Cobbs Land Co. v. Colonial Hill Co.

121 S.E. 395, 157 Ga. 236, 1924 Ga. LEXIS 28

• Court: Supreme Court of Georgia
• Decided: January 16, 1924
• Docket: No. 3898
• Status: Published

Opinion

Hines, J.

(After stating the foregoing facts.)

We do not think that the auditor properly construed the sixth paragraph of the contract; and the court did. not err in sustaining the plaintiff’s exception to his seventh finding of law. Allen and Davidson agreed that they would sell, before March 1, 1913, such an amount of the land as would net the owner, “in cash or notes,” the sum of $50,000, and that they would sell, between March 1, 1913, and March 1, 1914, such an additional amount of this land as would net the owner, “in cash and notes, the balance of the purchase-money it is entitled to receive under the terms of this contract.” So far the language of the contract is plain, and its meaning is free from ambiguity. The word “net,” in this provision of the contract, is explained by the provision in paragraph 5, under which “out of the first money received from the sale of each lot,” the owner was to deliver -to Allen and Davidson “five per cent. (5%) of the purchase-price, when collected, as commissions, and all money received in cash, or from the collection of the principal of the purchase-money notes, is to be appropriated by” the owner “until it shall have received the sum of one thousand dollars ($1000.00) net per acre for said land as hereinbefore agreed.”

In said paragraph 6 Allen and Davidson covenanted and agreed “that should they fail to sell such an amount of said land as will net party of the first part in cash and notes said amount of fifty thousand dollars ($50,000) by March 1, 1913, then and in that event this contract shall become void and of no effect,” and that they “shall thereupon forfeit and be divested of any and all rights and equities thereunder.” Here again the meaning of this language is clear as crystal and free from doubt. If Allen and Davidson did not sell such an amount of land as would net the owner $50,000 “in cash and notes,” by March 1, 1913, they were to forfeit all their rights and equities under the contract. But Allen and Davidson further covenanted and agreed that should “they fail to sell such an amount of said land between March 1, 1913, and March 1, 1914, as will net party of the first part the balance of the purchase-money it may be entitled to receive hereunder, then and in that event this contract shall become void and of no effect,” and that they should “forfeit and be divested of any and all rights and equities” under the contract. Here the language, “in cash and notes,” was dropped; and the requirement was that Allen and Davidson should sell a sufficient amount of the land to net the owner the balance of the purchase-money. Does the language of this provision mean that these agents were to sell, during the period named, enough of this land for cash to pay the balance of the purchase-money which the owner was to receive for this land under this contract? As notes are not money, and as these agents were to sell enough of the land to net the owner the balance of the purchase-money, this requirement, standing alone, and disassociated from other provisions of the contract, would seem to require these agents to sell enough of the land between March 1, 1913, and March 1, 1914, to net the owner in cash the balance of the purchase-money. But this provision must be construed in the light of the whole contract, and especially in view of the previous provision of the contract that Allen and Davidson were to sell, between-March 1, 1913, and March 1, 1914, such an additional amount of this land as would net the defendant in cash and notes the balance of the purchase-money coming to it under the contract. This fixed the obligations of these parties to the contract. They were to sell enough of this land by March 1, 1914, to net the owner in cash and notes the full amount of the purchase-money coming to it. The consequence of their failure to perform this obligation is then stated. They covenant and agree “that should they fail to sell such an amount of said land as will net” the owner “the balance of the purchase-money it may be entitled to receive hereunder, then and in that event this contract shall become void and of no effect, and parties of the second part shall forfeit and be divested of any and all rights and equities hereunder.” Construing together the clause of the contract fixing the obligations of Allen and Davidson in this particular and the clause of the contract providing for the forfeiture of their rights and equities upon their failure to fulfill this obligation, the fair construction of paragraph 6 of the contract is that there was no forfeiture of the rights and equities of Allen and Davidson thereunder if they sold, by March 1, 1914, enough of these lands to net the owner in cash and notes the full amount of purchase-money coming to it under the contract. It would be unreasonable to make that a cause of forfeiture which was not a breach of the obligation clause. The forfeiture should not be broader than the breach, and should not be declared for failure of performance of something which these parties had not agreed to perform. So we are of the opinion that this contract did not become null and of no effect, and that the plaintiff, as the subassignee of Allen and Davidson, did not forfeit and was not divested of its rights and equities under this contract by reason of the fact that the defendant did not realize from the notes of purchasers of these lots, within a reasonable time after March 1, 1914, the full amount of purchase-money coming to it under this instrument.

