Michigan Iron & Land Co. v. Nester

111 N.W. 177, 147 Mich. 599, 1907 Mich. LEXIS 959

Opinion

Grant, J.

(after stating the facts). Complainant insists that the court erred:

(1) In refusing to allow interest from the time the taxes were paid, rather than from the time of the final decree entered in the suit in the United States court.

(2) In dismissing the supplemental bill and refusing to enter a decree for the amount of taxes paid subsequent to the filing of the original bill.

(3) In allowing interest at 5 per cent., rather than the rate in force when the taxes were paid by complainant.

The defendants contend:

(1) That the court of equity had no jurisdiction, and that complainants’ remedy was at law.

(2) That defendants’ liability to pay taxes on the lands not involved in the suits brought in the United States court ended when the timber had been cut and removed therefrom, although the notice required by the contract was not given.

(3) That the liability for taxes involved in those suits ended with the taxes for 1892.

(4) If, however, the defendants were still liable to pay those taxes, the time of repayment was modified, and the same were not repayable until the final determination of the United States cases, October 24, 1902, and that interest did not begin to run until a reasonable time after demand.

(5) That a personal decree cannot be entered against the heirs of Thomas Nester.

1. Did the court of chancery have jurisdiction ? The contract between these parties is unambiguous. It contains no provision of doubtful meaning. The Michigan Land & Iron Company agreed to sell all the merchantable timber on the lands which the vendee should cut prior to December 30, 1902. The construction to be placed upon this part of the contract is determined in French v. Lumber Co., 135 Mich. 424. It conveyed only so much of the timber as should be cut within the time specified. See, also, Golden v. Glock, 57 Wis. 118; Hicks v. Smith, 77 Wis. 146. But the title to the timber was expressly reserved in the vendor until it was cut and removed in compliance with the terms of the contract.

The money consideration was divided into two parts, namely, the cash payments to be made at various times for the timber and the cash payments for taxes as they were assessed upon the land. It is fair to presume that the price for the timber was fixed with reference to the payment of taxes, just as the rate of interest in a mort-; gage is made with reference to the payment of taxes by the mortgagor. The times at which these taxes were to become due were fixed by the law. The only thing uncertain was the amount; and that became certain every year. The defendants’ theory is that the provision for the payment of taxes by the vendee was a covenant, and not a condition. The payment of taxes was just as much a part of the money consideration as was the payment of the price agreed upon. It was therefore a part of the purchase price. But, as was said in Monroe v. Bowen, 26 Mich. 523, the name to be attached to it is of little importance. Under the defendants’ theory the vendee might neglect to pay the taxes or to perform any of the other agreements by him to be performed, and coolly say to the vendor :

“ These are simply covenants on my part. Sue me at law. I have paid you the moneys particularly specified in the contract as the purchase price, and now propose to remove this timber without complying with any of the other agreements on my part, and leave you to your suits at law.”

This position is not sustained by the authorities or founded in reason. De Forest v. Holum, 38 Wis. 516; Brown v. Brown, 124 Mo. 79; Koch v. Roth, 150 Ill. 212; Grove v. Miles, 58 Ill. 338. It is conceded that, if-the taxes are to be considered a part of the purchase price, the vendor has a lien therefor upon the timber. It is unnecessary to discuss cases of strict foreclosure or to enforce forfeitures. The bill is not framed for the sole purpose of declaring a forfeiture, or to enforce a strict foreclosure. It specifically prays that the defendants may “be decreed to pay to. your orator the amount of all taxes paid by your orator as aforesaid, together with the interest thereon by a day certain.” The bill did'not seek to deprive the defendants of any rights. It sought only to compel them to perform their contract after the court had decreed that they should, and had fixed a reasonable time for performance. It properly asked that they be restrained from revmoving the timber until they had made payment as the court should decree. The law in such case does not require the vendor to look to the pecuniary responsibility of his vendee. A court of equity is a proper forum in which the vendor’s right can be enforced and the performance of ■the contract secured.

Whether the defendants acquiesced in the jurisdiction of the court by answering and giving a bond by which the injunction was removed, and they allowed to proceed with their work, we need not determine. It is sufficient to hold that the court acquired jurisdiction by the original bill, and is not ousted of that jurisdiction by the fact that before the case was brought toa hearing all the property to which a lien might attach was removed by the defendants. 16 Cyc. p. 106; 11 Am. & Eng. Enc. Law (2d Ed.), p. 201; Lane v. Traction Co., 135 Mich. 70; Beal v. Chase, 31 Mich. 490, 534; Hall v. Nester, 122 Mich. 141; McLean v. McLean, 109 Mich. 258.

