Keyworth v. Wiechers

• Decision Date: 31 October 1934
• Docket Number: No. 96,June Term, 1934.,96
• Citation: 273 Mich. 347,263 N.W. 57
• Parties: KEYWORTH v. WIECHERS et al. SAME v. MORAINE LAND CO. et al.
• Court: Michigan Supreme Court

273 Mich. 347

263 N.W. 57

KEYWORTH

v.WIECHERS et al.

SAME

v.MORAINE LAND CO. et al.

No. 96, June Term, 1934.

Supreme Court of Michigan.

Oct. 31, 1934.

On rehearing.

Decree reversed.

For former opinion, see 269 Mich. 687, 257 N. W. 755.

POTTER, C. J., and NORTH and WIEST, JJ., dissenting.

Appeal from Circuit Court, Midland County, in Chancery; Ray Hart, judge.

Argued before the Entire Bench.

Charles H. Goggin, of Alma, Chester E. Morris, of Midland, and Shields, Silsbee, Ballard & Jennings, of Lansing, for appellant.

Penny & Clark, of Muskegon, and James E. Ryan, of Mt. Pleasant, for appellees.

FEAD, Justice.

Upon re-examination of the case on rehearing, I find myself unable to agree fully with any of the other opinions. The facts appear in the original report of the case, in 269 Mich. 687, 257 N. W. 755, but certain specific and undisputed facts properly may be called to mind:

(1) An essential modification of the original Wiechers contract was to release him from personal liability for the purchaseprice and give him the option to make payment or not, as he pleased.

(2) Plaintiff claims the benefit only of such payments as Wiechers and the Moraine Land Company made before default and forfeiture. She offers, and must pay, the balance of her contract with the bank, now owned by the Moraine Land Company. The benefit she seeks is only the same which accrues to all vendors when they forfeit land contracts.

(3) The Moraine Land Company paid $500 and interest on the payment of $1,000 and interest due in November, 1931, and obtained extension of time to pay the balance to January 15, 1932. The notice of forfeiture was served December 18th. The contracted 90-day period of grace to cure the default expired March 18th. Defendants' attorney wrote plaintiff's attorney on December 24th stating that the balance of principal would be paid January 15th. It was not paid then, nor later. On March 9th defendants' attorney wrote plaintiff's attorney asking for statement of the amount necessary to adjust the contract. Plaintiff's attorney replied March 14th. No adjustment was had nor payments made either to plaintiff or the bank before March 18th.

(4) There is no testimony that before March 18th the Moraine Land Company had any negotiations with the bank to pay the contract in full or purchase its title. The earliest dates appearing in the record indicating such negotiations are April 15, 1932, the date of a draft, and April 18th, the date of the deed from the bank to William E. Schauppner. There is no testimony of prior negotiations. The deed was not paid for nor delivered until November 30, 1932, after this suit was commenced. The title was later conveyed to the Moraine Land Company.

(5) There is no testimony of a cloud having appeared on the title or been suggested until June, 1932. The claimed cloud was the Freeman oil lease, given by an ancient owner of the land, but then a stranger to the title. There is no evidence that the lease was mentioned or taken into consideration between the bank and the purchaser of the original vendor title, or that it delayed or affected negotiations, except the isolated fact that $50 was paid the Freemans and they gave a quitclaim deed to Schauppner, dated December 1, 1932, but not acknowledged until January 24, 1933.

(6) The negotiations between the bank and the Moraine Land Company for deed were not disclosed to plaintiff, nor did she know of them until after the deed had been delivered. Plaintiff never consented to the negotiations nor transfer. The deed from the bank to Schauppner was made subject to plaintiff's contract and the taxes.

(7) There are two vendors involved who must not be confused; the bank in the contract to plaintiff and the plaintiff in the contract to Wiechers.

(8) There is no testimony that in purchasing the original title from the bank in the name of a third party the Moraine Land Company purported or pretended to the bank, to plaintiff, or in its own mind, to purchase in fulfillment of or under the authority of the Wiechers contract.

(9) There is no evidence of waiver of strict time of payment under the modified contract. On the contrary, plaintiff gave notice of forfeiture at once after she discovered the first default in payment.

(10) After the default and before the period of grace expired, plaintiff made contract with others to finance here contract with the bank, subject to the default not being cured, and in February, 1933, completed the arrangement by new contract, and obtained the money to make tender of the purchase price to the bank and Moraine Land Company.

