Watters v. Ryan

• Court: South Dakota Supreme Court
• Writing for the Court: WHITING
• Citation: Watters v. Ryan, 31 S.D. 536, 141 N.W. 359 (S.D. 1913)
• Decision Date: 10 May 1913
• Parties: WATTERS v. RYAN.

31 S.D. 536

141 N.W. 359

WATTERS

v.RYAN.^†

Supreme Court of South Dakota.

May 10, 1913.

Appeal from Circuit Court, Spink County; Alva E. Taylor, Judge.

Action by George M. Watters against J. W. Ryan. Judgment for plaintiff, and defendant appeals. Reversed.Sterling & Clark and M. Moriarty, all of Redfield, for appellant.

W. F. Bruell and W. A. Morris, both of Redfield, for respondent.

WHITING, P. J.

Action for the specific performance of a contract for the purchase and sale of a half section of land. Trial to the court in June, 1911. Findings and judgment for plaintiff. Defendant appeals. Appellant's contentions are: First, that the written contract is not sufficiently complete, definite, and certain to warrant a court of equity in decreeing specific performance; second, that plaintiff has not shown such performance on his part and such tender of performance as to entitle him to a decree; third, that the contract is not equitable, just, and reasonable so as to warrant a court of equity in enforcing its specific performance. The contract was dated September 19, 1906. By its terms, Ryan, as first party, agrees to sell, convey, and assure unto Watters, as second party, in fee simple, clear of all incumbrance (except as thereinafter mentioned) by a good and sufficient warranty deed, the half section of land described. Watters agrees to pay Ryan $4,800, purchase price, as follows: “The sum of $400 at the execution of this contract, the receipt of which is hereby acknowledged; the balance of the purchase price to be paid when said land is conveyed to second party as hereinafter set forth.” The contract recites that the title to the land is in litigation in an action wherein one Thomas is plaintiff and Ryan and Edwards defendants, and provides that in case said action shall terminate in favor of Ryan in the Supreme Court of this state, he shall forthwith convey the land to Watters by warranty deed, and Watters “shall then and there pay *** the balance of the purchase price due, less whatever mortgages there are now upon said premises, and less all interest that may accumulate thereon from the date of this contract. It is understood and agreed that the second party shall pay, or cause to be paid, the mortgages now against said land with all interest accrued thereon after the date when said premises are conveyed to him.” Ryan was to have the crop grown on the premises for the year 1906, but Watters shall “go into possession of said real estate and shall have the use and benefit of said land and the right to the crops grown thereon during the year 1907 and until said matter has been finally terminated.” It is further provided that, if the decision in the pending litigation shall be adverse to Ryan, he shall be released from all liability under the contract, and shall refund to Watters the $400 paid on the purchase price. The contract further provides that Ryan shall pay the taxes that may accrue on the land up to the time of conveying the same; and that “the deferred payments under this contract shall not bear interest, except as hereinbefore mentioned as to the mortgages now existing upon said premises.” The foregoing are the provisions of the contract material to the questions presented on this appeal.

The trial court held the contract to be complete, definite, and certain in its terms, and construed the terms of such contract in accordance with the contention of respondent. Under the view which we take, it becomes unnecessary for us to pass upon appellant's contention that the terms of such contract were incomplete, indefinite, and uncertain. Neither is it necessary for us to determine whether there has been full performance of the contract on the part of respondent-there certainly has been such performance by him providing the trial court properly construed the contract. The only question necessary for our determination is whether the contract, as contended for by respondent and construed by the trial court, is “equitable, just, and reasonable,” and one which, especially under the circumstances of this case, a court of equity should enforce by a decree of specific performance.

