Court Opinion

ID: 3496919
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:04:34.966193+00
Date Added: 2024-06-11T14:05:14.575913
License: Public Domain

November 29, 1927, the Chemical State Savings Bank of Midland, Michigan, sold to plaintiff 960 acres of land in Porter township, Midland county, for the sum of $6,600, payable $1,000 and interest at seven per cent. on November 29, 1928, and $1,000 and interest annually thereafter until fully paid. The contract of sale was in the usual form, requiring plaintiff to pay all taxes and assessments in due season and plaintiff to assume and pay the taxes for the years of 1926 and 1927.
The land is mostly cutover land, having little value for farming but a potential value because it is located near proven oil fields. April 19, 1929, plaintiff leased the oil and gas rights in the property to the Pure Oil Company for a period of seven years. By the terms of the lease the Pure Oil Company agreed to commence drilling on the premises by May 5, 1929, or pay plaintiff annually 50 cents per acre, payable quarterly in advance to plaintiff's credit in the Chemical State Savings Bank.
When the payment on the land contract became due in November, 1928, the plaintiff was unable to comply in full with the terms of the contract and secured an extension from the bank by paying the taxes for the years 1926, 1927, and 1928, amounting to the sum of $1,650. To make this payment she borrowed from Wilford and Carey of Lansing, Michigan, the sum of $2,000 secured by an assignment of *Page 700 
a one-half interest in the land contract and in all oil and gas produced from the premises. By its terms, this assignment could be released or vacated upon plaintiff's payment at any time she might desire of the sum of $4,000.
In November, 1929, the plaintiff's payments due at the bank amounted to $2,000 and interest in the sum of $462. Plaintiff, being unable to pay, entered into an agreement in writing with defendant Wiechers whereby it was agreed that Wiechers should (1) pay the bank the principal and interest then due, aggregating $2,462; (2) pay one-half the taxes for the year 1929 and subsequent years, the plaintiff to pay one-half thereof, if the rentals and royalties were sufficient; (3) pay the Wilford and Carey claim of $4,000 within four months after demand upon the plaintiff to pay same; and (4) pay the balance owing the bank on plaintiff's contract. In consideration of which the plaintiff agreed to convey to Mr. Wiechers by warranty deed of conveyance an undivided one-half interest in and to said premises covering both surface and mineral rights. Upon execution of this agreement, Mr. Wiechers paid the plaintiff $2,462, being the principal and interest then due.
On January 6, 1930, Wilford and Carey requested payment of the $4,000 from plaintiff, who immediately notified Wiechers. The obligation was never paid, but this demand was waived (as was also a notice of forfeiture served by plaintiff on Wiechers on June 19, 1930), by the subsequent conduct of plaintiff in executing the supplemental agreement with Wiechers described hereafter. Subsequently plaintiff obtained a reduction of the Wilford and Carey claim to $2,000.
In November, 1930, before the November 29th installment of $1,000 principal and $322 interest became *Page 701 
due, plaintiff again talked with Wiechers with the result that she signed a modification of their former agreement at Wiechers' request. This agreement, dated November 24, 1930, provided that the contract of November 27, 1929, should remain in force except as expressly modified; that plaintiff convey to Wiechers an undivided interest in the oil, gas and minerals, but no surface rights; that the amount payable to Wilford and Carey by Wiechers be reduced from $4,000 to $2,000 and further provided:
"Second party may at his option make payments provided for by said contract, or may decline to make such payments, but in the event that such payments are not made, it is understood that second party forfeits all moneys paid upon such contract and shall have no further interest in said property unless he shall within 90 days, after receiving notice of such forfeiture, make the payments then due upon said contract, provided further, however, that in consideration of the payments made at the time of the execution and delivery of this supplemental agreement, that no forfeiture can be declared for a period of 12 months from and after this date."
At this time plaintiff borrowed from the Pure Oil Company the sum of $1,501.67 on advance rentals and royalties. Of this sum $1,000 was paid to the bank on the land contract and the balance was used to pay the 1929 taxes and penalties accrued thereon. The interest due the bank was paid from royalties theretofore received.
December 2, 1929, defendant Wiechers quitclaimed his interest in the land to one Keeler, trustee, who on April 18, 1931, quitclaimed to the Moraine Land Company. On November 25, 1931, the Moraine Land Company paid the bank $252 interest and $500 on *Page 702 
the principal installment then due and secured an extension until January 15, 1932, of the remaining $500 due on principal.
December 18, 1931, plaintiff sent Wiechers a notice of forfeiture "by reason of the nonpayment of the installments of principal and interest due." Upon request of Wiechers' attorney, plaintiff's attorney sent an itemized account of the amounts due, which account showed an item of interest to April 1, 1932, of $72.36, and other items totaling $6,403.69.
