Leggett v. Edwards

1 Hopk. Ch. 530

Opinion

The Chancellor.

The contract between John Edwards Junior and Edmund Curtiss Junior, was a contract for the sale and purchase of land. It was in substance, the ordinary contract between the vendor and the purchaser, where the purchaser pays a part of the price, and it is agreed, that the title shall remain in the vendor, as a security for the unpaid balance of the price. Such contracts are enforced in equity, according to the intentions of the parties. Courts of equity, not resting upon the forms and unessential parts of agreements, seize the sense and intention of the parties, and carry their intended objects into full effect. Upon this great principle of giving effect to contracts, according to their spirit and the intentions of the parties, rests a great portion of the jurisdiction of this court; and especially, the whole doctrine of mortgages, that of the specific performance of agreements, and the relief given against penalties and forfeitures. It is a jurisdiction, not to make or to vary contracts, but to carry them into effect, and to do substantial justice between the parties, by measures and methods of relief, which the courts of law do not afford.

If the substance of this contract is regarded, it seems abundantly clear, that the real object of Edwards and Curtiss, in agreeing that the deed from Edwards, should be placed in the hands of Haines, was, that it should be held as a security for the unpaid balance of the price of the land. This is the sense and substance of the allegations of the parties, and of all the testimony. Was this deed to be delivered to the purchaser of the land, or not, according to the pleasure of Edwards, the vendor? Was it in his option, whether this contract should be consummated, or not? Was Edwards at liberty, to proceed in the contract or not, at his pleasure ? Could he retain the portion of the price, which he had received, and refuse to complete the contract ? These questions must be answered in the negative; and Curtiss by this contract and its partial performance on his part, acquir ed perfect rights, which must be protected in equity. This transaction then, though in form different from a mortgage,' mi was in effect, a contract of the same nature. Ihe contract was perfect; and the object of retaining the deed as it was retained, was, to secure a part of the price of the land sold. It was the right of Curtiss, to receive a title to the land from Edwards, on payment of the portion of the price which remained unpaid. This was a perfect right in Curtiss ; it has passed to the complainant; and it is the foundation of this suit. These principles and this brief view of the case, seem sufficient to decide, that the complainant is entitled to relief.

The defendants insist, that this deed was merely an escrow, and that it was never delivered, as a deed. If this were so, the equitable rights of these parties, would not be varied. The deed was only one part in a series of transactions between Edwards and Curtiss. The contract for the sale and purchase of the land, was the foundation of the whole. The payment of a part of the price and the promissory notes given for the residue by Curtiss, on one side, and the deposite of the deed by Edwards, on the other, were steps in the subsequent performance of the contract. These acts can not be disjoined from each other, or from the contract on which they were founded, when the rights of these parties are to be decided by principles of equity. But this deed was not an escrow, in any sense of that term, which may import, that the instrument might be delivered or withheld, at the pleasure of the grantor, and without any right in the grantee to the delivery. It was prepared in pursuance of a previous contract. It had been executed and acknowledged; it was placed in the hands of Haines, to be held by him, until the balance of the price should be paid, or until satisfactory security for the payment of the two promissory notes, should be given. The deposite of the deed with Haines, was made by agreement between the parties; and was obviously, a method adopted by them, to secure the balance of the price, due to Edwards. The judgment of equity upon the whole case, must be, that Curtiss had a right to the delivery of the deed, when the condition, upon which it was agreed to be delivered, should be substantially, performed.

The rights of these parties were substantially, the same, as they would have been, if no deed had been prepared, and it had been agreed, that upon payment of the balance of the price by Curtiss at the appointed time, Edwards should give a conveyance. In either case, the essence of the contract would be, that upon payment of the remaining debt to the vendor, he should convey a title to the purchaser.

