Case Name: John J. Mahoney, et al., Appellants, v. F. M. McCrea
Court: Iowa Supreme Court
Jurisdiction: Iowa
Decision Date: 1898-04-06
Citations: 104 Iowa 735
Docket Number: 
Parties: John J. Mahoney, et al., Appellants, v. F. M. McCrea.
Judges: 
Reporter: Iowa Reports
Volume: 104
Pages: 735–740

Head Matter:
John J. Mahoney, et al., Appellants, v. F. M. McCrea.
1 Sales: forfeiture: . Election. Where a contract for sale of real estate provided, that if the purchaser should fail to make any payments when due, he should forfeit all right to the property, and also any money paid by him, unless the vendor should elect otherwise, it was the vendor’s duty to give the vendee notice, within a reasonable time after default, that he elected not to treat the contract as forfeited; and his failure so to do, worked a forfeiture, and barred him recovering the price.
2 Same. Where a contract for sale of real estate provides that on the purchaser’s failure to make payments when due, he shall forfeit all right to the property and to “any money paid by him,” and the forfeiture occurs, a subsequent acceptance of part of the amount due, while it was a waiver of the forfeiture, gave the vendor no right to recover the balance due and unpaid at the time of such acceptance, after a forfeiture had again occurred by reason of a subsequent default.
Appeal from Wapello District Court. — Hon. Robert Sloan, Judge.
Wednesday, April 6, 1898.
The following statements of the issues and facts made by appellants’ counsel are conceded to be substantially correct, and are sufficiently so for tbe purposes of the questions to be considered: “This action was commenced in the district court of Wapello county to recover on five promissory notes, each dated January 24,1887, one for one hundred and fifty dollars, due two years after date, one for one hundred and fifty dollars, due three years after date, and three for one hundred and thirty-one dollars and twenty-five cents each, due, respectively, one, two, and three years after date. Each note drew interest at the rate of eight pier- cent, per annum, payable annually. The answer admitted the making of the notes sued on, but set up as a defense that these five notes were part of a series of six notes given by the defendant for a part of the purchase price of two lots in an addition to the city of South Omaha, Nebraska; that at the time of making these, notes two land contracts were signed between the parties, and that, among other things, the contracts provided that, if the defendant should fail to make any payments when due, he should forfeit all right to the real estate, and also any money paid by him, unless the plaintiffs should -elect otherwise; that he did fail to make payments as they became due; that the plaintiffs did not elect not to forfeit the contracts; and that thereby he became released of liability on the notes. The plaintiffs, in their reply to the answer, admit the making of land contracts, deny that they elected to forfeit the defendant’s right to the land, and deny that they did not elect to require payment of the notes. The proof showed that on the twenty-fourth of January, 1887, plaintiffs sold the defendant two lots in Mahoney & Minnahan’s addition to South Omaha, — one for six hundred dollars, and one for five hundred and twenty-five dollars,- — on each of which the -defendant at the time paid one-fourth of the purchase price; that the defendant at the same time gave to the plaintiffs the three notes for one hundred and thirty-one dollars and twenty-five cents sued on in this action, and the three notes for one hundred and fifty -dollars each, two of which are included in this suit. The land contracts contain, among other things, these provisions: ‘In case the said party of the second part shall fail, refuse or neglect to pay such purchase money, interest, and taxes, as herein agreed, he shall forfeit any rights he may have to said real estate, and. also shall forfeit any money paid by him to-purchase the same, which shall he retained and applied in payment and satisfaction of rent for the use and occupation of said real estate, unless the said parties of the first part shall elect otherwise.’ ‘The said party of the second part shall be entitled to the possession of said real estate so long as he shall comply with the foregoing terms' of agreement, but upon a failure to comply with same his right to possession shall terminate, and he shall surrender the possession of said real estate, and improvements thereon, if any, to said parties of the first part.’ By the terms of the contracts and notes, there fell due on the twenty-fourth of January, 1888, one note of one hundred and fifty dollars, and interest on three notes of one hundred and fifty dollars each, amounting to thirty-six dollars; also, one note of one hundred and thirty-one dollars and twenty-five cents, and interest on three notes of one hundred and thirty-one dollars and twenty-five cents each, amounting to thirty-one dollars and fifty cents. None of this money was paid on the twenty-fourth of January, 1888, but on the twelfth of July, 1888, the defendant paid two hundred and thirty-nine dollars and fifty cents. The payment, as shown by the surrender of the first one hundred and fifty dollar note, and indorsements made upon some of the notes in suit, seems to have been applied, — first, in the taking up of the one hundred and fifty dollar note which matured on the twenty-fourth of January, 1888; -second, in paying the interest on the other two one-hundred and fifty dollar notes up to January 24, 1888; and, third, in an endorsement of forty-eight -dollars and fifty cents on the note for one hundred and thirty-one dollars and twenty-five cents, which matured on the twenty-fourth of January, 1888. When the twenty-fourth of January, 1889, was reached, nothing was paid; but afterwards, on the twenty-fourth of June, 1889. the defendant paid one hundred and fifty dollars, which does not appear to have been specifically applied on any particular note or interest Subsequent to June 24, 1889, no payments whatever were made. There was testimony put in by plaintiff® tending to show that after the twenty-fourth of June, 1889, they made repeated demands for payments. This was denied by the defendant, and thus was ma.de the issue of fact, which, under the ruling of the court below, was submitted to the jury. By means of instructions 2, 8, 4, 5, and 6, the court charged the jury that, when defendant made default in payments, it became the duty of the plaintiffs, within a reasonable time, to elect that they would not claim a forfeiture of the land, and if they failed to so elect, and to notify the defendant of their election, they could not recover on the notes. By instruction 7, the court charged that the acceptance of payments after they were due would not be a waiver of forfeiture on account of any failure on the part of the .defendant to pay installments thereafter accruing. Under these instructions the jury returned a general verdict for the defendant, and judgment was rendered upon that verdict.” Plaintiffs appeal.
