Page v. Martin

46 N.J. Eq. 585

Opinion

.The opinion of the court was delivered by

Garrison, J.

The bill was for the specific performance of an agreement to< convey lands. The attitude of courts of equity upon applications of this character may be summarized in two propositions— first, that the relief invoked is not a matter ex débito justitiae, but rests in the sound discretion of the court, and, second, that where a contract is certain in all its parts and for a fair consideration,, and where the party seeking its enforcement is not himself in default, it is as much a matter of course for courts of equity to-decree the performance of the contract, as it is for courts of law to give damages for the breaqh of it. That relief rests not upon what the court must do, but rather upon what, in view of all the-circumstances, it ought to do, is a distinction which is of little or no practical moment. In every case of this character the court is chiefly concerned with the equities of the parties hefore it. In the present case, the party seeking the enforcement of specific-performance grounds his right upon a written contract made-with the owner of the lands, under the supposed protection of which he entered into possession of the premises and laid out a-, large sum of money in their permanent improvement. Resistance comes not from the owner, but from one who, with full, notice of the above facts, purchased the lands, and is based solely upon the alleged incapacity of the owner to make a valid contract. The dismissal of the complainant’s bill under these circumstances does not inure to the benefit of him whose incapacity furnished the sole ground for the action of the court. In the-absence of fraud, its effect is simply to transfer the improvements-from him who innocently made them to a speculative volunteer. The defence, being a purely legal one, must be clearly made out by him who sets it up. The decree In the court of chancery dismissed the bill with the results above indicated. This appeal •questions whether such a disposition of the case does complete justice between, the parties. The facts necessary to an understanding of the original transaction are briefly these: One Ezra Tolman, who was the owner of two acres of rough land adjoining his other property, entered into a written agreement in respect to said lands with Page, a neighboring proprietor. After the •delivery of this writing Page enclosed the tract with wire fencing, aud, with the approval of the owner, expended nearly $700 in the construction of a boat-house and in otherwise fitting the premises for a pleasure park and picnic ground. This -was in the spring of 1884. In December of the year following Tolman was, upon an inquisition of lunacy, determined to be of unsound mind, aud in 1887 his guardian obtained an order for the sale ■of his-lands, and among them, the lands in the possession of Page under the said agreement were offered for sale. Previous to the sale of these lands, Page notified the guardian that, in the enercise of the option contained in his agreement with Tolman, he desired to take title to the said lands, and tendered himself ready to make payment therefor according to the terms agreed upon. At the sale Martin, who is the sole defendant in this suit, became- the purchaser at precisely the same price which Page had agreed to give. Before the bidding began Martin was notified by Page of his said agreement and of the other facts above stated. A deed for the lands was delivered by the guardian to-Martin, but without general covenants of title. Page then tendered to Martin the full sum which Page was to pay and which Martin had paid, aud, upon his refusal to convey, filed his bill in the court of chancery.

