Schwab v. Roberts

• Citation: 263 N.W. 19,220 Iowa 958
• Decision Date: 23 October 1935
• Docket Number: 43001.
• Parties: SCHWAB v. ROBERTS et al.
• Court: United States State Supreme Court of Iowa

263 N.W. 19

220 Iowa 958

SCHWAB v. ROBERTS et al.

No. 43001.

Supreme Court of Iowa.

October 23, 1935

Appeal from District Court, Crawford County; P. J. Klinker, Judge.

This is an action to quiet title to about 213 acres of land in Crawford county, Iowa. Appellees claim title to the land under a contract of sale executed to them in 1931. Upon trial to the court, a decree was entered in favor of defendants. Plaintiff appeals.

Reversed and remanded with instructions.

Thos J. Buckley, of Dunlap, and L. V. Gilchrist, of Denison, for appellant.

P. W Harding, of Denison, and Robertson & Robertson, of Council Bluffs, for appellees.

KINTZINGER, Chief Justice.

On October 22, 1931, plaintiff and the defendants entered into a contract of sale for about 213 acres of farm land in Crawford county, Iowa. Under the terms of the contract, the defendants agreed to pay plaintiff therefor the sum of $7,000 and take the land subject to a mortgage for $17,000. The $7,000 was payable as follows: " One Dollar on the execution of the agreement; one Thousand Dollars on June 1, 1933; one Thousand Dollars on June 1, 1934; fifteen Hundred Dollars on June 1 1935; fifteen Hundred Dollars on June 1, 1936; nineteen Hundred Ninety-nine Dollars on June 1, 1937, with interest at the rate of six per cent."

So much of the contract necessary for a consideration of this case is the following:

" And the party of the second part shall also annually pay taxes and assessments * * * on said property as they become due or before they become delinquent. * * * And it is expressly agreed by and between the parties hereto that the time and times of payment of said sums of money, interest and taxes as aforesaid is the essence and important part of the contract, and that if any default is made in any of the payments or agreements above mentioned to be performed by the party of the second part; * * * this agreement shall be void, and of no effect, and the party of the second part shall have no claim in law or equity against the party of the first part, nor to the above mentioned real estate nor any part thereof, and any claim or interest, or right the party of the second part may have had hereunder up to that time by reason thereof, or of any other payments and improvements made hereunder, shall, on * * * such default, cease, * * * and become forfeited without any declaration of forfeiture, re-entry or any act of the party of the first part.

The parties of the second part agree * * * to pay all the interest due on one certain real estate mortgage, in the sum of $17,000., which * * * draws five per cent interest * * * as said interest becomes due. * * *

Second parties expressly agree that if default be made in the payment of any or all of the items above set forth or any of the items set out in the body of this instrument then in that event this agreement and contract shall become null and void."

A first supplemental agreement was made to this contract on February 23, 1933, whereby, among other things, the time of paying the $6,999, above referred to, was extended two years. This supplement also contained the following provision: " Nothing contained herein shall effect or change the rights of the parties to said original contract except as modified or changed herein." A further consideration of the terms of this supplemental agreement is unnecessary for a determination of this case.

Thereafter, on January 5, 1934, a second supplemental agreement was entered into containing the following provisions:

" This agreement is made in connection with real estate contract entered into between the parties hereto on the 22nd. day of October, 1931, and a supplemental agreement entered into * * * on the 23d day of February, 1933, and it is agreed that this agreement is a supplemental agreement and made in connection with and made a part of the above mentioned agreements .

That in said real estate contract * * * of October 22nd, 1931, there is a provision that the second parties will pay to first party $1,000. on June 1, 1933, and that the supplemental agreement entered into on the 23d. day of February, 1933, provided for an extension of payment of said $1,000. to June 1, 1935. * * *

It is agreed that for and in consideration of the agreements and stipulations herein mentioned, * * * that the second parties pay to the party of the first part the sum of $300. on June 1, 1934, and that said payment of $300 is to be applied on the principal of the $1,000. payment due June 1, 1933, as provided in said real estate contract of October 22, 1931.

It is agreed between the parties hereto that this supplemental agreement will not alter or vary the terms of said real estate contract entered into October 22, 1931, nor the supplemental contract of February 23, 1933, except the payment of $300. mentioned herein."

