1. Where in part performance of an agreement a party has
advanced money, or done an act, and then stops short and refuses to
proceed to its conclusion, the other party being ready and willing
to proceed and fulfill all his stipulations according to the
contract, such first-named party will not be permitted to recover
back for what has thus been advanced or done.
2. By the statutes of Illinois as existing in January, 1857, a
contract for a rate of interest exceeding six percent, did not
invalidate the contract.
3. Where a parol promise is in substance but the same with a
written one which the party is already bound to perform, and where
all that is done on the former is in fact but in fulfillment of the
latter, no new consideration passing between the parties, the
existence or enforcement of the parol contract cannot be set up as
a rescission of the written one.
In January, 1857, Hansbrough and Hardin agreed with one Peck to
buy certain lots in Chicago for $134,000. The purchase money was
made payable in nine installments, each being for $4,300 except the
last, payable April 28, 1861, which was for $90,000. The lots had
on them at the time two wooden houses and a barn.
By the contract it was agreed
"
that the prompt performance of the covenants, and payment
of the money shall be a condition precedent, and that TIME IS OF
THE ESSENCE OF THE CONDITION."
And also
"that in case default shall be made in the payment of any or
either of said notes or any part thereof at the
time or
any of the
times above specified for the payment thereof,
for thirty days thereafter, the agreement, and all the preceding
provisions thereof, shall be null and void, and no longer binding,
at the option of said vendor. And all the payments which shall have
been made absolutely and forever forfeited to said vendor, or at
his election the covenants and liability of the purchasers shall
continue and remain obligatory."
And also
"That in case of default in the payments promptly on the days
named by the purchasers, that it is also the right
Page 72 U. S. 498
of said vendor to declare the contract ended and prior payments
forfeited, and to consider all parties in the possession of the
premises at the time of such default
tenants at will of said
vendor at a rent equal to ten percent on the whole amount of said
purchase money. And the vendor from that time is declared to
be restored, with the possession and right of possession in the
premises, to the exercise of all powers, rights, and remedies
provided by law or equity to collect such rent, or remove such
tenants, the same as if the relation of landlord and tenant were
created by an original, absolute lease for that purpose on a
special rent payable quarterly on a tenure at will, and that the
said tenants will not
commit or suffer any waste or damage
to said premises or the appurtenances, but, on the termination of
such tenancy will deliver the premises in as good order and repair
as they were at the commencement of such tenancy."
By a statute of Illinois: [
Footnote 1]
"The rate of interest upon the loan or forbearance of any money,
goods, or things in action, shall continue to be six dollars upon
one hundred dollars for one year."
"Any person who, for any such loan, discount, or forbearance,
shall pay or deliver any greater sum or value than is above allowed
to be received may recover in an action against the person who
shall have taken or received the same threefold the amount of money
so paid, or value delivered above the rate aforesaid, either by an
action of debt in any court having jurisdiction thereof, or by bill
in chancery in the circuit court, which court is hereby authorized
to try the same,
provided said action shall be brought or
bill filed within two years from when the right thereto
accrued."
Under this contract and in the state of the law above stated,
the purchasers went into possession and laid out $18,000 in
improving the property by building on it. They paid $10,000 also on
account of the notes, and about two years' interest. After erecting
these improvements, and
Page 72 U. S. 499
paying the two years' interest, the purchasers, becoming
embarrassed or dissatisfied with their contract, were desirous of
surrendering it, but were persuaded by the vendor to remain, and
they paid the interest for another year, 1859, making in all about
$28,000 of interest paid. The last payment of interest was made 31
January, 1860. After that, no further payments were made, and on
the 1st April, 1861, the vendor filed a bill in chancery in one of
the state courts to prevent the threatened removal of the buildings
from the premises and to get possession of the property. On the 23d
August, 1862, a decree was entered to this effect and the vendor
put into the possession. The decree restrained the purchasers from
removing the buildings, declaring them to be fixtures, and for the
default in the payment of the purchase money the plaintiff, the
vendor, was put in possession and all the tenants were required to
attorn to him. It declared further that he was entitled to the
estate and interest in the lots the same as before the contract.
And to remove any doubt in the title by reason of the contract and
the default in the payments, it declared that the premises should
be discharged from any encumbrance or charge in respect to the
contract of sale and that the purchasers or anyone claiming through
them should be forever debarred from having any estate or interest
or right of possession in the premises, having lost the same by
willful default, and that the articles of agreement were to be
held, in relation to the title and possession, as of no effect and
void as it respected the vendor and all claiming under or through
him.
