Cheney v. Libby

delivered the opinion of the court.

This is a suit to compel'the specific performance by the appellant, Oheney, of a written agreement entered into May .28, ■1880, between him and the- appellee, Libby, .whereby the' former demised and let to the latter the possession and' use of, and contracted, bargained and agreed to sell to him, two sec-' tions of unimproved' land in Gage. County, Nebraska. The

The question to be determined is, whether there was any such default ppon the part of the plaintiff, Libby, as deprived him of the right to specific performance.

The sum agreed upon for the possession, use, oceupancy and control of the land was $1361.60 yearly, represented in Libby’s notes, and in the taxes, .assessed and to be assessed against the land. The price for the land was $8960, of which $1600 was paid at the date of the contract- The. balance was to be paid, “without notice or demand therefor,” in annual instalments at- the times specified in promissory notes, of even date with the contract, which were executed by Libby to Cheney, at Tecumseh, Nebraska. The notes were made payable to the order of Cheney, at the office of Kussell & Holmes, private bankers in that city. Eight of the notes represented'the balance of the principal debt — each one being for $920 — and were payable respectively in three, four, five,.six, seven, eight,nine and ten years after date. The remaining ten notes represented the annual interest.

1 Libby agreed to meet the notes as they respectively matured, pay the taxes on the land for 1880 and subsequent years, and, during that year, (the weather permitting,) break two hundred acres, and build on the land a frame barn of sixteen feet by twenty, and a frame dwelling-house of a story and. a half. Cheney undertook to pay the taxes of 18Y9 and previous years, and bound himself to convey the land, in fee simple, with the ordinary covenants of warranty, (reserving the right of way that might be demanded for public- use for railways and common roads,) upon the payment by Libby of the several s.ums' of money aforesaid at the times limited, and the strict performance of all and singular the conditions of the contract.

It was further stipulated between the parties: That “ time and punctuality are material and essential ingredients in this contract;”

That in case the contract was forfeited, Cheney could take Immediate possession of - the land with all the crops, improvements, fixtures, privileges and appurtenances thereon or appertaining thereto, Libby to remain bound for all taxes then •assessed against the premises, and all instalments of principal or interest then due on the contract.to be regarded as rent;

That whenever one-half of the purchase price was paid, with ,all accrued interest and taxes, Cheney should execute a deed, as provided for in the contract, and take notes and a mortgage for the remaining payments to run the unexpired time; and,

That when Libby’s right to purchase the land terminated by reason of non-performance of his covenants,' or his failure to make the payments, or any of them, at the time specified, he should be deemed to have only the rights of a tenant, and to hold the land under £he contract as a lease, subject to the statute regulating the .'relation of landlord and .tenant; with the right in Cheney- to enforce the provisions of the contract, and recover possession of the land, with all the fixtures, privileges, crops and appurtenances thereon as if' the same wras held by forcible detainer.

The agreement also contained these stringent provisions: That no court should relieve Libby from a failure to comply strictly and literally with the contract; that no modification or change of the contract' could be made .except by entry thereon in writing signed by both parties; and that no oversight or omission to take notice of any default by Libby should be deemed a waiver by Cheney of the right to do so at any time..

Libby went into possession under the contract. He and

He, also, met promptly all the notes given for principal and interest maturing prior to 1885. The total amount paid by him prior to that date, including $1600 paid at the execution of the contract, was in excess of $5000.

1 But the defendant insists that there was such default upon-the part of the plaintiff with respect to the notes maturing* May 28, 1885, as worked a forfeiture of the contract, and, consequently, that specific performance cannot be decreed.. The precise grounds upon which this contention rests, as well as those upon which the plaintiff relies in support of his claim for relief, cannot be clearly understood without a careful scrutiny of all that passed between the parties in reference to the lands in question.'

The plaintiff resided in Iowa, while the defendant resided at Jersey ville, Illinois. The notes given by the-former were upon blanks furnished by the .latter’s agent, who caused them, to be made payable in Tecumseh, Nebraska, at the' private. bank of Russell & Holmes, through whom the defendant had, for many years prior to 1880, ’ made collections,' and with whom he had kept an account. The first payment - under the contrast was made in bank drafts delivered to the defendant’s agent in Tecumseh. All the other .notes falling due in 1880 to 1884, .inclusive, except the interest note maturing in 1882,

But it is quite apparent from the evidence that Cheney, in. 1885, indulged the hope that he could bring about a forfeiture of the contract for nonrcompliance upon the part of Libby with its provisions, and .that he would, in that or some other Way, get'the land back. It is proper to advert to the circumstances justifying- that conclusion.

