Mr. Justice Waterman
delivered the opinion of the Ooubt.
Appellant, while conceding the general rule in equity to be that a vendee who has taken possession of real property under a contract of sale, can not have the rents and profits arising from such possession without, at the same time, paying interest upon the purchase money if it has remained in his hands, insists, with great ability, that this case is to be distinguished from the numerous cases in which such rule has been announced, because of the existence of three things in the present instance, not to be found in any of the cases cited by appellee. These things are, as stated by appellant :
First. That the contract in this case expressly gave the vendee immediate possession of the land and set no limit to the period of that possession.
Second. That the contract did not contain any provision for interest on the purchase price.
Third. That the delay in completing the sale was due solely to the willful and excuseless conduct of the vendor itself.
Interest may be defined to be a compensation usually reckoned by percentage for the loan, use or forbearance of money. Interest in actions at law arises from the statute.
At common law interest was synonymous with usury. Abbot’s Law Dictionary; City of Pekin v. Reynolds, 31 Ill. 529; Ill. Cent. R. R. Co. v. Cobb, 72 Ill. 148.
Interest in equity is allowed because of equitable considerations. Equity follows the law, and ordinarily, if it give interest, does so because, under the statutes, the party is entitled to it; but a court of equity, subject to rules of law, gives or withholds interest as under all the circumstances of the case and the law applicable thereto, it deems equitable and just.
The rule as to interest in the case of the sale of real estate is stated in Sugden on Vendors (8th Am. Ed.) 814, as follows:
“ Equity considers that which is agreed to be done, as actually performed, and a purchaser is, therefore, entitled to the profits of the estate from the time fixed upon for completing the contract, whether he does or does not take possession of the estate; and as from that time, the money belongs to the vendor, the purchaser will be compelled to pay interest for it, if it be not paid at the day.
But if the delay be occasioned by the default of the vendor, and the purchase money has lain dead, the purchaser will not be obliged to pay interest. The purchaser must, however, in general, give notice to the vendor that the money is lying dead; for otherwise there is no equality; the one knows the estate is producing interest, the other does not know that the money does not produce interest. * "* * But even if a purchaser gave such notice, yet if the money was not actually and Iona fide appropriated for the purchase or the purchaser derived the least advantage from it, or in any manner made use of it, the court would compel him to pay interest.”
And Fry on Specific Performance of Contracts (3d Am. Ed., Sec. 1419) speaks as follows : “ The rule that the purchaser in possession shall pay interest on the unpaid part of the purchase money will be applied even in cases where the delay arises from the neglect of the vendor, and the purchaser makes no actual profit out of the land. ‘ The act of taking possession,’ said Grant, JVI. B., ‘ is an implied agreement to pay interest; for so absurd an agreement as that a purchaser is to receive the rents and profits to which he has no legal title, and the vendor is not to have interest, as he has no legal title to the money, can never be implied.’
And the same author at Sec. 1425 states the rule as follows : So strong does the court hold to this principle—that a purchaser in possession shall pay interest, on the unpaid purchase money, that it will look at any contract which appears to prevent the application of this rule by the light of this general principle of justice, and, it seems, refuse execution of it where it grossly violates this principle; for í5 a court of equity interposes only according to conscience."
In Sec. 429 of Pomeroy on Specific Performance the rule is stated as follows: “ The general rule is well settled' that where the contract is not completed until after the time stipulated for that purpose, but the court, nevertheless, decrees a specific performance, it will adjust the equities of the parties by placing them as far as possible in the same position which they would have occupied had the agreement been completed at the prescribed day, and to that end it will allow the purchaser the rents and profits, and to the vendor interest upon the purchase price from and after that date.”
The same author in note 2 to the above section, says ; “ The vendee is liable for the interest as stated in the text, even when the purchase money has lain all the time in his hands, dead ’—that is, unused, idle and producing no interest, income or profit, provided the delay was caused by his default (Calcraft v. Roebuck, 1 Ves. 221, Enraght v. Fitzgerald, 2 Ir. Eq. Rep. 87), but not when the delay ivas caused by the vendor’s fault. Howland v. Norris, 1 Cox, 59. But even in the last case, if the vendee would escape liability to pay interest, he must actually set aside the money and appropriate it for the vendor, must not in any way derive a benefit from it, and must notify the vendor of these facts, and that the money is thus lying idle. Since if the vendee does not set apart and appropriate the money, or if he derives any benefit from it, he must pay interest, although the delay is the vendor’s.33
Counsel for appellant, while, as AVe understand, conceding the general rule as above set forth, insist with great force that interest is never given because of the Avithholding of money Avhich, by the terms of the contract, is not due. Such is undoubtedly the rule at law, and for this reason the case of Minard v. Beans, 64 Pa. St. 411, the facts of Avhich were in many respects analogous to that of the present case, Avas rightly decided; the court holding that although the defendant had taken possession before the money became due, he could not be held to pay interest from the date of taking possession, because interest at law is not allowable on money, the payment of which is not due.
