Where there was a covenant to sell land upon condition that the
purchase money should be paid in installments and other acts done
by the covenantee, in failure to perform which rent was to be
charged, and the covenantee failed to execute his contract, the
rent was justly chargeable.
The Territory of Minnesota having abolished the court of
chancery, the excuses of the defendant must be judged of as if it
was a case in chancery, the statute having so directed. But in this
case, time would be held to be an essential consideration in the
contract by a court of equity, and the excuses for nonperformance
are insufficient.
The facts are stated in the opinion of the Court.
Page 61 U. S. 463
MR. JUSTICE CAMPBELL delivered the opinion of the Court.
This suit was commenced in the District Court of the United
States for Ramsey county, Minnesota, by Dousman to recover of
Stinson four hundred and eighty-one and sixteen one-hundredths
dollars as the rent of a parcel of land in the City of St. Paul
under a written contract executed in February, 1854, by those
persons. In that contract, Dousman covenanted to sell and convey to
Stinson the same land for the sum of eight thousand dollars, which
was to be paid, with interest at the rate of ten percent annually,
in three installments; the first installment of two thousand
dollars, and interest, was to be paid the 1st of September, 1854.
The vendee was required to keep the buildings insured, and engaged
that the policy in case of loss should inure to the benefit of the
vendor, and also agreed to pay all the taxes accruing from May,
1853. The contract concludes with an express condition
"That in case of failure by the vendee to perform either of the
covenants on his part, the vendor was at liberty to declare the
contract void, and thereupon to recover, by distress or otherwise,
all the interest which shall have accrued upon the contract up to
the day of declaring the contract void, as rent for the use and
occupation of the premises, and to take immediate possession
thereof, to regard the person or persons in possession at the time
as tenant or tenants holding without permission, and to recover all
damages sustained by unnecessary destruction of timber or trees
growing on the premises, or by holding over without
permission."
It was agreed that if the vendee paid the entire purchase
money
Page 61 U. S. 464
or secured it to the satisfaction of the vendor, he should have
a deed at any time after the payment of the first installment.
Contemporaneously with the execution of the contract, under the
seals of the parties, the vendee gave his promissory note for the
first installment. This installment was not paid according to the
note or contract; no insurance was effected on the property within
the terms of the agreement before September, 1854, nor were the
taxes on the lot paid before that date.
On the 14th of September, 1854, the plaintiff notified the
defendant that the contract of sale was annulled and he should
claim as rent the amount of interest that had accrued on the price
stipulated for the property, and demanded immediate possession of
the premises under the conditions of the contract. The object of
this suit is to recover that sum as rent.
The statute law of Minnesota provides
"That all equities existing at the commencement of any action in
favor of a defendant therein, or discovered to exist after such
commencement and before a final decision, shall be interposed, if
at all, by way of defense to the action, by answer or supplemental
answer in the nature of a counterclaim, and issue taken thereon, by
a reply or supplemental reply thereto, and be determined as other
issues in such actions,"
and that,
"When the party prosecuted has equities, claims, or demands
which could heretofore only be enforced by cross-action or
cross-bill, the same shall be interposed by way of answer in the
nature of a counterclaim, and the plaintiff may reply thereto and
put the same in issue, and if the same be admitted by the plaintiff
or the issue thereon be determined in favor of the defendant, he
shall be entitled to such relief, equitable or otherwise, as the
nature of the case demands by judgment or otherwise. The court of
chancery and the right to institute chancery suits are abolished in
the territory."
acts of Minnesota, 1853, ch. 9, secs. 5, 6, 14. The answer of
the defendant is framed not only to present a legal defense against
the claim preferred in the petition, but also to obtain a decree
affirmative of the continuing validity of the contract of sale.
He alleges that the note executed for the first installment of
the purchase money was accepted and received by the plaintiff for
that installment. That to provide for the punctual payment of the
note, he sent to the agents of the plaintiff, who held, and were
authorized to collect it, a draft on a merchant of responsibility
for its full amount, under a reasonable expectation and belief that
the money would be paid. That this draft was presented at the
office of the drawee by the agents of the plaintiff at a time when
he was absent, and that his clerk, through mistake
Page 61 U. S. 465
or error, declined to pay it; that as soon as he heard of the
dishonor of the bill, he made other arrangements for the payment of
the first installment by a bill on bankers in New York, and that
this bill was offered to the plaintiff before the date of his
notice to the defendant. That he has tendered the money and
interest to the plaintiff, and his tender has been refused, and he
now deposits the money in court for his use. He further answers
that the buildings on the lot have been covered by a suitable
policy of insurance, but the amount of the loss, if any, was not
payable to the plaintiff. That there was a mistake in the contract
relative to this stipulation which needed amendment, and that he
deferred the transfer of the policy till the correction was made.
