Lum v. Gertrude

• Decision Date: 03 February 1958
• Docket Number: No. 3055.,3055.
• Citation: 42 Haw. 286
• Court: Hawaii Supreme Court
• Parties: Q. C. LUM, ALSO KNOWN AS QUON CHOCK LUM v. GERTRUDE V. STEVENS, ADMINISTRATRIX OF THE ESTATE OF FRANK SOFFRA, DECEASED.

42 Haw. 286

Q. C. LUM, ALSO KNOWN AS QUON CHOCK LUM

v.GERTRUDE V. STEVENS, ADMINISTRATRIX OF THE ESTATE OF FRANK SOFFRA, DECEASED.

No. 3055.

Supreme Court of the Territory of Hawai‘i.

Argued November 22, 1957.

Decided February 3, 1958.

OPINION TEXT STARTS HEREAPPEAL FROM CIRCUIT JUDGE FIRST CIRCUIT, HON. CALVIN C. MCGREGOR, JUDGE.

Syllabus by the Court

In a suit for specific performance time is not ordinarily regarded as of the essence of a contract. Time may be made essential. Parties may make it so by express stipulation or by otherwise clearly manifesting their intention that the contract shall be performed on or before a specified day.

When time is essential, a party seeking specific performance will generally be denied the remedy unless he has performed or tendered the performance of his obligations within the specified time.

In this case time is made essential by a clear manifestation of intention by the parties to make time of the essence of the contract.

In a suit for specific performance, technical rules governing tender in actions at law are inapplicable. Tender in a suit for specific performance means a present willingness and ability in good faith to perform the acts required of one by the agreement, provided that the other will concurrently do the things which he is required by the contract to do, and notice by the former to the latter of such readiness, willingness and ability.

In this case there is insufficient showing of readiness and ability on the part of the party seeking specific performance to perform his obligation under the contract.

In decisions rendered after the adoption of Hawaii Rules of Civil Procedure, Rule 52 (a) of the rules applies, and R. L. H. 1945, § 10107, requiring the trial judge to state reason for his decision does not apply.

Under Rule 52 (a) of the Hawaii Rules of Civil Procedure, this court may not set aside a finding of the trial judge unless it is left with a definite and firm conviction that a mistake has been made by the judge. In this case, this court is not left with such conviction.Katsugo Miho ( Fong, Miho, Choy & Chuck with him on the briefs) for appellant.

Hyman M. Greenstein (also on the brief) for appellee.

RICE, C. J., STAINBACK AND MARUMOTO, JJ.

OPINION OF THE COURT BY MARUMOTO, J.

This is an appeal from a decree denying the specific performance of a contract for the sale of 16.86 acres of land in Kalihi Valley, Honolulu. The suit was originally filed by Q. C. Lum, purchaser, against Frank Soffra, seller. During the pendency of the suit in the court below, Soffra died and Gertrude V. Stevens, administratrix of his estate, was substituted as respondent.

The contract upon which the suit is based was prepared by Benjamin Kong, a real estate broker, on a form of “Initial Payment Receipt and Contract” generally used by brokers in Honolulu. It specifies a purchase price of $22,500, payable $1,000 down and balance “in cash within 30 days or sooner, commencing November 8, 1947.” It provides that in the event that the purchaser fails to pay the purchase price as therein provided, the seller may cancel the same and retain the initial payment as liquidated damages, and that in the event that the seller fails to consummate the sale, the purchaser not being in default, the purchaser may file and maintain a bill in equity for the specific performance thereof. It also contains the following rider: “November 7, 1947. The entire gross purchase price, $22,500 will be paid in cash upon execution and delivery of Deed. /s/ Q. C. Lum.” Lum's name on the rider is typewritten and not signed.

The trial judge denied specific performance on the basis of his findings that time was of the essence of the contract and that Lum failed to make a timely tender of the purchase price to Soffra. Lum appealed on the ground that the judge erred in making such findings and on the further ground that he failed to give any reason for such findings.

