Case ID: ad_142/html/0765-01.html
Source: Caselaw Access Project
Author: {"author": "McLaughlin, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Eli Koles and George W. Koles, Appellants, v. Borough Park Company, Respondent.
    First Department,
    February 10, 1911.
    Vendor and purchaser — contract for sale of land construed — forfeiture . on failure to make payments.
    In construing a contract the whole instrument must be considered and a conclusion reached as to what the parties intended to do or sought to accomplish.
    Where a contract for the sale of land provides that the price was payable- ‘ ‘ Twenty dollars on the signing of this contract * * * and the further sum of Fourteen dollars in each and every month * "* *, until said principal sum and all taxes and assessments hereafter levied 5 * *, the payment of which is hereby assumed by the vendee, together with interest * * * on unpaid balances'of the purchase price and the amount of said taxes and assessments * * *, shall have been fully paid by-the vendee,” all the money, which the vendee is required to pay is fourteen dollars each month and the interest, taxes and assessments are to be paid out of these installments. The vendor cannot declare the contract annulled because of the vendee’s failure to pay the interest, taxes and assessments in a lump sum on demand. .
    As the 'contract called for the payment of a certain sum each month, but specified no day in the month, the vendee could make payment at any time during the month.
    The contract provided that if the vendee failed to make the payments when they became due, then the contract should become null and void at the vendor’s option, but by another clause, if the vendees were unable to pay any installment by reason of ill-health “ or other reasonable cause,” they had a right to make it within two years, providing they notified the vendor in- writing within thirty days after the installment fell due óf the cause of their failure to pay. On the' 16th of June, 1910, the vendees were in default in the payment for May, 1910. On that day the vendor notified them that two installments, amounting to - • 828, were due and also ,§687.59 for interest, taxes and assessments. The vendee sent a check for §38 which the vendor retained but refused to credit on the installments until interest, etc., was paid. The vendees sent checks for §14 each both in July and in August. On August 8, 1910, the vendor returned the three checks and notified the vendees “that your contract is hereby' cancelled.”
    
      Held, in an action by the vendees' for breach of the contract that the plaintiffs were not in default when the vendor assumed to cancel the, contract but had performed all conditions on their part to be performed;
    That the defendant on June 16, 1910, having asked for and received a check, could not refuse to apply it on the installments falling due in May and June; That it was error to dismiss the complaint.
    ApPEAL-by the plaintiffs, Eli Holes and another, from abridgment of the Supreme Court in favor of the defendant, entered in the office of the cleric of the county of New York on the 3d day of November, 1910-, upon the dismissal of the complaint by direction of the court at the close of plaintiffs’ case on a trial at the New York Trial Term. ■
    
      William C. Rosenberg, for the appellants.
    
      A. Berton Reed, for the respondent.
   McLaughlin, J.:

On the 6th of October, 1903, the parties to this action entered into a written contract for the purchase and sale of real estate, the • consideration to be paid in installments as provided therein. The installments, aggregating $1,112, were paid, if not according to the terms of the contract, certainly to the satisfaction of the defendant, to the month of April, 1910. On the 16th of June, 1910, the defendant notified the plaintiffs that two installments amounting to $28 were due on their contract, and also $687.59 for interest, taxes and assessments, and requested a check for the same. On the ■ following day the plaintiffs sent to the defendant a check for twenty-eight dollars, and at the time wrote it that “ according to the terms of our contract * * *. the taxes and assessments may be paid by us in installments, as the principal sum and interest is paid.” The defendant acknowledged receipt of • the check, but declined to credit the samé upon the contract in payment of the installments due, unless the interest, taxes and assessments were also paid. Further correspondence took place between the parties,, each adhering to.his original contention that his construction of the contract was correct-. Oil the 5th of July, 1910, plaintiffs inclosed their check for fourteen dollars, installment due for that month. The check was. received by defendant, and nothing further appears to have been done by either of the parties until the sixth of August, when the plaintiffs sent a check to pay the installment for that month. Two days later the defendant returned to the plaintiffs the three checks mentioned, and at the same time notified' them 'that it had canceled the contract because the plaintiffs had failed to pay the interest, taxes and assessments. Thereupon this action was brought to recover damages for breach of the contract, plaintiffs alleging full performance upon their part. The defendant denied performance on the part off the plaintiffs and alleged, affirmatively, that they had failed to perform and by reason thereof the defendant had a right to cancel the contract. At the trial, at the close of plaintiffs’ case, the complaint was dismissed and from the judgment entered thereon plaintiffs appeal.

