Opinion ID: 2189686
Heading Depth: 1
Heading Rank: 2

Heading: Reinstatement of the Contract

Text: Carvers next contend that the trial court should have reinstated the contract under its equitable powers. Carvers first tendered their 1984 installment payment to Heikkilas on March 29, 1984, six days after Heikkilas commenced this action to foreclose on the contract. The sixty-day grace period had expired on March 18, 1984. Carvers claim they withheld payment pending a response to their formal demand of Heikkilas, made by letter on March 5, 1984, to pay or arbitrate damages allegedly caused to the ranch property by ongoing mineral development. Carvers' March 5 demand was made pursuant to an arbitration clause in the contract that specified that [s]ellers, heirs, etc., and/or mineral lessee shall pay the amount of the physical damage, to be determined by arbitration in the event of disagreement, to the real property or improvements caused by Sellers' said operations. The trial court, however, declined to reinstate the contract, finding that: Defendants never officially requested arbitration of a mineral related damage claim until after their default; that, notwithstanding Defendants' default under the Contract, Plaintiffs have agreed to arbitrate any such claims, and such claims are the subject of a separate arbitration hearing; that Plaintiffs' failure to submit to arbitration before formal demand for same does not amount to either a legal or equitable defense for non-payment of the purchase price under the facts; that any damages assessed by arbitration against the Plaintiffs are irrelevant to this foreclosure action and any such damages, if any, will be paid separately by the Plaintiffs to the Defendants as a result of a subsequent arbitration hearing. We agree with the trial court. Carvers' March 5 demand for arbitration did not empower them to unilaterally suspend their obligation to perform within the terms of the contract. The parties had expressly agreed that time was of the essence in the performance of this contract. Moreover, Carvers were on notice of Heikkilas' intention to insist upon strict compliance with the terms of the contract. When Carvers were delinquent in making their 1982 and 1983 payments, Heikkilas, as in 1984, gave notice of default with intention to foreclose if payment was not made within the sixty-day grace period. Most courts agree that time may be expressly made of the essence of the contract, and where this is done it is binding on the parties not only at law but in equity as well. A court of equity is not at liberty to disregard the contract of the parties in this respect where deliberately made and clearly expressed, for equity follows the law and will neither make a new contract for the parties nor violate that into which they have freely and advisedly entered. Therefore, as regards the vendor's right to enforce the contract, the time for the delivery of the deed may be made of the essence of the contract, and the time for the payment of the purchase money, if expressly made of the essence of the contract, is so recognized in a court of equity, and compliance therewith may be made essential to the right of the purchaser to compel the vendor to convey, and where such is the case a court of equity will not, as a general rule, interfere to relieve the purchaser from the consequences of his default. Jesz v. Geigle, 319 N.W.2d 481, 483 (N.D. 1982) (quoting 77 Am.Jur.2d, Vendor and Purchaser § 73 (1975).