Affirmed.
Work é Leiois and B. W. Boyd for appellants.
McNett & Tisdale for appellee.

Opinion:
Given, J.
I. The court instructed that a failure to pay any installment of the purchase money evidenced by these notes would operate as a forfeiture of all the defendant's interest in the real -estate, and the money paid by him to purchase the same, unless the plaintiffs elected otherwise; that it was the duty of the plaintiffs to elect not to treat the contract as forfeited, within a reasonable time after the -default was made in payment, and to notify the defendant thereof; and that unless the plaintiffs did so notify him within a reasonable time the defendant had the right to assume that the plaintiffs claimed a forfeiture; and t;hat under such circumstances the plaintiffs would have no right to enforce collection of the notes. The only question submitted to the jury was whether or not the plaintiffs, within a reasonable time after the defendant made default in payments of said notes, elected not to treat the contract as forfeited, and notified the defendant thereof. Appellants contend that this is an erroneous construction of those parts of the written contract set out above, providing lor forfeiture. They contend, on the authority of Barrett v. Dean, 21 Iowa, 423, and Sigler v. Wick, 45 Iowa, 690, that the defendant could not work a forfeiture by defaulting in payments; that the right of forfeiture its for the benefit of the plaintiffs, and at their election; and that no forfeiture could exist until so elected by them. In Barrett v. Dean, the contract provided that a failure to> make payment?, when due should render the agreement utterly void, and all payments made thereon forfeited. It also' provided that the purchaser should hold possession subject to removal if he failed to perform any condition oi covenant of the contract. It was held that, taking the whole contract together, it was intended that Barrett's agreement to convey should not be binding upon him, and Dean should forfeit all money paid if he did not fully comply with his contract, and that this- provision was intended for Barrett's benefit, not Dean's. In Sigler v. Wick, the contract provided that, if the purchaser should fail to make payments when due, the land should be considered forfeited, and the vendor should have the right to- enter upon the possession of the same, and should be held under no obligation to the vendee. It was held that the forfeiture should be at the option of the vendor. It is said, "The general rule is that a stipulation that the contract for the sale of the land shall become void upon non-payment is for the benefit of the vendor." A noticeable difference between those contracts and the ones under consideration is that in these the forfeiture is expressly made to follow a failure to pay, "unless the said parties of the first part shall elect otherwise." Here we have an affirmative 'duty imposed upon .appellants, — to elect in case of default in payment, whether or not that default shall work a forfeiture. In this respect these contracts are unusual, but it is conceded that in construing them we should give effect to the intention of the parties. We think it was clearly the intention of the parties that in case of default of payment the appellants should elect within a reasonable time whether they would insist upon forfeiture or performance, and notify the defendant thereof. The instructions are in harmony with this view of the contract. See Steel v. Long, 104 Iowa, 39.
II. The court instructed that acceptance of payment after the same was due would not be a waiver of the right to forfeit by reason of a default in any iustall- • ment. falling due after such acceptance. The cor-redness of this instruction is not questioned, but appellants insist that, at the time forfeiture was waived by receiving payment, there were three hundred and seventeen 'dollars and nineteen cents, due more than was paid, and that, notwithstanding forfeiture resulted from subsequent defaults in payment, they are entitled to recover the said sum of three hundred and seventeen dollars .and nineteen cents, with interest. Turning to the contracts, we see that it is "any money paid by him" that the defendant forfeited, and not money which, in the absence of forfeiture he might be liable to pay. Our conclusion is that the judgment of the district court should be affirmed.