2. The terms of the contract upon payment of taxes and interest are explicit. The vendee agreed to pay them. The vendor might pay them, and, if it did, the vendee agreed to repay the amount, with interest from the date of payment by the vendor. There is nothing upon the record from which an agreement that interest should be waived during the pendency of the suits in the United States courts can be inferred. On the contrary, it appears from the correspondence that the Michigan Land & Iron Company and its successor notified the defendants from year to year of the payment of the taxes, and the demand for repayment. In all the letters that passed between the parties there is no claim of or reference to a waiver of the interest. The learned circuit judge was in error in finding that there was any such agreement. The suits brought in the United States court did not operate to waive any of the rights of the complainant in the contract. It was not responsible for those suits. The complainant and the defendants in them appeared by their own solicitors and counsel. The solicitors for complainant deemed it advisable to proceed before the department of the interior at "Washington. The solicitors for the defendants believed that their title was perfect, and at times strenuously insisted upon pushing the suit. The defendants might have done so regardless of the wishes or advice of the complainant’s solicitors. Why the proceedings in the interior department were pending so long without a decision does not appear. Mr. Thomas Nester was undoubtedly familiar with the title to the land. He assumed any risk of delay that might be caused by an attack upon the title. •There is no evidence that the defendants suffered any serious damage by the delay. On the contrary, the standing timber was rapidly increasing in value. In fact, it had doubled in value. The complainant was liable to the defendants upon its covenant of warranty, and it was expressly agreed in that covenant that upon—

“ A breach of said covenant the damage to be recovered shall in no case exceed the consideration price for said timber herein mentioned, with interest thereon; and, in case of a breach of said covenant as to any part of said timber, such damage shall not exceed a corresponding portion of said consideration price, with interest.”

In view of the rapidly increasing válue of the timber, the importance to the defendants of sustaining the title is apparent. It is a fair conclusion from the conduct of the parties, and as well from the evidence, that the defendants yielded to the opinion of the solicitors for the complainant in the course pursued by them. Whether that was the wiser and speedier remedy is not material for us to consider. Aside from this, there is no evidence in the record from which a court can fix the damages if any there were. Mr. Nester had other and adjoining lands he could lumber, and on January 8, 1890, his attorney wrote the manager of the Michigan Land & Iron Company:

“ If enjoined, he [Nester] has other lands in that vicinity upon which he is cutting, and upon which he could put all his force without causing him any great damage, I think.”

This question is, however, decided in Monroe v. Bowen, supra. In that case the grantor of the land reserved the timber if he should remove the same before a specified time. The land was attached by a third person and the owner of the timber enjoined from cutting it within the time specified. This court held that all contingencies and risks of embarrassment of this kind must be estimated by the parties in making their contracts. It is in evidence that the defendants could have obtained a dissolution of the injunction in the United States court by giving a bond. They insisted that the Michigan Land & Iron Company should furnish the surety. They claimed that at one time an agreement was made that they should furnish one surety and the Michigan Land & Iron Company the other. This was denied by the company, and no bond given. There was a tacit, if not an express, understanding that the matter of taxes should be adjusted on the termination of the suit in the United States court, and that meanwhile the Michigan Land & Iron Company should pay them. If complainant’s title to any of the lands was void, it was liable in- damages, and, if- the defendants had meanwhile paid the taxes, they could, under the limitation in the covenant of warranty, have •recovered them from the complainant only as a part of the purchase price. There is no equity in relieving the defendants from the payment of taxes or interest thereon. They have had the use of the money which they agreed to pay. The complainant has lost the use of its money which it was under no obligation to pay. Furthermore, the defendants were requested to pay the taxes on the lands the title to which was not in dispute. This they did not do. The payment of these taxes was permitted to rest in abeyance until the determination of the suit in the United States court. There is no reason in even a supposition that the vendor intended to waive the ultimate payment of these taxes, or the interest thereon, or that the defendants understood that payment of either was waived.

