Grey v. Tubbs

California Supreme Court Apr 15, 1872 No. No. 2,390Published

Before: Rhodes

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Holding. The court held that where a contract explicitly provides that a failure to make payments as scheduled results in a forfeiture of the right to a conveyance, time is of the essence, and equity will not relieve a purchaser of their default.

Issues

Whether time is of the essence in a contract for the sale of land when the parties have expressly stipulated that failure to pay results in forfeiture of the right to a conveyance.
Whether a court of equity may grant relief to a purchaser who has defaulted on payment terms despite a clear contractual provision making time essential.

Disposition. reversed and remanded

Quotations verified verbatim against the opinion

“It would be difficult to express with greater clearness and certainty, than the parties did in this contract, that time is of the essence of the contract, except it were done by the insertion of those very words in the instrument.”

“Courts of equity have not the power to make contracts for parties, nor to alter those which the parties have deliberately made”

Synopsis

Appeal from the District Court of the Fourth Judicial District, City and County of San Francisco.

The following is the contract for the sale of land, referred to in the opinion. An action was commenced on the 4th day of January, 1869, to enforce a specific performance of the contract. Wright assigned the contract to the plaintiffs on the 27th day of Rovemher, 1868:

“ Article of agreement made and entered into the 1st day of July, 1867, between Hiram Tubbs, party of the first part, and Horace Wright, both parties of the Town of Clinton, Alameda County, State of California, of the second part, in the manner following:

“ That the said party of the first part, for the consideration hereinafter expressed, hereby agrees to sell unto the said party of the second part a certain parcel of land in the Town of Clinton, in block number (105) one hundred and five, commencing fifty feet from the corner of Jones and Lacy streets, on Jones street; and thence along Jones street one hundred feet; and thence parallel with Lacy street one hundred and fifty feet; and thence parallel with Jones street one hundred feet; and thence parallel with Lacy street one hundred and fifty feet, to Jones street, the place of beginning ; the same being a lot of land one hundred by one hundred and fifty feet, in block number one hundred and five, as per official map of the Town of Clinton, recorded at San Leandro, Alameda County, State of California, for the sum of four hundred United States gold dollars, which the said party of the second part hereby agrees to pay to the said party of the first part, as follows: Four hundred dollars on or before July 1st, 1870, with interest at the rate of one per cent per month, payable quarterly, in advance, on the first days of January, April, July, and October of each year till paid. Principal and interest payable in United States gold coin. And the said party of the second part agrees to pay all State, city, and county taxes, or assessments of whatsoever nature, which are or may become due on account of above mentioned. In the event of failure to comply with the terms hereof by the party of the second part, the party of the first part shall be released from all obligations in law or equity tó convey said property, and said party of the second part shall forfeit all right thereto. And the said party of the first part, on receiving such payment at the time and in the manner above mentioned, shall execute and deliver to the said party of the second part, or to his assigns, a proper deed.' And it is understood that the stipulations aforesaid are to apply to and bind the heirs, executors, administrators, and assigns of the respective parties.

“ In witness whereof the parties to these presents have hereunto set their hands and seals the day and year above written.”

By the Court,

Rhodes, J.: The contract of sale which the plaintiffs, who are the assignees of the purchaser, seek to have specifically enforced, provides that the interest on the purchase money shall be paid quarterly in advance, on the first days of January, April, July, and October. The principal sum was to be paid on or before July 1st, 1870—three years from the date of the contract. The interest up to January 1st, 1868, was paid in advance, but the interest for the next quarter was not tendered until the last day of February, 1868. The defendant refused to receive the money and stated to the purchaser that he had forfeited his contract. The plaintiff, in December, 1868, before the commencement of the action, tendered to the defendant the principal sum and all the interest then due, according to the terms of the contract.

The fact that the purchaser did not tender the amount which became due on the first of the two quarters succeeding January 1st, 1868, is not material; for if a Court of equity can excuse the delay in tendering the money which became due on the last mentioned day, the failure to tender the [363]interest for the next two quarters at the times mentioned in the contract is, under the circumstances, readily excusable.

The contract contains the following covenant: “In the event of failure to comply with the terms hereof by the party of the second part [the purchaser] the party of the first part shall be released from all obligations, in law or equity, to convey said property, and said party of the second part shall forfeit all right thereto.” The plaintiffs rely upon the rule which has so frequently heen applied by Courts of equity, that time is not of the essence of the contract, or as it is better expressed by Parsons in his excellent work on Contracts, that time is not necessarily of the essence of a contract. The defendant, while denying the applicability of the rule to contracts for the sale of property of the character of that in controversy—city or town lots—particularly in this State, where such property is as marketable and as subject to fluctuations in value, and is bought and sold with the same facility as personal property, yet he relies more upon a necessary qualification of the rule: which is that time is of the essence of a contract, if it be made so by the parties themselves, or by the circumstances of the case. He insists that the clause of the contract above cited, shows that the parties intended that the time for the performance of the contract on the part of the purchaser should be material, and of the essence of the contract. The parties agreed that a failure on the part of the purchaser “to comply with the terms hereof”—that is to say, to pay the money according to the terms of the contract—should operate as a release of the vendor from all obligation to convey the premises to the purchaser or his assignees; and to make the matter still clearer, and to show that the parties intended to make time essential, it was agreed that such failure should release him from all obligation “m law or equity” to convey the premises. The parties*further agreed—as if to place the matter beyond all doubt—that in case of such failure on the part of

Grey v. Tubbs

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