The undisputed evidence shows that the defendants failed to make the $300 payment on June 1, 1934, as agreed upon in the second supplemental agreement, or any interest thereon. The evidence also shows that a few weeks prior to the time said $300 became due, plaintiff notified appellee Roberts that he would expect payment thereof when due. Appellee Roberts testified that appellant told him before the money became due that he could pay it into the Dunlap Savings Bank, and that a few days' delay would make no difference. Appellant denies that he ever authorized Roberts to pay this or any other money into the bank. On the contrary, he says he told him he was attending to his own business.

On June 9, 1934, after the money was due, appellant duly served a 30 days' notice of forfeiture upon the defendants, as provided by section 12390 of the Code, that if the money due was not paid within 30 days from the date of the notice he would declare the contract forfeited.

Thereafter, on July 6, 1934, appellee Roberts deposited $300 to his own credit in the Dunlap Savings Bank, and on the afternoon of July 9, Roberts left his check of $300 with the cashier of the Dunlap Savings Bank, payable to appellant. This check, however, had the following indorsement thereon: " For credit on $1,000. note due June 1, 1934." On giving this check to the bank, appellee Roberts directed the cashier thereof to deliver it to the appellant when he came in, and then only on condition that he produce the note referred to in the check and credit the amount of the check thereon. The cashier thought he was acting for appellee, and said he would not have delivered the check to appellant unless the $1,000 note was produced and the credit made thereon. The record shows that there was no such note in existence. This check was not delivered to the bank until the afternoon of the last day of the expiration of the 30-day notice of forfeiture. After delivering the check to the cashier, appellee Roberts had some one telephone to appellant's house to advise appellant that " that money was in the bank." This message was received by appellant's daughter and conveyed to him about 5 o'clock that evening.

Upon this record the lower court found that appellee Roberts had deposited in the Dunlap Savings Bank a sufficient amount to meet the payment of the $300 due on June 1, 1934, and held, that although the money was not paid to appellant within the 30 days, the delivery of the check to the bank was a tender of payment of the amount due on the contract, and held that defendants had not forfeited their rights in the real estate. From this ruling, plaintiff appeals.

I. Appellant claims that the delivery of this check requiring a credit indorsement on a certain nonexistent note did not constitute payment within the time required by the notice of forfeiture.

Appellees contend that the supplemental contract requiring the payment of $300 on June 1, 1934, did not make the time of payment the essence of the contract; that such contract contained no forfeiture clause, and that appellant was, therefore, not entitled to a forfeiture.

Section 12389 of the Code relating to forfeitures provides: " A contract which provides for the sale of real estate * * * and for the forfeiture of the vendee's rights in such contract in case the vendee fails, in specified ways, to comply with said contract, shall, nevertheless, not be forfeited, * * * except as provided in this chapter."

Under this statute a forfeiture cannot be declared unless the contract of sale provides therefor. This is also the holding of our court. Van Vranken v. Cedar Rapids & M. R. R. Co., 55 Iowa, 135, 5 N.W. 197, 7 N.W. 504; Cody v. Wiltse, 130 Iowa, 139, 106 N.W. 510; Reiger v. Turley, 151 Iowa, 491, 131 N.W. 866; Waters v. Pearson, 163 Iowa, 391, 144 N.W. 1026; Marshall v. Pratt, 195 Iowa, 741, 185 N.W. 5. An examination of these cases, however, discloses that the contracts or extension agreements referred to therein contain no provision of forfeiture for nonpayment. Some of these cases related to extension agreements, but neither the original contracts nor the extension agreements therein contain a forfeiture provision in case of nonpayment.

The rule of these cases, however, would not apply to this case if the forfeiture provisions of the original contract of October 22, 1931, are sufficiently referred to and retained in the supplemental contracts of February 23, 1933, and January 5, 1934.

In order to determine whether or not the forfeiture provisions of the original contract were retained and made a part of the supplemental contracts by reference, an examination thereof is necessary. We have hereinabove set out so much of the original and supplemental contracts as may be necessary to determine this question. The original contract provides that it is " expressly agreed by and between the parties * * * that the time and times of payment of said sums of money,...