Calvert v. Joseph

• Decision Date: 03 January 1927
• Docket Number: No. 2838.,2838.
• Citation: 32 N.M. 384,257 P. 680
• Parties: CALVERTv.JOSEPH et al.
• Court: New Mexico Supreme Court

32 N.M. 384

257 P. 680

CALVERT

v.JOSEPH et al.

No. 2838.

Supreme Court of New Mexico.

Jan. 3, 1927.Rehearing Denied June 28, 1927.

Syllabus by the Court.

An executory land contract having been rescinded at the purchaser's suit, and he being entitled to recover what he had paid, consisting largely of his notes secured by collateral, which notes and collateral have passed into the hands of innocent third parties, a decree is equitable which fixes the amount of recovery as the face of the notes with provision for credit for such thereof as may be delivered up with their collateral.

On Motion for Rehearing.

Equity will not consider a vendee of land in default for interest, if, previously, the vendor has converted a larger sum of the vendee's funds.

Vendee of land may accept the vendor's wrongful declaration of forfeiture as an abandonment of the contract, in which case he may recover his payments, as upon a mutual recission, and his right to restitution is not defeated by his failure to tender interest due under the contract.

Appeal from District Court, Taos County; Leib, Judge.

Action by Simon P. Calvert against Elizabeth F. Joseph and others to cancel a land sale contract and to recover payments thereon. From the judgment, defendants Joseph appeal. Affirmed and remanded, with direction.

Decree rescinding purchase, fixing recovery at amount of notes owned by third parties with credit for those delivered up, held equitable.

J. O. Seth, W. J. Barker, and Renehan & Gilbert, all of Santa Fé, for appellants.

L. F. Twitchell and J. H. Burkhardt, both of Denver, Colo., John I. Palmer, of Saguache, Colo., J. J. Kenney, of Santa Fé, and William McKean, of Taos, for appellee.

WATSON, J.

[1] This litigation grows out of a contract dated June 8, 1920, whereby Elizabeth F. Joseph, Antonio F. Joseph, and Angela L. Joseph, Antonio's wife, agreed to sell to J. J. Handley and Simon P. Calvert the Ojo Caliente Springs property, consisting of about 1,300 acres of land and a hotel. The consideration named was $150,000, of which $59,457 was acknowledged to have been paid. It was recited that the vendees had received possession and that the vendors had executed a deed. It was agreed that the deed should be delivered in escrow to the Capital City Bank of Santa Fé, and should be by it delivered to the vendees whenever, on or before June 8, 1920, the vendees should have paid the sum of $90,533, with interest thereon at 6 per cent., payable December 15, 1920, and semiannually thereafter. The vendors agreed to pay forthwith the taxes accrued up to and including 1919, and to pay off all mortgages and incumbrances then outstanding on or before June 8, 1930; the vendees also having the right to pay off such incumbrances at any time and to have credit for such payments. It was provided that, in case of default by the vendees in any covenant or condition of the agreement, they should immediately deliver quiet and peaceable possession of the premises, and that time should be the essence of the contract, and that, in case of failure of the vendees to fulfill any condition or covenant of the agreement, the vendors might, at their option, declare the agreement canceled and the rights of the vendees forfeited, and might enter upon and take possession of the premises, and that all payments made and all improvements placed thereon and all personal property therein should be forfeited to the vendors as liquidated damages. The contract was executed by J. J. Handley for himself and as attorney in fact for Calvert, and by Antonio F. Joseph for himself and as attorney in fact for the other vendors.

This suit was commenced by Calvert against Handley, the three Josephs, and certain other defendants, for the purpose of canceling the contract and of recovering what had been paid thereon. Judgment was rendered against Handley by default and against the other defendants after trial; only the defendants Joseph appealing.

The facts found by the trial court, freely rendered, are as follows: Antonio F. Joseph at all times was the duly authorized agent and attorney in fact for defendants Elizabeth F. Joseph, his mother, and Angela L. Joseph, his wife. Handley, who had an agreement with Joseph for a 5 per cent. commission if he should sell the Ojo Caliente property for $150,000, proposed to Calvert, with Joseph's knowledge, that they-Handley and Calvert-buy the same together and operate it as partners. While thus posing as a prospective partner, with interests identical with Calvert's, Handley really had no bona fide interest in the purchase, was unable to contribute substantially thereto, and was, in fact, working in concert with Joseph to effect the sale.