I cannot view the contract between plaintiff and Wiechers as an option, because, under the original contract, Wiechers took a vested vendee interest in real estate (gas, oil, and minerals), which was continued and confirmed, not divested, by the amended agreement; by the express terms of the supplemental contract, Wiechers had ‘an interest in said property’ which would remain in him until ‘forfeited’ by election and affirmative action of plaintiff; and there can be no doubt that the parties intended that, had any gas, oil, or minerals been produced from the land while the contract was in force, Wiechers would have been entitled to one-half of such production as would have accrued to plaintiff under her outstanding oil lease or otherwise. These positive incidents of conveyance of real estate are wholly inconsistent with the effect of an option, and must preponderate, in establishing the character of the contract, over the personal privilege of Wiechers to pay or not, at his pleasure. The agreement was something more than an option.

However, specific designation of the agreement as an option or land contract is unnecessary to decision, may confuse the issue, as it already has done, and might afford a vexatious precedent. The point of the case is whether the forfeiture of the contract was valid and effective. The procedure for forfeiture was set up in the contract. The law of options is immaterial to the point in issue unless it would justify us in brushing aside the contract provisions as to notice of forfeiture and grace to cure default and in holding that forfeiture automatically followed failure to pay on the due date, regardless of such provisions. No one does, or could, so contend. The law of land contracts is immaterial to the point unless it would afford Wiechers or his assignee greater rights or privileges against forfeiture than the contract provides. The most liberal protection against forfeiture which the law of land contracts affords a vendee is that, where time is not of the essence of the contract and where the vendor has waived strict performance, the vendor, in order to terminate the contract, must give the vendee notice of forfeiture and accord him a reasonable time thereafter to perform. The contract at bar is more liberal to the vendee than the law of land contracts would be, because, in view of the small amount of the default and the want of showing of excuse for failure to pay it, 90 days of grace after notice was a longer time than a court would have been justified in holding reasonable; and, moreover, the record contains no evidence of waiver of strict performance of the final agreement by plaintiff.

Consequently, the issue must be determined upon the contract as made, regardless of the name by which it is called.

Two suits, commenced by plaintiff, consolidated on stipulation, are involved. The first bill, filed against Wiechers and the Moraine Land Company before the latter had obtained the deed from the bank, in substance prayed for decree enforcing the forfeiture. The second, against the bank and the Moraine Land Company, prayed conveyance to plaintiff of the original bank vendor title, upon payment of the balance of her contract with the bank. Obviously, plaintiff is entitled to decree for such conveyance, subject to any rights of the Moraine Land Company under the Wiechers contract. Giving the broadest construction possible to the pleadings and allowing all imaginable amendments, the status of the contract depends upon (1) whether the forfeiture was valid, and (2) whether, if valid, the Moraine Land Company has made out an equitable case for relief from the forfeiture.

Ordinarily, a court of equity will not aid in enforcing a forfeiture, but will dismiss the bill and leave the party to his remedy at law. However, the rule is not hard and fast, but, in some cases, equity will recognize a valid forfeiture and grant appropriate relief, Negaunee Iron Co. v. Iron Cliffs Co., 134 Mich. 264, 96 N. W. 468, or it will inquire whether or not a forfeiture has occurred, declare the fact, and thereafter, proceed in the particular case as the fact is found, Miller v. Steele, 146 Mich. 123, 109 N. W. 37;Pendill v. Union Mining Co., 64 Mich. 172, 31 N. W. 100;Lozon v. McKay, 203 Mich. 364, 169 N. W. 11.

‘It is true equity dislikes to adjudge a forfeiture, and as a rule will do so only when no other adequate remedy is at hand, but where parties have, by lawful contract, expressly provided for a forfeiture, equity is not squeamish about granting what they have agreed to.’ Village of Grandville v. Grand Rapids, H. & C. Railway, 225 Mich. 587, 196 N. W. 351, 353, 34 A. L. R. 1408.

On the other hand, the jurisdiction of equity to relieve from a forfeiture on equitable grounds is undoubted. But relief will be denied when the default was the result of gross negligence or willfulness. 21 C. J. p. 104.

The record discloses no equities running to defendants to justify decree setting aside the forfeiture or relieving from it.

The project was an ordinary and common oil speculation. The parties were sui juris and dealt at arm's length. If there was any inequality, Wiechers was dominant because he furnished the money, dictated the terms of the transaction, and had the greater experience in oil speculations.

Wiechers defaulted in the original contract. The supplemental agreement was drafted by...