Hunt v. Mahoney

The trial court rendered judgment in favor of plaintiff against defendants, decreeing specific performance of a written contract for the sale of certain real property, including the home thereon, awarding damages in the sum of $300 for use and occupancy, and the sum of $75 to compensate for a partially ineompete bathroom.

The contract upon which this action is based was furnished and filled out by defendants' real estate agent, and is entitled “Deposit Beceipt for Purchase of Beal Property.” The

At the time of the signing of the contract the house still was not finished, and defendant Gather Mahoney admitted that on April 9th, the time to which the agent had authority to extend the time of payment, it was still not finished.

The house was being built by defendants, who, although it was not completely finished, occupied it. Mechanics’ liens were filed against the property and demands for payment of

When the 30 days from the date of the contract had passed, the house was still unfinished and mechanics’ liens were still against the property and in prospect. Scotto had requested the $1,200 advance, which a few days later was granted as above set forth, and from time to time the plaintiff came to the house where the defendants were living to observe the progress of the work. Nothing seems to have been done by either party or the agent to extend formally the time of payment. However, it is apparent that all parties assumed that the time of payment had been extended the additional 30 days.

On April 9th, the day the balance of the purchase price would have to be paid under the extended time, plaintiff, a Mr. Lethbridge representing the bank which had agreed to lend plaintiff the balance of the purchase price, and Scotto, met at the office of the title company mentioned in the contract and whom the real estate agent had instructed to “prepare a report and instructions for purposes of this sale.” Neither defendant was present. The purpose of the meeting was to pay to the title company the balance of the purchase price, to be delivered to defendants as soon as good title could be vested in plaintiff and a deed of trust from plaintiff to the bank be made a valid first lien. Mr. Harrow, the title company representative, called attention to the fact that the title to the property was not clear because of the mechanics’ liens already filed and the fact that the legal time after notice of completion in which to file additional liens had not yet expired. Lethbridge stated that the bank was prepared to advance the necessary moneys to pay the balance

The first contention made by defendants is that as time is expressly made of the essence of the contract, plaintiff’s failure to pay the $14,000 in 30 days constituted a failure to comply with the contract.

There are four answers to this: first, the seller had failed to comply with his agreement to have the house finished; second, the seller was in no position to deliver marketable title; third, the time of payment was extended by, or its extension acquiesced in, by both the seller and his agent; and fourth, the defendants waived the right to claim a default. The first two answers will be considered later.

As to the third, the evidence shows that while there was no express statement by the agent that the time was extended, his conduct, and that of the defendants in having him obtain from plaintiff consent to the withdrawal of $1,200 from the deposit, which amount they accepted after the 30 days had expired, shows conclusively that the agent was exercising, with their knowledge and consent (although he had the right to do it without their consent), the right given him by the express terms of the contract to extend the time of payment for an additional 30 days.

Defendants cite Glock v. Howard, & Wilson Colony Co., 123 Cal. 1 [ 55 P. 713 , 69 Am. St. Rep. 17 , 43 L.R.A. 199 ]; Winter v. Kitto, 100 Cal.App. 302 [279 P.1024]; Kelso v. Ulrich, 67 Cal.App.2d 698 [ 155 P.2d 407 , and Martinelli v. Hogrefe, 123 Cal.App. 438 , [ 11 P.2d 412 ], as authority for the

Fourth': Defendants accepted $1,200 of the deposit after the date when the $14,000 should have been paid, if, as contended by defendants, the time of payment was not extended. At argument, defendants contended that they were entitled to it as a forfeiture under the contract, which provided that in the event of failure by plaintiff to pay the balance of the purchase price the defendants were entitled to retain the deposit as liquidated damages. But it was not so taken by defendants. Defendant Gather testified that he requested that he “might be privileged to withdraw” this $1,200. The evidence clearly shows that this request was communicated to plaintiff by Seotto, and the withdrawal was made solely by reason of the letter which plaintiff signed authorizing it as an advance. There was no question of forfeiture at the time. That this withdrawal was a waiver of the right to declare a default is well shown by the following language from Boone v. Templeman, 158 Cal. 290 , at page 294 [ 110 P. 947 , 139 Am. St. Rep. 126 ] : “The general rule on the subject is thus stated by Mr. Pomeroy: ‘A condition that the title shall be made, or the price shall be paid, on or before a day named, may be waived by the party entitled to performance; and if such party thus waives the exact performance at the day, or if he goes on treating the agreement as still binding after default has been made, he cannot after-wards turn around and set up the delay or default as creating a forfeiture, and therefore, a defense. ’ (Pomeroy on Contracts, sec. 337.) ‘The one entitled to insist upon a punctual' performance by the other or else that the agreement be ended, may waive his right and the benefit of any objection which he might raise to a performance after the prescribed time, either expressly or by his conduct; and his

Defendants’ second contention is that there could be no extension of the time of payment by the agent unless such extension was in writing, citing section 1698, Civil Code, and Battaglia v. Winchester Dried Fruit Co., 32 Cal.App.2d 436 [ 90 P.2d 111 ]. But neither that section nor ease applies here. The section reads: “A contract in writing may be altered by a contract in writing, or by an executed oral agreement, and not otherwise.” (Emphasis added.) Here the contract was not being altered. On the contrary, the extension was made pursuant to the very terms of the contract itself.

