Church of God in Christ, Inc. v. Congregation Kehillath Jacob

• Decision Date: 14 August 1975
• Parties: CHURCH OF GOD IN CHRIST, INC. v. CONGREGATION KEHILLATH JACOB et al.
• Court: Appeals Court of Massachusetts

Page 918

332 N.E.2d 918

3 Mass.App.Ct. 420

CHURCH OF GOD IN CHRIST, INC.

v. CONGREGATION KEHILLATH JACOB et al.

Appeals Court of Massachusetts, Suffolk.

Argued Dec. 12, 1974.

Decided Aug. 14, 1975.

Edward J. Barshak, Boston (Alan S. Goldberg, Boston, with him), for African Episcopal Methodist Zion Church.

David L. Taylor, Boston (Irving Levenson, Newton, with him), for Church of God in Christ, Inc.

Frank L. Kozol, Boston, for Congregation Kehillath Jacob, submitted a memorandum.

Before HALE, C.J., and KEVILLE, GOODMAN, GRANT and ARMSTRONG, JJ. ^*

ARMSTRONG, Justice.

This is a bill in equity brought by the plaintiff against the Congregation Kehillath Jacob (Congregation) and the African Methodist Episopal Zion Church (Zion Church) seeking specific performance of an agreement under which the Congregation was to sell real estate to the plaintiff, and an injunction against the sale of the same property to the Zion Church pursuant to a later agreement. The defendants appeal from a final decree, entered on a master's report, ordering the Congregation specifically to perform the first agreement.

No appeal was taken from the interlocutory decree confirming the master's report, which therefore settled the facts between the parties. Perry v. Oliver, 317 Mass. 538, 59 N.E.2d 192 (1945). Limoli v. Accettullo, 358 Mass. 381, 382, 265 N.E.2d 92 (1970). The issue is thus whether the subsidiary findings in the report and reasonable inferences therefrom show the plaintiff to be entitled to enforcement of the agreement between it and the Congregation. Marine Contractors Co. Inc. v. Hurley, --- Mass. ---, ---, ^a 310 N.E.2d 915 (1974). A majority of the court are of the opinion that they do not.

The agreement between the plaintiff and the Congregation was executed on October 19, 1972. Under its terms the Congregation, having relocated to Newton, was to sell the plaintiff its former synagogue in Dorchester for a price of $75,000, to be paid by a deposit of $10,000 on execution, a further deposit of $25,000 on passage of title, and the balance by a promissory note for $40,000, with interest at seven per cent per annum, secured by a first mortgage, to be paid, in part, in monthly installments of $500 commencing one month after passage of title. Title was to pass on December 27, 1972, and time was expressly stated to be of the essence.

On December 27, the plaintiff was unable to pay the $25,000 further deposit. The plaintiff and the Congregation instead executed a written agreement modifying the purchase and sale agreement by extending the time for performance to February 26, 1973. Under its terms the plaintiff was to pay (1) forthwith, $6,000 towards the further deposit; (2) on January 26, 1973, interest on the.$19,000 'balance of deposit', $5,000 to be applied towards that deposit, and $500 to be applied to principal and interest on the $40,000 balance (after the still not fully paid further deposit) of the purchase price; and (3) on February 26, 1973, the remainder of the deposit ($14,000), with interest, and a further $500 payment of interest and principal on the balance (after the further deposit) of the purchase price.

On February 26, 1973, the plaintiff was again unable to make the payments called for by the agreement, as modified by the extension. Instead, the plaintiff and the Congregation entered into an oral extension agreement under which the plaintiff was to have 'an additional reasonable time in which to obtain the necessary funds to perform' (which we infer refers to the deposit balance) 'on the express understanding (among other things) that the extension would last only so long as payments were made under the purchase and sales agreement' (which we infer refers to the $500 principal and interest payments due in monthly installments on the balance, after payment of the further deposit, of the purchase price).

The master's report does not include findings concerning the amounts of payments made by the plaintiff after the oral extension was agreed to on February 26. There is a finding that between February 12 and June 12 the plaintiff paid the Congregation varying sums totalling $4,441, but no finding is made as to the application of those payments. On June 12 the plaintiff informed the attorney for the Congregation that it 'was having financial difficulties and expected to be able to produce sufficient funds to complete the transaction probably in August or the first of September of 1973.' The attorney responded 'that such an arrangement was all right with . . . (him) so long as it met the approval of . . . (the president of the Congregation)', but there is no finding that such approval was ever given.