That he is now willing to assign the policy to the plaintiff.
He answers that since the notice of the plaintiff, he has
attempted to pay the taxes in arrear, but that he had been
forestalled by him; that he is ready to pay the amount of taxes
paid by the plaintiff into court. The defendant claims that the
plaintiff has sustained no injury from any delay on his part, and
that he is able and willing to fulfill his contract.
The District and Supreme Court of Minnesota decided that the
answer was not sufficient, and judgment was entered for the
plaintiff. The admissions of the answer exhibit a case of default
on the part of the defendant in respect to his performance of the
covenants in the contract of sale. The technical rule, that "accord
and satisfaction is no bar to an action for debt certain,
covenanted to be paid" is perhaps inapplicable in a system like
that contained in the Code of Minnesota, and it is probably true
that a debt by covenant may be discharged there by a simple
contract or agreement. But the answer of the defendant does not
show that the promissory note given for the first installment of
the purchase money was designed to be a substitute for the
covenant, and was taken in discharge of the debt created by it. Nor
can we suppose that the plaintiff intended to release the condition
which formed so important a part of his security. The contract and
the note bear date of the same day, relate to the same subject, and
are consistent with each other. The evidence must be very explicit
and unequivocal to lead to the conclusion that the one was designed
to impair or alter the effect of the other.
The excuses rendered by the defendant for his nonpayment of the
taxes due upon the property and his failure to insure the buildings
for the security of the plaintiff are insufficient. The record
discloses a case of inattention and neglect on the part of the
defendant which authorized the plaintiff at law to annul the
contract.
Page 61 U. S. 466
The question arises whether his answer affords any ground for
equitable interposition in his favor. In respect to contracts for
the sale of land, a court of equity in general does not exact from
the parties a punctual performance of their engagements to entitle
them to its aid in obtaining a specific performance. If the
contract is silent in respect to the condition of time or fails to
indicate a distinct purpose of the parties to make it an essential
consideration, and where no circumstance exists to manifest its
importance, it is the habit of the court to relax the stringency of
the rules of legal interpretation on that subject and to decree
performance and direct compensation even in cases where there has
been inattention or neglect.
Secombe v.
Steele, 20 How. 94;
Roberts v. Berry, 3 De
G., M. & Gord. But if the parties have declared in their
contract that time is a material consideration and have agreed that
their rights shall depend upon a scrupulous fidelity to their
engagements, it does not belong to that court to make another law
for the parties. Where it plainly appears that the sale is
conditional, and its completion is dependent upon the fulfillment
of any of the terms with punctuality by either party, a court of
equity, in general, will not interpose to relieve the party in
default, on the principle that time is not of the essence of the
contract.
In the case before us, the contract recites that the vendor, in
consideration of one dollar, part of the purchase money thereafter
mentioned and then actually paid, and upon the express condition
that the defendant do well and faithfully perform the covenants and
agreements thereafter mentioned, agreed to execute and deliver a
deed of conveyance in fee simple &c.
To the terms of sale there is the condition,
"Provided, always, and these presents are upon this express
condition, that in case of failure in the performance of either of
the covenants or agreements on the part of the vendee to be
performed, the vendor shall have the right to declare this contract
void."
The contract concludes with a minute description of the
relations and consequences that were to ensue from the exercise, by
the vendor, of the right he had thus reserved.
The contingency thus foreseen and provided for occurred. The
defendant failed to perform either term of his contract, and his
answer contains no valid excuse for his neglect.
The defendant in error objected that the matter in dispute was
not of the value of one thousand dollars, and therefore this Court
had no jurisdiction of the cause. The objection might be well
founded if this was to be regarded merely as an action at common
law.
Page 61 U. S. 467
But the equitable as well as the legal considerations involved
in the cause are to be considered. The effect of the judgment is to
adjust the legal and equitable claims of the parties to the subject
of the suit.
The subject of the suit is not merely the amount of rent
claimed, but the title of the respective parties to the land under
the contract. The contract shows that the matter in dispute was
valued by the parties at eight thousand dollars.
Bennett v.
Butterworth, 8 How. 124. We think this Court has
jurisdiction.
Judgment affirmed.