One Thomas formerly owned this land and had conveyed the same to one Edwards, who in turn had conveyed to appellant. In January, 1906, Thomas brought an action against appellant and Edwards seeking a decree setting aside the deed from himself to Edwards and the deed from Edwards to appellant. In the spring of 1906, the trial court rendered judgment in said action in favor of Ryan, and Thomas appealed said cause to this court, where it was pending at the time of the execution of the contract involved in this action. Final judgment upon said appeal was not entered until January 25, 1910, when judgment in favor of Ryan was entered by this court. Thomas v. Ryan, 24 S. D. 71, 123 N. W. 68. At the time the contract was entered into between the parties hereto, the land in question was incumbered by three certain real estate mortgages securing, in the aggregate, notes amounting to $2,950 and bearing interest at 8 per cent. per annum. These debts and the interest thereon not being paid when due, each of these mortgages was foreclosed and sale had in the foreclosure proceedings during the time that the appeal in Thomas v. Ryan, supra, was pending in this court. Appellant failed to pay the taxes assessed and levied against this land, which taxes amounted to about $40 per year. During the year of redemption from each of said foreclosure sales, respondent redeemed the lands from such foreclosure sale; and he also, from time to time, either purchased the land on tax sales for the unpaid taxes and acquired tax certificates therefor, redeemed the lands from tax sales, or paid the taxes without there being a sale therefor. Respondent in March, 1910, demanded a deed of appellant and tendered the sum of $55 as the amount remaining due and unpaid on the contract herein. This tender was rejected, and appellant refused to deliver the deed unless paid the sum of $859.91. On April 9, 1910, respondent deposited to the credit of appellant the sum of $55 in a bank at Redfield, which deposit still remains in said bank. The trial court found that the amount due against said land under the said contract for the taxes and interest thereon paid by respondent, and for the mortgage indebtedness and foreclosure expenses paid by him, did, on April 9, 1910, amount to the sum of $4,582.50; and the court further found that the appellant, at all times subsequent to the date of the contract, refused to redeem the said land from the taxes and tax liens and from the mortgage foreclosures. It appeared, by the uncontradicted evidence herein, that the value of the use and occupation of these premises amounted to the sum of at least $300 per year, and that the respondent had the possession of said premises and enjoyed the use of same in accordance with the terms of the contract.

It was the contention of respondent-which contention was upheld by the trial court-that, under the terms of the contract involved in this action, the respondent was not bound to pay any interest whatsoever on the deferred payment of $4,400 from the date of such contract to such time as, under such contract, the deed should be delivered by appellant; that appellant had covenanted to pay all taxes assessed against the land and to keep the interest on the mortgages paid up, so that respondent was entitled to deduct from the deferred payment of $4,400 all sums paid by him upon taxes together with the interest on said sums, and also was entitled to deduct from said deferred payment of $4,400 the mortgage indebtedness against said land, including all interest and foreclosure costs that had accumulated thereon; and that respondent was entitled to the use and occupation of said premises without crediting appellant anything therefor.

Appellant is certainly right in his contention that the contract before us is one that is not equitable, just, or reasonable, and is one such as no court of equity should enforce by a decree of specific performance, providing the said contract is subject to the construction given to it by the respondent and the trial court. Applying equitable principles long established and cherished by civilized humanity to this contract as construed by the trial court, and to the surrounding facts and circumstances, no court, entitled to be called a court of justice, can find justifiable excuse for enforcing same. This court has well said: “When *** the material facts are established by undisputed evidence, ‘the principles of equity come into operation and pronounce with certainty and absoluteness whether the remedy shall be granted or withheld.”’ Case T. M. Co. v. Farnsworth, 28 S. D. 432, 134 N. W. 819. And when, as in this case, a trial court has failed to regard the established principles of equity, the appellate court should not hesitate in reversing it. One of the fundamental principles of equity is, “He who comes into a court of equity must come with clean hands”; another, “He who seeks equity must do equity.” A person who contracts to purchase property, knowing the terms of his contract to be such as respondent contends are found in the contract before us, and, after the lapse of nearly four years, attempts to enforce those terms, neither comes into court with “clean hands,” nor does he offer to “do equity” toward his fellow man, and his claim is not entitled to favorable consideration in a court of equity.

The commonly recognized rule is that, where a purchaser has possession of the property, he should pay interest upon the deferred payments and keep up the taxes, and courts will enforce this wherever possible, holding the same to be reasonable and equitable. Upon the other hand, where the purchaser does not acquire possession, the courts hold that it is reasonable and equitable that the seller receive no interest on deferred payments and that he pay the taxes. Let us see what ...