Moore v. Beiseker

147 F. 367, 77 C.C.A. 545, 1906 U.S. App. LEXIS 4246

• Court: Court of Appeals for the Eighth Circuit
• Decided: July 9, 1906
• Docket: No. 2,387
• Status: Published

Opinion

PHILIPS, District Judge,

after stating the case as above, delivered the opinion of the court.

It is to be conceded to the contention of counsel for defendants that the contract between the parties, in its inception, was ah optional contract, whereby the defendants agreed to sell the lands to the plaintiff on the conditions named, which option ran for a period of 30 days. It may also be conceded that the $500 deposited with Eugene D. Case was in the nature of a consideration for the purchase of the option; and that looking alone to the face of the contract and what, at the time of its execution, was in the contemplation of the parties an obligation on the part of the defendants to convey, did not become operative until the plaintiff complied or offered to comply with the requirement to pay one-third of the purchase money within the specified time. It may further be conceded, that as time was made the essence of the contract, if not waived, the said offer of performance should be made within 30 days; and further, that at any time during the existence of the mere option the plaintiff might have retired therefrom, forfeiting only the $500 to the defendants. This case, however, very fitly illustrates in practice the difference between a mere theory and actual facts. Let us see precisely what was the status of the $500 put up with Case. The first thing to be ascertained was whether or not the lands proposed to be sold were of the quality designated or required. Case was agreed upon to act as arbiter in this matter. If he decided and reported that the lands complied with the requirements, the plaintiff was then to say whether the deal should proceed further. Or, if of his own initiative the plaintiff became satisfied with the lands, he could give notice thereof. If he then declined to proceed further the $500 would become forfeited to the defendants. If he gave notice of his acceptance and the defendants declined to go further the $500, should be returned to the plaintiff. It is upon this hypothesis that defendant’s counsel insists that the $500 was only the consideration for the purchase of the option; and that until within the 30-days’ period, he made tender of +he one-third purchase price for the lands contemplated to be sold, the option lapsed, and the plaintiff has no standing in court.

There are two objections to this contention: In the first place, it is to be observed that on the acceptance by the plaintiff of the lands as satisfactory the $500 might become and be considered a part of the purchase price. This appears in the fact that in the computation of the full acreage at $6.75 per acre it was estimated at $76,680; while the consideration recited in the contract is $76,180, or $500 less in one aspect, and in the other as “$76,180 more or less, being with' said $500 (italics ours) at the rate of $6.75 per acre.” Not only did the plaintiff, on December 14, 1901, within the prescribed 30 days, notify the defendants that he would take the lands as satisfactory, and was ready to close the deal as soon as the abstracts were furnished and examined, but in his letter of the same date to Mr. Case, the stakeholder and representative in this matter of the defendants, he said: “You may pay them (the defendants) the $500 now in yóur hands to apply upon the purchase price of the lands." (Italics ours.) Thus were the defendants distinctly advised that in consenting to have the $500 handed over to them by Case, it was the purpose of the plaintiff to have it applied as a part payment of the purchase money for the land, and not as a payment for a mere option to purchase.

This $500 was thereafter retained, not only without an intimation from the defendants that they held it as a forfeit on the option contract, but the whole subsequent correspondence and course of dealings between the parties, extending over a period of about nine months, show beyond the possibility of a reasonable cavil that the defendants treated and regarded the transaction thereafter as in full force, executory in effect, and that there was no default on the part of the plaintiff. On the contrary, the only obstacle that arose in the way of a final execution and closure of the contract for the sale was the inability on the part of the vendors to furnish the required abstracts showing title.

The entire discussion, therefore, able and learned as it is, respecting- the quality and effect of a mere contract of option to purchase, is quite academic as applied to a situation like this, where both parties have treated the $500 put up as a guaranty, or, if you please, as the consideration for the option, after notice of acceptance by the purchaser, as being held b)r the vendors as part of the purchase price of the land. There has never been any rule of construction of contracts more instinct with the spirit of justice and practical sense than that which declares that where the provisions of a contract become the subject of controversy between the parties, the practical interpretation placed ethereon by their acts, conduct and declarations is of controlling force. This for the reason that the interest of each leads him to a construction most favorable to himself, and when differences have become serious and beyond amicable adjustment, it is the better arbiter. So in Long-Bell Lumber Company v. Stump, 86 Fed. 574, 30 C. C. A. 264, this court said:

“Courts may use the actual construction put thereon by the conduct of the parties under the contract as a controlling circumstance to determine the construction which should be put upon the contract in enforcing the rights of the parties. The most satisfactory test of ascertaining the true meaning of a contract is by putting ourselves ‘in the place of the contracting parties when it was made, and then considering, in view of all the facts and circumstances surrounding them at the time it was made, what - the parties intended by the terms of their agreement’ And when this intention is made-clear by the course of their subsequent dealing and action thereon, it must prevail in the interpretation of the instrument, regardless of inapt expressions or careless recitations.”

