Maxfield v. Terry

4 Del. Ch. 618

• Court: Court of Chancery of Delaware
• Decided: September 15, 1873
• Status: Published

Opinion

.The Chancellor

The effect of the transaction between Cleaver and Maxfield, touching the purchase of the property in, conr troversy, was to create a contract for its conveyance by Cleaver to Maxfield in consideration, first, that Max-field should occupy the property prior to its conveyance to him' and pay a stipulated rent for it ; and, second, that he should repay to Cleaver the purchase,money. This agreement was upon sufficient consideration and being rer duced to writing was of force within the statute of frauds. There is sufficient evidence to shew that three years were given to Maxfield for the performance of his part of the contract, and the Court is justified in treating that period as the limit to his right to have a conveyance, for, although not a part of the written agreement, it may be taken as a reasonable time measured by the assent of the parties. Within the three years then, commencing in October, 1866, it may be considered that Maxfield had an equity to a conveyance upon payment or tender of the purchase money with any arrears of rent. But it appears from the testimony of Cleaver that before selling the property to Terry, he applied to Maxfield to take it off his hands, pursuant to the contract. Maxfield professed himself unable to do so, and without any prospect of becoming able. Thereupon Cleaver requested to be discharged from his obligation longer to hold the property and that he might be at liberty to sell it to some one else. Maxfield did not insist, as he might have done, upon the unexpired portion of the three years given him to fulfill the agreement, but consented to Cleaver’s proposal to sell the property to some one else, and to sell it clear of Max-field’s right, for a sale clear of the agreement was' evidently what the parties meant. Again, after the purchaser was found, Cleaver saw Maxfield, and gave him another opportunity to take the property, but proposing that if he, Maxfield, could not do so, Terry would take it, and meet his obligations by paying the purchase money ■and rent" in "arrear. With this proposal Maxfield expressed himself as satisfied, saying that he would take his chance of making some arrangement with Terry. Pursuant to the consent thus given, Cleaver sold- the property to Terry, and it was purchased by Terry with the express information that Maxfield’s rights under the agreement were discharged.

Now, upon this evidence, there was, on the part of Maxfield, a clear and unequivocal waiver of his right to a conveyance under the agreement. The case is quite within the rule as cited by the complainant’s counsel from the Master of the Roll’s opinion, in Robinson vs. Paige, 3 Russ. 120, that the waiver must amount to a dissolution of the contract placing the parties in statu quo. By this is meant that they be placed in their former situation as to the obligations of the contract.

But the question is raised whether a written, agreement can be discharged by a paroi waiver.

There might be doubt whether a bare paroi waiver, ■ that is one which has not been acted upon, nor caused any change in the position of the parties, is sufficient to discharge a written agreement; as, if the title still remained in Cleaver, and this were a bill filed against him for a conveyance, and his defense were that at some time Maxfield had expressed his intention not to insist upon . his right, but without canceling or surrendering the written agreement, and without Cleaver’s having acted ; under such declaration of Maxfield. Such is the case put by Sir William Grant in Stackhouse vs. Barnston, 10 . Ves. Jr. 465, cited in argument, where he says,—“ A “ waiver is nothing, unless it amount to a release. It is “by a release, or something equivalent, only, that an “ equitable demand can be given away. A mere waiver “ signifies nothing more than an expression of inten- “ tian not to insist upon the right; which in equity “will not bar the right any more than at law “ accord without satisfaction would be a plea.” It may be conceded that, in a suit at law on a written agreement, such a bare paroi waiver would not be bar. In equity, upon a bill for specific performance, it seems to be settled that the Court will not enforce performance in favor of a party who has clearly abandoned it, and consented to its discharge, even though by paroi only. The propriety of the rule appears to have been doubted by Lord Hardwicke in 2 Eq. Cas. Abr. 33, and by Mr. Sugden, in his work on Vendors and Purchasers. But it is fully established. The cases are collected in 1 Sugd. on Vend. Ch. 3, sec. 9. The rule proceeds upon the ground that the exercise of this jurisdiction is a discretionary one to be exercised subject to all the equities of the particular case, and that it will not be exercised to relieve a party who has clearly and unequivocally waived or abandoned his right.

The present case goes beyond that of a bare paroi waiver just referred to. Maxfield’s consent, given for the sale of the property to another purchaser, was acted upon. In consequence of it Cleaver and Terry were led to alter their situation, and must suffer prejudice if Maxfield be now permitted to retract his consent to the sale, and to hold the property charged with his equity. To enforce the specific performance under such circumstances would be grossly inequitable, and would be contrary to the principle which regulates the exercise of this jurisdiction. That principle is that a specific performance of a contract will not be decreed where, under the circumstances, such a decree would work manifest injustice between the parties : But in such case the complainant will be left to his remedy at law. To this extent the jurisdiction for specific performance is discretionary. It was so held upon a full examination of the subject in Godwin vs Collins; a case decided in Kent County in 1868, and affirmed on appeal.

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The result is that inasmuch as Maxfield’s consent to the sale made to Terry has been acted upon, and the parties have become involved under it, and in reliance upon the agreement having been discharged, so that to enforce it would now be inequitable, a court of equity will give to the waiver all the effect of a release, and refuse to interfere.