Equity proceeds upon the principle that it is not just for a vendor to have the use and enjoyment of the premises and also to have the use of the purchase money, and consequently it in many cases allows the vendor to recover interest, although the non-payment of the purchase money may have been caused by his fault; but a court of equity will never do this if the allowing of such interest seems to it inequitable. As, if the payment of the purchase money was withheld because the vendor failed to make such title as he had agreed to convey, or fail to present such an abstract of title as he had agreed to furnish, in such cases courts of equity have refused to require the vendee in possession to pay interest. It is to be observed in respect to such cases that not only was the vendor at fault, that is, had failed to comply with the terms of his contract, but there was nothing that the vendee could do to relieve himself from the situation. He could not tender the purchase price, because the title not being shown to be good by making such tender, he would have run the risk of losing his money.
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Mr. Justice Waterman
delivered the opinion of the Ooubt.
Appellant, while conceding the general rule in equity to be that a vendee who has taken possession of real property under a contract of sale, can not have the rents and profits arising from such possession without, at the same time, paying interest upon the purchase money if it has remained in his hands, insists, with great ability, that this case is to be distinguished from the numerous cases in which such rule has been announced, because of the existence of three things in the present instance, not to be found in any of the cases cited by appellee. These things are, as stated by appellant :
First. That the contract in this case expressly gave the vendee immediate possession of the land and set no limit to the period of that possession.
Second. That the contract did not contain any provision for interest on the purchase price.
Third. That the delay in completing the sale was due solely to the willful and excuseless conduct of the vendor itself.
Interest may be defined to be a compensation usually reckoned by percentage for the loan, use or forbearance of money. Interest in actions at law arises from the statute.
At common law interest was synonymous with usury. Abbot’s Law Dictionary; City of Pekin v. Reynolds, 31 Ill. 529; Ill. Cent. R. R. Co. v. Cobb, 72 Ill. 148.
Interest in equity is allowed because of equitable considerations. Equity follows the law, and ordinarily, if it give interest, does so because, under the statutes, the party is entitled to it; but a court of equity, subject to rules of law, gives or withholds interest as under all the circumstances of the case and the law applicable thereto, it deems equitable and just.
The rule as to interest in the case of the sale of real estate is stated in Sugden on Vendors (8th Am. Ed.) 814, as follows:
“ Equity considers that which is agreed to be done, as actually performed, and a purchaser is, therefore, entitled to the profits of the estate from the time fixed upon for completing the contract, whether he does or does not take possession of the estate; and as from that time, the money belongs to the vendor, the purchaser will be compelled to pay interest for it, if it be not paid at the day.
But if the delay be occasioned by the default of the vendor, and the purchase money has lain dead, the purchaser will not be obliged to pay interest. The purchaser must, however, in general, give notice to the vendor that the money is lying dead; for otherwise there is no equality; the one knows the estate is producing interest, the other does not know that the money does not produce interest. * "* * But even if a purchaser gave such notice, yet if the money was not actually and Iona fide appropriated for the purchase or the purchaser derived the least advantage from it, or in any manner made use of it, the court would compel him to pay interest.”
And Fry on Specific Performance of Contracts (3d Am. Ed., Sec. 1419) speaks as follows : “ The rule that the purchaser in possession shall pay interest on the unpaid part of the purchase money will be applied even in cases where the delay arises from the neglect of the vendor, and the purchaser makes no actual profit out of the land. ‘ The act of taking possession,’ said Grant, JVI. B., ‘ is an implied agreement to pay interest; for so absurd an agreement as that a purchaser is to receive the rents and profits to which he has no legal title, and the vendor is not to have interest, as he has no legal title to the money, can never be implied.’
And the same author at Sec. 1425 states the rule as follows : So strong does the court hold to this principle—that a purchaser in possession shall pay interest, on the unpaid purchase money, that it will look at any contract which appears to prevent the application of this rule by the light of this general principle of justice, and, it seems, refuse execution of it where it grossly violates this principle; for í5 a court of equity interposes only according to conscience."
In Sec. 429 of Pomeroy on Specific Performance the rule is stated as follows: “ The general rule is well settled' that where the contract is not completed until after the time stipulated for that purpose, but the court, nevertheless, decrees a specific performance, it will adjust the equities of the parties by placing them as far as possible in the same position which they would have occupied had the agreement been completed at the prescribed day, and to that end it will allow the purchaser the rents and profits, and to the vendor interest upon the purchase price from and after that date.”