In this state of facts, the purchasers filed, August 23, 1862, a
bill in the Circuit Court for the Northern District of Illinois to
recover back the moneys paid upon the contract and also for the
value of improvements made on the premises, the ground of the bill
being that the contract had been rescinded by the defendant.
In regard to the matter before mentioned of the purchasers'
having been desirous of surrendering, and of being persuaded by the
vendor to stay, the bill alleged:
Page 72 U. S. 500
"That the contract became and was so intolerably oppressive that
in November, 1859, they proposed a relinquishment of the same
unless it should be modified or made less rigorous and exacting.
That the vendor thereupon proposed to them that if they would not
abandon the same, but would pay certain taxes, assessments, and
charges, and interest then accrued, the whole amounting to ten
thousand dollars, within sixty days from the first day of December,
1859, he would thereafter so accommodate and indulge them that they
could carry on said contract, and to this end he would, until there
should be a revival of trade and business in Chicago, take the net
income from the property over and above taxes and insurance in lieu
of interest on the purchase money until such revival of trade and
business. That your orators accepted said proposition, and in
accordance with his request, in order to comply with the
proposition, sent an agent from Kentucky to reside in Chicago
aforesaid, to take charge of the property and collect and get in
the rents and pay the same to said vendor, less the taxes and
insurance. And also your orators, on or about the 31st day of
January, A.D. 1860, paid said taxes, assessments, and other charges
and accrued interest, the whole amounting to ten thousand dollars
as aforesaid, in compliance with his said proposition, and
thereafter were ready and willing and, from time to time offered to
pay the vendor the net income from the premises after deducting the
taxes and insurance as aforesaid; but he declined to abide by his
said proposition, and thereafter continued to enforce the said
contract of January 29, 1857, and all its provisions, with the most
exacting rigor, notwithstanding there was no considerable increase
of income from the property nor a revival of trade and business in
Chicago."
Upon this case, which in substance was the one set forth, the
defendant in the case, the original vendor, demurred, and the court
below dismissed the bill.
Page 72 U. S. 505
MR. JUSTICE NELSON delivered the opinion of the Court.
It will be seen from the facts in this case that the plaintiffs
were in default on account of the nonpayment of the interest for
more than a year, and also that the principal fell due a few days
after the filing of the bill in chancery in the state court on
account of this default in the payments. The contract was a very
stringent one. Time was, in terms, made the essence of it in
respect to the payments, and further, in case of a default in any
one payment for thirty days, the agreement was to be null and void
and no longer binding, at the option of the vendor, and all
payments that had been made were to be forfeited to him, and also
in case of default in any of the payments it was agreed that the
contract, at the election of the vendor, was to be at an end, and
the purchasers deemed to be in possession as tenants at will,
liable for a rent equal to the amount of interest of the purchase
money.
The decree in chancery in the state court is relied on as having
rescinded the contract at the instance of the defendant, by reason
of which the plaintiffs have become entitled to recover back the
purchase money paid, together with the value of the improvements.
The position is that there is no longer a subsisting contract, as
an end has been put to it by the vendor, and he has in consequence
resumed the possession, and claims to hold the estate the same as
if no contract had ever existed, and that in such case the
purchaser, upon settled principles of law and equity, is at liberty
to recover back the consideration paid and the value of the
improvements. But the difficulty is that the vendor has only
availed himself of a provision of the contract which entitled him
to proceed in a court of chancery, by reason of the default of the
purchaser in making his payments, to put an end to it and be
restored to the possession. It is a proceeding in affirmance, not
in rescission of it, by enforcing a remedy expressly reversed in
it. Indeed, without such clause or
Page 72 U. S. 506
reservation, the remedy would have been equally available to
him. It is a right growing out of the default of the purchaser, as
the law will not permit him both to withhold the purchase money and
keep possession and enjoy the rents and profits of the estate, nor
will it subject the vendor to the return of the purchase money if
he is obliged to go into a court of equity to be restored to the
possession.
In case of a default in the payments, there are several remedies
open to the vendor. He may sue on the contract and recover judgment
for the purchase money and take out execution against the property
of the defendant, and among other property, the lands sold, or he
may bring ejectment and recover back the possession; but in that
case, the purchaser, by going into a court of equity within a
reasonable time and offering payment of the purchase money,
together with costs, is entitled to a performance of the contract;
or the vendor may go in the first instance into a court of equity,
as in the present case, and call on the purchaser to come forward
and pay the money due or be forever thereafter foreclosed from
setting up any claim against the estate. In these contracts for the
sale of real estate, the vendor holds the legal title as a security
for the payment of the purchase money, and in case of a persistent
default, his better remedy, and under some circumstances his only
safe remedy, is to institute proceedings in the proper court to
foreclose the equity of the purchaser where partial payments or
valuable improvements have been made. The court will usually give
him a day, if he desires it, to raise the money, longer or shorter,
depending on the particular circumstances of the case, and to
perform his part of the agreement.
