Pujol v. McKinlay , 42 Cal. 559 ( 1872 )

By the Court, Crockett, J.:

In this case there were cross-appeals, and so much of the judgment as the plaintiff appealed from was affirmed from the bench. The defendant’s appeal relates only to the accounting which was had under the order of the Court, and the errors alleged are: First, that the Court computed interest at the rate of two and one half per cent per month, compounded quarterly and without rests, upon the amount advaneed by the plaintiff to effect the redemption from Allen, and upon the sums paid by the plaintiff for taxes on the land; second, that the Court fefused to allow to the defendant interest on the value of the calves, which were to be paid annually by the plaintiff as rent for the land under lease; third, that the Court erred in refusing to charge the plaintiff with the value of James McKinlay’s one quarter interest in the calves, after the date of the judgment in ejectment in favor of the plaintiff against McKinlay.

In considering the first point, it is to be observed that, by the contract of the 19th of June, 1860, McKinlay stipulated that the plaintiff should be paid interest on his advances at the rate of two and one half per cent per month, compounded quarterly, and the only reason now urged against this rate of interest is, that under the contract the plaintiff was to advance a further sum, which, when added to the other advances, would aggregate the sum of three thousand dollars, and it is said that inasmuch as the last named advance was never made by the plaintiff, the contingency did not happen upon which McKinlay agreed to pay so high a rate of interest; hence it is claimed that the plaintiff" is entitled only to legal interest on the sums actually advanced. But under the contract of June nineteenth, the undertaking of the plaintiff to make the last advance, and of McKinlay, that he and his wife would make and deliver their promissory note and mortgage to secure the three thousand dollars, were mutual and dependent covenants; they were concurrent acts, to be performed at the same time, and neither of the parties could put the other in default, except by an offer to perform on his part; and McKinlay having failed to tender the note and mortgage, on or before September 3d, 1860, the plaintiff was in no default in omitting to tender the additional advance before that period, and on -that day he became entitled, under the contract, to the Sheriff’s deed for the property. Assuming that he held the legal title thus acquired, subject to a trust created under the contract of June nineteenth, in favor of McKinlay and wife, nevertheless when they "come into a Court of equity, seeking to enforce the trust, their right to the relief demanded is founded on the contract itself, and they cannot claim the benefit of such portions of it as are ‘to their advantage, and repudiate the rest. The plaintiff, as we have seen, was in no default until after he had obtained the Sheriff’s deed, and the defendants are not entitled to divest him of the legal title, except on payment of his advances, with the stipulated rate of interest. The maxim, that he who seeks equity must do equity, applies to the defendants’ case. In Hidden v. Jordan, 28 Cal. 313, the plaintiff sought to enforce a parol trust, similar to that in this case; and it was held that he could enforce the trust only by the payment of the stipulated sum, with the agreed rate of interest, which was largely in excess of the legal rate when none was agreed upon. I think that case is decisive of the point now under discussion, and that the Court did not err in computing interest at the stipulated rate. Uor did the Court err in refusing to deduct the value of the calves from the plaintiff’s demand, as of the several dates at which they were to be delivered under the lease. The defendants’ demand for the non-delivery of the calves was in the nature of unliquidated damages, the amount of which could not be ascertained until the accounting was had. Ueither at common law, nor under our statute, could unliquidated damages of this nature be the subject of a set-off or counterclaim in an action at law for a liquidated money demand, not connected with or growing out of the same transaction in which the alleged set-off, or counterclaim, originated; and though a Court of equity, in making a final settlement of the accounts between the parties, in order to avoid a multiplicity of actions, will estimate the damages and deduct them from the plaintiff’s demand, with a view to end the litigation, it will not, in such cases, compute the interest on the plaintiff’s demand with rests. The calves can in no just legal sense be regarded as a payment pro ianto of 'the plaintiff’s demand, as of the several dates when they were to he delivered under the lease. The defendants, at most, had only a cause of action against the plaintiff for the value of the calves, which was unascertained and sounded in damages. A cause of action of this nature could not stop the running of interest on the plaintiff’s demand until the final accounting, and the value of the calves was ascertained. But I think the Court erred in refusing to compute interest at the legal rate on the value of the calves from the respective dates at which they ought to have been delivered. It is well settled that in an action at law for the conversion or non-delivery of personal property, the Court or jury may award interest by way of damages for a breach of the contract; and there are even more cogent reasons why a Court of equity should adopt the same rule, in the settlement of a long standing account between the parties, as in this case. The plaintiff has had the use of the calves, or their value, for many years, and there is no reason, founded either in law or justice, -why he should not be chargeable with interest on their value. In respect to the third point, the Court below proceeded on the theory that James McKinlay’s interest in the lease became merged in and terminated by the judgment in ejectment, and consequently, that said McKinlay’s interest in the rent, under the lease, was thenceforth extinguished. This was undoubtedly true in respect to McKinlay’s. legal title to the rents. If Mc-Kinlay had brought an action at law to recover the rents, the judgment in ejectment would have been a sufficient answer to it. He would have been estopped thereby from asserting title, in an action at law, to the land or its rents. But he was not bound to set up his equitable defense in that action; and now that he has appealed to a Court of equity, it appears for the first time that the legal title acquired by the plaintiff under the Sheriff’s deed, and which was the foundation of the judgment in ejectment, was and is held by him, subject to the equities created by the contract of June nineteenth; and consequently the judgment in ejectment did not have the effect in a Court of equity to merge or extinguish McKinlay’s interest in the lease, or the rents reserved thereby. I am therefore of opinion that the Court erred in refusing to deduct from the plaintiff’s demand the amount due to James McKinlay for his portion of the rents, during the whole term of the lease, with interest thereon.

That portion of the judgment from which the defendants appealed is therefore reversed, and the cause remanded, with an order to the Court below to modify its judgment in accordance with this opinion.

Mr. Chief Justice Sprague and Mr. Justice Wallace, the latter being disqualified, did not participate in the foregoing decision.