The same author in note 2 to the above section, says ; “ The vendee is liable for the interest as stated in the text, even when the purchase money has lain all the time in his hands, dead ’—that is, unused, idle and producing no interest, income or profit, provided the delay was caused by his default (Calcraft v. Roebuck, 1 Ves. 221, Enraght v. Fitzgerald, 2 Ir. Eq. Rep. 87), but not when the delay ivas caused by the vendor’s fault. Howland v. Norris, 1 Cox, 59. But even in the last case, if the vendee would escape liability to pay interest, he must actually set aside the money and appropriate it for the vendor, must not in any way derive a benefit from it, and must notify the vendor of these facts, and that the money is thus lying idle. Since if the vendee does not set apart and appropriate the money, or if he derives any benefit from it, he must pay interest, although the delay is the vendor’s.33
Counsel for appellant, while, as AVe understand, conceding the general rule as above set forth, insist with great force that interest is never given because of the Avithholding of money Avhich, by the terms of the contract, is not due. Such is undoubtedly the rule at law, and for this reason the case of Minard v. Beans, 64 Pa. St. 411, the facts of Avhich were in many respects analogous to that of the present case, Avas rightly decided; the court holding that although the defendant had taken possession before the money became due, he could not be held to pay interest from the date of taking possession, because interest at law is not allowable on money, the payment of which is not due.
Equity proceeds upon the principle that it is not just for a vendor to have the use and enjoyment of the premises and also to have the use of the purchase money, and consequently it in many cases allows the vendor to recover interest, although the non-payment of the purchase money may have been caused by his fault; but a court of equity will never do this if the allowing of such interest seems to it inequitable. As, if the payment of the purchase money was withheld because the vendor failed to make such title as he had agreed to convey, or fail to present such an abstract of title as he had agreed to furnish, in such cases courts of equity have refused to require the vendee in possession to pay interest. It is to be observed in respect to such cases that not only was the vendor at fault, that is, had failed to comply with the terms of his contract, but there was nothing that the vendee could do to relieve himself from the situation. He could not tender the purchase price, because the title not being shown to be good by making such tender, he would have run the risk of losing his money. In the present case it is recited in the contract that the vendee is satisfied to receive the title the vendor then had, with releases of mortgages placed thereon by the vendor, and to rely for its title to the property upon covenants of warranty to be contained in the deed.
There has, therefore, in the cause under consideration, never been any question of title. Appellant could with entire safety at any time have relieved itself from the payment of interest by making a tender of the contract price, and keeping such tender good. Or it could have deposited such money in some suitable place for the use of the vendor.
We do not regard the three distinguishing features, said by appellant to exist in this case, as sufficient to take the case at bar out of the general rule existing in equity in respect to the payment of interest. The contract did give to the vendee immediate possession, and it failed to provide for the payment of interest upon the purchase price, because such payment was made to depend upon the doing of certain things by the vendor, and it was when those things were done that the purchase money was to be paid. Those things having been done, the purchase money became due, but contemporaneous with the payment of such money the vendor was to make a deed with full covenants of warranty. The vendor refused to make such deed, and, consequently, could not in any action at law have recovered interest upon the purchase money. While, however, such refusal on the part of the vendor was willful and may be said to have been inexcusable, yet it was not in any sense wicked or fraudulent.
The vendor seems to have acted in perfect good faith, and upon what it honestly, understood were its rights. If, therefore, the vendor for all the time during which it ought to have been in the possession and enjoyment of the purchase money is not to receive interest thereon, and the vendee, while having had during this period the use and enjoyment of the land, is to be allowed to retain the interest which it is presumed to have made on the purchase money, the spectacle will be presented of a court of equity punishing the vendor for in good faith acting upon a misconception of its rights, and rewarding the vendee because of such misconception, when at the same time it is not shown that the vendee has suffered any loss because of such conduct on the part of the vendor.
The vendee in this case is not required to pay interest because of any default upon its part, for it has not been in default; but it is made to pay that which it is presumed to have earned upon the purchase money remaining in its hands.
A court of equity regards the rights of the parties as if those things agreed to be done had been done, and when under a contract of sale of real estate the time for the delivery of possession and payment of the purchase price has arrived, thenceforth the land is treated as belonging to the vendee, and the receipts and profits thereof, by whomsoever received, as being held for his use; while at the same time the purchase money is considered as being the property of the vendor, and the interest earned thereon, or that which it is presumed was earned thereon, is treated as belonging to the vendor. In the present case the vendee has had the rents and profits of the property purchased by it, and the vendor is given the interest presumed to have been earned by the purchase money held these years by the vendee.
