Lytle v. Scottish Am. Mortg.Co

• Citation: 122 Ga. 458,50 S.E. 402
• Parties: LYTLE. v. SCOTTISH AMERICAN MORTG.CO.
• Decision Date: 25 March 1905
• Court: Supreme Court of Georgia

122 Ga. 458
50 S.E. 402

LYTLE.
v.
SCOTTISH AMERICAN MORTG.CO.

Supreme Court of Georgia.

March 25, 1905.

VENDOR AND PURCHASER—EVIDENCE OF RELATION—RESCISSION OF CONTRACT—DAMAGES— STIPULATION—PAROL EVIDENCE — RECOVERY OF LAND — IMPROVEMENTS—COMPENSATION— ACCOUNTING.

1. A land contract calling for 10 payments, aggregating $1,260, designated as purchase money, and 10 payments, aggregating $2,750, designated as rental, and providing that, upon the payment of the said sums, conveyance in fee should be executed, created the relation of vendor and vendee, and not that of lessor and lessee.

[Ed. Note.—For cases in point, see vol. 48, Cent. Dig. Vendor and Purchaser, § 3.]

2. Where time is made of the essence of the contract, the vendor may exercise the reserved right to rescind when the vendee makes default.

3. Usually rescission is in toto. leaving the rights of the parties to be determined by a court of equity, and not by the abrogated contract.

[Ed. Note.—For cases in point, see vol. 48, Cent. Dig. Vendor and Purchaser, §§ 153, 154.]

4. But the law will not force parties to litigate, nor prevent them from entering into agreements to avoid litigation. They may therefore stipulate in advance as to the amount of damages to be paid if the contract is rescinded because of the vendee's default.

5. The validity of such agreement, however, is to be determined, not by the names given the stipulation, but by reference to the law applicable to liquidated damages.

6. While a valid written contract cannot be contradicted or varied by parol, it is competent by such evidence to show that the writing is but a cover for usury, penalty, or forfeiture.

7. What is called "rent" may be shown to have been really a part of the purchase money, or a device to obtain a penalty.

8. In contracts for the sale of land, the damages are capable of exact computation, and a stipulation by which an amount in excess of such legal damages shall be paid or retained is not enforceable.

[Ed. Note.—For cases in point, see vol. 15, Cent. Dig. Damages, §§ 154, 162; 168.]

9. A stipulation that, on the vendee's default in making payments, the vendor shall retain money previously paid on account of the purchase, and that the vendee shall lose all interest in the property or improvements, amounts to a penalty and forfeiture forbidden by Civ. Code 1895, § 3795.

10. If on rescission the vendor seeks to recover the land, he must account to the vendee for purchase money paid in part performance of the contract by the vendee.

11. On such rescission the vendee is to be charged with the damages occasioned by his breach, and a fair rental value for the land during the time it was held in possession under the agreement.

12. If on rescission the vendor takes back the land, he must allow for improvements made by the vendee.

13. This does not lead to the conclusion that the vendor may himself be required to pay for improvements which he did not order, and which he does not desire.

14. Where, in a suit for the recovery of land on rescission of a contract of sale, the defaulting vendee claims compensation for improvements, and the vendor disputes the value of the improvements, or is unwilling or unable to pay therefor, there must be an accounting, in which the rights of the parties must be adjusted. The decree should provide for a sale of the land, and direct the proceeds first to be applied to the payment of the amount found on the accounting to be due the vendor, and the surplus to the vendee.

15. If, with the consent of the vendor, a part of the land was sold by the vendee to a third person, and all of the purchase price therefor was paid over to the vendor, the latter, on rescission of the original contract, must account to the vendee for so much of the payment as was in excess of the value of the land thus sold, calculated on the basis of the original contract.

(Syllabus by the Court.)

Error from Superior Court, Floyd County; W. M. Henry, Judge.

Action by the Scottish American Mortgage Company against J. C. Lytle. Judgment for plaintiff, and defendant brings error. Reversed.

