Though time is not of the essence of a contract for the sale of real estate, unless made so by the express agreement of the parties, yet, in every case it will devolve upon the party seeking relief in a Court of Equity, to account for his delay.
And, where a party seeks to enforce a contract to convey land to him, if there are circumstances showing culpable negligence on his part, or if the length of time which ‘has been permitted to intervene, together with other circumstances, raise a presumption of an abandonment of the contract, or if the property has greatly enhanced in value, and he has apparently laid by for the purpose of taking advantage of this circumstance, he will not be entitled to a decision in his favor.
In applications of this kind, the party is not entitled to relief as a matter of course, but subjects himself to the equitable consideration of the Chancellor, and must show a case free from doubt or suspicion. *
Where the plaintiffs gave their note to the defendants, payable in one year and only bearing interest at ten per cent, per annum, at a time when the current rate of interest was ten per cent, per month, in consideration of which he received a covenant from the payees to convey them certain land, on the payment of the note at maturity, the low rate of interest raises the presumption that the parties intended that the note should be paid at maturity.
And where it appeared that the defendants were desirous to raise money to make certain improvements, for which reason they were anxious to dispose of some of their land, and that the plaintiffs never offered to pay their note so given, until three years after its maturity, during which time the property of one of the 'defendants had been sold under execution, and the other defendants had been obliged to raise money at a high rate of interest, to meet their obligations respecting this and other property, and had paid all the taxes on the land; while the plaintiffs refused to have the property assessed to them or to pay taxes thereon: that they had been ever since the making of the contract in receipt of the rents and profits of the land, which had greatly inhanced in value since the maturity of their note; and further, that since the maturity of their note they, with others, had made a written request to the defendants to be allowed to purchase the land occupied by them and the others; all these facts go to show conclusively that the plaintiffs never intended to consummate the purchase unless they found it to their interest to do so.
This conclusion is strengthened when the complaint sets up as a reason for the non-payment of the note that the defendants hitherto had been unable to make a “ good and sufficient deed,” as they had covenanted to do, for the reason that the title to the land in the defendants had only recently been confirmed by the U. S. Land Commission.
The opinion of the Court was delivered by Mr. Chief Justice Murray. Mr. Justice Heydenfeldt and Mr. Justice Terry concurred.
It is a familiar principle of equity that time is not of the essence of a contract for the sale of real estate, unless made so by some express agreement of the parties. The rule, however, is subject to some exceptions, and is thus stated by Judge Story, in the case of Taylor v. Longworth, 14 Peters’, p. 172: “ There is no doubt that time may be the essence of a contract for the sale of property. It may be made so by the express stipulations of the parties, or it may arise by implication, from the very nature of the properly, or the avowed objects of the seller or the purchaser. And even when time is not thus, either expressly or impliedly, of the essence of the contract, if the party seeking a specific performance has been guilty of gross laches, or has been inexcusably negligent in performing the contract on his part, or if there has, in the intermediate periods, been a material change in circumstances, affecting the rights, interests, or obligations, of the parties, in all such cases Courts of Equity will refuse to decree any specific performance, upon the plain ground that that it would be inequitable and unjust. But, except under circumstances of this sort, or of an analogous nature, time is not treated by Courts of Equity as of the essence of contracts; and relief will be given to the party who seeks it, if he has not been grossly negligent, and cqmes within a reasonable time, although he has not complied with the strict terms of the contract. But in all such cases the Court expects the party to make out a case free from all doubt, and to show that the relief which he asks is, under all the circumstances, equitable; and to account, in a reasonable manner, for Ms delay and apparent omission of duty.”
From the foregoing, which is but a concise statement of the principle, it may be gathered that, while time is not of the essence of the contract, ordinarily, yet in every case it will devolve on the party seeking relief to account for his delay, and, if there are circumstances showing culpable negligence on his part, or if the length of time which has been permitted to intervene, together with other circumstances, raise the presumption of an abandonment of the contract; or if the property has greatly enhanced in value in the mean time, and the purchaser has [572]laid by apparently for the purpose of taking advantage of this circumstance, he will not be entitled to a decree in his favor.
