Papesh v. Wagnon

• Decision Date: 03 May 1916
• Citation: 29 Idaho 93,157 P. 775
• Parties: W. W. PAPESH, Appellant, v. W. B. WAGNON, Respondent
• Court: Idaho Supreme Court

157 P. 775

29 Idaho 93

W. W. PAPESH, Appellant, v. W. B. WAGNON, Respondent

Supreme Court of Idaho

May 3, 1916

CONTRACT FOR SALE OF LAND-TIME ESSENCE OF CONTRACT-CONDITIONS PRECEDENT-NOTICE OF FORFEITURE-ENCUMBRANCE ON LAND AT TIME OF FINAL PAYMENT-WAIVER-TENDER TO ESCROW HOLDER-RESCISSION BY VENDOR.

1. In the case of a contract for the sale of land upon instalments where time is made the essence of the contract and it is provided that upon default by the vendee in any of the conditions to be performed by him the contract shall become void and he shall forfeit his rights thereunder, and any payments that may have been made to the vendor shall be deemed liquidated damages, and it is further provided that upon performance of all the conditions of the contract by vendee, vendor shall execute and deliver a good and sufficient warranty deed to vendee, and under such contract a deed to the land in question is placed in escrow, and the vendee fails to make the final payment on said contract at the time said payment becomes due, and the vendor declares no forfeiture, but about six months thereafter submits to vendee a statement of account and about a year thereafter withdraws his deed from escrow, and subsequently the vendee brings suit against the vendor to recover all payments made on the contract, alleging that vendor was not in a position at the time the last payment became due to give good title to the land, for the reason that said land was encumbered by an outstanding mortgage, held that vendee was not in a position to demand a deed until he had complied with the conditions precedent of his contract, and in the absence of acts or conduct on the part of vendor such as would amount to a waiver of vendee's default, all payments theretofore made according to the terms of the contract became forfeited to the vendor under such contract.

2. In the case of a contract for the sale of land, where time is made the essence of the contract and it is stipulated that in the event of default by the vendee in performing any of the conditions of the contract the contract shall become void, and such default on the part of the vendee occurs, the vendor is not required to serve notice upon the vendee of his intention to declare a forfeiture.

3. Where a vendee fails to perform an obligation that is a condition precedent in a contract for the purchase of land the vendor may rescind without tendering a deed; and if the deed has been placed in escrow pending a performance of the conditions, tender of the same need not be made, since the vendee knows where it is and how he can get it.

4. A statement of account under a contract for the purchase of land submitted by vendor to vendee after the latter has defaulted in the final payment under the contract, in which statement such final payment is offset by a mortgage on the land owing by vendor, with the amount of which mortgage vendee is credited in such statement, is not a waiver or breach of the conditions of the contract on the part of the vendor.

5. Under a contract for the sale of land where time is made the essence of the contract, covenants on the part of the vendee are conditions precedent to the execution and delivery of a deed from vendor; and where the land in question is encumbered by a mortgage, it is the duty of the vendor, after the performance of the precedent conditions, to forthwith execute and deliver such deed to the vendee and to procure a release of the mortgage on the land. The circumstance of an outstanding mortgage lien in an amount equal to the final payment under the contract would furnish no legal excuse for the failure of the vendee to pay or tender the amount due upon the contract, in the absence of an allegation that vendor was unable or unwilling to give an unencumbered title to the land when vendee had complied with his part of the contract.

6. The tender by vendee to an escrow holder of the amount due under a contract for the purchase of land after the time for making such payment has expired and at a time when, according to the provisions of the contract, vendee has forfeited his right to a performance on the part of the vendor, and vendor has accordingly withdrawn a deed to the land from escrow, will not avail to restore the rights of the vendee under such contract.

[As to when time is or may become of the essence of contracts for the sale of land, see note in 104 Am.St. 265]

APPEAL from the District Court of the Eighth Judicial District for Kootenai County. Hon. R. N. Dunn, Judge.

Action to rescind an executory contract and to recover money paid thereunder. Judgment for defendant. Affirmed.

Judgment sustained. Costs awarded to respondent.

Reed &amp Boughton, for Appellant.

The law is clear that the covenant by the vendor in an executory contract of sale, to give a "good and sufficient warranty deed," is in the eyes of the law a contract to give a marketable title free from encumbrance. (39 Cyc., pp. 1445 and 1446, with many authorities cited.) It follows that if the covenant on the part of the vendor to execute a "good and sufficient warranty deed" was concurrent with the obligation of the vendee to pay the last instalment of the purchase price, that the vendor was in no condition to declare the contract forfeited, or claim the balance due until he had cleared title and thus put himself in a position to perform. (Gibson v. Rouse, 81 Wash. 102, 142 P. 464; Boyd v. Boley, 25 Idaho 584, 139 P. 139; Kessler v. Pruitt, 14 Idaho 175, 93 P. 965; Bank of Columbia v. Hagner, 1 Pet. (26 U.S.) 455, 7 L.Ed. 219.)