The main question presented by the appeal turns upon the con - struction to be put upon the following clause of the contract: “ The price is Twenty-one hundred dollars, payable as follows: Twenty dollars on the signing of this contract, the receipt whereof is hereby acknowledged; and the further sum of Fourteen dollars in each and every month following the date hereof, until said principal sum and all taxes and assessments hereafter levied by the City and State of New York, the payment of 'which is hereby assumed by the vendee, together with interest beginning on the Sixth day of October, nineteen hundred & four, on unpaid balances of the purchase price and the amount of said taxes and assessments at the rate of five per cent per annum, shall have been -fully paid by the vendee. All taxes levied prior to the day of Oct. 6/0d, shall he paid by the vendor, and interest on the amount of the taxes and assessments to be paid- by the vendee shall be charged only from the date of confirmation of the same or payment for the same by the Company.”

Were the plaintiffs obligated under the clause quoted to pay the interest, taxes and assessments in addition to the installments provided for; in other words, were they in default when the defendant canceled the contract? It seems to me there can be but one answer to the question. The language used in the clause plainly indicates that all the moneys required to be paid by the vendees, including the purchase price, taxes and assessments and in tersest charges, were to be paid in installments of fourteen dollars a month until the same were fully paid. The provision is that an'installment shall be paid “in each and every month * *' * until” such items “ shall have been fully paid by .the vendee.” The first three words after the Word “ until ” are “ said principal sum.’» The construction contended for by the respondent necessitates the omission of all of the words following these three until the concluding phrase “ shall have been fully paid-.” But the -words “ said principal sum ” are followed without a break by the words “ and all taxes and assessments.” .The conjunction “and” gives to the expression “ all taxes and assessments ” precisely the same function' in the sentence as that possessed by the words “ said principal sum” preceding it.' The conjunction “together” accomplishes the same result with reference to the -interest charges. - If. the payment in full of the “principal sum” is a limitation of the period during which the monthly installments must be continued to be paid, then so is the payment in full of “all taxes and assessments ” and of the “ interest ” charges. If this be true, then the taxes, assessments and interest are to be paid in and by these installments and not otherwise. There is no other method prescribed or to be implied from the language used for paying them. In this connection it is significant that there is an implied undertaking by the defendant to pay them first and charge the- vendees interest on the amount so paid.

This conclusion is strengthened by the construction which the parties themselves put upon the contract. up to June, 1910. As already indicated, the contract was made on the 6th of October, 1903, and under it the appellants became liable for the taxes which fell due in 1905, 1906, 1907, 1908 and 1909, aggregating- $61.35, and for assessments levied December 13, 1906, and April '2-, 1908, aggregating $197.93. The plaintiffs were not asked to pay . these sums when they became due, nor was a suggestion ever made to them that they were obligated under the contract to pay them until the letter of June 16, 1910.' And the same is true as to the interest upon the principal sum, which, on April 1, 1910, amounted 'to $489.66. The respondent had received the $14 monthly installments, for over four years, without suggesting that anything more was due under the contract, and on the 17th of October, 1906, it furnished the appellants witli a statement of their account in which the sum total of the monthly installments was credited against the sum total of the amount claimed to be due, which included in one group the purchase price, taxes for 1905 and 1906, and interest charges, and it was not until after the present controversy arose that the account was changed and the monthly installments credited to the purchase price alone. The whole contract indicates, as plainly as anything can, that the purchase price of the land in question was to be paid in small installments. There is nothing to indicate that the vetidees undertook to pay any assessments that might be levied, together with interest, in a lump sum, while carefully stipulating for the payment of the purchase price in very small installments. A provision was inserted which protected the vendees against temporary inability to pay these small installments provided for, the vendor agreeing to forego their payment for a period of two years under certain conditions. The construction contended for by the respondent is not only unreasonable, but not justified by the language used, or the construction which the parties themselves put upon the contract. . In construing a contract the whole instrument must be considered, and from such consideration á conclusion reached as to what the parties intended to do or sought to accomplish. (O'Brien v. Miller, 168 U. S. 287; Woolsey v. Funke, 121 N. Y. 87.) When the contract here under consideration is thus construed, I am clearly of the opinion that when the defendant made the demand for the payment of interest, taxes and assessments, there was no legal obligation resting upon the plaintiffs to pay the same. If this be so, then the fact that such payment was not made did not justify it in refusing to thereafter apply upon the contract the installments paid.

