Van Dyke v. Cole

70 A. 593, 81 Vt. 379, 1908 Vt. LEXIS 156

• Court: Supreme Court of Vermont
• Decided: July 12, 1908
• Status: Published

Opinion

Watson, J.

Tbe orators moved to strike tbe cross bill from tbe files for that it is based on matters irrelevant to tbe case made by the original bill, and it is urged that the motion should have been granted. The determination of this question requires an examination of the original bill with reference to subject-matter and relief sought, and a relative similar examination of the cross bill.

The orators brought their action of ejectment to recover the possession of the land in question and damages. The declaration alleged that on the 12th day of April, 1898, the orators were seised and possessed of the land in their own right in fee and so continued until the 13th day of April, 1898, when the defendant, without law or right, and contrary to the will of the orators, thereinto entered and ejected, etc., the orators therefrom, and ever since has kept and still keeps them out of said premises, etc. In their bill the orators allege the bringing of the suit at law, recite the declaration, and allege the facts set forth therein to be true; that they are the sole owners of the land in question; that from the day of the bringing of that suit the defendant has been and still is despoiling,- wasting, and irreparably damaging said land by cutting down and removing therefrom valuable timber, and that he intends to continue so to .do unless restrained by injunction; and praying for an injunction restraining the defendant from further cutting down and removing or selling timber on or from said land during the pendency of the action at law and until final judgment therein, and for general relief. A temporary injunction was obtained according to the prayer.

The defendant made answer alleging and relying upon his purchase of the land and his bond or contract executed in connection therewith, and his thenceforth continuous possession of the property under the contract to the present time. The answer further alleges the part payment of the consideration in money by the defendant, at the time of the purchase, the giving of his note for the balance, and the making of payments on the note from time to time; the condition of the contract, among other things, that on payment of the note by the defendant the vendor would execute and deliver to him a good and valid warranty deed to convey to him a good and valid title to the land in fee simple; that he has made valuable improvements on the land by way of clearing and making a portion of it arable, erecting buildings, etc.; that he always has been and now is ready and willing to pay the amount due and owing on said note and accept such a deed of the land; that the vendor subsequently quit-claimed all his right, title, and interest in said lands to the orators subject to the-rights of the defendant under his contract, and indorsed and delivered to them the said note, which conveyance and note the orators took with full knowledge of the land contract from the vendor to the defendant and of the latter’s rights thereunder.

The cross bill contains substantially the same allegations as the answer, and piraying for specific performance of the contract, that the orators be enjoined from further prosecuting their action at law, and for general relief. The contract impliedly shows that finder it the defendant was immediately to take and thereafter have possession of the property, and the master finds that he did so take possession and thus continued to have it openly, notoriously, exclusively, and undisturbedly, up to the time of the bringing of the suit at law, subject to such liabilities as the facts reported imposed.

In making out a case under their bill the orators are obliged to show title derived from Florien Harriman subsequent to his contract with.the defendant, and subject to the latter’s rights under it. It devolves upon them to show not only a non-performance of the contract by the defendant, but also a declaration of forfeiture by the party having such optional right. Indeed, the basis of the orators’ claimed right to relief is that all rights of the defendant under the contract had been forfeited and consequently that any further cutting of timber by him would be a commission of waste and an irreparable damage-to the land; and upon their prayer he was temporarily enjoined from “further cutting down, removing or selling any timber or lumber on or from the land and premises described, ’ ’ regardless of the purpose of cutting, or the use to be made of the timber or lumber when cut. No question is made but that the case is properly in equity for the purpose of an injunction to stay waste, and any relief agreeable to the ease made by the bill, though not within the special prayer, may be had under the prayer for general relief. The Court having jurisdiction of the case for one purpose it will be retained for a final disposition of the whole matter. Hastings v. Perry, 20 Vt. 272; Whipple v. Fair Haven, 63 Vt. 221, 21 Atl. 533. Thus it appears that the real basis of the orators’ case is a claimed forfeiture of the contract under which, if iu force, the defendant has rights paramount to those of the orators on the case made by their bill. The defendant by his answer in effect denies a forfeiture in equity, and by cross bill prays that the contract be performed, and that further prosecution of the action of ejectment be perpetually enjoined. The cross bill is a proceeding to procure a complete determination of a matter already in litigation, and the new facts introduced by it are such, and only such, as are necessary to have before the court in the decision of the questions raised in the original suit, to enable it to do full and complete justice to all the parties before it in respect to the cause of action on which the orators rest their right to aid or relief. Consequently in overruling the motion there was no error. Rutland v. Paige, 24 Vt. 181; Krueger v. Ferry, 41 N. J. Eq. 432, 5 Atl. 452.

