Southern Pacific Railroad v. Allen , 112 Cal. 455 ( 1896 )

Van Fleet, J.

This is an appeal from the judgment upon the judgment-roll.

The action is to compel the payment of moneys alleged to be due under contracts for the purchase of lands, and, in default of payment, to foreclose defendant’s rights under the contracts, and for general relief. The action is on more than one contract, but they are alike in terms, and one will serve as a • type of all. Plaintiff agreed to sell, and defendant to buy, a certain piece of land. At the date of the contract defendant paid one-fifth of the purchase price and one year’s interest upon the unpaid portion, and agreed to pay the same interest annually in advance until the completion of the purchase, or the termination of the contract, together with all taxes and assessments levied upon the land, and to pay the remainder of the purchase price “on or before the first day of February, 1893.” Defendant is given the right of immediate possession of the land, and upon the performance of all the conditions of his contract is to receive a deed for the land, which deed plaintiff agrees to make upon denland, “after the receipt of a patent therefor from the United States.” The contract proceeds: “It is further agreed between the parties hereto, that the party of the first part claims all the tracts hereinbefore described, as part of a grant of lands to it by the Congress-of the United States; that patent has not yet issued to it for said tracts; that it will use ordinary diligence to procure patents for them; that, in consequence of circumstances beyond its control, it sometimes fails to obtain patents for lands that seem to be legally a portion of its said grant; therefore nothing in this instrument shall be considered as a guaranty or assurance that patent or title will be procured; that, in case it be finally determined that patent shall not issue to said party of the first part for all or any of the tracts herein described, it will, upon demand, repay, without interest, to the party of the second part, all moneys that may have been paid to it by him on account of any such tracts as it shall fail to procure patent for, the amount of repayment to be calculated at the rate and price per acre fixed at this date for such tracts by said party of the first part, as per schedule on page three" hereof; that said lands being unpatented, the party of the first part does not guaranty the possession of them to the party of the second part, and will not be responsible to him for damages or cost in case of his failure to obtain and keep such possession.”

This action was brought upon default of defendant in paying the second, third and fourth years’ installments of interest. It was commenced before the expiration of the five-years’ limitation for the payment of the balance of the purchase money, but was brought to trial and decided after the lapse of that period. Defendant, by answer, denied title in plaintiff, and by cross-complaint alleged false representations by plaintiff of its title, injury to himself therefrom, and concluded with an offer of rescission and demand for a return of the moneys paid by him. The findings are in favor of plaintiff, except as to the fact of possession by defendant of the lands described in the complaint, and against the answer and cross-complaint, and the decree requires defendant to pay within six months the amount found due as unpaid interest, or be debarred and foreclosed of all right and interest in and to said lands, and in and under the contracts.

The only question really involved in the case is as to the construction of the contracts sued upon. It is contended by the defendant that he was under- no obligation to purchase the land or to pay the remainder of the purchase price, unless the plaintiff should, within the five years, obtain a patent for the land; and that, as the plaintiff had failed to obtain a patent within that time, and as the action was not tried until after the expiration of that time, the defendant was entitled to a rescission of the contract. But clearly the contracts will not bear any such construction. The defendant contracted unconditionally to pay the remainder of the purchase 11rice “on or before” a certain day named, and to pay interest annually in advance on such remainder; but the plaintiff contracted to convey to defendant only “upon the receipt of a patent,” and was to repay the money only “in case it be finally determined that patent shall not issue.” The defendant, therefore, was not entitled to terminate the contract, or to require a repayment of the moneys paid, until the question of the issue of a patent to the plaintiff should be “finally determined.” The findings state that proceedings are now pending in the United States land department for the issue of patent to the plaintiff, and that it has not been finally determined that such patent shall not issue. At the time, therefore, at which defendant contracted to pay the balance of the purchase price, plaintiff was not in default, nor was it in default at the time of the trial.