The balance of the price was to be paid by Curtiss, within a short time, or before either of the two notes should become payable; and he was then to receive the deed from Haines. Curtiss did not make payment, within the time limited ; and Haines did not deliver the deed. It is a rule of equity, that where time is not of the essence of a contract, and just compensation may be made for delay, the party omitting to perform, at the time appointed, shall not forfeit his rights, but shall have relief, upon terms of indemnity to the other party. This rule is particularly applicable to cases in which the object of a penalty or forfeiture, is to secure the payment of a debt. In such cases, though the debtor does not pay the debt at the stipulated time, he is relieved from the forfeiture, upon making a just compensation to the creditor; and this indemnity is generally, interest upon the debt; interest being considered an equivalent for delay of payment. These principles of equity are illustrated and applied in the ordinary case of a bond and a mortgage, to secure the payment of money. The bond binds the debtor in a penalty, for payment,, on a certain day; and the mortgage by its terms, conveys an estate which becomes absolute in the mortgagee, if payment is not made at the appointed time. But equity considers both the penalty and the time of payment, as matters not of the essence of the contract; treats the whole transaction as a mere security for a debt; and allows the debtor to discharge his debt with interest, after the stipulated time for payment. In the case now before the court, the condition to be performed within the limited time, was the payment of money, for which Curtiss had given his promissory notes. Was the time appointed for this payment, an essential part of the contract? I can not perceive, that the time limited for payment by these parties, was a more essential part of their contract, than the time, for payment, appointed by any ordinary mortgage. If security to the creditor, was the great object of these parties, the time appointed for payment, was material to this creditor, only as it is material to other creditors, in like cases. I am sensible of the justness and force of the views advanced by the late chancellor, in the case of Benedict against Lynch, 1 Johns, ch. 370: and I fully concur in the opinion, that in agreements -for the sale of land, the time of performance, may be an essential .condition of the contract. But here was no agreement, that if payment should not be made by Curtiss, at the appointed time, the coutnct of the parties should be rescinded ; no stipulation, that the portion of the price which was paid by Curtiss to Edwards, should be cither forfeited to Edwards, or be returned to Curtis ; and no agreement, that the promissory notes given by Curtiss for the balance of the price, should not be enforced. The deed was retained in the hands of Haines, merely as a security for the payment of the promissory notes ; and the transaction though not a mortgage in form, was a mortgage in effect, and is subject to the equitable principles which govern mortgages. The case in respect to the time of payment, is exactly analogous to the ordinary case, where‘the mortgagor does not pay the mortgage debt at the stipulated time, and is nevertheless, allowed to redeem the land. Curtiss had paid about two thirds of the price of the land, and had given his promissory notes for the residue; and to say, that because he failed to pay the residue, within the stipulated time, he lost both the land and the price, would be foreign to the true sense of the contract, and repugnant to equity.

The acts of the parties throughout, afford evidence, that they regarded the deposite of the deed with Haines, as a measure intended and operating, merely to secure payment of the balance due to Edwards. The price of thesland was five hundred and twelve pounds ; of which sum, one hundred and sixty pounds, being the amount of the two notes, remained unpaid. Partial payments were afterwards made by Curtiss and received by Edwards, and receipts were indorsed on one of the notes. In 1799, after both notes were payable, Edwards offered to deliver the deed, on payment of the amount then due on the two notes. His representatives after his death, offered to accept payment. These offers made after the failure by Curtiss to make payment within the stipulated time, prove decisively, that the parties considered and treated each other, as still standing in the relation of debtor and creditor, and that no forfeiture was claimed, on the part of Edwards.

There has been great delay, on the part of the defendants, in asserting their claim, and on the part of the complainant, in seeking equitable relief. But these delays seem to have arisen from the peculiar circumstances of the case ; and they are so far explained and accounted for, that they do not, I think, preclude either of these parties from any of their equitable rights. The conduct of the complainant, in procuring the deed which had been deposited with Haines, without payment of 'the debt justly due, was immoral and reprehensible: but he can gain no advantage by this culpable act; and it can not deprive him of the rights which he had previously acquired, by his purchase from Curtiss.