It is urged that time is of the essence of the contract, and that by its terms the defendant’s acts in breach of covenant changed the- legal relation of the parties, permitting the vendor, and his assigns, to take possession, sell the property with all improvements, and retain all sums of money paid, as liquidated damages for failure to perform. And that even though it be thought that the contract does not expressly make time essential, yet here the subject-matter — principally growing timber the value of which has materially increased — is such that time will be considered material and the defendant will not be allowed to lie by until the change in his favor and then ask for, specific performance. Assuming but not deciding that time is of the essence, the effect of the contract is not such that non-performance ipso facto works a forfeiture. A forfeiture was made optional with the vendor, and if he did not see fit to declare it, the contract by virtue of its own provisions continued in full force.

It is further urged that the vendor, by his conveyance to Drew, in effect elected to rescind his contract with the defendant. But this is not so, since as before seen in each instance the conveyance to Drew was expressly made subject to the defendant’s rights under the contract, and the note was transferred to the orators in connection therewith. Instead of these conveyances indicating a rescission, the vendor thereby recognized the contract and note as subsisting obligations. The same recognition was made by Drew in Ms conveyances to Van Dyke; and as grantees neither of them conld take greater rights than were possessed by his grantor.

Not only does the record show that no declaration of forfeiture in fact or effect was ever made prior to instituting proceedings at law to eject the defendant in November, 1905, and then only as the effect of that action, but in addition thereto it is found that a payment of fifty dollars in cash was made on the note by the defendant and accepted by the vendor in March, 1895, — between two and three years after the last installment was due, — and that a further payment of thirty dollars, by way of work by the defendant for the vendor, was made in the fall of the same year. The receiving of these payments manifested not only the vendor’s assent to previous delays, but also his understanding that the contract was still ,in full force. Again the conveyances by the vendor to Drew and by the latter of one undivided half to Van Dyke, subject to the rights of the defendant under his contract, were severally in 1898, in 1900, and finally as late as October 24, 1905. In Hunter v. Daniel, 4 Hare, 420, the covenants and agreements were such that in case the plaintiff failed to perform, “then, and in any such case, it should be lawful for the defendants, or for any of them, by writing to rescind the agreement,” etc. It was held that each breach on the part of the plaintiff in non-payment of money was a new breach of the agreement,; and that, time being of the essence of the contract, such breach gave defendants a right to rescind the contract; but that right should have been asserted the moment the breach occurred. That the defendants were not at liberty to treat the agreement as still subsisting, and to take the benefit of it at the expense -of the plaintiff, if they meant to insist that it was at an end.

In Gaughen v. Kerr, 99 Iowa, 214, 68 N. W. 694, the action was for specific performance of a contract for the sale of land. The vendee executed his several promissory notes for the agreed price, payable at different times in a period of nearly three years; and in addition thereto the vendee assumed the payment of the taxes on the land for the previous year and the subsequent taxes. The contract provided that in ease the vendee should fail M strict literal performance thereof, the vendor “shall have the right to declare this agreement null and void,” etc. Later when one of the notes was more than six months overdue and unpaid, and the taxes for two years were long since due, the vendors, not having exercised their right to declare a forfeiture, assigned the notes and contract, and conveyed the land to one of the defendants in that case, after which the assignee, claiming the right of strict forfeiture, entered a cancellation on the contract. It was held that such an option must be exercised by election at the time of default, to be of any effect. The court saying that a different rule would leave the matter entirely' at the mercy of the seller; that if the land should appreciate in value, it would be within his power at any time to declare a forfeiture, take possession, and reap the benefits of the enhanced value; while if there should be a depreciation, he could insist on the enforcement of the contract; that such a construction would not be upheld unless the clear import of the contract required it; that it was a reasonable construction and more in harmony with equity and good conscience, to hold that the parties intended, not only that prompt payment should be made, but also that the right to forfeit, to be available, should be exercised promptly. To the same effect are Hall v. Delaplaine, 5 Wis. 206, 68 Am. Dec. 57; Fargusson v. Talcott, 7 N. Dak. 183, 73 N. W. 207; Pier v. Lee, (S. Dak.) 86 N. W. 642; Fulcher & Co. v. Daniel & Son, 80 Ga. 74, 4 S. E. 259. In Battell v. Matot, 58 Vt. 271, 5 Atl. 479, it is said: “The essentiality of time is matter of intention, and may be waived by the party entitled to insist upon it, and is waived by conduct on his part that shows he could not consistently have intended to insist upon it, or that he intended to treat the contract as still subsisting notwithstanding the delay. And when the essentiality of time has been waived, it cannot be revived again without notice to the party in default, fixing a certain and reasonable time within which he is required to perform, in which ease the time thus allotted becomes essential, and if the party neglects to perform within it, a court of equity will not aid him to enforce the contract, but will leave him to whatever legal remedy he may have. ’ ’