Moreover, the words “good and sufficient deed” refer only to the form of conveyance and not to the interest intended to be conveyed, therein differing from words of covenant and warranty.
And further, though it might be a defence to an action brought by the vendor to enforce such a contract, that he had no title, the rule cannot be invoked in an action brought by the vendee, who has broken his contract, against a vendor who only agreed to convey the interest he had in the land.
The decision of the U. S. Board of Land Commissioners confirming the title of defendants to the land, only amounts to an acknowledgment on the part of the Government that it has no claim thereto, and in no way affects the title as between the parties.
The defendants were not bound to tender a deed and demand the purchase money, in order to avoid the contract. In this State there is no rule on the subject, but in England it is the duty of the vendee to tender a deed.
It will be borne in mind that in applications of this kind the party is not entitled to relief, as a matter of course, but that he subjects himself to the equitable consideration of the chancellor, and must show a case free from doubt or suspicion. Hence it may often result that, although time was originally no material element of the transaction, the subsequent conduct of a party, taken in connection with his default, may make a case which would deprive him of all relief in equity, i
In examining the case under consideration, it will be necessary to look—first, at the letter of the contract; second, at the circumstances under which it was made, to ascertain the intentions of the parties; and, third, to the facts and circumstances which have transpired since its execution, to determine whether they take it out of the general rule first stated.
The bond under which the plaintiffs in the Court below claim their rights, binds the defendants to make a good and sufficient deed, on payment of the note at its maturity. Now, although this language of itself would be insufficient to establish the fact that the payment of the note, at a precise point of time, was an essential element which controlled or induced the contract, still, it may be taken in consideration, with other facts and circumstances, to establish the true intention of the parties. >>
It appears from the testimony that the defendants were anxious to dispose of the property in question, for the purpose of making certain contemplated improvements; that they were greatly in need of ready money, and that the sale was made to obtain it. In addition to this, the note of the plaintiffs bore no interest other than the legal interest, which was ten per cent, per annum, -while the conventional interest at that time was ten per cent, per month. This fact alone would be sufficient of itself to raise the presumption that the parties understood that the note should be paid at maturity; for, if it had not been so understood, a different rate of interest would, in all probability, have been agreed upon, at least after the note became due.
In the next place, it appears that the plaintiffs never offered or evinced a desire to perform the contract on their part, until three years after the maturity of the note; and, in the mean time, although the sale was understood to be for cash, the property of one of the obligors was sold on ex ecution; that the defendants were compelled to borrow money at a high rate of interest to meet their obligations, in respect to this and other property, of which it was originally a part; and that the land was assessed in the name of the defendants, they paying the taxes thereon, while the plaintiffs refused to give it in for assessment- or pay the taxes; that the property has greatly improved in value since the note became due; that they have been in receipt of the rents and profits thereof ever since the time of the sale; and further, that they signed a written request or letter to the defendants to be allowed to purchase a portion of said land, on its confirmation by the United States Land [573]Commissioners. All the evidence in the case goes to show conclusively, as we think, that the plaintiffs never intended to consummate the purchase, unless they found it to their interest to do so; and it was their intention to lie by, and, if the grant was rejected by the Land Commission, to claim it by pre-emption and settlement.
This conclusion is strengthened by the character of the defence set up by way of excuse for not sooner complying with their part of the contract, viz.: that the defendant was not in a situation to make them a “ good and sufficient deed ” at the date of the execution of the bond. It is shown by the testimony that the character of the defendants’ title was a matter of general notoriety; besides, the Recording Act had gone into effect, and it would hardly be too much to suppose that the grant had been recorded, and that the plaintiffs knew the title they were purchasing.