Even at law, in an action for damages against Cleaver for a breach of his agreement to convey, the facts proved would be a defense. For Cleaver having disabled himself from fulfilling the agreement, with -Maxfield’s express consent, would not be liable for the breach of it : under the maxim, “ volenti non Jit injuria.”

It remains to notice two special grounds taken by the complainant’s counsel against the defense of waiver.

First. It was argued that this agreement is more than a mere contract of sale, that it is a declaration of trust, and vested in Maxfield immediately an equitable interest in the property,such as could not be parted with or divested by paroi. I am of opinion, however, that this memorandum amounts to a contract of sale. I look to the substance and effect of the transaétion. Cleaver bought the property, took the title, and paid the purchase money. Maxfield paid nothing. There was therefore no resulting trust to Max-field, raised by law out of the transaction ; and no present vested interest is, upon fair construction, expressed, or implied by the written agreement. It is true that Cleaver in terms acknowledges that he has bought the property for Maxfield, and is to hold it for him—not however that he is to hold it as a trustee for Maxfield., so as to vest in him a present interest in it before he had reimbursed a dollar of the purchase money. On the contrary what Cleaver meant by holding the property for Maxfield is shown by the concluding clause, viz.: “when the said “ 'Norris-Maxfield shall pay me the sum’of $450.00,1 hereby •"agree to convey the property to:him.” This is the language of "an executory contract of .sale, and not of a .declaration ’ of .trust. But even if Maxfield had taken under, the agreement a present equitable interest, such as ordinarily could only be assigned or released by writing, still, the question would remain, whether his consent to the sale made to Terry and Terry’s purchase, in consequence of such consent, would not raise in Terry an equity sufficient to protect him against Maxfield’s claim as against Terry. Maxfield would in that view be equitably estopped from setting up any interest in the premises which he could be supposed to have had. The case however does not rest on that point, but upon the ground that this was but a contract of sale, and the right under it was wholly discharged by Maxfield’s consent, acted upon, to have the property sold.

A second special ground, taken by the complainant’s counsel, was that the defense of waiver, taken at the bar, is not consistent with the case made by the answer, Which was that Terry purchased the property upon the information by Cleaver, that Maxfield had forfeited his right by a failure to comply with the agreement, not that he had voluntarily abandoned it. But the substance of the defense made by the answer'is this, that Terry purchased, upon information by Cleaver and belief that Maxfield’s right under the agreement had been discharged, or, in the words of the answer, “that the same was null and void,” and that he would take a title under Cleaver’s deed “clear “of any claim on the part of Maxfield." The further statement in the answer that Terry understood from Cleaver that Maxfield had “ forfeited ” his right seems to me to be but circumstantial, and not of the substance of the issue. I think therefore that the evidence as to Max-field’s consent to the sale and that Cleaver informed Terry, as he testifies, of such consent, supports the main issue, viz. that Maxfield’s right was discharged. If, by the introduction of this evidence, under the state of the pleadings, the complainant could have suffered any surprise, that might be taken into consideration by the Court, butit is the complainant himself who hasintroduced Cleaver’s testimony, and made it a part of the cause.

Again, in the argument for the complainant, stress was laid upon the fact that Terry bought the property with the knowledge that Maxfield held possession of it. It is true that possession is constructive notice to a purchaser of any equity existing in the party holding possession ; and, in this case, Maxfield’s possession and Terry’s knowledge of it might have protected the right or equity of Maxfield had he not voluntarily abandoned it. But the effect of Maxfield’s possession, as constructive notice of his right, is countervailed by his own relinquishment of the right and consent to the sale made to Terry; and the fact, that Terry purchased under a waiver by Maxfield of his equity, places him on, at least, an equal footing with a purchaser for value without notice of any equity. Indeed, his position as a purchaser is, in a court of equity, stronger than that of an ordinary purchaser without notice, for Maxfield’s consent and Cleaver’s information that Max-field’s right was discharged, afforded a stronger ground for a purchaser’s confidence that he was getting a good title than an ordinary purchaser without notice would have.

I have examined the case of Kelly vs Stanberry, cited from 13 Ohio Rep. 408. There a purchaser was put into possession without a deed and executed a mortgage to the purchaser for the purchase money. Afterwards the vendor sold and conveyed his legal title to a third person who stealthily gained possession in the absence of the first purchaser. On ejectment brought, one of the defenses was that the first purchaser had at some time by paroi agreed to give up the land to the vendor. But the difference between that case and this, is that there the alleged waiver was not acted upon, had no influence upon the vendor or his subsequent purchaser and was therefore, as the Court say, without consideration. There was not in that case anything to raise an equity in favor of the second pur-' chaser, as there is here in favor of Terry, but on the contrary the.second sale in that case was a gross fraud and so treated by the Court.

Looking at all the circumstances of the case, I think that Maxfield by his voluntary consent to this sale has lost, as against the purchaser, whatever equity he could have had, under'the agreement with Cleaver, whether the agreement be considered a contract of sale, or a declaration of trust.

I cannot therefore decree a specific performance of this agreement, and must dismiss the bill with costs.

3 Del. Ch. 189.