Keystone Sheep Co. v. Grear

• Decision Date: 17 November 1953
• Docket Number: No. 2612,2612
• Citation: 263 P.2d 138,72 Wyo. 189
• Parties: KEYSTONE SHEEP CO. v. GREAR.
• Court: Wyoming Supreme Court

Page 138

263 P.2d 138

72 Wyo. 189

KEYSTONE SHEEP CO. v. GREAR.

No. 2612.

Supreme Court of Wyoming.

Nov. 17, 1953.

Clarence G. Cypreansen, R. N. Ogden, Casper, for appellant.

Edward E. Murane, R. R. Bostwick, Casper, for respondent.

BLUME, Chief Justice.

This is an action for specific performance of a contract to convey real estate. The judgment was in favor of the plaintiff and the defendant Frank C. Grear has appealed to this court. The petition alleges the following facts:

Plaintiff is a corporation duly organized and existing under the laws of the State of Wyoming. On February 10, 1950, Frances McCarthy, then a single person, was the owner of Section 35, in Township 36 North, Range 87 West of the Sixth Principal Meridian in Natrona County, Wyoming, and entered into an agreement with the plaintiff in which she agreed to execute a warranty deed to said real estate for the consideration of $3,200. A copy of the agreement is attached and made part of the petition. The consideration for the deed was fair and reasonable. In compliance with the agreement, there was paid to Frances McCarthy on behalf of Keystone Sheep Company the sum of $1,600 on November 15, 1950. Thereafter an additional sum of $1,000 was paid by plaintiff and credited to the estate of Frances McCarthy Grear and thereafter the balance of $600 was paid to Ruth A. Olsen, administratrix of the estate of Frances McCarthy Grear. Keystone Sheep Company has fully complied with the agreement for deed and has paid the full consideration therefor. Frances McCarthy during her lifetime failed to execute the warranty deed to plaintiff covering said real property. She died on or about March 31, 1951, intestate. Her estate was probated in Natrona County, Wyoming. A decree of distribution was made and entered in said estate on December 31, 1951. Defendant Frank C. Grear is the surviving husband of the deceased and under said decree the property involved herein was distributed and set over to him. Before the commencement of the action, plaintiff demanded of the defendant to execute the deed mentioned in the contract but he has failed to do so. Plaintiff accordingly asked for a specific performance of the contract above mentioned.

The defendant demurred to the petition on the ground that it failed to state a cause of action. This demurrer was overruled. Thereafter the defendant filed his amended answer in the cause alleging that the petition fails to state a cause of action against the defendant and admitting substantially all the allegations of the petition except as here mentioned. He denied that the payments were made as alleged in the petition but on the contrary alleged in paragraph 7 in substance that the sum of $3,200 paid as alleged in the petition was not paid on the contract in question, but was paid by Ruth McCarthy individually on account of a loan (or accommodation) made to her by Frances McCarthy during the latter's lifetime.

The contract in question herein, which is admitted to have been executed by Frances McCarthy during her lifetime, called for the payment of $3,200 but stated that $1 was paid down. We think that the dollar was mentioned pro forma and we shall ignore that amount in the further discussion herein. The contract was executed by Frances McCarthy Grear while she was single. The whole amount of $3,200 was payable on April 10, 1950, but, as shown by the petition, was not paid until later and by three installments as alleged. Later in 1950, or the early part of 1951, Frances McCarthy married the defendant Frank C. Grear. They went to California, the date not appearing, and Frances was killed in an automobile accident, the automobile being driven by her husband who was arrested by reason thereof. Bail was furnished by Ruth McCarthy in the sum of $1,000. The result of the case against the defendant does not appear. The stock of the Keystone Sheep Company, plaintiff herein, was all owned by Ruth McCarthy, except two shares issued to two individuals to qualify them as directors, and Frances McCarthy, sister-in-law of Ruth, was one of them. In other words, for all practical purposes, the Sheep Company and Ruth McCarthy were substantially one and the same party and it seems that all the payments on the contract herein were made by Ruth McCarthy individually.

It has not been easy for us to determine just how to discuss this case in order to cover the various points raised in the brief of counsel but we shall do the best we can to reach at least the fundamental arguments which have been advanced by counsel for appellant.