But, aside from this, the words, “ good and sufficient deed,” only refer to the form of the conveyance, and not the interest intended to be conveyed; in other words, the defendants obligated themselves to make a conveyance sufficient to pass their title, whatever it might be, to the plaintiffs. (Gazley v. Price, 16 Johns., 169.) On the other hand, if words of covenant and warranty are made use of in the instrument, they refer to the character of the estate—as was the case in Finney v. Ashley, 15 Pick., 546, where the vendors had bound themselves to execute a “ good and sufficient warranty deed; and the Court held that the words “ good and sufficient ” relate only to the validity of the deed to pass the title which the defendants had to the plaintiff, and do not imply that their title was valid, or that it was free from encumbrances. To guard against any defect of title a covenant of warranty was provided for, which shows clearly that the agreement was so understood by the parties. If any authority were necessary to support so plain a construction of the contract, the case of Gazley v. Price, above quoted, will be found full and decisive as to this point.
The judge below, in deciding this case, seems to have relied on the decision in Parker v. Parmalee, 20 Johns., 131, in which Chief Justice Spencer, in speaking of the decision of the chancellor, in Clute v. Robinson, 2 Johns., said : “ I fully concur in the proposition that when a party seeks the aid of a Court of Equity to enforce a specific execution of an agreement for the acceptance of a conveyance of a piece of land, under a covenant to execute a good and sufficient deed, and to compel the payment of the money stipulated to be paid as a consideration for the conveyance, it would be a good defence that the party had no title.”
The correctness of this opinion cannot be doubted; the difficulty is in its application, and that consists in the difference of the attitude of the two parties. A Court of Equity would not compel a party to give something for nothing. But this rule will not apply in a case where the vendor never agreed to convey anything, except his interest in the land, and when he does not seek the interposition of a Court of Equity, but the party who has broken his covenant.
[574]In addition to this, it may be added, that the establishment of a Board of Land Commissioners could in no way affect or cloud the title to the land in question. Its determination simply amounts to an acknowledgment, on the part of the United States, that the Government had no claim in the property.
It is urged, on behalf of the respondents, that the value of their improvements should be taken into consideration, as showing their good faith in the transaction. The testimony as to their value is conflicting. It is shown that they are of a temporary character, not calculated to enhance the value of the freehold; and for the years 1851, ’52, ’53 and ’54, were given in to the assessor at $400 ; and he testifies that it was his usual custom to swear parties as to the correctness of the value so estimated on their property, although he does not remember whether he did so in this case.
In 1855, after the commencement of this suit, the property was assessed at $2,500, while the annual rents and profits have largely exceeded the value of the improvements, or the original price agreed to be paid for the property.
/ It is also contended that it was the duty of the defendants, if they wished to avoid the contract, to have tendered a deed, and have demanded the purchase money. The law enjoins no such duty upon them." In this State there is no settled rule on this subject, though in England it is the duty of the vendee, and not the vendor, to tender a deed.
On a full examination of all the facts, we are satisfied that the decree is erroneous and ought to be reversed. Ordered accordingly.
AI Brief
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Holding. The court held that specific performance of a real estate contract will be denied where the purchaser has been guilty of gross laches, inexcusable negligence, or where there has been a material change in circumstances, such as a significant increase in property value, indicating an abandonment of the contract.
Issues
Whether time is of the essence in a contract for the sale of real estate.
Whether a purchaser who delays performance for three years and fails to account for such delay is entitled to specific performance.
Whether the phrase 'good and sufficient deed' implies a warranty of title or merely the form of conveyance.
Disposition. reversed
Quotations verified verbatim against the opinion
“It is a familiar principle of equity that time is not of the essence of a contract for the sale of real estate, unless made so by some express agreement of the parties.”
“the words, “ good and sufficient deed,” only refer to the form of the conveyance, and not the interest intended to be conveyed”
“All the evidence in the case goes to show conclusively, as we think, that the plaintiffs never intended to consummate the purchase, unless they found it to their interest to do so”