The evidence as to Tolman’s general incapacity to transact business in 1884 was so slight, that we must assume what indeed was evident from the conclusions of the vice-chancellor who •heard the case, that the main ground for declaring void his contract with Page is its supposed inadequacy of consideration. The inadequacy which thus becomes the controlling feature of the case will, ujjon examination, be found to attach solely to the leasehold interest and easements which Page was to enjoy prior ■to the exercise by him of his option to purchase, and even upon these points all inadequacy vanishes, in view of the large sum of money immediately expended by the lessee upon the lands of his lessor. Where a tenant with power to purchase expends in one year on the permanent improvement of the land double its entire purchase price, it is a refinement of technicality to say, that all of his rights shall be lost because he was not, by the terms of his lease, compelled to make these improvements. The jurisdiction now exercised concerns itself solely with that which conduces to justice. Moreover, the terms of the lease are before us only as evidence of mental incapacity on the one hand or of mala fieles on the other. For all other purposes that portion of the contract is excluded and passed. The insistment is, not that the agreement was unfair or disadvantageous, as understood and performed between the parties to it,'but that it is evidence of inability to contract, because advantage might have been taken of some of-its provisions by a person less scrupulous than the complainant. The agreement in question actually resulted in changing a piece of land valueless to its owner into improved property, so that in any event the owner became assured of receiving the full value of his land, for, if the purchase fell through, he still had the land, permanently improved beyond even the purchase price. So that, if we are to judge of Tolman’s business capacity by the only transaction fully before us, it indicates at least average shrewdness and foresight. As to mala fides on the part of Rage, the contract is singularly at variance with such a notion. It being admitted that he was not compelled to put the improvements upon the land, the fact that he did so is the strongest possible proof of good faith upon his part. If we look to the part of the agreement which concerns the purchase of the land by Rage, it bears the same evidence of entire fairness. The price agreed upon was §150 an acre, which, according to the testimony, was all that it was worth. Moreover, with what force can this price for the bare soil be criticized by one who himself gave precisely the same price for the same land after $700 had been expended in its improvement ? It will not, I think, be contended, that a decree which cedes these improvements without consideration to a mere volunteer with notice is compelled by the equities of the case, or that it does complete justice to the parties to this dispute. T cannot avoid the impression that the agreement has been viewed too rigidly as a-lease and too little as a contract of sale, in which latter aspect we are now solely concerned with it. The criticism of the court below and much of the argument of counsel cease to be significant when the contract is regarded in this latter light. Thus viewed, it is a contract of sale, plain and fair in all its parts, whereby the owner agrees to sell for a full price land valueless, or even an expense to him, and by which the vendee is given a period of option, during which time he is to save the owner harmless and bear himself all of the expense of care and improvement. If there is anything harsh or suspicious iu such a transaction, I utterly fail to perceive it. If Page’s object had been to acquire the land for an inadequate price (and unless this was a possible result of his contract, the case against him falls to the ground), he must have known that to a man of Tolman’s habits a cash sum much smaller than the purchase price, to say nothing of the improvements, would have been the surest means of accomplishing his object.

The result reached in this court is, that Page had a contract fair in all its parts; that Tolman’s incapacity to make such a contract is not shown; that Page, in bona fide reliance upon this contract, improved the property and was entitled to a deed upon tender of the purchase-money; that Martin purchased with, notice of the facts out of which complainant’s rights grew, and that complete justice will be done to the parties to this suit by a decree that Martin deed the property to Page upon payment of the price paid by him for said lands, without interest.

’ Upon the argument it was insisted, that the contract set out in the bill could not be enforced because it lacked mutuality of obligation. Iu so far as this contention rests in matter of law, the proposition is, that a contract to convey, which at its inception contemplated an option in the vendee, cannot be enforced by him after an affirmative exercise of the option because, prior to its exercise, he was under no obligation to purchase. In support of this contention the case of Hawralty v. Warren, 3 C. E. Gr. 124, is cited. That case was, it is true, almost identical with the one now before us, but, so far from supporting the proposition for which it is cited, it is diametrically opposed to such an insistment. The language of Chancellor Zabriskie in that case is as follows: “ It is now well settled that an optional agreement to convey, without any covenant or obligation to convey and without any mutuality of remedy, will be enforced in equity if it is made upon proper consideration, or forms part of a lease or other contract between the parties that may be a true consideration for it.” This case was afterwards cited by the chancellor (Runyon) in Scott v. Shiner, 12 C. E. Gr. 187, as an authority for the doctrine, that a stipulation that a party shall have an option of purchase is equivalent to a conditional agreement to convey.

The complainant’s case must be deemed to be before us for consideration upon its merits.

Let the record be remitted, in order that a decree may be entered in accordance with the views herein expressed.

For affirmance — None.

For reversal — The Chief-Justice, Dixon, Garrison, Magie, Reed, Yan Syokel, Brown, Clement, Cole, Smith — 10.