It is unnecessary to decide how far, if at all, the rule requiring prompt exercise of the optional right of forfeiture is affected by the provision of the contract that it shall be lawful “at any time after” default; nor is it necessary to consider whether, as a matter of law, there was a waiver of forfeiture by the vendor or by the orators; for facts are found from which the court below could legitimately infer such a waiver in fact by the vendor as long as he had the legal title, and by the orators thereafter, if there were any new acts of default by the defendant, until the bringing of their action of ejectment, and to sustain the decree this Court will presume that such inference was there made. This is conclusive that the orators cannot now base any right of forfeiture on the defendant’s failure to pay at the original times appointed, nor afterwards, since no notice was ever given him by the vendor nor by the orators subsequently fixing a certain and reasonable time within which payment must be made. It is also conclusive against them regarding all acts of the defendant in committing prohibitive waste before the proceedings at law. For such acts once acquiesced in or waived cannot afterwards afford- a ground for terminating the contract.

The question then is whether the findings of the master show such subsequent cutting of timber as constitutes waste for which the optional right of forfeiture is given. The contract contemplates that the defendant might necessarily cut down and carry off growing timber in clearing land for cultivation, and by its terms such cutting does not constitute waste or damage thereunder. It does not appear that the cutting referred to in' this paragraph was not lawfully done under that provision of the contract; and the orators, seeking to avail themselves of -the optional privilege, must be held strictly within the limits of the authority giving the right. The result is that on the facts found the orators are not entitled to relief under the original bill.

Should the defendant be granted relief under the cross bill ? That he has shown himself ready, desirous, and eager to perform by making full payment since the waiver of time as an essential part of the contract, there can be no question in view of the facts found that the defendant has always been ready to pay the amount due on the note and, as late as 1896, told the vendor that if he would meet defendant and ascertain the amount, the latter would pay it, he not then knowing that the legal title had been conveyed to the orators; and that after the service of the original bill, but before either the answer or cross bill was filed, the defendant’s solicitor and one E. M. Bartlett went to the office of the orators’ solicitor and informed him that they were ready to pay the amount due and asked to see the note. The orators’ solicitor did not then have the note and so did not show it. The master finds that the defendant’s solicitor and Bartlett were then ready, and are now, to pay the sum due. Exception was taken because Bartlett was allowed to testify that he was then ready to make such payment, it being argued that the orators were under no obligation to accept payment of him, a stranger. It appears that Bartlett testified concerning that interview and for aught before us he may have stated that he and the solicitor were sent there by .the defendant to pay the note and so informed the orators’ solicitor. We cannot say the testimony was improperly received.

It is said, however, that no formal tender was ever made by the defendant, and that this was necessary. But in bringing their action of ejectment the orators at least attempted to rescind the contract, and thereafter in bringing their bill under oath and procuring the injunction, they in effect asserted that the contract had been terminated. In these circumstances a formal tender would have been useless, for which reason if for no other it was not required in order to support an action for specific performance. Hunter v. Daniel, 4 Hare, 420; Ockey v. Cook, 41 N. J. Eq. 350, 7 Atl. 495; Bauman v. Pinckney, 118 N. Y. 604, 23 N. E. 916. Nor does it make any difference in this respect that the relief is sought by cross bill. Fargusson v. Talcott, cited above.

Assuming that in seeking specific performance it devolves on the defendant to show that he has done or offered to do, or is ready and willing to do, all the essential and material acts required of him by the contract, except so far as they are shown to have been waived, will the fact that the defendant has not justified the cutting of timber after the action of ejectment was brought, prevent such relief? It is argued by the orators, though not set up as a defence in their answer to the cross bill (the necessity of which we'do not consider), that this unjustified act precludes him from obtaining a decree in his favor. Yet this does not necessarily follow. By the contract the defendant has the equitable title to the land and the rightful possession thereof. The orators have the legal title, but the extent of their interest in equity is as security for the payment of the amount due on the note, such contracts haviDg always been regarded in equity as analogous to equitable mortgages. The right of forfeiture for breach of covenants against waste was only in aid of the security. If the orators are paid the amount due on the note with the costs allowed them, they will receive full compensation and have no reason to complain of that cutting of timber even though it constituted waste. On the other hand, in addition to sundry payments, the defendant has made valuable and permanent improvements, intending to occupy the premises, as he has, for farming purposes and as a home. The cutting of timber after notice to him by way of the action of ejectment that the orators intended to insist upon their legal rights under the contract in case of future breaches, — treating the bringing of that suit as such an unequivocal act as unmistakably showed that intention, although there may be some doubt whether the orators could rescind the contract without first returning or tendering the unpaid note to the defendant, — was in no just sense an impairment of the security and the orators were not injured thereby. Indeed, that this act was comparatively of very little consequence to the orators is manifest from the facts that the stump-age value of the timber so cut, 9,962 feet, was only $69.73, that the amount due from the defendant to the orators as of October 2, 1906, was $699.93, that there is still on the land some 300,000 to 350,000 feet of soft wood timber and 50,000 feet of hard wood, and that the place is worth from $2,500 to $3,000. In these circumstances specific performance-should be decreed, for thereby the orators will receive justice by way of full compensation, while a denial of such relief would leave the defendant without any adequate remedy on his contract, and result in great hardship and injustice to him. Hager v. Buck, 44 Vt. 285, 5 Am. Rep. 368; Pom. Con. see. 358.

