Cook-Reynolds Co. v. Chipman
| Decision Date | 02 May 1913 |
| Citation | 133 P. 694,47 Mont. 289 |
| Parties | COOK-REYNOLDS CO. v. CHIPMAN. |
| Court | Montana Supreme Court |
Appeal from District Court, Fergus County; E. K. Cheadle, Judge.
Action by the Cook-Reynolds Company against L. H. Chipman. From a judgment for plaintiff, defendant appeals. Reversed and remanded.
Edward C. Russel and J. C. Huntoon, both of Lewistown, for appellant.
Belden & De Kalb, of Lewistown, for respondent.
On June 17, 1910, the parties to this action entered into a written agreement for the sale by respondent, plaintiff below, and the purchase by appellant, defendant below, of certain real and personal property situate in Fergus county, Mont. The purchase price as fixed by the agreement was $29,605 payable, with interest, as follows: $5,000 at the execution of the contract; $5,819 on or before February 1, 1911; $9,786 on or before December 1, 1911; $1,000 on or before December 1, 1912; $1,000 on or before December 1, 1913; and $7,000 on or before December 1, 1914. It was further provided in the agreement that the purchaser should pay all taxes thereafter accruing; that when the purchaser should make the payment of $9,786 due December 1, 1911, he should be entitled to a warranty deed of the lands, giving back to the seller a mortgage or mortgages to secure the balance of the unpaid purchase price; that "in case of the failure of the said purchaser to make either of the payments or interest thereon or any part thereof, or to perform any of the covenants on his part hereby made and entered into, then the whole of said payments and interest shall become immediately due and payable and this contract shall, at the option of the seller be forfeited and determined, * * * and the said purchaser shall forfeit all payments made by him on this contract, and all his right, title and interest in all buildings, fences or other improvements whatsoever, and such payments and improvements shall be retained by the said seller in full satisfaction and in liquidation of all damages by them sustained, and they shall have the right to re-enter and take possession of the premises aforesaid, and the purchaser shall redeliver to the seller the personal property hereinbefore enumerated, or the value thereof."
The amended complaint is in two causes of action. The first cause of action alleges that defendant defaulted in the payment due February 1, 1911; that plaintiff after such default made demand upon defendant for the surrender of the property, both real and personal, which was refused; that plaintiff is the owner and entitled to the immediate possession of all said property; and that it is unlawfully withheld, to plaintiff's damage in the sum of $5,000. The plaintiff's theory of its rights is set forth in the following allegation: "That by reason of the acts complained of on the part of the defendant, and defendant's failure to keep and perform the said contract, a copy of which is hereto attached, at the time and in the manner therein specified, under and by virtue of the terms thereof, defendant has abandoned and forfeited all his right under said contract, together with the right of possession of said premises in said contract prescribed, and to the right of the possession of the personal property therein enumerated, which plaintiff has demanded of defendant that he quit and surrender up to this plaintiff." The second cause of action is for interest, and attorney's fees for collecting the same, upon a promissory note for $3,000, given as part of the first payment; the principal having been paid.
The prayer contains no specific demand for damages, but asks, among other things: "That the said contract be declared to be ended and determined, and all rights of the said defendant, L. H. Chipman, thereunder, together with all payments made thereon, be forfeited according to the terms of said contract," and "that plaintiff have such other and further relief in the premises as * * * may seem meet and agreeable to equity." The answer admits default in the payment due February 1, 1911; denies that the plaintiff is the owner or entitled to the immediate possession of the property, or that he, the defendant, unlawfully withholds the same, or that plaintiff is damaged by such withholding, or that plaintiff ever made demand for possession of the same prior to the commencement of the action, and alleges that he, the defendant, made an offer to restore the property to the plaintiff upon the condition that the plaintiff return to him the $5,000 paid down on the contract "less a reasonable amount to be allowed to the plaintiff for the use of said property, for the time defendant was in possession thereof," which offer the plaintiff ignored; that he, defendant, has an equity in said real estate, and is the owner of said personal property, and is entitled to withhold possession of both until the sum of $5,000, paid down by him, is returned, with interest, "less a reasonable sum for the use of such property from the 17th day of June, 1910, until the same is restored to the possession of plaintiff." By way of affirmative defense an estoppel is attempted, and there is also a counterclaim pleaded for the return of the first payment of $5,000 with interest, and for the return of $143.58, taxes paid, with interest, less a reasonable sum for the use of the property. The defendant's prayer is specific, but concludes with a demand for such other relief as may be just and equitable.