Why should the court be asked to hold that after the expiration of the 30-days limit fixed in the original contract, the contract had' spent its force and was at an end, when the parties themselves for months thereafter did not so regard it? Why should the defendants now be heard to say that the plaintiff had defaulted in exercising the optional right for failure to make tender-of the first payment within 30 days after the date of the original contract when during all the succeeding months they held the $500 as a payment on the purchase price of the land and were trying to complete their abstracts, and asking for time, the furnishing of which was a condition precedent to the obligation of the plaintiff to pay the one-third of the purchase money? In recognition of the fact that the contract was operative in accordance with the provisions therein, “that should it be found that any of said lands are not owned or controlled by said parties of the first part, or the title to any of them prove to be otherwise defective, such lands shall be excepted from the lands to be conveyed, and the purchase price hereinbefore mentioned shall be reduced at the rate of $6.75 per acre for every acre so excepted,” when the defendants discovered that they could not make title to all the lands they requested the plaintiff to accept the title to such of them as were shown to be clear by the abstracts and close up the deal pro tanto. Bach party thereupon consented to a separation, not of a dead but oí a recognized, subsisting contract, obligatory upon both, whereby the one-third of the purchase money for the acres thus accepted was to be paid and deeds and mortgages exchanged. Not one word of objection was uttered — no bone of contention arose between the parties ■ — until the question of the back interest was broached. According to the facts recited in the petition, the only objection ever made to the final estimate and. closure of the purchase came from the demand of the defendants when the parties approached the juncture for Ike exchange of title papers and payment of the one-third of the purchase money, respecting the deferred payments bearing interest from the 1st of December, 1901.

In Kansas Union Life Insurance Company v. Burman (C. C. A.) 141 Fed. 835, where an insurance agent for the insurance company, under a salary contract and for certain commissions, sent in his resignation to the company specifying certain grounds therefor, which did not include the objection that the insurance company had failed to renew its license in the state where the agent was operating under the contract, and in his suit to recover damages for a breach of the contract of employment he assigned, inter alia, such failure to renew the license as a ground of recovery, it was held that he was estopped from alleging such ground as the cause of his resignation. The court said:

“It is a wholesome rule ol" law, instinct with fair play, expressed by Mr. Justice Swayne, in Railway Company v. McCarthy, 96 U. S. 267, 24 L. Ed. 693, that: ‘Where a party gives a reason for Ills conduct and decision touching anything involved in a controversy, he cannot, after litigation has begun, change his ground, and put his conduct upon another and different consideration. He is not permitted thus to mend his hold. He is estopped from doing it by a settled principle of law.’ This principle has been applied in the following instances: Davis v. Wakelee, 156 U. S. 690, 15 Sup. Ct. 555, 39 L. Ed. 578, where a bankrupt obtained his discharge, claiming that the judgment against him was not affected by it, it was held that ho could not, in a subsequent action on the judgment, deny its validity. In Davis, etc., Company v. Dix (C. C.) 64 Fed. 411, where it was held that the purchasers of a creamery repudiating the contract on the ground of fraudulent representations, could not thereafter set up an interpolation in the contract. In Harriman v. Meyer, 45 Ark. 40, where it was held that the defense that a tender was not made in ready money was not admissible where the prior-objection was to inadequacy of price. In Wallace v. Minneapolis Elevator Company, 37 Minn. 465, 35 N. W. 269, where it was held that a bailee refusing to deliver wheat becapse claimed by another, could not afterwards refuse on the ground that the charges were not paid. In Harris v. Chipman, 9 Utah, 105, 33 Pac. 243, where it was held that a plaintiff rejecting title-for want of administrator’s bond, could not be heard to object afterwards that letters of administration were not under seal. In Ballou v. Sherwood, 32 Neb. 689, 49 N. W. 796, where it was held that title objected to because of pending litigation, the purchaser could not afterwards object .tor want of seal on the deed. In Frenzer v. Dufrene, 58 Neb. 436, 78 N. W. 720, where it was held that where a party alleged his wife's recalcitrance as a reason for not executing a contract, he could not afterwards be heard to-allege other reasons.”