It is said that the defendant's delay in asking has been unreasonable, and hence such relief should not be granted. Yet the case stands with the essentiality of time waived; and since the defendant took and has retained the uninterrupted possession of the premises under the implied terms of his contract, ever by his acts showing a fixed, marked intention to carry the contract into execution, without any declaration or act by the vendor, or by the orators before instituting their ejectment suit, other than in recognition of a continuance of the contract in force, equity will not allow the lapse of time to prejudice his remedial right. Pom. Con. sec. 404; Waters v. Travis, 9 Johns. 450; Bruce v. Tilson, 25 N. Y. 194; Ely v. McKay, 12 Allen, 323.

It is further urged that since the orators are not parties to the contract they should not be compelled to perform; that the contract is personal with the vendor, otherwise there is no force in the last part of the provision therein that he will “convey or cause to be conveyed,” etc. It is a sufficient answer to this position to say that whatever the force of this provision may be as against the vendor, it does not affect the equitable rights of the defendant against the orators. They took their deeds of the property with full knowledge of the defendant’s contract and subject to his rights under it. In these circumstances they stand in equity with reference to the contract as did the vendor, and will be compelled to perform by a conveyance of the land in the same manner and to the same extent as he would have been liable to do, had he retained the legal title. Wilkins v. Somerville, 80 Vt. 48, 66 Atl. 893, 11 L. R. A. (N. S.) 1183. Nor is it necessary to the granting of such a decree that the vendor be a party to the suit, for he has no interest in 'the land and no relief is sought against him. Bridgman v. St. Johnsbury & Lake Champlain R. R. Co., 58 Vt. 198, 2 Atl. 467.

Exception was taken to the master’s report wherein he states that there was no proof that the defendant knew the vendor had sold to orator Drew, or that the orators or either of them had any interest in the “Cole land” until a little time before the ejectment suit was begun, on the ground that the orators’ deeds admitted in evidence showed that they were of record. But this position is without force, since the record of these deeds was not constructive notice to the defendant, he being the "equitable owner and in possession under a prior contract to which the deeds were made subject. Leach v. Beatties, 33 Vt. 195; Howard v. Clark, 71 Vt. 424, 45 Atl. 1042, 76 Am. St. Rep. 782.

The exceptions to the report relied upon in argument but not herein particularly noticed, are in effect overruled so far as they are material in disposing of the other questions in the case.

Decree affirmed and cause remanded with mandate.

Watson, J.

After this cause was heard and determined in this Court and final entry made, and after the same had been remanded and a mandate sent down, a petition was filed by the orators for a rehearing, under the provisions of sections 1313-1316 of the Public Statutes, and thus by force of the law of those sections the case was again transferred to this Court. It appears from the petition that the orators seek, if a rehearing be granted, to present the constitutional question of the impairment of the obligation of contracts, claiming that the decision of this Court impairs.the obligation of the land contract involved, in that the Court, it is claimed, failed to give force and effect particularly to the words therein, “at any time after such default,” etc. It further appears from the petition,"as the fact is, that this constitutional question was not raised before this Court when the hearing was had — that the orators now seek to raise it for the first time. In State v. Franklin County Savings Bank & Trust Co., 74 Vt. 246, a motion was made, after a decision had been rendered in this Court, for a rehearing on the ground, as here, that the moving party desired to present a question in argument not before presented. It was held that a rehearing would not be granted to give an opportunity to raise and present a new question, and the motion was overruled, but no further opinion was written. That ease was prior to the enactment of the statute under which the present petition is brought, yet the holding is equally applicable when a rehearing is sought under this statute.

Rehearing refused, petition dismissed, and cause remanded.