In a suit for specific performance, principles developed in courts of equity apply. In equity, time is not ordinarily regarded as of the essence of a contract. However time may be made essential. Parties may make it so by express stipulation or by otherwise clearly manifesting their intention that the contract shall be performed on or before a specified day. Where there is a clear manifestation of intention that time shall be of the essence, a party seeking specific performance will generally be denied the remedy unless he has performed or tendered the performance of his obligations within the specified time. (Martin v. Morgan, 87 Cal. 203, 25 P. 350; Wimer v. Wagner, 323 Mo. 1156, 20 S. W. [2d] 650; Stern v. Shapiro, 138 Md. 615, 114 Atl. 587; Dodge v. Galusha, 151 Neb. 753, 39 N. W. [2d] 539; Fullerton v. McLaughlin, 24 N. Y. S. 280; 4 Pomeroy, Equity Jurisprudence, 5th ed., § 1408; 49 Am. Jur., Specific Performance, § 42)

In Pomeroy's Equity Jurisprudence, supra, it is stated: “Time may be essential. It is so whenever the intention of the parties is clear that the performance of its terms shall be accomplished exactly at the stipulated day. The intention must then govern. A delay cannot be excused. A performance at the time is essential; any default will defeat the right to a specific enforcement.” The statement appears too extreme because it allows no exception. The following statement in American Jurisprudence, supra, is more in accordance with the decided cases: “Time may be made of the essence of the contract by express stipulation, or even without an express stipulation to that effect where such intention is clearly manifested from the agreement as a whole, construed in the light of the surrounding facts. In either case the court may refuse to decree specific performance where it appears that the plaintiff failed to perform on his part within the stipulated time, unless there is something in the facts to take the case out of the usual rule.”

With respect to tender, it is stated as a general rule that technical rules governing tender in actions at law are inapplicable in equity and that tender in a suit for specific performance means “a present willingness and ability in good faith to perform the acts required of one by the agreement, provided that the other party will concurrently do the things which he is required by the contract to do, and notice by the former to the latter of such readiness, willingness and ability.” (49 Am. Jur., Specific Performance, § 146; Lewis v. McCreedy, 378 Ill. 264; 38 N. E. [2d] 170)

We shall consider the evidence adduced at the trial with the foregoing principles in mind. The evidence is conflicting. Lum, Soffra and Kong did not agree in their testimonies. With reference to such conflict the trial judge stated: “To a large measure the case resolves itself into one of credibility of witnesses. The Court was deeply impressed with the frankness and candor of the Respondent, who was called by the Petitioner at the outset as an adverse witness. The Respondent died during the trial thereby foreclosing him from appearing as a witness in his own behalf at the close of the Petitioner's case. To the extent, however, that his testimony was contradicted by Mr. Ben Kong, real estate broker, and the Petitioner, the court is of the opinion that the Respondent is worthier of belief than either of them.”

In June 1947 Soffra listed the property for sale with Kong for $25,000. Kong did not receive any offer to purchase at that price. On November 3, he received two offers to purchase for $22,500, one from Lum and the other from Roy Soko Tomihama. Each offer was accompanied by a deposit of $1,000 on account of the purchase price. These offers were reduced to writing on forms prepared by Kong.

Lum's offer provided for the payment of the purchase price as follows: “$4,000 cash upon execution of an agreement of sale, balance to be paid in full within one year or sooner at 5% interest per annum; seller to give a partial release upon any lot sold after subdivided.” Tomihama's offer was “$1,000 cash, balance, $21,500, to be paid within 60 days.” On November 7 Lum signed a rider to his offer which provided for the payment of the entire purchase price upon execution and delivery of deed.

On November 8 Soffra went to Kong's office. Soffra had prior knowledge of Tomihama's offer because Tomihama had seen him personally after submitting the offer to Kong. It is not clear whether Soffra had prior knowledge of the details of Lum's offer. In any event, when Soffra went to Kong's office, he discussed the two offers with Kong.

Kong advised Soffra to accept Lum's offer, stating: “Well, Mr. Lum was the first, and he is interested in it, and he is sincere, and he has the funds, and I think you should give him every consideration, and in the event, if it should fall through, then this other party should have the preference.” Soffra did not like the terms of payment in Lum's offer, even with the rider, and insisted upon cash payment of the purchase price within thirty days.

Thereupon, according to Soffra, Kong prepared the contract in this case, which specifically provides for such payment. Soffra also testified that when he signed the contract Lum had not yet signed it. On this point Kong contradicted Soffra. Kong testified that he prepared the contract on November 3 and Lum signed it on the same day.

Soffra's testimony is more plausible. The contract provides for the payment of the balance of the purchase price within thirty days “commencing November 8, 1947.” It is difficult to believe that Kong prepared a contract containing such language on November 3, particularly in view of the fact that he did not insert any reference to the commencement date of November 8 in Lum's original offer or Tomihama's offer, both of which he prepared on November 3.

When Soffra signed the contract, he in effect rejected Lum's original offer and made a counter offer in which he required the payment of the purchase price within thirty days. Lum, by signing the contract,...