From the inception of the dealings between the parties they recognized that as a condition precedent to the right of the vendors to demand, and the obligation of the vendee to make, payment of the one-third of the purchase price, the defendants should furnish the-plaintiff with the required abstracts showing title in the vendors to the land. Accordingly abstracts were furnished from time to time-as the defendants were able to clear the title. In the first instance it was evidently the mind of the defendants that their title was in-such condition that the deal could be brought to a final conclusion within 30 days. Discovering that this expectation-could not be realized, they retained $500 as part of the purchase price, and by mutual consent sent in abstracts as they could. The plaintiff, growing impatient over -the delay, made complaint and insisted upon closing up-the matter. Whereupon the defendants recognizing their inability to perfect title to more than 8,829.08 acres, it was mutually agreed to complete the transfer to that, leaving the residue in abeyance. In view of these actions — the construction placed upon the transaction by the parties — it is made manifest that the contention now put forth for them by astute counsel is an entire after-thought.

The extreme position is now taken in argument by counsel for the defendants that the 10-days period fixed in the contract for examination of the abstracts limits the time for compliance by the plaintiff; and not having made tender within that time, as the abstracts-were furnished, the right of action is gone. The provision in question was inserted in the contract for the purpose of allowing the plaintiff a reasonable opportunity to examine or have examined the-title, and the right of the defendants to withdraw if the abstracts were longer detained. Having in view that the abstracts would be timely furnished by the defendants, it was then assumed that the deal could be closed within thirty days. But as the abstracts were , not furnished within 30 days, the defendants holding the $500 without offering to return it, and both parties being anxious not to lose the sale and purchase, they waived the time limit for completion; and in the very nature of the situation, a reasonable time would be accorded in contemplation of law,, having regard to the situation of the parties, in which to conclude the drawing of the deeds of con-, veyance and the mortgages and to make the payment. At no time thereafter, although recognizing the contract as in force, were the defendants in position to insist upon the 10-days limit, as they had not furnished the abstracts to all the lands. When the defendants reached the limit of their ability to tender title to more than 8,829.08 acres, by common consent the parties fixed upon another time for the final act of performance. Why, therefore, should the court be asked to rule that the time first agreed upon should control? It was a matter in the keeping of the parties, which they could alter at will. If any consideration were essential to its support, ample is presented in subserving the wishes and interests of the defendants in consummating the sale so long deferred by them, whereby they would be entitled to hold the $500 already received and obtain the balance. When the parties by mutual designation finally met, September 12, 3902, to close up tíre matter, the only insistence of the defendants "was as to the back interest. They assigned no other reason for refusal to proceed. Now that litigation has supervened, they should be heard to make no other excuses.

Were the defendants entitled to the interest demanded? If they were, this action must fail; if they were not, their demurrer was not well taken. Interest is allowed either by virtue of a contract, express or implied, to pay it, or as damages for the wrongful detention of what is due to another. The interest here claimed is based upon the literal terms of the original contract. Interest based on a contract “is recoverable strictly as interest only during the continuance of the contract and as provided by its terms, before breach and not after.” 16 American & English Enc. of Law, p. 999. As it was contemplated by both parties in entering into the original contract that the sale would be consummated within 30 days therefrom, the provision respecting the deferred payments bearing interest from the 1st of December, 1901, was consented to and was reasonable. Had the contract been so completed the plaintiff would have been let into possession of the land and been in position to put in on the market, and thereby he would have enjoyed the use — -the equivalent of the interest. But for about nine months he was kept out of the possession, solely by reason of the default of the defendants. He was thus deprived of the use and any benefit he might derive by selling on a favorable market. "The law will not reward their delinquency by exacting interest from the indulgent party. See 1 Warvelle on Vendors, p. 193; Worrall v. Munn, 38 N. Y. 142, 144.

The further technical objection is made in behalf of the defendants that the amount of money tendered in payment of the one-third purchase money on the 8,829.08 acres was insufficient. This is predicated of the fact that included in the sum tendered was the $500 placed with Case; the contention being that the $500, if a payment on the purchase price, was apportiouable to the whole body of the land; i. e., the. 11,000 acres. It would seem to be the natural and reasonable thing that where, on a contract of purchase of property, it was agreed that one-third of the consideration shall be paid in cash at the time of delivery, and notes given for the deferred payments, and $500 is paid as earnest money, when the parties come to consummate the bargain the $500 in cash already in the hands of the vendor should be treated as part of the entire cash payment. The contention respecting the application of the $500 is remarkable in view of the admission made by the defendants in their letter of September 30, 1902, to the plaintiff, in which they proposed (on the terms of course of the demand for back interest) to carry out the contract as to the 8,829.08 acres that “the titles to the remaining lands therein described have proved to be defective, and are therefore by the terms of said contract excepted from the lands to be conveyed.” Upon what permissible ground, founded in reason and good conscience, can the defendants demand to retain that portion of the $500 that bears equal relation to the undivided lands ?