The findings and conclusions of law by the trial court were in favor of the plaintiff, and judgment was entered accordingly. In the judgment was included an award of "$870 damages incurred by the plaintiff by reason of the refusal of defendant to deliver possession of said premises and property on the 11th day of July, 1911," and a decree that all right, claim, and interest of the defendant in and to the property involved "is ended and determined, and all payments made thereon are adjudged and decreed to be forfeited to the plaintiff."
The principal contention is that the trial court erred in decreeing the defendant's payments forfeited, and in decreeing the return of the property involved "without imposing the condition that the plaintiff return to the defendant the payments made by him, less a reasonable rental for the use of the property and any damages suffered by the plaintiff by reason of the breach of contract." As we understand the argument of appellant, it is that the provision of the contract above quoted, being a stipulation for liquidated damages, is void; that time was not of the essence of the contract, hence there was no basis for a forfeiture; that a forfeiture was precluded because the property was subject to a vendor's lien; that the appellant was entitled to be relieved from the forfeiture of his payments in view of his offer to make full compensation; that the respondent was estopped by its conduct in the premises from claiming a forfeiture; that this suit is based upon an election of respondent to rescind, and, having appealed to equity to vindicate its action, equity forbids that it retain more of appellant's payments than will suffice to recoup its damage.
1. Whether the provision of the contract above quoted is a stipulation for liquidated damages, and whether, as such, it is within the inhibition of section 5054, Revised Codes, we need not inquire. Even if it be so, this fact would not of itself require that in every, or in any, case the defaulting purchaser should have a return of the moneys paid by him; on the contrary, its effect is to leave the parties where they would be if no such stipulation had been made (Bennett Bros. Co. v. Tam, 24 Mont. 457, 468, 62 P. 780; Glock v. Howard & Wilson Colony Co., 123 Cal. 1, 55 P. 713, 43 L. R. A. 199, 69 Am. St. Rep. 17; List v. Moore [Cal.] 129 P. 962; Egerton v. Peckham, 11 Paige [N. Y.] 352); and it is settled that without such a stipulation the defaulting purchaser is not, in the absence of an equitable showing, entitled to a return of any part of the moneys paid. Perkins v. Allnut, 47 Mont. 13, 130 P. 1; Clifton v. Willson, 47 Mont. 305, 132 P. 424; Hansbrough v. Peck, 5 Wall. 497, 18 L.Ed. 520; List v. Moore, supra; Glock v. Howard & Wilson Colony Co., supra.
2. But it is urged that neither the principle last stated nor the stipulation itself could be a proper basis of the court's decree, because time was not expressly made as of the essence of the contract. Whether time is or is not of the essence of the contract is material to the application of the above rule only where there has been a tender or offer of performance by the party in apparent default, with a refusal of acceptance by the other. Here the appellant not only has made no such tender or offer, but expressly pleads his inability to perform. The situation thus presented is in effect the same as though time had been expressly made as of the essence of the contract. 3. Nor can we sustain the contention that forfeiture was precluded in this case because of the following provisions of the Revised Codes: "All contracts for the forfeiture of property subject to a lien, in satisfaction of the obligation secured thereby, and all contracts in restraint of the right of redemption from a lien, are void" (section 5715)--and: "One who sells real property has a vendor's lien thereon, independent of possession, for so much of the price as remains unpaid and unsecured, otherwise than by the personal obligation of the buyer" (section 5800). Neither section is pertinent. By the argument the application of section 5715 is made to depend upon the existence of a vendor's lien under section 5800. We think that section does not apply where the legal title is retained by the vendor. As an expression of our views we quote from Professor Pomeroy as follows: ...
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