1. Demurrer.

Counsel interposed a demurrer alleging that the petition failed to state cause of action. After the demurrer was overruled, counsel still insisted upon the same point in the answer which the defendant filed. Counsel assert that the demurrer should have been sustained because the petition failed to disclose performance by the plaintiff of the contract and no explanation was given because of the belated payments. The requirement in pleadings necessary in suits for specific performance, § 126, in 81 C.J.S., Specific Performance, § 126, page 680. And the point as to whether a demurrer to a petition in such action is good is discussed in 81 C.J.S., Specific Performance, § 138, page 706. The petition in this case alleges that the plaintiff has fully complied with the agreement for deed, and has paid the full consideration therefor. This allegation, it seems, was admitted by the demurrer. 81 C.J.S., Specific Performance, § 138, page 708. Counsel for appellant however, appear to contend that the contract itself, to which reference was made in the petition, should be considered and that the contract on its face shows that, as a matter of fact, it was not literally complied with. We might say in this connection that the argument made by counsel also goes to the point raised by counsel as to whether or not it is equitable to enforce specific performance in this case. So far as the petition is concerned, it does not allege when the payments required to be made under the contract should be made. That is to say, it does not disclose that the payments to be made under the contract were not made at the required time. But counsel for appellant seem to think that by considering the petition and the contract together, it is clearly shown that the payments were not made at the required time, namely on April 10, 1950, and it thus appears that the demurrer should have been sustained, and that it further appears that it is inequitable to decree specific performance. The main reason relied upon by counsel for appellant is the fact that time was made of the essence of the contract. So let us examine the contract.

It provides in part that the sale is made 'upon the Express Condition, which is hereby declared a condition precedent, Time being the Essence of such condition; that the said party of the second part, etc.,' should pay the amount specified and further provides as follows: 'Provided Always, and these presents are upon the express condition, that in case of failure of said party of the second part * * * to perform all or either of the covenants and promises on its part to be performed, then said party of the first part, her heirs, executors, administrators or assigns, shall have the right to declare this contract void, * * *.' While accordingly the contract states that time is of the essence, it is modified by the proviso above quoted. Discussing that matter it is stated in Pomeroy's Specific Performance on Contracts, 3rd Ed., § 393, as follows: 'Returning to the stipulations which made the time of payment essential, if the clause be not absolute that the contract shall be ipso facto void upon a default in payment at the time, but its object and its language are to give the vendor his election and power to put an end to the agreement upon the vendee's failure in paying at the appointed day, then the vendor, if he intends to avail himself of the provision, must give the purchaser a timely and reasonable notice of his intention to avoid the contract, or must do some unequivocal act which unmistakably shows that intention, for the vendor cannot treat the default alone as terminating the agreement.' In 58 C.J. 1093 and 81 C.J.S., Specific Performance, § 106, pages 628, 629, that rule is stated to be the general rule.

In the case of Gaughen v. Kerr, 99 Iowa 214, 68 N.W. 694, 695, 696, the contract in question contained clauses very similar to the clause contained in the contract here and the court said: "This brings us to a consideration of the question as to whether there has been such a forfeiture of the contract as to bar the plaintiff's rights thereunder. The time of payments of the notes is made, by express stipulation, of the essence of the contract. The parties have made it an essential part of the contract, but not in that sense as claimed by the defendant in his contention * * *. A failure to pay promptly when due does not ipso facto work a forfeiture of the contract. The parties did not so stipulate, and a court of equity will not extend the language beyond its fair import, to sustain a forfeiture, but rather limit it to its literal meaning, when that is necessary to give effect to its provisions, and maintain the rights of the parties under the contract. The language of the contract is that, upon failure to pay promptly when due, 'then the first party shall have the right to declare this agreement null and void.' This is a stipulation for the benefit of the grantor, and under it he may elect to declare a forfeiture or continue the contract in force, and upon his failure to make such election the contract remains in force." The court thereupon mentioned the fact that it would be inequitable for a seller not to elect to declare the contract void when the property might depreciate in value but insist upon the literal terms of the contract making time of the essence when the value of the property would...