Keeping in mind -the fact that the $500 had been paid as a part of the purchase price of the land, when it was announced by the defendants that they were unable to make title to over 8,829.08 acres, and it was thereupon agreed to close the deal on the acceptance thereof by the purchaser, the natural and reasonable intendment would be that the $500 already received should be deemed a part of the first cash payment to be made. Any other view would be impracticable. No apportionment could be predicated of the number of the remaining acres, for the palpable reason that it was then impossible to know whether the vendors would ever be able to perfect title to the whole, or any lesser part; and until such title should be obtained the defendants would not be entitled to hold a dollar of the five hundred. The practical business sense of the situation, therefore, was, when the vendors announced their ability to declare title to only 8,829.08 acres, and the parties consented to close on that, to regard the $500 already received as part of the cash payment then to be made. No such objection was made to .the tender in the letter of defendants of September 30, 1902. It was conceived afterwards, in searching for some loophole of escape from liability. The formal tender of the money, notes, and mortgages was made by the plaintiff in about two weeks after the final rupture, which was a reasonable time under the attendant circumstances, and was less than 30 days after it was agreed to accept the title to less than the quantity of land originally contracted for. The notes tendered bore interest from the 1st day of September, 1902, which, in all conscience, was as much as the defendants could claim. Criticism is made by defendants’ counsel of the following language employed by the plaintiff in .his letter of September 27, 1902, to the defendants:

“You are hereby notified that I rescind said contract and declare the same to be no longer in force.”

This must be read and understood, however, in its connection; for it was followed up by saying:

“And I hereby demand the payment to me of the $500 paid by me on said-contract, and shall also hold you responsible for all damages sustained by me on account of your refusal to carry out and perform said contract.”

From which it is evident that the words “rescind” and “no longer in force” were used in no other sense than to indicate that the contract was broken and at an end for the purpose of further dealings with the defendants; and that, therefore, the plaintiff would hold them liable for damages.

Finally, contention is made on behalf of the defendants that this action should fail, because in his tender the plaintiff included some lands different from those described in the original contract. In the letter of August 29, 1902, addressed by the plaintiff to Mr. Case, attention was called to the fact that in the abstracts sent there were some variances in certain sections from the lands described in the contract, with the suggestion that the error might be in the discription by the abstracter or it might be an error in the list in the contract. “Please see which is correct when deed is made.” The suggestion was also made that as to one quarter section described in the contract he understood from parties who had examined the land for him that that section was government land. “You submit an abstract on the N. W. FÍ of 17, 141-, 83, which is not in my contract, so suppose the description in the contract is an error and was intended for range 83 instead of 82;” followed by a distinct statement that “these titles are accepted” with the understanding that titles not yet recorded were to be placed on record and the abstracts continued to date; with the further statement that “in accordance with your request I am now ready to close the purchase of the above lands, the abstracts on the balance of the lands to be submitted as fast as titles are in shape, and the deal closed on the rest of the lands.”

As, under the contract, the right was reserved to the defendants to substitute other lands of equal value; and as they made no reply, or objection to the discrepancy, the plaintiff had the right to accept the abstracts sent as correct, and if there was any objection to the plaintiff’s acceptance it was the duty of the defendants to say so when the parties met to close up the deal. More than all this, after the receipt of the plaintiff’s formal tender, accompanied with a discription of the lands, the defendants in their letter of September 30, 1902, only imputed to the plaintiff a failure to comply because he had “already declared that you [he] do not intend to take advantage of said contract and purchase thereunder;” and then said:

“You aro hereby notified that if you. on or before October 20, 3902. carry out and perform the terms, conditions and portions of said contract to bo by you performed in ease of the purchase of the said lands by you, we will convey or cause to be conveyed to you, in manner specified in said contract, the lands herein described, the titles to which have been accepted by you, being the same lands described or referred to in your alleged tender "to Thomas L. Beiseker on September 38, 3902, and will In all respects carry out and perform our part of said contract.”

They thus, in effect, conceded that the tender made was as to the lauds properly described in the tender, without one word of objection or suggestion on their part of any variances or non compliance on the plaintiff’s part in respect of the description of the lands. To such a situation applies with pungent force the rule of estoppel, that he who is silent when he should speak shall not be heard to speak when lie should be silent.

It results that the judgment of the Circuit Court on the demurrer is reversed, and the cause is remanded with directions to overrule the demurrer, and for further proceedings in conformity with this opinion.