Pence v. Tidewater Townsite Corp.

• Decision Date: 10 June 1920
• Parties: PENCE. v. TIDEWATER TOWNSITE CORPORATION.
• Court: Virginia Supreme Court

103 S.E. 694

PENCE.

v.TIDEWATER TOWNSITE CORPORATION.

Supreme Court of Appeals of Virginia.

June 10. 1920.

Appeal from Circuit Court, Lunenburg County.

Suit by the Tidewater Townsite Corporation against A. E. Pence. Decree for complainant, and defendant appeals. Reversed and remanded, with directions.

W. E. Fowler, of Victoria, and W. E. Nelson, of Lunenburg, for appellant.

N. S. Turnbull, Jr., of Victoria, for appellee.

KELLY, P. In September, 1907, the Tidewater Townsite Corporation sold and conveyed lots 17, 18, 19, 20, 21, and 22 of block 13, in the town of Victoria, to Mrs. A. E. Pence. The consideration recited in the deed in general terms was "one thousand dollars and other valuable considerations hereinafter set forth, " and immediately following the description of the property, there was this provision:

"And, further, the said A. E. Pence, as a part of the consideration for this conveyance, agrees and binds himself to erect upon the property hereby conveyed within six months from the date hereof a building to cost seven hundred and fifty dollars or more, excepting in case of sickness; then the said time to be extended three months. Should the said A: E. Pence fail to erect said buildings within the time specified, then and in that case lots Nos. 20, 21, and 22 shall revert to the said Tidewater Townsite Corporation, without cost or charge to the said party of the first part."

Mrs. Pence failed to erect a building of any kind upon either of the lots. In August, 1918, the Tidewater Townsite Corporation brought this suit in equity to annul and rescind the deed as to lots 20, 21, and 22, proceeding upon the theory that the agreement to build on the property was a condition subsequent, the breach of which entitled the complainant to a cancellation of the deed and a reinvestiture of the title as to the three lots named.

The defendant demurred, assigning a number of grounds, among which were (1) that the bill alleges a breach of a covenant, for which there is an adequate remedy at law; and (2) that the bill prays for the forfeiture of the title of real estate, which equity will not actively enforce. The circuit court overruled the demurrer, and thereupon the defendant answered, proof was taken on both sides, and upon final hearing the court entered a decree holding that the agreement to build was a condition subsequent, and directing that the deed be annulled as to lots 21, 22, and 23, and the title thereto vested in the complainant. From that decree this appeal was allowed.

A number of points were raised by the assignments of error, but in our view of the case it will be only necessary to consider two questions: First, did the court err in holding that the stipulation in the deed requiring the grantee to build on the lots constituted a condition subsequent? and, second, did the court err in holding that a court of equity could properly enforce the forfeiture of title arising from the breach of the condition? We will consider these two questions in their order.

1. Conditions subsequent, because they tend to destroy estates, are not favored in law, and when effective to work a forfeiture of title they must have been created by express terms or clear implication. Millan v. Kephart, 18 Grat. (59 Va.) 1, 8; Alexandria & Wash. R. Co. v. Chew, 27 Grat. (68 Va.) 547, 558; King v. N. & W. Ry. Co., 99 Va. 625, 39 S. E. 701; People's Pleasure Park Co. v. Rohleder, 109 Va. 439, 444, 61 S. E. 794, 63 S. E. 981; 2 Dev. on Deeds (3d Ed.) §§ 970, 970b.

But the converse proposition is equally well settled. If it is the clearly expressed intention of the parties to create an estate upon a condition subsequent, the courts must give effect to such intention. 2 Dev. on Deeds (3d Ed.) § 970d; Epperson v. Epperson, 108 Va. 471, 475, 62 S. E. 344.

The language of the deed in the instant case clearly creates a condition subsequent. The specified consequence of the breach, namely, that the title as to lots 20, 21, and 22 shall revert to the grantor, stamps it as such. Graves' Notes on Real Property, § 252, p. 320, and authorities cited; 2 Min. Inst. (4th Ed.) 492.

The circuit court was right, therefore, in refusing to sustain the demurrer on the alleged ground that the stipulation was a covenant and not a condition; and the further question whether, if it had been merely a covenant, the remedy at law would have been adequate, need not be considered.

2. Coming, now, to the second question requiring consideration on this appeal, it is insisted that, inasmuch as this is a suit for the express and sole purpose of enforcing a forfeiture of the title to real estate for breach of a condition subsequent, a court of equity cannot properly grant the relief.

The word "forfeiture" is variously defined In the books, and its exact signification varies more or less, according to the connection in which it is used; but one of its recognized and settled meanings is the loss of an estate in consequence of the doing or omission of some act. 3 Words and Phrases, First Series, p. 2893 et seq.; 2 Words and Phrases, Second Series, p. 611. And this is one of the meanings in which the word is used in the time-honored aphorism that equity will not affirmatively assist in the enforcement of a forfeiture.

