Economy Sav. & Loan Co. v. Hollington

• Decision Date: 24 June 1957
• Citation: 152 N.E.2d 125,105 Ohio App. 243
• Parties: , 6 O.O.2d 61 ECONOMY SAVINGS & LOAN CO., Appellee, v. HOLLINGTON, Appellee; Beaverson, Appellant, et al. *
• Court: Ohio Court of Appeals

Page 243

105 Ohio App. 243

152 N.E.2d 125, 6 O.O.2d 61

ECONOMY SAVINGS & LOAN CO., Appellee, v. HOLLINGTON, Appellee; Beaverson, Appellant, et al. ^*

Court of Appeals of Ohio, Williams County.

June 24, 1957.

Syllabus by the Court.

1. Where real property is sold under a land contract, under the terms of which the price of $20,000 is payable in monthly installments of $200, at four per cent interest payable semiannually, with the purchaser being entitled to retain the rental receipts of $2,000 per year and, in case of default, the vendor, at his option, is entitled to declare the unpaid installments due and payable or to treat the contract as void, re-enter the premises and retain any payments made as stipulated damages, and the purchaser, after making regular payments for approximately one year but no payment of interest, consents to the appointment of a receiver and thereafter defaults in the payment of installments and is unable to make any payments whatever, the vendor may, at his option, elect to treat the contract as void and bring an action for forfeiture and termination of the contract.

2. The filing of a cross-petition in the receivership action by the vendor in such case, praying for forfeiture and termination of the contract, is an effective notice of his election and intention to rescind and terminate the contract.

3. In such case, the provision in the contract whereby the vendor, electing to terminate the contract, may retain the payments made as stipulated damages is construed as a stipulation for liquidated damages and not a penalty, it being apparent, from the terms of the contract, that the purchaser was afforded the opportunity to purchase the premises upon unusually good terms, that damages from the breach would be uncertain as to amount and difficult of proof and that the amount stipulated as damages is neither unreasonable nor disproportionate to the actual damages sustained.

4. The court, in such case, will not order sale of the premises, but the vendor is entitled to a judgment of forfeiture and termination of the contract, to have possession of the premises and to retain the payments made as liquidated damages.

5. In such case, the vendor is entitled to benefit by any increase in the market value of the premises, it being apparent from the terms of the contract that the parties knew and considered that the premises would undoubtedly fluctuate in value during the period of years over which the contract was to extend and that the risks during such period were to be assumed by the vendor.

6. Where the purchaser under a land contract is required to make monthly installment payments of a specified sum of money, the acceptance of some irregular payments by the vendor, without demanding immediate termination of the contract for default, is not a waiver of the vendor's right to terminate the contract when the purchaser has become insolvent and is in default.

Gebhard & Hogue, Bryan, for appellant.

Karl Weaner, Defiance, for appellee Economy Savings & Loan Co.

Newcomer & Shaffer, Bryan, for appellee Wesley Ellis, receiver.

DEEDS, Presiding Judge.

This is an appeal on questions of law and fact from a finding and decree of the Court of Common Pleas of Williams County. The action was commenced by the defendant Rosella M. Beaverson, appellant herein, by filing a cross-petition in the receivership action, entitled Economy Savings & Loan Company v. Richard P. Hollington, in which cross-petition defendant Beaverson prayed for the termination of a certain land contract and the possession of a farm property which the defendant Hollington had contracted to purchase. The appeal has been submitted on a stipulation of facts, the original pleadings, a transcript of the entries and proceedings in the Court of Common Pleas, and the oral arguments and briefs of counsel for the parties.

The land contract was signed and executed by the defendant Beaverson, her husband, Virgil Beaverson, and the defendant Hollington on October 21, 1954, whereby the defendant Beaverson and her husband agreed to sell to the defendant Hollington a certain farm for the agreed purchase price of $20,000 and the defendant Hollington agreed to pay the said sum in installments of $200 or more each month, commencing November 1, 1954, with interest at the rate of 4% payable semiannually, until the entire balance of the purchase price was paid in full.

