Hansbrough v. Peck

• Decision Date: 01 December 1866
• Citation: 18 L.Ed. 520,72 U.S. 497,5 Wall. 497
• Parties: HANSBROUGH v. PECK
• Court: U.S. Supreme Court

72 U.S. 497

18 L.Ed. 520

5 Wall. 497

HANSBROUGH v. PECK.

December Term, 1866

ERROR to the Circuit Court for the Northern District of Illinois.

In January, 1857, Hansbrough and Hardin agreed with one Peck to buy certain lots in Chicago for $134,000. The purchase-money was made payable in nine instalments, each being for $4300, except the last, payable April 28th, 1861, which was for $90,000. The lots had on them at the time two wooden houses and a barn.

By the contract it was agreed 'that the prompt performance of the covenants, and payment of the money shall be a condition precedent, and that TIME IS OF THE ESSENCE OF THE CONDITION.'

And also 'that in case default shall be made in the payment of any or either of said notes, or any part thereof, at the time or any of the times above specified for the payment thereof, for thirty days thereafter, the agreement, and all the preceding provisions thereof, shall be null and void, and no longer binding, at the option of said vendor. And all the payments which shall have been made, absolutely and forever forfeited to said vendor, or at his election the covenants and liability of the purchasers shall continue and remain obligatory.'

And also 'that in case of default in the payments promptly on the days named by the purchasers, that it is also the right of said vendor to declare the contract ended, and prior payments forfeited, and to consider all parties in the possession of the premises at the time of such default, tenants at will of said vendor at a rent equal to ten per cent. on the whole amount of said purchase-money. And the vendor from that time is declared to be restored, with the possession and right of possession in the premises, to the exercise of all powers, rights, and remedies provided by law or equity to collect such rent, or remove such tenants, the same as if the relation of landlord and tenant were created by an original, absolute lease for that purpose on a special rent payable quarterly on a tenure at will, and that the said tenants will not commit or suffer any waste or damage to said premises or the appurtenances; but, on the termination of such tenancy, will deliver the premises in as good order and repair as they were at the commencement of such tenancy.'

By a statute of Illinois¹——

'The rate of interest upon the loan or forbearance of any money, goods, or things in action, shall continue to be six dollars upon one hundred dollars for one year.

'Any person who, for any such loan, discount, or forbearance, shall pay or deliver any greater sum or value than is above allowed to be received, may recover in an action against the person who shall have taken or received the same threefold the amount of money so paid, or value delivered above the rate aforesaid, either by an action of debt in any court having jurisdiction thereof, or by bill in chancery in the Circuit Court, which court is hereby authorized to try the same: PROVIDED, said action shall be brought or bill filed within two years from when the right thereto accrued.'

Under this contract, and in the state of the law above stated, the purchasers went into possession, and laid out $18,000 in improving the property by building on it. They paid $10,000, also, on account of the notes, and about two years' interest. After erecting these improvements, and paying the two years' interest, the purchasers becoming embarrassed, or dissatisified with their contract, were desirous of surrendering it, but where persuaded by the vendor to remain, and they paid the interest for another year, 1859, making in all about $28,000 of interest paid. The last payment of interest was made 31st January, 1860. After that, no further payments were made, and on the 1st April, 1861, the vendor filed a bill in chancery in one of the State courts to prevent the threatened removal of the buildings from the premises, and to get possession of the property. On the 23d August, 1862, a decree was entered to this effect, and the vendor put into the possession. The decree restrained the purchasers from removing the buildings, declaring them to be fixtures; and for the default in the payment of the purchase-money the plaintiff, the vendor, was put in possession, and all the tenants were required to attorn to him. It declared further, that he was entitled to the estate and interest in the lots, the same as before the contract. And to remove any doubt in the title by reason of the contract and the default in the payments, it declared that the premises should be discharged from any incumbrance or charge in respect to the contract of sale; and that the purchasers, or any one claiming through them, should be forever debarred from having any estate, or interest, or right of possession in the premises, having lost the same by wilful default; and that the articles of agreement were to be held, in relation to the title and possession, as of no effect and void, as it respected the vendor and all claiming under or through him.

