, or under them, or any or either of them, shall be foreclosed of all right, title, and interest in and to the premises and of all right to redeem the same. It follows as a matter of course that if the defendants comply with the provisions of such decree they are entitled to a proper deed of the premises, free and clear of all incum-brances and free and clear of all taxes assessed against and payable on said premises prior to November 3, 1920, and subject only to the mortgage indebtedness of $8,000, with interest thereon from November 3, 1920. — 481 — By the Court. — Judgment reversed, with $25 costs, with directions to enter judgment in.the lower court in accordance with this opinion.