Defendants’ third contention is that there was no tender or sufficient offer of performance by plaintiff. The first answer to this contention is that the evidence shows such tender and offer of performance. Plaintiff and his banker met with defendants’ agent at the title company. True, plaintiff did not have $14,000 in cash present. But after stating that they were there for the purpose of paying the balance of the purchase price, the banker stated that they were ready, able and willing to pay the balance of the purchase price, and the title company could draw on them for it at any time. No objection was made by defendants’ agent to this form of tender. In fact, he seemed to consider it the proper method. Had the title been marketable and the house finished at that time, there can be no question but that the money would have been paid.

Scotto handled for defendants all the details of the transaction from the very beginning, and it is apparent from the evidence that all parties expected the matters connected with the receiving of the final payment to be handled by him. In fact, the defendants at no time have claimed that he did not have such authority. A tender to him under the circumstances of this case was a tender to the defendants. A failure to object to the form of the tender constituted a waiver. ‘‘All objections to the mode of an offer of performance, which the creditor has an opportunity to state at the time to the person making the offer, and which could be then obviated by him,

Defendants seem to contend that in order to bring this suit, the tender of April 9th, if made, must be kept good by the deposit of the $14,000 in the bank for the account of defendants, and cites section 1500 of the Civil Code in support of this contention. But as said in Marshall v. Hilton, 209 Cal. 531 , at page 534 [ 289 P. 165 ]: “This section has no application to a tender made in a case of this kind. It applies in cases where the object and purpose of the tender is to extinguish an obligation. Here no claim is made that the tender proven extinguishes the obligation of the respondents to pay to the appellant the amount due her under the agreement of sale, but was a preliminary step to be taken before an action could be instituted by the respondents against the appellant to specifically perform the contract. In such a case ‘the law does not require the purchaser to keep the tender good or deposit the money in the vendor’s name and thus place himself at the vendor’s mercy, since the decree, if granted, will require the plaintiff to pay the purchase money before receiving the deed. ’ (23 Cal.Jur.459.)”

A second answer to this contention is that the house was not finished. At that time, as well as at the expiration of

A third answer to this contention is that defendants were in no position at this time to deliver a marketable title. The agreement provides “in the event the title to said property shall not prove marketable and said seller shall not perfect same within ninety (90) days from this date, the buyer shall have the option of demanding and receiving back said deposit” etc. (Emphasis added.) It is clear that the marketability of title was a condition precedent to the payment of the purchase price and that if the title was not marketable not only did the seller have 90 days to perfect it, but the time of payment likewise would be extended, for, if at the end of the 90 days the title had not been perfected, the buyer had the option of getting back his deposit. Had it been intended that the buyer must pay the balance of the purchase price and then wait for the seller to perfect title, this clause would have provided for the return of the purchase price rather than the deposit.

Defendants rely upon Bourdieu v. Baker, 6 Cal.App.2d 150 [ 44 P.2d 587 ], for their contention that plaintiff was obligated to pay the balance of $14,000, and then wait 90 days for defendants to perfect the title. But the situation in that case was entirely different from that here. There the contract acknowledged receipt of $10 on account of the purchase price of $25,000, and provided that the purchase price was to be paid: $3,000 on or before 30 days, and the balance to be paid on or before six months from date; title to be perfect and deed to be delivered on or before a date five months later, “Provided, however, that the payment of $3000.— is paid at said date, but if not paid . . . then this contract to be of no effect.” It will be noted that there were two payments to be made, one of $3,000 in 30 days, and the other of $22,000 in six months. Within the 30 days, the buyer deposited the $3,000 with a title company in escrow to be paid to the seller when the title company had a deed of the property to the sellers. Moreover, the buyer instructed the title company to make certain payments, such as mortgage interest and taxes, out of the $3,000, none of which payments the seller had ordered. Notice was given the seller of this deposit. The court held that the agreement constituted only an option to purchase the land. Here, the agreement is definitely one of purchase and sale. There the court held that the offer to sell would not become binding until the payment of $3,000 within the 30 days, that such payment constituting acceptance must be made

Assuming that there was no tender on the due date, April 9th, defendants were in no position to accept the $14,000 were it tendered, as they themselves could not have complied with the contract, and conveyed to plaintiff a marketable title and a finished house. The law does not require an idle act. (Williston on Contracts, rev. ed., vol. 3, § 698A, p. 2008.) Before defendants were in a position to perform on their part, defendants notified plaintiff through their agent, Seotto, that they did not intend to perform the contract. In fact, they claimed they had made it impossible to do so by selling the property to another. (It appeared later that they had not sold, but had placed a new deed of trust on the property.) This, of course, excused plaintiff from thereafter making any tender. (Williston on Contracts, supra; Giarratano v. McIlwain, 215 App.Div. 644 [ 214 N.Y.S. 582 ]; Tatum v. Levi, 117 Cal.App. 83 [ 3 P.2d 963 ].)

The position taken by defendants on this appeal shows that the sellers thought they saw an opportunity, through technicalities, to get their property back and to keep .the deposit of the buyer, who at all times acted in the utmost good faith. The law does not look favorably upon such a situation.

The judgment is affirmed.'

Peters, P. J., and Ward, J., concurred.

Appellants’ petition for a hearing by the Supreme Court was denied January 22, 1948.