Western Townsite Co. v. Lamro Town Site Co.

139 N.W. 777, 31 S.D. 47, 1913 S.D. LEXIS 104

Opinion

POELEY, J.,

This1 is an equitable action brought by the Western Town Site Company against the Lamro Town Site Company, Lamro State .Bank, the Bank of Dallas, ©t al., for the purpose of compelling the return and cancellation of a certain contract. and checks drawn by the Western Town Site Company against the Bank of Dallas and in favor of the' defendant Lamro Town Site Company. The ■controversy grew out of a certain contract entered into oii the 7¡th day of May, 19x0, by the Lamro Town Site Company and one A. E. Kull, who was acting as agent for the plaintiff, Western Town Site Company, a corporation organized for the purpose of promoting town -sites in Gregory, Tripp-, and other counties. .

•In order to understand the conditions of the contract, it will be necessary to set it out in full. • It is as follows: “This contract, entered into ¡this 7'fh day of May, 1910, by and between the Lamrq Town Site Co., Incorporated, party of the first part, and A. E. Kull, of Burke, S. D., party of the second part, wherein the party of the first part agrees to sell to ■ party of the second part. the following described property: The southwest quarter of section nineteen (19) in-township1 ninety-nine (99) north, of range seventy-six (76) west, of tthe 5th P. M., for a consideration of ten thousand dollars ($10,000), to be .paid for as .per .conditions hereinafter set forth: Party af the second part to deposit a certified check for two thousand dollars ($2,000.00). with the Lamro State Bank, said amount, to. be paid to the party of the first part on the first day of July, 1910: Provided, however, that "at least six of the following business institutions of Lamro, S. D., shall have moved-lo the town of Winner, S. D., or shall have in course of construction substantial business buildings in said town of- Winner, S'. D., to.be occupied by them: Lamro .State Bank; C. Kissling; Sas and Ketchmark; Smith and McGrivey; Hall & Grei.ves; S. N. O-pdahl, or Jay Weaver. Party of the second .part further agrees to pay party of the first.part two thousand dollar-s ($2,000.00)- -on the 15th dqy day of-July; 1910, for which amount a certified-.-check has been de~ posited with the Lamro State Bank, provided ithaf at least twelve of the business institutions now located on the .Main street of Lamro, S. D., shall have moved to the town of Winner, S. D. Be it also provided that party of the second part shall deposit with' the Lamro State Bank a certified check for $4,000.00 to be paid to the party of the first part on July 20, 1910; provided, however, that at least eighty per cent, of all the buildings now located in the town of Lamro-, S. D., shall have been moved to the town of Winner, S. D. Party o-f the second part further agrees to assume a mortgage of $2,000.00 now on said land. The party of the first part to deposit with the Lamro State Bank a warranty -deed conveying above described land to A. E. Kull, together with abstract showing clear title with all interest and taxes paid up to. date, and free from all incumbrances except the mortgage above provided for, said deed to be delivered to A. E. Kull when the above payments 'shall have been made as provided for. Be if provided, that in case the party of the first part shall fail to- move, or -cause to be removed, the various buildings and business institutions as provided for, then in that case all checks and moneys having been deposited by the party of ifche second part as provided for in this -contract shall be returned t-o said party of the second part, and this contract shall be made null and void. The Lamro- Town Site Co., Incorporated. By-, President. By —:-, Secretary. (Signed) A. E. Kull, Second Party.”

Pursuant to the terms of the contract, the Lamro Town Site Company deposited with the Lamro State Bank a warranty deed, conveying the said quarter section of land to the said A. E. Kull, together with an abstract showing clear title, with all interest and taxes paid up to date and free from all incumberance, except the said mortgage. The said Kull, as agent for the Western Town Site Company, deposited three checks in the Lamro. State Bank, drawn on the Bank of Dalla's, and in favor of the Lamro- Town Site Company. Two of these checks were for $2,000 each; the other for $4,000. E'ach check wa-s certified by -the Bank of Dallas, by E. A. Jackson, its president, and each of them had plainly written on its face: “To apply on land per contract.” The plaintiff’s said agent also deposited in -the Bank of Dallas a sufficient sum of money to pay 'each -of the'se checks.