3. The court was in error in dismissing the supplemental bill. By the original bill -the court obtained jurisdiction of the parties and of the subject-matter of the litigation. Taxes assessed subsequent to the filing of the original bill were governed by the same contract and by the determination of the court in that case. In foreclosing a mortgage for nonpayment of one installment, if before the determination of the suit another installment falls due, the subsequent installment may be included in the final decree upon a supplemental bill. In that case it would make no difference that meanwhile the property had been totally destroyed. Having once obtained jurisdiction, the court will retain it to dispose of the entire controversy between the parties, and to ascertain and decree the amount due. The same principle applies here. The defendants are not prejudiced by the court’s retention of jurisdiction to settle the entire controversy. There are no material questions of fact in dispute to be submitted to a jury, and, if there were, it would make no difference. The sole advantage which these defendants could now obtain if the supplemental bill were dismissed would be an opportunity to plead the statute of limitations in a suit at law. Under the circumstances this would be most inequitable.

4. The first clause of the provision in regard to the payment of taxes would have required, the vendee to pay the taxes upon all the lands until all the timber was removed. The next clause, however, provided that the vendee might relieve himself from the payment of taxes by reporting in writing the fact that the lands specified in the notice had been cut over. By a previous provision of the contract it was arranged that the Michigan Land & Iron Company might enter upon and examine these lands for the purpose of ascertaining whether the cutting had been done pursuant to its terms. It was not contemplated that knowledge thus obtained or obtained in any other manner should be the equivalent of the notice or release provided. The vendee and his heirs thoroughly understood the contract, and gave notices as required. Knowledge of the extent of the cutting thus obtained by the vendor did not release the vendee or the defendants from the obligation to give the notice. The vendor’s agent, from time to time, appeared before the taxing'authorities, and reported, for the purpose of having the taxes reduced, the extent of the cutting. This was a favor' to the vendee, and is no legal excuse for failure to give the notice; neither does it constitute a waiver of the notice.

Furthermore, it is in evidence that the vendor’s agents talked with the respondents about releasing the land, that they replied that they would look it up and see what they could do, and that defendants made no replies, but that the only releases were those specified in the above statement of facts. The reason for such a notice is apparent. The vendor might desire to sell the remaining timber, or to sell the land to other parties. Any proposed purchaser would run the risk of buying a lawsuit with the defendants. They might insist that they had not completed their cuttings, and that their right to cut had not terminated until they had given the notice required. The defendants were under obligation to pay the taxes until they had absolved themselves from that obligation by giving the agreed notice.

5. It is further urged that the decree is erroneous because (1) it holds the heirs of Thomas Nester personally liable for his debts; (2) it establishes a claim against the estate of Thomas Nester. Thomas Nester paid all the taxes assessed upon the lands during his lifetime, except that of the year previous to his death. The bill alleges that the defendants were the heirs of Thomas Nester; that defendant George Nester was also the administrator of his father’s estate; that the defendants were proceeding to cut the timber under the contract, ignoring their duty to pay the taxes. The answers to both the original and supplemental bills admit that the defendants were cutting the timber under the contract, and claimed the right to do so. By the bill the defendants are placed in the position of assignees of the contract. The answers admit it. No claim in their answers or during the progress of the suit, or upon the hearing, was made that the defendants were not proper parties. The defendants by their pleadings have admitted that their rights are virtually the same as those of an assignee of the contract. They assumed the right to act under it. They have acted under it, and received the profits, which were very great. Neither law nor equity will permit them to receive the benefits without bearing the burdens imposed by the contract. By their pleadings and conduct they have made the obligations of the contract their own, and are personally liable for the performance of its conditions. Whether the administrator was acting under the order and direction of the probate court in performing this contract does not appear. If the administrator alone were performing it, whether by the direction of the probate court or without, he could not, neither could the estate, obtain the benefits of the contract without assuming its obligations. If, as we have held, a court of equity had jurisdiction to com pel the performance of the contract, it would follow that the court could make a decree binding upon the estate. If the administrator and heirs have seen fit to perform this contract, both are estopped to now set up that the decree is not binding upon both. It is immaterial to these defendants whether the decree is certified to the probate court and paid by the administrator for the benefit of all, or whether it is paid by the defendants individually, or whether the administrator, who is a party defendant, pays it and charges it against the estate. Whatever method of payment is adopted, the defendant heirs of Thomas Nester pay it.

The decree will be modified in accordance with this opinion, with costs to the complainant.

McAlvay, C. J., and Blair, Montgomery, and Ostrander, JJ., concurred.