Mayflower Realty Co. v. Security Sav. & Loan Soc.

• Decision Date: 03 November 1937
• Docket Number: 26734.
• Citation: 72 P.2d 1038,192 Wash. 129
• Court: Washington Supreme Court
• Parties: MAYFLOWER REALTY CO. v. SECURITY SAVINGS & LOAN SOC. et al.

72 P.2d 1038

192 Wash. 129

MAYFLOWER REALTY CO. v. SECURITY SAVINGS & LOAN SOC. et al.

No. 26734.

Supreme Court of Washington

November 3, 1937

Department 1.

Appeal from Superior Court, Grays Harbor County; J. M. Phillips Judge.

Action by the Mayflower Realty Company against the Security Saving &amp Loan Society and others, in which defendants filed a cross-complaint. Judgment for plaintiff, and defendants appeal.

Modified and affirmed as modified.

L. B Donley, of Aberdeen, for appellants.

Hogan & Adams, of Aberdeen, for respondent.

HOLCOMB Justice.

This involves an action brought by respondent as vendee, tried without a jury, against appellant Security Savings & Loan Society, vendor, and its successors in interest, following the federalization of this society, to enjoin appellants from forfeiting a contract, and to require appellants to accept Security Savings & Loan Society stock in payments on the contract at par value. The Security Savings & Loan Society will hereinafter be referred to as the 'Society.'

Appellant Society was the owner of a certain apartment house in Grays Harbor county, Wash., described as lot 4 in block 11, Weatherwax and Benn's addition to Aberdeen.

One J. P. Standke had an option to purchase the property and on April 25, 1933, the vendor entered into a land contract with Standke for the sale of this property. The consideration therefor was $12,100, of which $3,000 was paid upon the signing of the contract, the balance to be paid at the rate of $1,500, plus interest at 6 per cent. per annum, on April 20 of each succeeding year until the balance due on this contract with interest had been paid in full. The contract also provided: 'Any of the above payments may be paid in shares of the Security Savings and Loan Society and shall be credited hereon at the par value thereof.'

The contract provided further that time is of the essence and provided for forfeiture upon failure to make payments on principal, interest, and taxes pursuant to the terms of the contract.

On May 23, 1933, Standke assigned his interest in the contract to respondent. Payments were made on the contract in approximately the sum of $5,000 in savings and loan stock. Early in 1935, Friedlander, president of respondent corporation, called upon Goodbar Jones, president of the Society, and stated that he had learned that the Society was planning to federalize, and that he was prepared to pay off the balance due on the contract with Security Savings & Loan stock. A few days later in April, 1935, Jones told Friedlander that only cash would be received in payments on the contract. All installments maturing on the contract up to the time the bank was federalized had been seasonably paid by the vendee. Before the contract had been completely performed, the Society voluntarily federalized, thereby forming the First Federal Savings & Loan Association and the Monarch Corporation, and extinguishing the Security Savings & Loan Society stock. At the time the bank was federalized respondent had paid the sum of $4,709 on the contract.

On July 30, 1935, a notice of forfeiture of the contract was given to respondent by appellant First Federal Savings & Loan Association, by reason of an alleged overdue balance of $515 principal and $17.07 interest due on the installment of April 20, 1935. The notice of forfeiture gave respondent until August 15 to make the payments required under the terms of the contract. On or about August 8, 1935, Friedlander offered to pay the arrears in savings and loan stock, but the offer was refused by appellants.

In the answer and cross-complaint of appellants the contract was alleged to be in arrears and it was admitted a declaration of intention to demand a forfeiture had been made by reason of the breach of the contract in failing to make payments pursuant to the terms of the contract.

The court held the fair market value of the stock on April 20, 1935, was fifty cents on the dollar and therefore respondent should have the right to liquidate the unpaid balance on the contract by payment to appellants of a sum of money equal to the market value of the shares, and that no interest should be paid after the date of tender.

A number of errors are assigned but the only on that need be considered here is whether or not the trial court erred in not declaring the contract forfeited.

We have repeatedly held that forfeitures are not favored in law and are not enforced in equity unless the right thereto is so clear as to permit of no denial. Wallis v. Elliott, 154 Wash. 625, 282 P. 928; Deming v. Jones, 173 Wash. 644, 24 P.2d 85; Grosgebauer v. Schneider, 177 Wash. 282, 31 P. (2) 901.

The record indicates that the taxes were paid within the time designated in the notice of forfeiture and hence the only ground on which the forfeiture could be declared is the failure of respondent to make payments on principal and interest pursuant to the terms of the contract.

After an examination of the contract and of the record, we are satisfied that the parties to the contract intended that the purchase price might be paid either in lawful money of the United States or in shares of the Security Savings & Loan Society. The testimony shows respondent tendered to the Society the full amount of the shares of stock of that institution necessary not only to pay the balance of the installment maturing April 20, 1935, but also the entire unpaid balance of the purchase price on the contract. The tender, however, was refused by the Society by reason of the federalizing of that institution....