Fratt v. Daniels-Jones Co.
| Decision Date | 14 June 1913 |
| Citation | 133 P. 700,47 Mont. 487 |
| Parties | FRATT ET AL. v. DANIELS-JONES CO. ET AL. |
| Court | Montana Supreme Court |
Appeal from District Court, Yellowstone County; Geo. W. Pierson Judge.
Action by David Fratt and another against the Daniels-Jones Company and another. Judgment for plaintiffs, and defendant company appeals. Affirmed.
Wm. V Beers, of Billings (J. Van Valkenburg, of Minneapolis, Minn of counsel), for appellant.
W. M Johnston and H. J. Coleman, both of Billings, for respondents.
On March 26, 1909, David Fratt and wife entered into a contract in writing with the Daniels-Jones Company, a corporation, by which they sold and agreed to convey to the company section 7, Tp. 4 N., R. 25 E., for $6,370, payable $637 in cash and the balance in 10 equal annual installments, with interest at the rate of 6 per cent. per annum, payable annually. The vendee was to have possession on May 15, 1909, and was to pay all taxes upon the land after the year 1909. The contract contains this provision: "It is hereby expressly understood and agreed that time is of the essence of this contract and if the party of the second part fails to pay any deferred installment, with interest thereon, or any portion thereof, when the same becomes due and payable, such failure shall work an immediate forfeiture of this contract, without any notice whatever, and the money paid on this contract shall be retained by the parties of the first part as liquidated damages." In 1911 this suit was instituted. The complaint states two causes of action. The first contains the usual allegations in an ordinary suit to quiet title; and the second sets forth the facts concerning the execution of the contract, copies the agreement at length, alleges that the defendant Daniels-Jones Company entered into some kind of an agreement to sell the property to the defendant Luke; that the defendant Daniels-Jones Company failed to pay the installment of the purchase price and interest due March 26, 1910, and failed to pay the taxes for that year; that plaintiffs notified the company soon after March 26, 1910, and took possession of the property. There are certain allegations of the complaint and certain portions of the prayer which relate to the defendant Luke alone, and further reference to which is omitted. The prayer is that the defendants be required to set forth the nature of their claim for adjudication, that plaintiffs' title be quieted, that the contract of March 26, 1909, be canceled, and that the defendants be enjoined from asserting any interest or claim to the property by reason of such contract. The answer of defendant Daniels-Jones Company contains some general admissions and denials, and then sets forth affirmatively, and at length, the facts concerning the execution of the contract of March 26, 1909; alleges that the company took possession of the land in controversy, on May 15, 1909, and thereafter continued in such possession; that it paid plaintiffs $637 upon the execution of the contract; that it did not pay the installment due March 26, 1910, because the company's officers were engrossed with other business, and overlooked the fact that a payment was then due; that while it did not pay the taxes for the year 1910, it intended to pay them before they became delinquent, if the plaintiffs had not paid them; that on July 22, 1910, it received from the plaintiffs notice, signed by the plaintiff David Fratt, which, after referring to the contract of March 26, 1909, continued, "You have forfeited your part of the contract by failing to pay the deferred payment that came due March 26, 1910"; that immediately thereafter it tendered to the plaintiffs the amount due with interest, but the tender was refused; that again in March, 1911, it made another tender of the amount then due, and this was also refused; that plaintiffs have never repaid the $637 paid on the purchase price at the time the contract was executed, or any part thereof; that the land has increased in value; and that the company is now ready, able, and willing to pay the amount which may be found due by the court. The reply does not raise any material issues. Plaintiffs moved the court for judgment on these pleadings, and this motion was granted and a decree rendered and entered according to the prayer of the complaint. It is from that judgment that the defendant Daniels-Jones Company appealed.
1. Counsel for appellant contend that the complaint does not state facts sufficient to constitute a cause of action for the rescission of a contract, and cite section 5065, Revised Codes, and authorities applying the rules there announced; but they misapprehend the character of this suit. Plaintiffs are not seeking to rescind the contract; they are relying upon it and upon the provision for its own termination automatically upon the failure of appellant to meet the requirements imposed, and are now asking the court to decree that the contingency has arisen which, by the terms of the contract, renders it of no further force or effect. They ask, further, that the contract, as a menace to their title, be canceled. The purpose of such an action is so far distinct from that of one to rescind a contract that the rules governing rescission do not have any application here. The question is not a new one in this state. It has been considered a number of times. Clark v. American D. & M. Co., 28 Mont. 468, 72 P. 978; Merk v. Bowery Min. Co., 31 Mont. 298, 78 P. 519; Arnold v. Fraser, 43 Mont. 540, 117 P. 1064; Cook-Reynolds Co. v. Chipman, 47 Mont. 289, 133 P. 694 (May 2, 1913).
2. Counsel for appellant contend also: "That this action seeks to enforce a forfeiture which is against the law and against public policy: (1) As to liquidated damages; (2) As to time of essence of contract; (3) as to necessity of giving notice." But again they are mistaken as to the character or purpose of this action. Plaintiffs are not asking the court to declare the payment of $637 forfeited to them, and the judgment entered does not make any disposition of that sum or mention it at all. The language of the contract quoted above, in which the word "forfeiture" appears, does not mean anything more than that upon the failure of this appellant to keep and perform the terms of the contract by it to be kept and performed and within the time limited, the contract thereupon terminates.
(a) It is said that in so far as the contract provides for liquidated damages it is void and of no effect under section 5054, Revised Codes. This may be conceded, but still it does not avail the appellant; for, as said before, there is not any contention by plaintiffs that the amount paid to them shall be forfeited, and neither is there any adjudication upon the subject. But in any event, in the absence of a showing on the part of the defaulting purchaser such as would appeal to the conscience of a court of equity, he is not entitled to a return of the part payment of the purchase price even though he asked for it, and that was not done in this instance. Perkins v. Allnut, 47 Mont. 13, 130 P. 1; Clifton v. Willson, 47 Mont. 305, 132 P. 424; Cook-Reynolds Co. v. Chipman, above.
(b) That neither the provision "time is of the essence of this contract" in a contract, nor the contract containing such a provision, is invalid as against positive law or public policy is too well settled to merit serious consideration. At common law such a provision was read into every contract, but...
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