At -the time of entering into the contract, Lamro was a town of 500 to 600 inhabitants; it contained 150 buildings, of all kinds, and was the temporary county seat of Tripp county. The plaintiff, Western Town Site Company, w'as the owner of the town site of Winner, situated about 234 miles from Lamro and on the proposed line of the Chicago & Northwestern Railway. It was a candidate for the permanent county seat of Tripp county at the general election to be held in November, 1910. While the contract, on its face, appears to be for the sale and purchase of a quarter section of land, the real object of it was to eliminate Lamro from the contest as a candidate for permanent county seat, to bring about the removal of the inhabitants of Lamro to the town of Winner,*and to secure their influence and their votes for Winner as the permanant county seat.

It was stipulated by all parties to the action at the trial that the land in question, at the ime of making the contract was worth $6,000, and no more; so. that the other $4,000 of the purchase price was to go to> the Lamro Town Site Company as compensation for its influence and efforts in causing the removal of the people of Lamro to the town of Winner. The Lamro Town S-ite Company proceeded in good 'faith and with diligence to. carry out its part of the contract, and on ithe 1st day of July, 1910, had succeeded in moving Or causing .the removal, of 6 of the enumerated business institutions of Lamro to Winner; by the 15th of July, it had moved, or caused the removal, of 12 of the business establishments of Lamro — xi of which were from Main street — to the town site of Winner; by the 20th of July, it had Succeeded in moving, or causing the removal, of 53 per cent, of the whole town of Lamro to the town site of Winner; and prior to* the 15th of March, 1911, had succeeded in moving, or causing the removal, of 90 per cent, of all the people of Lamro to Winner. In other words, it had practically moved the town of Lamro onto, the town site of Winner. On the 18th day of July, 1910, the two checks for $2,000 each were presented for payment by the Dallas State Bank to the Bank of Dallas, on which 'bank they were drawn and payment refused, for die reasons, as given by the cashier, that it had not been furnished with satisfactory proof that payment of the checks was then due, and that: “ we do not believe the instruments are negotiable.” On the 21st day of July, 1910, the Western Town Site Company served upon the Lamro Town Site Company a written notice, notifying it that i't had failed to perform the conditions of the said contract of May 7th, and that the Western Town Site Company had therefore elected to rescind said contract and declare the same null and void. Thereafter, .and prior to the commencement of this- action,' the Lamro Town Site Company commenced an action in the circuit court of Tripp county against the Bank of Dallas to recover the $4,000 and interest due on the said checks, and that suit is still pending. - At the commencement of this action, a temporary injunction was issued, restraining the defendant Lamro Town Site Company from further attempting to collect said checks, and from further prosecution of the action then pending, until the disposition of this action.

At the trial, the facts were stipulated in writing by all the parties, and thereafter the court entered its conclusions of law and final judgment, dismissing plaintiff’s complaint and discharging said temporary restraining order. The judgment of dismissal is assigned as error, and appellants have presented two propositions of law for disposition: First, that, by the terms of the agreement, time is of the essence of the contract, and that, the Lamro- Town Site Company having failed to bring -about the removal of a specified number of Lamro people by a given date, the contract became forfeited, and it was entitled to rescind; and second, tha,t the checks involved are negotiable, and, to prevent'them from being negotiated and passed into the hands of innocent purchasers, it is necessary to have them canceled by a court of equity.

[1] Whether time is of -the essence of a contract depends not so' much upon -the express wording of the particular contract as upon the object and purposes of the agreement. It is a question of construction, and, unless- it plainly appears that the object and purpose of the contract depends upon its being performed by a given date, time will never be construed to be of the essence -of the -contract. Section 1267, -C. C., is as follows: “Time is never considered as of the essence of a contract unless .by its -terms -expressly so provided.” In 9 Cyc. 605, the rule as to whether time is of the essence of the contract is said -to depend upon: “Whether, in fact, the performance of the contract by -one party was meant to -depend upon the -other’s ■ promise 'being fulfilled by the day named therefor, or whether -a day was named merely in -order to -secure performance within a reasonable time.” And Judge Maxwell, in Homan v. Steele, 18 Neb. 657, 26 N. W. 476, states the rule.as follows: “That when, there is nothing special in the nature of .the property,'or of -the purposes for which it was intended, although a particular ■ á&y may be fixed for the completion of the contract, yet the general object being the accomplishment of the purpose for which the promise was made, viz., the Completion of the contract, the particular day named is merely formal.”