If the covenant to convey is to convey upon payment of the last instalment, the covenants to pay the prior instalments are independent of the covenant to convey, but the payment of the last instalment and the delivery of the deed are dependent and concurrent acts. (Kessler v. Pruitt, supra; Christy v. Baiocchi, 53 Wash. 644, 102 P. 752; Bean v. Atwater, 4 Conn. 3, 10 Am. Dec. 91; Sheeren v. Moses, 84 Ill. 448; Duncan v. Charles, 5 Ill. (4 Scam.) 561; Reard v. Ephrata Orchard Homes Co., 78 Wash. 180, 138 P. 678; Harris v. Reed, 21 Idaho 364, 365, 121 P. 780.)

A party to an agreement for the sale of real estate is not in a position to declare a forfeiture of the contract while he is not in a position to make a marketable title to the real estate in question. (Sievers v. Brown, 34 Ore. 454, 56 P. 171, 45 L. R. A. 642; Higinbotham v. Frock, 48 Ore. 129, 120 Am. St. 796, 83 P. 536; Wheeling Creek Gas, Coal etc. Co. v. Elder, 54 W.Va. 335, 46 S.E. 357; Cabrera v. Payne, 10 Cal.App. 675, 103 P. 176.)

The taking of interest on the delinquent purchase price amounts to an unequivocal recognition of the contract, and constitutes a waiver of the time clause. (Merriam v. Goodlett, 36 Neb. 384, 54 N.W. 686; Robinson v. Trufant, 97 Mich. 410, 56 N.W. 769; Smith v. Northern P. R. Co., 22 Wash. 500, 509, 61 P. 255.)

"When it is apparent that tender and demand will be unavailable, as where the vendor gives notice of his intention not to perform, absolutely refuses to perform, puts himself in a position in which performance is impossible, offers a defective title, or is unable to perform, a formal tender and offer of payment and demand of deed by the purchaser is not necessary to entitle him to recover back what he has paid under the executory contract, as the law does not require idle ceremonies." (39 Cyc. 2048; Merrill v. Merrill, 102 Cal. 317, 36 P. 675; Joyce v. Shafer, 97 Cal. 335, 32 P. 320; Cabrera v. Payne, supra; Walters v. Mitchell, 6 Cal.App. 410, 92 P. 315.)

Featherstone & Fox, for Respondent.

There is no provision in the contract that left the termination thereof or the forfeiture thereunder optional with the vendor, so that no declaration of forfeiture or notice to the vendee were necessary, but by the clear provision of the contract the default of the vendee rendered the contract void and worked a forfeiture of the money paid. (Kessler v. Pruitt, 14 Idaho 175, 93 P. 965; Prairie Development Co. v. Leiberg, 15 Idaho 379, 98 P. 616; Rischar v. Shields, 26 Idaho 616, 145 P. 294.)

The deed to the property as alleged by appellant was in escrow at the bank where the final payment was to be made at the time the payment became due. That was a sufficient tender if any tender by respondent was necessary. (39 Cyc. 1377.)

Appellant seeks to recover the forfeiture caused solely by his own wilful default and abandonment of the contract. He is in no position to demand a repayment or to ask the aid of the court to recover the forfeiture. (39 Cyc. 2002-2025.)

The mortgage was not such an encumbrance as would entitle plaintiff to disregard his contract entirely without even making an objection thereto or a demand upon defendant to have it released. (39 Cyc. 1408; Garrett v. Cronin, 11 Idaho 214, 81 P. 615.)

It is not claimed by appellant that he at any time made a demand for the deed, either on the date of maturity of the contract or after his default. (Brinton v. Lewiston Nat. Bank, 11 Idaho 92, 81 P. 112.)

BUDGE, J. Sullivan, C. J., and Morgan, J., concur.

OPINION

BUDGE, J.

This is an action brought by appellant to recover part of the purchase price paid under an executory contract to purchase a tract of land in what is known as the Post Falls Irrigation Tract, located in Kootenai county. The contract recites the consideration to be paid for the land. Two hundred dollars was paid on the delivery of the contract, and the balance was to be paid at the Scandinavian-American Bank, Spokane Washington, upon various dates stipulated in the contract, together with interest on the unpaid balance at eight per cent. All payments were made under the contract except the last of $ 600 and interest, which was due and payable according to the terms of the...