Fulton v. Chase

• Decision Date: 14 June 1949
• Docket Number: 47447.
• Citation: 37 N.W.2d 920,240 Iowa 771
• Parties: FULTON v. CHASE.
• Court: Iowa Supreme Court

37 N.W.2d 920

240 Iowa 771

FULTON v. CHASE.

No. 47447.

Supreme Court of Iowa

June 14, 1949

Leighton A. Wederath, Carroll, and Batschelet & Thompson, Guthrie Center, for appellant.

C H. Taylor, Guthrie Center, for appellee.

HAYS Justice.

Plaintiff seeks to rescind a contract for the purchase of real estate based upon the inability of the defendant to perform his part of the contract and upon mutual rescission. The defendant asserts an abandonment by the plaintiff and also that there has been a forfeiture of the contract. The trial court found there had been an abandonment by plaintiff and dismissed the petition. Plaintiff appeals.

There is little dispute in the facts. In November 1947 appellant purchased under contract from the defendant, Lot Two (2) Block One (1) in the Original Town of Guthrie Center, Iowa $1,000 was paid at the time of the signing of the contract with the balance of $5,000 payable March 1, 1948 at which time possession and a warranty deed were to be given. The contract contained a forfeiture clause and time was made of the essence. In December 1947 appellant rented the premises to the then tenant effective March 1, 1948. In February 1948 appellant, then residing in Minnesota, served appellee with a notice of rescission and a demand for a return of the down payment, asserting fraud in the contract. The rent due March 1, 1948 was paid to appellee. On March 20 1948 appellee sold the premises by contract to one Conrad Madsen, who, under arrangement with the tenant then in possession, moved into the premises on March 24th. The contract of purchase was not recorded. It contained a provision to the effect that litigation over the title was possible and in the event of an adverse ruling the contract might be declared void from its inception and the down payment returned.

In April 1948 appellee served notice of forfeiture of the contract upon appellant by publishing the notice in a Guthrie County newspaper, the last publication being April 15, 1948. By this notice, if appellant failed to comply with the terms of the contract within thirty days after the last publication, the contract would be forfeited. This notice was not served upon the party in possession. On April 27, 1948 appellee, and his wife, executed and delivered to Madsen a full warranty deed to the premises. No reference was made to the contract of March 20th. On April 26, 1948, Madsen mortgaged the premises to the Guthrie County State Bank by the terms of which the loan, for which it was security, was to be paid in payments with the final payment due in April 1951. The mortgage did not contain a payment acceleration clause. Appellant did not comply with the terms of the contract within the thirty day period, and no payment has been made by appellant, other than the down payment. This action was commenced May 18, 1948 three days after the expiration of the thirty day period.

While several propositions are urged as a basis for a reversal, the main proposition urged is to the effect that the trial court erred in holding an abandonment by appellant rather than a mutual rescission of the contract.

The trial court held that since no notice of forfeiture was served upon the party in possession, as required by Section 656.2, Code 1946, I.C.A., the notice of forfeiture was ineffective and no question of forfeiture was before the court. This is in accord with our holdings: See, Bull v. Weisbrod 185 Iowa 318, 170 N.W. 536; Sarazen v. Kunz 226 Iowa 1309, 286 N.W. 471; Kilpatrick v. Smith 236 Iowa 584, 19 N.W.2d 699; Eastman v. De Frees 235 Iowa 488, 17 N.W.2d 104.

Another equally strong reason why the forfeiture was ineffective is the clearly established fact, under this record, that the appellee at the time of the attempted forfeiture, was himself in default in that he had placed the legal title to the premises beyond his control. A vendor in default may not forfeit his contract. McLain v. Smith 201 Iowa 89, 202 N.W. 239; Marx v. King 193 Iowa 29, 186 N.W. 680. It is a breach of the contract for vendor to place the title to the property beyond his control during the period of time within which vendee may perform on his part. Pardoe v. Jones 161 Iowa 426, 143 N.W. 405; Benedict v. Nielsen, 204 Iowa 1373, 215 N.W. 658; Kilpatrick v. Smith, supra. While the trial court held that appellee was in...