On February 1, 1899, the parties signed an instrument partly printed and partly written. It was designated as a land contract. By it the Scottish American Mortgage Company, Limited, in consideration of $275 to be paid yearly on the 1st of January for the full term of 10 years, "demised, leased, and rented" to Jessie C. Lytle certain real estate in Floyd county; she being bound to pay the taxes, as additional rental. On default in the payment of the taxes or rental, at the option of the mortgage company, "this contract of rental shall without notice become absolutely void except as to the obligation of [Mrs. Lytle] to pay all arrearages of rent, * * * and except that the [mortgage company] will still have the right by summary process or otherwise to collect the sums of money so due, and its liens for rent shall remain unimpaired.* * * Upon the payment to it on this date of four hundred (400) dollars, and thereafter, * * * in each

[50 S.E. 403]

* * * year during the term of the above contract of rent, of the sum of eighty-five and 10/100 (85.10) dollars (which installments or sums of money, said party of the second part agrees without option or condition to pay) in addition to the rental above stipulated for, then and in that event the said party of the first part, when all of said payments shall have been fully * * * made * * * the said party of the" first part, is to make to the said party of the second part, her heirs or assigns, * * * title in fee simple, to the premises aforesaid. * * * It is distinctly understood that time is of the essence of this agreement, and that if the said party of the second part shall fail promptly to pay at maturity any one of the said purchase-money notes, or shall at any time fail to do and perform any of the conditions of the aforesaid contract of rental by her to be performed, or shall fail-to pay promptly at maturity any one of said installments of rent, or any taxes as. aforesaid, and the said party of the first part shall have declared said contract of rental avoided as above provided, then and in either of said events, at the option of the said party of the first part and without notice to the said party of the second part, * * * this agreement to convey shall be and become absolutely null and void, and all the rights, whether legal or equitable, of the said party of the second part under this agreement to convey or under the aforesaid contract of rental, shall be absolutely forfeited, including all moneys heretofore paid by the said party of the second part under the aforesaid contract of rental or this agreement to convey."

On June 18, 1003, the mortgage company brought suit against Mrs. Lytle, attaching this contract as an exhibit, and averring that Mrs. Lytle was in default, having failed to pay $142 of the rent due on January 1, 1902, $275 of the rent due on January 1, 1903, "and has also failed and refuses to pay $85.10 in addition to said rentals due January 1, 1903"; that by agreement between the parties 15 acres of the land had been sold to J. H. Orr for $500, and that the defendant would have been entitled to a credit for the purchase price of the said 15 acres, had she complied with the agreement, but, having failed and refused to comply by the terms of the contract, petitioner has the right to declare the same null and void, preserving to petitioner the right to collect all arrearages of rent up to the date of the trial; that, in view of defendant's default, petitioner is only required, in equity and good conscience, to account for the money actually paid by the defendant on account of the contract, and is entitled to receive $275, the fair yearly rental as agreed upon in the contract; that upon such accounting defendant is not entitled to a credit for the proceeds from the 15 acres, the same never having become her property, and the sums actually paid by defendant not being suffi cient to extinguish the rent due and owing petitioner under the contract: that the total amount paid by the defendant is $881.48, which includes everything paid, whether by way of rent, interest on rent not paid at maturity, or as purchase money; that the amount due petitioner by way of rental up to June 1, 1903, was $1,130, without interest; that, deducting the $881.48 paid, it will be seen that defendant was indebted to petitioner on said debt, by way of rent, $248.52, and by the time this case is ready for trial $275 additional rent will have accrued; that defendant having given petitioner the right to avoid and rescind the contract, and to recover the land, except the 15 acres, petitioner now, upon such avoidance of the contract, offers to account to defendant for all money paid by her on account of the contract, and offers to surrender the contract itself, canceled, upon the payment of the balance due by the defendant to petitioner, and the surrender of the land less 15 acres. Wherefore, expressly waiving answer under oath, petitioner elects to rescind, declares the contract avoided, prays that it may recover the land less 15 acres, and for a judgment against the defendant for the amount due, and for such other and further relief as to the court may seem meet and proper.

The defendant filed a plea in which she made no objection to the rescission of the contract, but claimed that by reason of the rescission she was entitled to the value of her improvements on the land, and to a return of all sums paid by her, less a reasonable and fair rent, during the time she had possession of the property; that the price of the land as originally agreed on was $3,200 cash, but, as she could only make a payment...