This construction seems to be sustained by the general scope and terms of the contract. The owner was to be paid for these lots from cash received and notes taken from the purchasers thereof. The owner authorized Allen and Davidson to sell these lots for initial and deferred payments as small as $10, with 6 per cent, interest on deferred payments. With this provision in the contract, it can hardly be said that the understanding between the parties was that the owner was to realize from the cash and deferred payments the full purchase-money of this land by March 1, 1914, or within a reasonable time thereafter. Again, the owner was to have all interest on the purchase-money notes up to $80,000, and was not to account therefor. This made it a matter of moment to the owner to get cash or notes by March 1, Í914, sufficient to cover the amount of purchase-money coming to it, but not a matter of vital importance to it to get all cash by that date, as it would be getting interest on the notes taken for deferred payments. Again, the owner upon final settlement was to “receive in cash or purchase-money notes the estimated value of the work done by the town of East Point and the County of Fulton in the development of said property, not to exceed eight thousand dollars.” Here is shown the willingness of the owner to take cash or notes; and this fact sheds light upon the meaning of the forfeiture provision of the contract. Besides, the law does not favor forfeitures. They are abhorred at law and in equity. Glover v. Central Investment Co., 133 Ga. 62, 65 (65 S. E. 147). All ambiguities in a contract are to be resolved against their existence, and the contract is to be so construed as to prevent forfeiture, unless a contrary construction is demanded. Equitable Loan &c. Co. v. Waring, 117 Ga. 599 (44 S. E. 320, 62 L. R. A. 93, 97 Am. St. R. 177). So in our opinion, when Allen and Davidson and the plaintiff expended in the improvement of this land the sum stipulated in the contract, sold enough of this land by March 1, 1913, to net the owner in cash and notes $50,000, and between March 1, 1913, and March 1, 1914, it sold an additional amount of this land sufficient to net the owner the balance of the purchase-money coming to it under the contract, they fully complied with the obligations assumed by them under paragraph 6 of this agreement; and the contract did not become null and of no effect, and they were not divested of their rights and equities thereunder by reason of the fact that the owner did not realize from the cash and notes the full amount of purchase-money coming to it under this contract by March 1,1914, or within a reasonable time thereafter.

But under this contract the owner was not to convey to Allen and Davidson or their assigns the land remaining unsold, on March 1, 1914, if by that, time they or their assigns had sold enough of said land to net the owner in cash and notes the amount of purchase-money coming to it under the contract. In the contract is the stipulation, “that after the party of the first part shall have received in cash the purchase-price of said land as set out in paragraph five hereof, and shall have received in cash or notes the value of such work as may be done by either the town of East Point or the County of Fulton, or both, in the development of said property as agreed in paragraph five hereof, then party of the first part agrees and binds itself to convey to parties of the second part, their heirs and assigns, by warranty deed all the land remaining unsold at said time, and deliver and assign to them, their heirs and assigns, all uncollected notes given for the purchase of said lots, and any money remaining in its hands derived therefrom.” The owner, under this agreement, was not to convey the remaining unsold land and assign the uncollected purchase-money notes to these parties, or their assigns, until it had received in cash the purchase-price of this laud. The sale of enough of this land by March 1, 1914, to net the owner in cash and notes the amount of purchase-money which it was to get therefor under the contract, prevented the forfeiture of the rights and equities of the other parties under the contract, but did not entitle them or their assigns to a conveyance of the unsold land and the assignment of the uncollected purchase-money notes. The receipt in cash of the full purchase-money of the land by the owner was to take place before it was required to convey the unsold lots and to assign the uncollected notes. Until the owner got in cash the full purchase-money of this land, it was under no obligation to make this conveyance and this assignment. Until then the plaintiff, nothing further appearing, would not be entitled to bring suit to compel such conveyance and such assignment; and the non-receipt in cash of the full purchase-price by the owner at the time the suit was instituted would ordinarily defeat a recovery by the plaintiff. This would clearly be so if the plaintiff was under an obligation to pay to the owner the purchase-money of this land. In that case payment or tender of the purchase-money would be a condition precedent to entitle the plaintiff to specific performance. Failure to perform this condition would be an inevitable bar to recovery. McGehee v. Jones, 10 Ga. 127; DeGraffenried v. Menard, 103 Ga. 651 (30 S. E. 560). Burkhalter v. Roach, 142 Ga. 344 (82 S. E. 1059); Davis v. Gay, 16 Wall. 203, 229 (21 L. ed. 447).