But it is urged, even if the foregoing views be correct, that the plaintiffs were, nevertheless, in default because they did not pay the installments which fell due on Hay 6 and June 6, 1910, and for that reason the defendant had a right to cancel the contract. The provision of the contract relied on is, “ In case the vendee shall fail to make said payments or any of them when the same shall become due, then this contract shall be null and void'and all rights of the vendee under this agreement * * * shall be cancelled, and the same, and the amounts paid on this contract, shall be forfeited to the vendor, at its option, and remain its property as liquidated damages for failure to fulfill this agreement completely * * . * ”.

The defendant did not assume to cancel the contract until August 8, 1910. Were the plaintiffs then in default in the payment of the installments provided for ? I think-not. The contract, as we. have seen, was dated October 6, 1903. It provided for a. payment of twenty dollars on that day, which was paid, and the further sum of fourteen dollars “in each and every month following the date hereof” until all of the payments had been made. The first installment- of fourteen dollars was payable in November, and no day being specified, the plaintiffs had the whole month within which to make the payment (Curtiss v. Howell, 39 N. Y. 211), and for the same reason the installments falling due thereafter could be'paid at any time’during the month within which they fell due. On the 16tli of June, 1910, the plaintiffs had paid to apply on the -contract one thousand one hundred and twelve dollars that is, twenty dollars paid at the time of. its execution and fourteen dollars for each month thereafter, except the month of May. They were not then in default for the month of June, because they could pay that installment any time during that month.. They were in default for the month of May, but defendant could not work a forfeiture of the contract for failure to pay that installment before the thirtieth of June. If the plaintiffs were unable to pay that installment by reason of ill-health “ or other reasonable cause,” they had, under the 5th clause of the contract, a right to make it within two years, provided they notified the defendant in writing within thirty days after that installment fell due of "the cause of their failure to. pay. That installment did not fall due until the last day of May, and plaintiffs had until the last day of June within which to give the written notice. When the defendant, therefore, requested the plaintiffs on the sixteenth of June to send them a check for twenty-eight dollars to pay the installments for the months of May and June, all there was due under the contract was fourteen dollars.' The plaintiffs immediately complied with the request and sent a check for twenty-eight dollars. The defendant having asked for and received the check, could not thereafter refuse to apply it in payment of the installments falling due in May and June. Mor could it thereafter be heard to say, for the purpose of working a forfeiture of the contract, that the May installment was not paid when due, certainly not without returning the check before the thirtieth of June, with notice that it would claim a forfeiture for failure to pay the May installment when due. Had that been done the plaintiffs could have given the written notice. It is true when defendant asked for the payment of the installments for May and J une it also asked for the payment of interest, taxes and assessments-But this is of no importance because, as we have already seen, it had no right to ask for the payment of such sums and the plaintiffs were under no legal obligation to pay them.

It is also significant that the defendant, doubtless appreciating the force of the provisions of the contract which it had caused to be prepared, did not declare the contract forfeited for'the failure to pay the May installment, but on the contrary received the installment due in J uly without protest, and it was not until after the August installment had been paid that it attempted to cancel the contract, and then because of plaintiffs’ refusal to accede to its demand and pay the interest, taxes and assessments. On the eighth of August, when it returned the checks which had been sent in payment of the May, June, July and August payments, it notified the plaintiffs “that.your contract is hereby cancelled.” The plaintiffs were not then in default. They had made every payment called for by the contract. They had at that time fully performed on their part, and when the defendant refused further to perform, the plaintiffs had a right to maintain an action for damages.

It seems to me, therefore, that the court erred in dismissing the complaint, and for that reason the judgment appealed from must be reversed and a new trial ordered, with costs to appellants to abide event.

Ingraham, P. J., Clarke, Miller and Dowling, JJ., concurred.

Judgment reversed, new trial ordered, costs to appellants to abide . event.