It was agreed further that the farm premises was leased on a cash rental basis and that the seller should receive all rents up to November 1, 1954, and that the purchaser, Richard P. Hollington, was entitled to all rentals payable thereafter. The defendant Hollington was to pay the taxes for the year 1954 and thereafter.

It was agreed that when the purchase price was paid in full with interest, taxes and assessments, at the time and in the manner stipulated in the contract, the appellant as seller would convey to the buyer by good and sufficient warranty deed the farm premises described, same to be clear and free of all encumbrances.

The husband agreed, in consideration of the payments to be made and the sum of one dollar, to unite in the deed and release all of his right and expectancy of dower in the premises.

The provisions of the contract pertinent in a determination of this appeal are as follows:

'It is expressly agreed by the between the parties to this agreement, that if any one of said installments, or the interest accrued thereon, shall not be paid when due, then all of said installments remaining unpaid shall at once become due and payable, at the option of the first party.

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'In case default shall be made by the party of the second part, his heirs, executors, administrators or assigns, in any of the conditions above stipulated to be performed by him, it shall and will be lawful for the party of the first part, if they so elect, to treat this contract as thenceforth void, and to re-enter upon said premises at any time after such default, without serving on the party of the second part, or any person holding under him a notice to quit said land; and in case this contract shall be so treated as thenceforth void, the party of the second part, or those claiming under him, shall thenceforth be deemed a mere tenant at will under said party of the first part, and be liable to proceeded against without notice to quit, under the provisions of the law regulating proceedings in case of forcible detainer; and the party of the first part, in such case, shall be at liberty to sell the land and premise to any person whatsoever, without being liable in law or in equity to the party of the second part or any person claiming under him for any damages in consequence of such sale or to return any payments made on account of or under this contract, and the payments that shall have been made may be retained by the party of the first part as stipulated damages for the nonperformance of this contract on the part of the party of the second part.'

The defendant Beaverson filed her cross-petition by leave of court on April 17, 1956, in which she described the real estate and alleged that she was the owner of same in fee simple. Defendant Beaverson alleges further that defendant Hollington made payments in the sum of $200 on November 1, 1954, and $200 on each month thereafter, to and including December 1955; that defendant Hollington failed to make the payment of $200 due on the 1st day of January 1956, and has failed and refused to make the payments due since that date; and that, by reason of the default of the defendant Hollington in failing to make the payments as agreed, defendant Beaverson might elect to terminate said contract and retain all payments as stipulated damages.

The prayer of plaintiff's cross-petition prays:

'Wherefore, this defendant prays for an order, judgment and decree that said contract is forfeited and terminated; that possession of said premises be immediately restored to her; that said defendant, Richard P. Hollington, and Wesley Ellis, receiver herein, be forever barred from asserting any right, title and interest in said real estate; that this defendant be awarded all payments on said contract as liquidated damages, and for such other and further relief as the courts shall deem just and equitable.'

The answer of the receiver to the cross-petition of the defendant Beaverson is as follows:

'Now comes Wesley Ellis, receiver herein, and for his answer to the cross-petition of Rosella M. Beaverson, states that he is without knowledge as to the facts alleged therein and, therefore, denies each and every allegation thereof.

'Wherefore, this answering receiver asks that the court deny the prayer of said cross-petition and protect the interests of the creditors of Richard P. Hollington in this matter.

'Wesley Ellis, Receiver.'

The record discloses that the defendant Hollington consented to the appointment of a receiver on February 23, 1956, and that Wesley Ellis was appointed as receiver of all the defendant Hollington's property on February 24, 1956.

There is some conflict in the record as to whether the defendant Hollington made any payments pursuant to the terms of the contract after the payment of $200, which it is admitted defendant made on December 1, 1955, and a credit of $50 in January 1956, as payment on a mortgage which Hollington held on appellant's automobile, The conflict is concerning the sum of $83, which the defendant Hollington claims as an additional credit in the month of January 1956.

It is undisputed that defendant Hollington was in default for a part of the payment due January 1, 1956, and also the full amount of the payments due on February 1, March 1 and April 1, 1956, respectively, prior to the filing of defendant's cross-petition herein, and that defendant Hollington and his receiver are in default for all payments which have become due since the filing of the cross-petition.

It is also undisputed that defendant...