So as it appears that the owner had not received in cash the full amount of the purchase-money of this land at the time this suit was begun, this fact would ordinarily defeat the plaintiff’s right to a decree for specific performance. But the owner had undertaken to repudiate the contract on the ground that the plaintiff had forfeited its rights and equities under the contract. It had so written the plaintiff. Under these circumstances any tender of the balance of the amount coming to the defendant would be unnecessary. Tender by the plaintiff to the defendant of this amount was excused by the conduct of the defendant in repudiating the contract before the suit was commenced. Where the vendor, by conduct or declaration, proclaims that, if a tender should be made, acceptance would be refused, such tender of payment is excused. Miller v. Watson, 139 Ga. 29 (76 S. E. 585); Burkhalter V. Roach, supra. Besides the plaintiff had delivered to the defendant, in the time fixed by the contract, notes representing the purchase-money of lots into which this land had been subdivided, far in excess of the amount of purchase-money coming to the defendant. The defendant had been receiving the proceeds arising from the collection of these notes. Plaintiff prayed for an accounting from the defendant, and that the correct amount coming to the defendant be ascertained and declared. Under these circumstances no formal tender of the actual amount due the defendant was necessary. Wynne v. Fisher, 156 Ga. 656 (119 S. E. 605). The decree fixes this amount and provides for its payment before the defendant is required to convey the unsold lots and assign the uncollected purchase-money notes.

We think it unnecessary to decide the question, which is discussed at length in the briefs of counsel, whether this contract is one of agency or one of purchase. This case differs from National Bank v. Goodyear, 90 Ga. 711 (16 S. E. 962), in which the agent was to pay all storage charges, keep the property insured for the consignor’s benefit, and assume all risk of its loss or damage, and was to receive as his compensation the difference in price between what he might receive from purchasers and the invoice price at which he was to settle with his consignor. In that case there was no agreement to convey. This is true of the case of McKenzie v. Roper Grocery Co., 9 Ga. App. 185 (70 S. E. 981). In the case at bar the owner agreed to convey by warranty deed the unsold lots to Allen and Davidson, or their assigns, when it had received in cash the amount of purchase-money coming to it under the contract. This fact brings this case within the ruling in Belk v. Amyett, 155 Ga. 388 (117 S. E. 94). If it were necessary to classify this contract in order to properly decide this case, we would be disposed to hold that it is dual in character, partly one of agency and partly one of purchase. But whether solely a contract of agency or not, under the ruling in the last-cited case, the owner can be required to specifically perform his agreement to convey the unsold lots and assign the uncollected notes, when it gets the balance of the money coming to it under the contract.

The auditor found that the balance of the principal amount coming to the defendant was $10,744.98, and the court by its decree awards this amount to the defendant. This amount is made up of $202.93 of taxes which the plaintiff was to pay under the contract and which the defendant paid, of $7,430.62 for work done by East Point and the County of Pulton, for which the plaintiff was to be paid in cash or notes on final settlement, and of $3,111.43 which was the balance of the purchase-money coming to the defendant. The trial judge allowed the defendant interest on the amount paid by it for taxes, which the plaintiff should have paid, from March 1, 1914, and on the balance of $10,542.05 awarded to the defendant the court allowed interest from Jan. 30, 1920. The defendant insists that it should have interest on the whole amount from March 1, 1914. In this contention the defendant was partly right and partly wrong in claiming the interest which it should receive on the above balance. Of this balance $7,430.62 was for the work done by the City of East Point and the County of Fulton in the improvement of this property. The defendant was to receive this amount in cash and notes, not by March 1,1914, but upon final settlement of this transaction. So the court did not err, as against the defendant, in awarding interest on this sum to the defendant only from Jan. 30, 1920; but the court did err in not allowing the defendant interest on $3,111.43, the balance of the purchase-money coming to it under the contract from March 1, 1914, it appearing that the defendant had not received in full interest on $80,000 of the notes given for the deferred payments of the purchase-money of these lots. We affirm the judgment of the court below with direction that its decree be so amended as to award to the defendant interest on $7,430.62 of the principal amount awarded to the defendant from Jan. 30, 1920, and interest on $202.93 paid by the defendant for taxes, and on $3,111.43 of said principal, from March 1,1914. Costs of bringing this case to this court are taxed against the defendants in error.

Judgment affirmed, with direction.

All the Justices concur.