Calvert was 76 years of age, had spent his life in the cattle business, from which he had just retired, and had no other business experience, and was “almost without capacity, because of the depreciation caused by age and infirmities to make a contract of any kind,” and these facts were known to Joseph. The sale price of the property “was an exceedingly excessive price for the same, and very largely in excess of any reasonable valuation thereof.”

Negotiations among Joseph, Handley, and Calvert progressed to an understanding, which, as we may infer, is correctly represented by the written contract made, except in these particulars: (a) The sale was to include the personal property, commissary, and supplies situated on the premises, but this was not included in the contract; (b) interest on deferred payments was to be paid annually, while the contract made it payable semiannually; (c) a strict forfeiture clause, such as was inserted in the contract and afterwards invoked, was not contemplated.

Having reached this understanding, Joseph and Handley represented to Calvert that some one must go to Santa Fé to examine the title, and that it would expedite matters if Handley were armed with power of attorney to act for Calvert. They thus prevailed upon him to clothe Handley with power-

“to sign all papers in regard to deal now pending re of Springs, * * * to sign my name to three notes of $10,000 each, with the full understanding that these notes are to be secured by notes of like amount due in the years of 1926, 1927, 1928, and are signed by E. B. Noland and Gordon Gotthelf * * * above-mentioned notes that I am putting up as security are in the Saguache County Bank. * * * Also further understood that any further papers in regard to the above-mentioned deal are also to be signed, where my signature is needed, by J. J. Handley, of Ojo Caliente, N. M., and that same signature will be as binding as if same were signed by me personally.”

By virtue of this power, Joseph and Handley, at Santa Fé, in the absence of Calvert, prepared the written contract and executed it; Calvert himself never having seen it until December 20, 1920.

The sum of $59,467, acknowledged in the contract to have been paid, was largely made up as follows: Three notes of $10,000 each, executed by Handley for himself and as attorney in fact for Calvert, payable, respectively, on June 8, of the years 1926, 1927, and 1928, with annual interest at 8 per cent., each of these three notes being secured by a $9,250 note given by the Calvert Cattle Company to Calvert; a $7,000 note and a $10,000 note, signed by Calvert and Handley, payable to Jesse Boothe, maturing, respectively, on June 4 in the years 1921 and 1922, with annual interest at 8 per cent.-these notes being secured by two $9,250 Calvert Cattle Company notes; a $3,000 note, due one year after date, with 8 per cent. interest, with Handley as principal and Calvert as surety, Calvert's signature being by Handley as attorney in fact; and Handley's $7,500 commission. The notes made payable to Boothe were, according to agreement, the consideration for which Boothe surrendered to the Josephs a contract which he had with them at the time for the purchase of an undivided half interest in the property.

About September following this, on the representation that he would use them for the purpose of paying delinquent taxes and outstanding incumbrances on the property, Joseph obtained from Calvert two additional notes of $9,250 each, maturing, respectively, on June 8 of the years 1931 and 1932, with annual interest at 8 per cent., and, as collateral, obtained two $9,250 Calvert Cattle Company notes, payable, respectively, on March 1, in the years 1930 and 1931, with 6 per cent. annual interest. Joseph had no intention of so applying these notes, but did in fact at once dispose of them, together with two of the $10,000 notes and their collateral, receiving therefor property in Denver of the value of $15,000 and $10,500 in cash. All of the Calvert Cattle Company notes thus used as collateral were Calvert's sole property.

About December 15, 1920, a check given to Joseph by Handley for the semiannual interest was dishonored, and Handley immediately disappeared, and his whereabouts has since been unknown to all parties. On December 20, 1920, because of this breach in the condition of the contract, Joseph took possession of the property, thereafter retained it, declared a forfeiture of all payments made, and, on January 22, 1921, entered into a contract to sell it to other parties. On December 20, when the forfeiture was declared, Joseph had not paid the delinquent taxes nor the incumbrances, and had in his hands, belonging to Calvert, more than enough money to pay all that was due on the contract. By this finding it was undoubtedly meant that the two notes, which Joseph had disposed of contrary to his agreement, amounted to more than the interest due on December 15.

Upon these findings the court rests conclusions of law upon which the judgment is based. An analysis of these conclusions shows two main propositions: First, that Joseph had no right in equity to exact or declare a forfeiture, and that, by doing so, he became bound in equity and good conscience to return what had been...