In early July, 1973, the president of the Congregation informed the plaintiff that another prospective purchaser of the synagogue was about to make an offer, that if the plaintiff 'had 'some alternative' . . . i.e., a new firm proposal, he . . . would present it to the congregation', and that he would "delay the meeting (of the congregation) as long as possible' . . . to give the . . . (plaintiff) time to develop 'some alternative." On July 16, 1973, the Zion Church offered to purchase the synagogue for $75,000, and submitted a deposit of $2,500. The Congregation notified the plaintiff of the receipt of this offer. On July 27, 1973, the Congregation by letter notified the plaintiff that it had 'failed to perform under the terms and conditions of an agreement to purchase' the synagogue and 'that said agreement has been cancelled.'

The Congregation returned the Zion Church's $2,500 deposit on August 6 and made what was in effect a counteroffer. There followed a course of negotiation between the Congregation and the Zion Church which culminated in the execution of a purchase and sale agreement between them on August 24. Meanwhile the Congregation refused tenders of cash, cashiers' checks, and a personal check (in unspecified proportions) made by the plaintiff on August 22 and August 24. Whether the proffered payments were pursuant to the purchase and sale agreement, or were in furtherance of a new proposal, is not at all clear from the master's findings. However, they have no significance on the view that the majority takes of the case, which is that the plaintiff has failed to show that the purchase and sale agreement was still in effect when the payments were tendered.

Performance on time was expressly made an essential condition of the purchase and sale agreement. Such a provision, when not waived by words or conduct, will be given legal effect. Porter v. Harrington, 262 Mass. 203, 207, 159 N.E. 530 (1928), and cases cited. American Oil Co. v. Katsikas, --- Mass.App. ---, --- - --- , ^b 300 N.E.2d 204 (1973). The plaintiff argues that the extensions of time agreed to by the parties had the effect of waiving the provision that time was of the essence. Nothing in the cases cited by the plaintiff (Moskow v. Burke, 255 Mass. 563, 152 N.E. 321 (1926); Porter v. Harrington, supra; Gentile Bros. Corp. v. Rowena Homes, Inc., 352 Mass. 584, 227 N.E.2d 338 (1967); Flynn v. Wallace, 359 Mass. 711, 270 N.E.2d 919 (1971)), however, supports a contention that an extension, by itself, necessarily nullifies a provision that time is of the essence.

An extension of time to perform an agreement operates as a waiver only in accordance with its terms. If, for example, the parties to a contract to sell land, time being of the essence, agree to a one day extension of the time for performance, the later time is still of the essence. To contend that the extension waives the provision that time is of the essence, and that absent such a provision the parties have a reasonable time to perform, is to ignore the intention of the parties. Similarly, if the parties agree to an extension conditional on the making of a payment, and the payment is not made, the extension is nullified, because the parties have not agreed to an extension regardless of whether the payment is made or not.

In the present case the oral agreement that the plaintiff should have an additional reasonable time to pay the deposit was conditional. It was made by the parties to depend on the continued payment of the monthly installments due on the balance of the purchase price. Upon failure of the condition, the extension would be at an end. Absent agreement of the parties to the contrary, the agreement would be terminated, and, if no tender had been made by either party within the time for performance, both parties would be discharged. Corbin, Contracts, § 663, p. 181 (1960). See American Oil Co. v. Katsikas, supra.

The burden of proving payment of the installments called for by the extension agreement was on the plaintiff, both because it was the plaintiff's burden to demonstrate the existence of the defendant's contractual obligation (Phipps v. Mahon, 141 Mass. 471, 5 N.E. 835 (1886); Waldo Bros. Co. v. Platt Contr. Co. Inc., 305 Mass. 349, 359, 25 N.E.2d 770 (1940); George v. Goldman, 333 Mass. 496, 497, 131 N.E.2d 772 (1956)) and because the payment of the installments at the requisite times by the plaintiff was 'a condition precedent to the defendant's duty of immediate performance . . . (and thus) a necessary part of the plaintiff's cause of action. . . .' Corbin, Contracts, § 749, p. 467 (1960). Mirachnick v. Kaplan, 294 Mass. 208, 1 N.E.2d 40 (1936). See Morrison v. Clark, 7 Cush. 213 (1851); Central Bridge Corp. v. Butler, 2 Gray 130 (1854); Wylie v. Marinofsky, 201 Mass. 583, 88 N.E. 448 (1909). Compare Gray v. Gardner, 17 Mass. 187 (1821), analyzed by the court as a present debt subject to defeasance on a condition subsequent. With Gray v. Gardner compare Temple v. Phelps, 193 Mass. 297, 79 N.E. 482 (1906), and Starratt v. Mullen, 148 Mass. 570, 20 N.E. 178 (1889). It cannot be argued that the burden should be shifted on the basis that the making of such payments was a fact peculiarly within the knowledge of the defendants. Muchnick v. Bay...