On the 4th of March, 1885, — all previous instalments/ having been punctually met — Libby offered, in writing, to paj ail the" principal notes mentioned in the contract, as. well as the interest note due May 28, 1885, if a deed was made to him. To this offer Cheney replied, under date of March 19, 1885 : “Your letter of the 4th has just reached me. I have no papers with me and cannot attend to the matter as you request,. Lexpect to go to.New Orleans to the Exposition and to be at home in time to see to it properly. If I am "behind timé no harm will como to you;” Libby wrote again,.under - date of May 20, 1885, renewing the offer contained in his letter of March 4. ■ Under date of May 23, 1885, — only five days before the notes for 1885 matured,— Cheney replied: “ Yours of 20th is received.. . I think it probable that I can do as you suggest, but I wili be in Beatrice [the county . seat of Gage County, where the lands are] between the 1st and 10th of. June on other business, and will -then make. inquiries and see if I can lend the money1 to good hands, and will then let you knotymore certainly.” '

On the 28th of May, 1885, A. W. Cross, of the First National Bank of Jerseyville, Illinois,- — -where Cheney resided, — appeared at the. banking-house of Russell & Holmes, and made a deposit of $5000, all in current funds, and a good portion of it-m bills of his own bank. While there he inquired.of Kussell & Holmes (without disclosing the reason for his inquiry) whether they kept a “legal-tender revenue [reserve], as .national banks were required to do.” He was told that .they did not,-but that a supply of legal-tender was on hand. About two o’clock of the 1st of June — which, as May 31 fell on Sunday, was the last day of grace for Libby’s two notes due in 1885,.Neb. Stat. c. 41, § 8 — one of Cheney’s attorneys went into the bank of Kussell & Holmes, and asked if he could be given $5000 in legal-tender notes in exchange for other currency. His request was complied with.. At a later hour of the same day Cheney appeared in the bank, without having responded to Libby’s offer, twice made, to pay all the notes for the principal debt, and the interest note maturing - in 1885. He came there with checks, drawn by Cross, to be cashed, and asked as an accommodation to him that they be paid in legal-tender notes. He was promptly accommodated to the • extent of $2500. But when he asked for $2500 more in legal-tender notes, Holmes suspected there was a scheme to exhaust his bank of legal-tender notes, and refused to comply with this request. After Kussell & Holmes had thus, by way of accommodation, paid to Cheney and his attorney seven thousand five hundred dollars in legal-tender notes — but not until the hour for closing the bank, on that

'Within fifteen or twenty minutes after Cheney and his notary left the bank, Holmes, of the firm of Bussell & Holmes, went to the office of the notary to find Cheney and pay the notes in the. funds demanded. But Cheney was not there, and the notes were in his hands. Inquiry was made at the principal hotel and at other places, but he could not be found. Holmes was informed that he had left town.

. Libby having been notified of the protest of the notes, notwithstanding he had, in due time, sent a bank draft to Bussell & Holmes to be used in paying them, directed Stuart, the banker at Madison, Nebraska, to go immediately to Tecumseh.' The latter arrived there on the 9th of June, and, having learned what passed between Cheney and Bussell & Holmes, determined to pay off -the notes in such funds as Cheney demanded. ' He informed the notary, who had protested the notes for non-payment, that he was then ready, in behalf of Libby, to pay them in gold. The latter did not have the notes, did not.know where Cheney had gone, and said that the latter “ did not want the money, but that he wanted the landbáck.”

Stuart having knowledge of Cheney’s letter, in which he notified Libby of his purpose to visit Beatrice between the 1st and 10th of June, went to that place in search of Cheney, but could not find him.

On the 20th .of August, 1885, Libby, by his attorney, made a tender to Russell & Holmes of $120 in gold coin as a balance of one-half of the purchase'money, and offered to surrender the contract and execute a mortgage and notes for the balance of the purchase money, as stipulated in the contract, and demanded a deed; of all which Cheney was notified. ' The -latter replied, under date of August 22, 1885,. that he would not receive aiiyuüoney from Libby, and refused to make a deed.

Shortly before the commencement of this suit Libby again offered to Cheney to pay in cash all the unpaid portion of the principal debt named in the contract, and all ihterest due at' that date. He also renewed his offer to execute a mortgage on the land to secure all unpaid instalments not due, and demanded a deed. But thosó offers being declined, the present suit was brought.

The peculiar wording of the written contract renders- it somewhat doubtful whether there was a sale of the lands to the appellee to be made complete by a conveyance of the legal title or defeated altogether, according to his performance or failure to perform the conditions upon which he was to receive a deed; or whether he was simply given possession, paying a fixed amount annually, for use and occupancy, with the privilege of purchasing and with the right to demand a conveyance in fee simple, upon the performance of those conditions. Taking the whole contract together, we incline to adopt the former as the true interpretation. Such was the view taken by the Supreme Court of Nebraska of a similar contract as to- land between Cheney and one Robinson. Robinson v. Cheney, 17 Nebraska, 673, 679. But it is not necessary to express any decided opinion upon this question; for, in any view, it is clear from the contract, not only that appellant could retain the legal title until the appellee’s obligations under it had all been performed, but that he could resume possession immediately upon the failure of the appellee to meet, punctually, any of the conditions to be performed by him. Time may be made of the essence of the contract “ by the express stipulations of the parties, or it may arise by implication from the very nature of the property, or the avowed objects of .the seller or the purchaser.” Taylor v. Longworth, 14 Pet. 172 , 174; Secombe v. Steele, 20 How. 94 , 104; Holgate v. Eaton, 116 U. S. 33 , 40; Brown v. Guarantee Trust Co., 128 U. S. 403 , 414. The par-'