This mode of selling real estate in the United States is a very
common and favorite one, and the principles governing the contract
both in law and equity are more fully and perfectly settled than in
England or any other country. The books of reports are full of
cases arising out of it, and every phase of the litigation
repeatedly considered and adjudged. And no rule in respect to the
contract is better settled than this: that the party who has
advanced money, or done an
Page 72 U. S. 507
act in part performance of the agreement, and then stops short
and refuses to proceed to its ultimate conclusion, the other party
being ready and willing to proceed and fulfill all his stipulations
according to the contract, will not be permitted to recover back
what has thus been advanced or done. [
Footnote 2]
The same doctrine has been repeatedly applied by the courts of
Illinois, the state in which this case arose. [
Footnote 3]
This principle would of itself have defeated the plaintiffs in
this suit independently of the decree foreclosing their equity in
the contract.
It appears in the case that the parties agreed upon the rate of
ten percent interest for the forbearance of the purchase money
unpaid when, at the time, as is admitted, it was only six
percentum. But this law did not invalidate the contract. It
authorized the party to recover of the party taking usury threefold
the amount above the legal rate at any time within two years after
the right of action accrued. This bill was filed the 23d August,
1862. The last payment of interest was made 31 January, 1860. More
than two years, therefore, had elapsed before the suit was
brought.
We should add it is not admitted by the defendant that this
arrangement had the effect to make the contract usurious, and would
not, according to the case of
Beete v. Bidgood, [
Footnote 4] if the excess of interest
stipulated for was in fact a part of the purchase money.
After the default of the purchasers, and when they were disposed
to surrender the contract, the vendor proposed to them, if they
would abandon the idea and pay up the taxes in arrears and interest
that had accrued, he would indulge them, and to that end, and until
a revival of business in Chicago, he would be satisfied with the
net income from the property over and above the taxes and
insurance, and it is
Page 72 U. S. 508
averred that they agreed to the propositions and paid the taxes
and interest, but that the vendor declined to carry out the
agreement and enforced the contract, though there had not been any
considerable increase of income from the property or revival of
trade and business in Chicago. This provisional arrangement is very
loosely stated in the bill, but is, of course, admitted by the
demurrer. It admits the revival of business, to some extent before
the enforcement of the contract. There is great difficulty,
however, in determining the extent of increase contemplated by the
arrangement from the statement in the bill. It was entered into in
November, 1859, and this suit was not instituted till August, 1862,
some two years and nine months afterwards.
But the true answer to this part of the case is that the
arrangement was not in writing, nor any consideration passing
between the parties that could give validity to it. The promise by
the purchasers was but in affirmation of what they were bound to
perform by their written agreement, and all that was done was but
in fulfillment of it.
We have thus gone carefully over the case as presented and
considered every ground set up on the part of the plaintiffs for
the relief prayed for, but with every disposition to temper the
sternness of the law as applicable to them, we are compelled to say
that according to the settled principles both of law and equity, a
case for relief has not been established.
The truth of the case is that these plaintiffs improvidently
entered into a purchase beyond their means, and doubtless relied
very much upon the rise of the value of the estate and of the
income to meet the payments and expenditures laid out upon it.
Their anticipations failed them, and a heavy debt was the
consequence, beyond their ability to meet. Of the $93,000 purchase
money, they have paid only $10,000. Of interest, some $28,000. They
expended for improvements $18,000. There still remained due against
them $83,000 purchase money and over $20,000 interest, at the time
the vendor went into possession. The plaintiffs
Page 72 U. S. 509
themselves had been in the possession and enjoyment of the
premises for a period exceeding that for which the interest on the
purchase money had been paid, which at least must be regarded as an
equivalent for the money thus paid.
Decree affirmed.
[
Footnote 1]
1 Furple's Statutes, p. 633.
[
Footnote 2]
Green v. Green, 9 Cowen 46;
Ketchum v.
Evertson, 13 Johnson 364, Spencer, J.;
Leonard v.
Morgan, 6 Gray 412;
Haynes v. Hart, 42 Barbour
58.
[
Footnote 3]
Chrisman v. Miller, 21 Ill. 236, and other cases
referred to in the argument.
[
Footnote 4]
7 Barnwall & Cresswell 453.