It is quite true, as is urged by the vendee, that by the terms of the contract this purchase money has not been due because of the failure of the vendor to execute such a deed as it contracted to deliver. The purchase money was not due, not because a date fixed in the contract had not arrived, but merely because the instrument which vested the legal title in the vendee had not been executed by the vendor. The question presented in the present case is not, has the vendor so complied with the terms of the contract as to the execution of a deed that the money coming to it is due, but what, under all the circumstances and the rules of law applicable to this case, is it equitable should be done.
Had the vendee shown that in consequence of the refusal of the vendor to make such a deed as it contracted to deliver it, the vendee had suffered a loss, the chancellor undoubtedly would, in making his decree, have allowed to it compensation for such loss. So too, if it had appeared that the rents and profits of this property for the period during which the vendor was improperly refusing to make a deed were less than the interest presumed to have been earned upon the purchase money, the chancellor would not have allowed to the vendor interest in excess of such profits; for the vendor can not, by his default, whether willful or arising from circumstances beyond his control, either make a profit to himself or compel the vendee to sustain a loss. Jones v. Mudd, 4 Russ. 122; Esdale v. Stevens, 1 Sim. & Stu. 122; King v. Ruckman, 24 N. J. Eq. 556; Leggott v. Metropolitan R. W. Co., L. R., 5 Ch. App. 716.
Counsel for appellant urge that as the contract provided that appellant should have immediate possession of the land in question, some consideration must have been given by appellant for such agreement, and that the decree of the court allowing interest to appellee, the vendor, is in effect to deprive the vendee of the benefit of the plain provision of a contract, for which provision it must be presumed to have given an adequate consideration.
The contract between the parties did indeed provide that the vendee might go at once into possession of the premises sold, and that the vendor should proceed to make certain improvements upon said premises and procure the release of certain incumbrances thereon, and when this had been done the purchase price was to be paid, a deed being at the same time given by the vendor. It was not, so far as appears, however, contemplated by either of the parties, that a misunderstanding between the vendor and vendee would arise as to the form of the deed to be made by the vendor, and the contract contains no provision as to what the lights of the parties should be as to rents, profits and interest in case of such misunderstanding, and a delay in' the making of such deed, consequent thereon.
¥e are therefore called upon to consider the rights of the parties in respect to a condition of affairs not contemplated when the contract was made and not provided for in that instrument. At this juncture we do, indeed, look at the contract to determine what was the duty of each of the parties, and what their obligations and situation toward each other were, and having so done, the general principles of equity applicable to such a state of affairs as is found to exist, must' control in respect to the payment of interest. A general principle of equity is, that a vendee can not at the same time have the rents and profits of the property sold and also the use of the purchase money, and this, although the failure to pay the purchase money may have been owing to the fault of the vendor; provided, nevertheless, that the vendee may, by making a tender of the purchase money and keeping the same good, relieve himself from the burden of interest; and provided, also, that if the situation of affairs was such that the vendee could not with safety make such tender, or if the vendee, on account of the default of the vendor, has sustained a loss, or if the rents and profits of the property are not equal to the interest, that the vendee will not be required to pay anything, or at least not such an amount as that the vendor, by reason of any duty omitted or fault committed by .him; shall make a profit.
It is quite true, as appellant contends, that the meaning of contracts does not depend upon the party who asks for their interpretation. What we are concerned with at present is not so much the meaning of the contract as the situation that arose and exists in consequence of a misunderstanding not contemplated when the contract was made. The action of the court in awarding to the vendor that which it could not have obtained in an action at law, is no different from that which" a court of equity does in many cases, as, in the familiar instance where the property of a party has been sold for taxes, the purchaser can not, in an action at law, compel the owner to refund to him the amount he has so paid; it is not owing by or due from the owner; while if the owner file a bill to remove the cloud created by such sale, a court of equity will, as a condition of such removal, require such purchaser to pay not only the amount of the taxes for which the property was so sold, but also interest thereon.
Substantially, it is now conceded that the interpretation put upon the contract by the vendee was right; and if the court was of the opinion that the vendor had, in insisting upon a different interpretation, acted in any way in bad faith, it would not allow to the vendor the interest which has been awarded. Under the circumstances, the vendee not being shown to have sustained any loss on account of the default of the vendor, it not being claimed that the rents and jirofits are not equal to the interest presumed to have been earned upon the purchase money, although the vendor was wrong in its interpretation of the contract, yet, having acted in good faith, a court of equity will not inflict upon it the punishment of losing the rents and profits of the estate it had sold and given possession of, and also the interests presumed to have been earned by the purchase money.
The court has taxed the costs in this case against the vendor and it might, perhaps, have properly insisted that as a condition of the allowance of interest the vendor should pay a reasonable sum as a fee for the necessary employment of solicitors by the vendee. This has been, however, not seen fit to do, and ~vjre see no sufficient reason for interfering with its discretion in this regard.
The decree of the Circuit Court is therefore affirmed.