■ But there are other principles, founded in justice, that must control the decision of the present case. Even where time is 'made, material, by express stipulation, the failure of one of the parties to perform a condition'within the particular time limited, will not in every case defeat his right to specific performance, if the condition be subsequently performed, without unreasonable delay, and no circumstances have intervened that would render it unjust or inequitable to give such relief. The discretion which a court of equity has to grant or refuse specific- performance, and- which is always exercised with reference to the circumstances of the particular case before it, (Hennessy v. Woolworth, 128 U. S. 438 , 442,) may, and of necessity must often be controlled by the conduct of the party-who bases his refusal to perform the contract' upon the failure of the other party to strictly .comply with its conditions. Seton v. Slade, 7 Ves. 265, 279 ; Levy v. Lindo, 3 Merivale, 81, 8 4; Hudson v. Bartram , 3 Madd. 440, 447; Lilley v. Fifty Associates, 101 Mass. 432 , 435; Potter v. Tuttle, 22 Connecticut, 512, 519. See, also, Ahl v. Johnson, 20 How. 511 , 518.

. To this class belongs, in our judgment, the case before us. Although the contract' between Cheney and Libby called for

But it is contended that the provision • in the contract forbidding its modification or change, “ except by entry thereon

It results from what has been said that the failure of the' plaintiff,. Libby, in • person or by agent, to pay the notes maturing in 1885, in coin of legal-tender paper, at the time they w’ere presented by Cheney for payment at the banking-house of Russell & Holmes., did not work a forfeiture of the contract, and does not stand in "the way of a decree for specific performance. '

In respect to the notes falling due in 1886 and 1887, the evidence- satisfactorily shows that the plaintiff, .at the times, and place appointed for their payment, offered, and was then and there ready, to pay them in lawful money, but .the notes not being on either occasion in the hands of Russell & Holmes . for collection, he could not make actual payment, but left the money at their bank' to be paid over to Cheney whenever the' notes were presented at that place. ■ The Sotes due in those years were, it- is true, in the manual possession of Russell & Holmes, but. they were not in their custody by -direction of

The court below found that the notes falling due in 1885,' 1886 and 1887 were paid; that the plaintiff had deposited

We are not able to concur in the finding that the notes falling- due in 1885, 1886 and 1887 had been paid when this decree was passed. If those notes had been placed by Cheney with Russell & Holmes for collection, and the latter had collected the amounts due on them, then they would have been paid ;• for, in such case, that firm would have been the agent of the payee to collect' the notes, and the money received by them would have belonged to him:

In Ward v. Smith, 7 Wall. 447 , 450, the question arose as to whether a bank at which certain bonds were made payable was the agent of the holder to receive payment. The court said: “ It is undoubtedly true that the designation of the place of payment in the bonds imported a stipulation that their holder should have them at the bank, when due, to receive payment, and- that the obligors would produce there the funds -to pay them. It was inserted for the mutual convenience of the parties. And it'is the general usage in such cases for the holder of the instrument to lodge it with the bank for collection, and the party bound, for its payment can call there and take it up. If the instrument be not there lodged, a.nd the obligor is there at its maturity with the necessary funds -to pay it, he so far satisfies the contract that he' cannot be made responsible for any' future damages, either as costs of suit or interest, for delay. When the instrument is lodged with the bank for collection^ the bank becomes the agent of. the payee or obligee t<yReceive payment. The

Bussell & Holmes, then, did not become the agent of Cheney to receive the amount of the notes by reason simply of the fact that the notes were made payable at their bank. The funds left by Libby with' them to be' applied in payment of the notes of 1885, 1886 and 1887 are, therefore, his property, not the property of Cheney. The utmost effect of Libby’s offer, within a reasonable time after June 1, 1885, to pay the note of that year in lawful money, and of his offers, at the appointed times and place, to pay the notes of 1886 and 1887, was to prevent the forfeiture of the conti’act, and to save his right to have it specifically performed, so far as that right depended upon his paying those notes. But they' must be actually paid by him before he is entitled to a deed, or to a decree that will have the force and effect of a conveyance. Under the circumstances it was not absolutely necessary that he should have'brought the money into court for the defendant at the time he filed his bill. His offer in the bill to perform all the conditions and stipulations of the contract was sufficient to give him a standing in court. Irvin v. Gregory, 13 Gray, 215 , 218; Hunter v. Bales, 24 Indiana, 299, 303; Fall

The decree below is affirmed. But it is adjudged ■ cmd ordered that the said decree be and is hereby suspended, and shall not become operative until the plaintiff brings into ■ the court below for the defendcmt the full amount of the notes for principal a/nd interest executed by him to the defendant cmd made payable on the 28th days of May, -1885,1886 a/nd 1887, without interest upon cmy note after ; its.maturity. ■