With these rules as a guide, and keeping in mind the object and purposes of this contract, to-wit, the removal of the people of Lamro to Winner, the elimination of Lamro as a candidate for county seat, the influence and votes of the people of L'amro in favor of Winner, and the securing of the county seat for Winner, let us examine the conditions of this agreement: The contract was for the sale of a piece of land; the consideration, in addition to paying an encumbrance of $2,000, was $8,000; $2,000 of this sum was to be paid on the 1st day of July, provided the Lamro Town Site Company had moved, or caused the removal, of certain enumerated business establishments in Lamro to Winner; but it does not provide that the $2,000 should be forfeited in case of the failure to bring about the removal of said business establishments. The same is true in regard to the two other payments; so that, so long as the one party continued to diligently carry out its part of the contract and the other party to accept the benefits thereof, the only effect that, the failure to remove this specified number of establishments by the given dates would be to defer the date of the payments till the happening of that contingency. It is conceded by appellant that the specified number had been moved by the 1st of July, and that every covenant on the part of the Lamro Town Site Company was complied with up to that date. , This entitled it to the payment of the $2,000 due at that time. By the 15th of July, it had caused the removal of 12 establishments, all but one of which was from Main street; but if continued diligently.with its efforts and must have had the specified number removed within a ázy or two, because only five days later, on the 20th of July, it had-succeeded in causing the removal of more than one-half of the entire town of Lamro.

[2] . The appellant, up to this time, had made no objection to any failure of performance on the part of the Lamro Town Site Company, and, so. far as appears from 'the record in this case,, both of the $2,000 oheck-s were due when they were presented for payment on the 18th of July; and, in refusing to pay the same, the appellant, or rather 'the Bank of Dallas, which was officered by the same individuals, was gtiilty of the first default. It is'true that the removal did not take place quite as fast as the contract called for, and the plaintiff undertook to rescind; but it is also true that this was not attempted until after more than one-half of the people of Lamro had been removed to Winder. The stampede was on, and it is not at all likely that anything could have prevented the others from going, and restitution by the plaintiff would have been impossible. Winner secured the population of Lamro, .and the per-, manent county seat as well., It does not appear just when the Lamro Town Site Company succeeded in causing the removal of 8o per cent of the people of Lamro, nor, for the purpose of this case, is it material. Keeping in mind the real purpose of the contract, its every obj ect was accomplished not later than the. date of the general election, in November, 19x0. ' This is as early as the contest could be finally determined; and whether or not 80 per cent, had been removed before this time, it is certain that a sufficient number was removed to confer upon the plaintiff every benefit it had in contemplation when entering into the contract. This being the case, we are unable to hold that time is- of the essence of this contract; and plaintiff is in no position to come into a court of equity and ask for a cancellation of this contract and to have the Lamro Town Site Company enjoined from further attempting to collect the checks.

[3] To allow 'the plaintiff to retain all the expected benefits of this enterprise, and to enjoin the Lamro- Town’ Site Company from .reaping any reward for its efforts, would be a most unequitable thing to'do. “He who seeks equity, must - do- equity.”

This disposes -of all Of the eq-uitable 'features of the case, and dispenses with the .necessity of deciding whether, the checks are negotiable--or nonnegotiable. The appellant.has shown no right to have the transfer-of the .-checks enjoined, even though -they were negotiable. ■ ' . ■ , > •• .-

No reason appearing why any party to this proceeding has not a complete and adequate remedy at law, the judgment of,the trial court is affirmed, and all parties remanded to theijj rights at law.