On November 30, 1932, upon payment of $3,172, the bank delivered a warranty deed of the premises, subject to plaintiff's contract, to one Schauppner, who on January 30, 1933, quitclaimed his interests in the land to the Moraine Land Company. February 17, 1933, plaintiff tendered to the bank and the Moraine Land Company the balance due on her contract, but in the meantime and on November 21, 1932, she had filed her bill of complaint for the cancellation of her contract with Wiechers. On March 8, 1933, she filed a bill for specific performance of the bank contract. These bills were consolidated in the circuit court.
The lower court held that plaintiff was entitled to a decree providing as follows: (1) a warranty deed from the defendant Moraine Land Company for the land, excepting and reserving a one-half interest in the oil, gas and minerals; (2) that the defendant Moraine Land Company pay the Wilford and Carey obligation of the plaintiff; (3) that the defendant Moraine Land Company pay all the taxes on said land with interest. Plaintiff appealed.
The principal question is the nature of the original contract with Wiechers as modified by the writing of November 24, 1930. Plaintiff contends that *Page 703 
this modification made the contract nothing more than an option; that her notice of forfeiture given December 18, 1931, became effective March 18, 1932; and that thereafter Wiechers and his assignees had no rights under the original contract or the modification thereof.
Cameron v. Shumway, 149 Mich. 634, 640, adopted the definition of an option as "a contract by which the owner agrees with another person that he shall have the privilege of buying his property at a fixed price within a limited time." And in Range v. Davison, 242 Mich. 73, it was held that the test distinguishing an option from a land contract is that in the latter both parties are bound, the seller being obligated to sell and the purchaser to buy. Again in Bailey v. Grover,237 Mich. 548, 554, it was said:
"An option is not a contract of purchase, it is simply a contract by which the owner of the property agrees with another that he shall have a right to buy the property at a fixed price within a specified time. An option is but an offer, strict compliance with the terms of which is required; acceptance must be in compliance with the terms proposed by the option both as to the exact thing offered and within the time specified; otherwise the right is lost."
An examination of the modified agreement of November 24, 1930, discloses that Wiechers had the right to make payments or decline to do so and that in the event he failed to make payments all prior payments were forfeited. The result of this modified agreement was that no action could be taken against Wiechers in the event that he failed to make any payments. It was not enforceable as against Wiechers, and in line with the decisions above quoted was purely an option and nothing more. *Page 704 
We next come to the question of whether or not the defendant Wiechers and his assignees were in default on December 18, 1931, at the time that plaintiff sent the notice of forfeiture. Under the modified agreement it became the duty of the defendants on November 29, 1930, to pay the bank installment of $1,000 and interest in the sum of $322, together with the 1929 taxes in the sum of $501.67. These items were all paid by accrued or advanced royalties and not by Wiechers or his assignees. On November 29, 1931, it again became the duty of Wiechers to pay the bank installment of $1,000, interest in the sum of $252, and 1930 taxes in the sum of $410.11, together with the Wilford and Carey obligation of $2,000. Of this amount the sum of $500 principal and $252 interest was paid by the Moraine Land Company. Defendants Wiechers and Moraine Land Company contend that there was no default in the payment of the principal inasmuch as the bank had extended the time to January 15, 1932, for payment of the balance of the principal then due. This promise on the part of the bank to extend the time did not release plaintiff from her obligation to the bank. The record is lacking in any evidence to show that the bank substituted the Moraine Land Company for plaintiff as its debtor. Consequently there was no compliance with the terms of the agreement between plaintiff and Wiechers.
The defendants were clearly in default on December 18, 1931, when plaintiff served her notice of forfeiture upon them. No further notice was required, as the agreement of the parties was that the option should be terminated "unless he (Wiechers) shall within 90 days after receiving notice of such forfeiture, make the payments then due upon said contract." *Page 705 
Such a notice is a reasonable warning and meets all the requirements of the law. Nor do we think that there has been a waiver of the notice of forfeiture. The only waiver claimed by defendants is that plaintiff's attorney included in the itemized list of defaults an item of interest to April 1, 1932, which was beyond the date when the forfeiture should become effective. This does not show an intention to waive, which is an essential element of waiver. 67 C. J. p. 303. Nor is there any estoppel, for the defendants did not rely upon nor were they misled or prejudiced by anything contained in this letter.
Plaintiff is therefore entitled to a cancellation of the Wiechers' contract and, upon payment of the balance due on her land contract, an absolute deed to the premises.
NELSON SHARPE, C.J., and BUSHNELL, J., concurred with EDWARD M. SHARPE, J.