It will thus be seen that, under these contracts, the times fixed for the payment by defendant of the balance of the purchase price, and the installments of interest on that balance, might all arrive before the happening of the event upon which plaintiff agreed to convey, or before the happening of the event upon w'hich plaintiff agreed to return the money paid. A certain day was appointed for the payment of the balance of the purchase price, and the interest thereon, in advance. But the issuance of the patent to plaintiff, or the final determination that such patent should not issue, were events the time of the occurrence of which was uncertain, and which might take place long after the expiration of the five years. 'The case is, therefore, strictly within the well-established rule that, “if a. day be appointed for payment of money, or a part of it, or for doing any other act, and the day is to happen or nay happen before the thing which is the consideration of the money, or the act is to be performed, an action may be brought for the money, or for not doing such other act, before performance; for it appears that the party relied upon his remedy, and did not intend to make the performance a condition precedent.” (Donovan v. Judson, 81 Cal. 334; Front St. etc. R. R. Co. v. Butler, 50 Cal. 574; Platt v. Gilchrist, 3 Sand. 125; Loud v. Pomona etc. Co., 153 U. S. 564, 576; Coleman v. Rowe, 5 How. (Miss.) 460; 37 Am. Dec. 164; , Couch v. Ingersoll, 2 Pick. 301; Bean v. Atwater, 4 Conn. 10; 10 Am. Dec. 91; Edgar v. Boies, 11 Serg. & R. 450.) The whole framework of the contracts shows that both parties understood that the question whether or not patents would issue was one of uncertainty, and that it was impossible to know, in advance, when that question would be “finally determined.” Defendant, with full knowledge of that fact, contracted to make his payments at all events and within certain specified times; merely reserving the right to a repayment of the money in case the particular title contracted for should fail. Under these circumstances the obtaining of patents could not be a condition precedent to his obligation to make the deferred payments.

The defendant further contends that the contracts were void, ab initia, for want of mutuality or consideration, or amounted at most to mere offers to purchase on his part. This contention cannot be sustained. Plaintiff claimed title to these lands, but its title had not been perfected by patent. Defendant had the same opportunity as plaintiff of knowing the nature and probable validity of that claim. Under these circumstances plaintiff agreed to convey to defendant when it should obtain a patent, and to permit defendant to enter into possession of the land at once. In consideration of these promises defendant agreed to purchase when a patent should be issued, paid at once one-fifth of the purchase price and one year’s interest on the balance, and agreed to pay the remainder (with interest thereon annually in advance) on or before a given date, with the right to a repayment without interest in the event of an ultimate failure to obtain a patent. These promises were strictly mutual,.and each constituted a sufficient consideration for the other. Plaintiff by its contract surrendered its right to contract with or sell to any one else, and yielded to defendant the present right to possession which it claimed. These concessions were clearly a detriment to plaintiff, and, in a legal sense, an advantage to defendant; and they, therefore, furnished a consideration for defendant’s promise to pay.

Defendant also claims that the bringing of this action was a rescission of the contracts, which entitled him to a return of the money already paid. But since, 'under the contract, plaintiff was entitled absolutely to receive the money at the times agreed upon, and to have the benefit of its use until the final determination of the question of the issuance of patent, it was entitled to enforce the collection of the money by this action, and in the event of a failure to pay to have defendant foreclosed of bis rights under the contracts. (Keller v. Lewis, 53 Cal. 118; Fairchild v. Mullan, 90 Cal. 194; Hansbrough v. Peck, 5 Wall. 506.) The decree gave the defendant the alternative of paying within six months, or suffering foreclosure; and this was in accordance with equity. It may be, in view of the fact that the action was tried after the expiration of the time for the payment of the last installment of the purchase price, that the decree should have required the defendant to pay the balance of the principal as well as the unpaid installments of interest; but the error, if any, in that particular is in favor of defendant, and cannot be considered on his appeal.

It follows from these considerations that plaintiff is entitled to the relief granted by the court below, and that the judgment must be affirmed.

It is so ordered.

McFarland, J., Garoutte, J., and Harrison, J., concurred.