Upon the whole case, I am of opinion, that the complainant is entitled to the land in question, upon the basis of the contract between Edwards and Curtis, and upon terms of equitable indemnity to the defendants. These terms must be, the payment of the principle remaining due on the original contract, and interest upon it, and also, all expenses which the defendants have incurred in this suit and in the prosecution of their claim at law. The circumstances of this case, render it equitable, that the complainant should pay to the defendants, not only their legal costs, but all reasonable expenses of every kind, which the litigation has imposed on the defendants,

Footnotes

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(a)

The following is the form of the decretal order entered in this cause»

This cause having been heard upon the pleadings and proofs, and having been argued by Mr. Henry of counsel for the complainant, and by Mr. Hopkins of counsel for the defendants, and due deliberation having been thereupon had, it is declared by the chancellor, that the said complainant is entitled to relief touching the matters in the pleadings mentioned upon equitable terms» Whereupon in order to give such zelief, it is ordered that it be refer red to one of the masters of this court to ascertain and report what sum is due for principal and interest on the two several promissory notes for eighty pounds each, given by Edmund Curtiss Junior to John Edwards Junior, mentioned in the pleadings and proofs in this cause, being in part of, and on account of the price of five hundred and twelve pounds agreed tobe paid by Edmund Curtiss Junior mentioned in the pleadings, on the purchase of the lands in the pleadings mentioned from John Edwards Junior also in the pleadings mentioned, according to the contract in that behalf between the said John Edwards Junior and Edmund Curtiss Junior mentioned in the pleadings aforesaid, the residue of such price having been admitted or proved to have been paid, and also the amount of the taxable costs of the said defendants in this suit, and also their taxed costs in the several actions of ejectment brought in the supreme court for the recovery of the possession of the said lands also in the pleadings mentioned, and also the amount of all reasonable expenses» beside taxable costs as aforesaid, which hare been paid or incurred by the said defendants, both in the prosecution of the several actions of ejectment aforesaid and in the defence of this suit, and report the same to this court, with all convenient speed. And it is further adjudged and decreed, that when the master shall have so made his report, ascertaining the amount of the principal, interest, costs and other reasonable expenses aforesaid, and the said i eport shall have been confirmed, the said complainant may within twenty days after the confirmation of such report, pay or tender to the said defendants, or their solicitor in this cause or in case of refusal to receive the same, pay to the register or assistant register of this court for the use of the defendants, the amount of the said principal, interest, costs and other reasonable expenses so ascertained by such report. And it is further adjudged and decreed that upon such payment being made, the deed from John Edwards Junior to Edmund Curtiss Junior, of the twenty third day of May in the year of our Lot d one thousand seven hundred and ninety six, mentioned in the pleadings in this cause for the premises described in the said deed and plead, ings, shall from thenceforth be, and be deemed and taken, an absolute deed of conveyance, and to have vested an absolute estate of inheritance in the same premises in the said Edmund Curtiss Junior, his heirs and assigns forever. And further, that upon such payment, the injunction issued in this cause be and the saméis hereby made perpetual, and the defendants in this cause respectively be, and they respectively are, hereby perpetually enjoined and restrained from setting up any estate or title whatsoever, in or to the said premises, or any part thereof, and from all actions and proceedings at law touching the said premises, or any part thereof, or.for the recovery thereof, or of any part thereof. And this decree is to be binding upon the infant defendants Marina Edwards, Eliza Edwards, Henry Edwards and Jane Edwards respectively, unless they respectively shall, within six months, after they shall respectively attain the age of twenty one years being served with process for that purpose show unto the court good cause to the contrary : Provided however, and it is farther adjudged and decreed that in case the said somplainant shall not within twenty days from the confirmation of the said report make such payment of the amount which shall so be ascertained and reported as aforesaid, the said complainant's bill of complaint in this cause, shall stand and be dismissed with costs to the defendants to fie taxed, and that the defendants thereupon have execution therefor &c.