Unless requisite to the accomplishment of complete justice in a case in which jurisdiction has been properly acquired onsome other grounds, a court of equity, according to well-settled rules and almost universal precedent, will have nothing to do with the enforcement of penalties and forfeitures. The function of such a court in this respect is not to enforce in any case, but to relieve against the enforcement where the circumstances warrant equitable interference.

Accordingly we find that the discussions in the books concerning the exercise of the extraordinary powers of a court of equity in regard to penalties and forfeitures all proceed upon the fundamental proposition that the business of a court of equity in regard to these subjects is to give relief against some proceeding at law or some legal consequence resulting from a penalty or forfeiture; and it may be stated that, where the authorities indicate that a court of equity recognizes the right to enforce a forfeiture, they do not usually mean that the enforcement will be affirmatively decreed in such a court, but merely that the court will not lend its aid in such cases to relieve against the enforcement. Exceptional cases have overlooked this proposition. Thus in 10 Ruling Case Law, § 86, p. 337, after citing the case of Equitable Loan, etc., Co. v. Waring, 117 Ga. 599, 44 S. E. 320, 62 L. R. A. 93, 97 Am. St. Rep. 177, holding "that the law permits a man to make a contract which will result in a forfeiture, and when it is clear from the terms of the contract that the parties have so agreed, a court of law as well as a court of equity will enforce the forfeiture, " the author adds:

"An examination of the cases in which this broad statement is made, however, will in most instances disclose that the court of equity confined itself merely to refusing to relieve against the forfeiture provided for, thereby letting the contract itself take effect by operation of law."

In the case in hand we have a condition subsequent which has been broken, and, as the facts appear in the record before us, the grantor has the right to a reinvestiture of the title. This right is purely a creature of law, and the remedy for the enforcement of the right is purely a legal remedy, which in modern practice, provided for in Virginia by statute, is an action of ejectment. 2 Min. Inst. (4th Ed.) 267; Graves' Notes on Real Prop. § 277, and authorities cited; Code 1919, § 5530.

The law is stated by Mr. Graves (section 277, supra), with a full citation of the authorities, as follows:

"Assuming that there has been a breach of a valid condition subsequent, the estate vested in the grantee does not cease in him, and revest in the grantor ipso facto, but remains unimpaired in the grantee until entry, or its equivalent, by the grantor or his heirs. For the grantor or his heirs may waive the right to enforce the forfeiture; and though there has been no express waiver, and the estate of the grantee is still liable to forfeiture, the law, in favor of the vested estate, will not permit its destruction until the right to forfeit has been exercised. See note to Cross v. Carson (Ind.) 44 Am. Dec. 754; Chalker v. Chalker, 1 Conn. 79, 6 Am. Dec. 206; Spear v. Fuller, 8 N. H. 174, 28 Am. Dec. 391; Thompson v. Thompson, 9 Ind. 323, 68 Am. Dee. 638; O'Brien v. Wagner, 94 Mo. 93, 7 S. W. 19, 4 Am. St. Rep. 362; Preston v. Bosworth, 153 Ind. 458, 55 N. E. 224, 74 Am. St. Rep. 313; Hubbard v. Hubbard, 97 Mass. 188, 93 Am. Dec. 75; Langley v. Chapin, 134 Mass. 82; Schulenberg v. Har-riman, 21 Wall. 44, 22 L. Ed. 551; Little Falls, etc., Co. v. Mahan, 69 Minn. 253, 72 N. W. 69; Bonniwell v. Madison, 107 Iowa, 85, 77 N. W. 530; Robinson v. Ingram, 126 N. C. 327, 35 S. E. 612; Houston, etc., R. Co. v. Compress Co., 23 Tex. Civ. App. 441, 56 S. W. 367; Lewis v. Lewis, 74 Conn. 630, 51 Atl. 854, 92 Am. St. Rep. 240.

"As to the mode of exercise of the right to enforce a forfeiture, the common law required, in order to divest an estate of freehold (unless the grantor was already in possession at the time of the breach), an entry on the land, in order that the estate, which had vested by entry and livery of seisin, should be divested by the equal notoriety of entry and the resumption of that seisin. 2 Min. Inst. (4th Ed.) 267; note to Cross v. Carson (Ind.) 44 Am. Dec 755. But in modern practice the forfeiture is usually enforced by the action of ejectment; and in order to bring this action no actual entry is required at common law, and it is dispensed with by the provisions of the statutory action. Ruch v. Rock Island, 97 U. S. 693, 24 L. Ed. 1101; Cowell v. Springs Co., 100 U. S. 55, 25 L. Ed. 547; Plumb v. Tubbs, 41 N. Y. 442; Cornelius v. Ivins, 26 N. J....