In this state of facts, the purchasers filed, August 23, 1862, a bill in the Circuit Court for the Northern District of Illinois, to recover back the moneys paid upon the contract, and also for the value of improvements made on the premises; the ground of the bill being that the contract had been rescinded by the defendant.

In regard to the matter before mentioned of the purchasers' having been desirous of surrendering, and of being persuaded by the vendor to stay, the bill alleged:- 'That the contract became and was so intolerably oppressive, that in November, 1859, they proposed a relinquishment of the same unless it should be modified or made less rigorous and exacting. That the vendor thereupon proposed to them that if they would not abandon the same, but would pay certain taxes, assessments, and charges, and interest then accrued, the whole amounting to ten thousand dollars, within sixty days from the first day of December, 1859, he would thereafter so accommodate and indulge them that they could carry on said contract, and to this end he would, until there should be a revival of trade and business in Chicago, take the net income from the property over and above taxes and insurance, in lieu of interest on the purchase-money, until such revival of trade and business. That your orators accepted said proposition, and in accordance with his request, in order to comply with the proposition, sent an agent from Kentucky to reside in Chicago aforesaid, to take charge of the property and collect and get in the rents and pay the same to said vendor, less the taxes and insurance. And also your orators, on or about the 31st day of January, A. D. 1860, paid said taxes, assessments, and other charges, and accrued interest, the whole amounting to ten vendor the net income from the in compliance with his said proposition, and thereafter were ready and willing, and, from time to time, offered to pay the vendor the net income from the premises after deducting the taxes and insurance as aforesaid; but he declined to abide by his said proposition, and thereafter continued to enforce the said contract of January 29th, 1857, and all its provisions, with the most exacting rigor, notwithstanding there was no considerable increase of income from the property, nor a revival of trade and business in Chicago.'

Upon this case, which in substance was the one set forth, the defendant in the case, the original vendor, demurred; and the court below dismissed the bill.

Mr. Thomas Hoyne, for the appellee and in support of the decree:

I. The bill is not maintainable as a bill to recover back money paid or laid out in part performance of a contract because the appellants are themselves in default, and refused to perform their contract with the appellee.²

II. The court will not entertain jurisdiction of the bill, because it seeks compensation in the nature of damages only.³

III. The bill shows, on its face, that the same matters have before been litigated between the same parties in a court of competent jurisdiction, and that a former decree was rendered thereon forever determining the rights of the parties, and in which the appellants might have litigated, if they did not, and have had decided all matters put in controversy by them in this cause.⁴

IV. Irrespective of all other questions in this cause, the appellants being in default, and not only so, but refusing to perform the contract, in fact repudiating its terms, without any pretence of fraud, mistake, or accident, to excuse them, they are entitled to no relief whatever.⁵

Mr. Arrington, contra:

I. As to the return of the money, more than $28,000, paid by the appellants to the vendor.

That the vendor should be allowed to keep this large sum, and the land too, is revolting to conscience.

The equity of the appellants rests upon the definite rule of law and justice, which prescribes that the parties, upon the rescission of a contract, shall be replaced in statu quo ante.⁶

The vendor seeks to escape from this legal and equitable rule by interposing that monstrous provision of the contract which authorized him, upon declaring a forfeiture of the agreement, 'to retain the money previously paid.'

To this objection we answer——

1. The provision for the retention of the payments made previously to the forfeiture is strictly a penalty.⁷ In fact, even if the provision in question had specified that the money should be retained as liquidated damages, it would be, in contemplation of law, a penalty, and nothing more.⁸

The rule of law and equity has ever been compensation, and not forfeiture. And parties cannot be permitted to annul a principle of such eternal justice by a mere stroke of the pen.

That equity will relieve against penalties is an axiom as old as the Court of Chancery.⁹ And it exists now in the State from which this appeal comes. In Glover v. Fisher,¹⁰ the Supreme Court of Illinois says:

'It would be unconscionable to let the defendant keep the land as well as the...