Court Opinion

ID: 9855980
Source: CourtListenerOpinion
Date Created: 2023-09-24 06:35:39.604469+00
Date Added: 2024-06-11T09:37:23.097902
License: Public Domain

McDONOUGH, Justice.
Ivan Call sold a ranch to Frank Lewel-len giving him a bond for deed and taking in return a promissory note executed by Lewellen. These items were placed in escrow. The bond for deed recited the terms of the agreement and contained a forfeiture clause effective 60 days after Lewellen’s failure to comply with certain terms. This forfeiture clause expressly provided that upon default the buyer at seller’s election became at once a tenant at will of the seller and the escrow had the right to return the bond for deed, note, abstracts, and contract to the seller. It was also “agreed that time was of the essence of this agreement” and that “it is understood and agreed that if the seller accepts payments from the buyer on this contract other than according to the terms herein mentioned, then by so doing it will in no way alter the terms of the contract as to forfeiture hereinafter mentioned.”
Various complex transactions occurred which for all practical purposes are abridged as follows: Lewellen assigned his equity in the bond for deed to Shurtz who was to perform the conditions and assume all payments under such bond, and who assigned one-half of his interest to *126Wright. Wright and Shurtz then sold the ranch to Johnson under a Uniform Real Estate Contract. Payments became delinquent under the terms of the bond for deed and two days before the 60 day period of the forfeiture clause had run Call assigned and quitclaimed his interest in the bond for deed, and endorsed Lewellen’s promissory note over tO' the plaintiff Pearce. After the grace period expired plaintiff served notice on Wright, Shurtz, and Johnson declaring them tenants at will and giving them 5 days to vacate the premises. No demand for payment was made upon Lewellen, Wright, Shurtz, or Johnson and no notice was served on Lew-ellen. Plaintiff brought action in unlawful detainer under Title 104-60-3(2), U.C. A., 1943, against Wright, Shurtz, and Johnson. T íe lower court entered judgment for the plaintiff. Defendants raise three questions on appeal.
(1) Whether the failure to give notice or make demand upon Lewellen made the action of unlawful detainer premature.
(2) Whether the original bond for deed gave rise to mortgagor-mortgagee relationship.
(3) Whether the acceptance of the delinquent payments constituted a waiver of the forfeiture provision.
These issues are discussed in the order stated.
Appellant contends that since Lewellen was the only person liable on the promissory note demand for payment should have been upon him, that he should have been notified of the forfeiture for default, and that he should have been joined as party defendant in a suit for possession based on the forfeiture. This contention might be sound if the action were other than unlawful detainer. Unlawful detainer, however, is an action to remove a tenant from possession and is primarily against the person in possession. It is not similar to a quiet title action wherein anyone with any interest should be joined. Neither is it similar to an action upon the promissory note. Title 104-60-7, U.C.A., 1943 provides:
“No person other than the tenant of the premises, and subtenant if there is one in the actual occupation of the premises when the action is commenced, need be made a party defendant in the proceeding, nor shall any proceeding abate, nor the plaintiff be nonsuited, for the nonjoinder of any person who might have been made a party defendant; * *
This provision is indicative of the nature of the unlawful detainer action and of the fact that failure to serve demand or notice upon Lewellen in this case did not result in the action being premature.
The second question raised on appeal is whether a landlord-tenant rela*127tionship between plaintiff and defendant resulted upon default. Appellant contends that a mortgagor-mortgagee relationship is created where the seller retains title but gives possession to the buyer and takes a promissory note for the payments to be made at the end of which time title to the property will be transferred. Several cases are cited to support this position and we do not reject them. See Marquardt v. Fisher, 135 Or. 256, 295 P. 499, 77 A.L.R. 265 and cases cited and discussed in annotation beginning at page 270 of 77 A.L.R. In a situation where title is held until payment is complete the general conclusion to be drawn is that a conditional sale or a mortgagor-mortgagee relationship exists. The instant contract, however, expressly provided that upon failure of performance of conditions the buyer would “become at once a tenant at will of the seller.” This provision was undoubtedly adopted to obtain the benefits of the unlawful detainer statute. Such was the express provision of the contract and this court will not rewrite the agreement. It is not within our province to torture some other meaning out of the bond for deed because of escrow and title retaining provisions. As we stated in Foxley v. Rich, 35 Utah 162, 99 P. 666, 672;
“ * * * Where the parties themselves stipulate what the result of a breach of a particular contract shall be, the courts ordinarily have no authority to impose other consequences
than those agreed upon. There may be circumstances under which the results would be so inequitable and unjust that a court of equity would be authorized to give relief, but the case in hand presents no such contingency. ‡ i{i it
The transaction in Foxley v. Rich, supra, was strikingly like that here. A contract for the sale of land at the agreed price of $3,500 was entered into. Seven notes for $500 each, payable one year apart, were executed by the purchaser. The notes and a deed from the seller were placed in escrow, with an agreement of the parties which provided that upon default of any payment when due, the deed and notes were to be returned to the seller who was entitled to retain, as rental for the land any payments made prior to the default.
In the instant case, the payments stipulated to be made, and evidenced by the escrowed note, in the Call-Lewellen contract amounted to $1,000 per year for 12 years. The trial court found, that the finding is supported by the record, that the reasonable rental value of the land involved was $150 per month. Hence, the provision in the contract for retention by the seller of payments made prior to declaration of forfeiture cannot be held to be a provision for a penalty, but is rather one for reasonable, stipulated, liquidated damages. Christy v. Guild, 101 Utah 313, 121 P.2d 401.
*128 Since Johnson could only obtain what Shurtz could give and Shurtz under the assignment from Lewellen became a tenant at will upon plaintiff’s election, we conclude that a landlord-tenant relationship existed at the time notice was served on defendants and that hence Title 104— 60-3(2), U.C.A., 1943 was applicable.
The third contention made by appellant is that the acceptance of prior delinquent payments constituted a waiver of the forfeiture provision. The contention must be rejected. Appellant is in the curious position of maintaining that his default arose under the contract between himself and Wright and Shurtz and that Lewellen was the only one obligated on the Call-Lewellen contract; at the same time, he insists that the acceptance by Call in 1946 of late payments constituted a waiver of the “time of the essence” clause as to him. The payment of $1,000 due on December 1, 1949, was the first annual payment due under the Wright-ShurtzJohnson contract and upon expiration of the 60-day grace period, according to the terms of the contract, Johnson, at the election of the sellers, became a tenant at will of Wright and Shurtz. Likewise, upon default of the Call-Lewellen contract, Wright and Shurtz became tenants at will of Pearce, who held the rights of Call under that contract. Even if Johnson knew, which the evidence does not indicate, of the acceptance of late payment by Call, he could not rely upon that acceptance in regard to his own contract.
Appellant’s claim that because he acquired the interest of Shurtz after suit was commenced his interest is enlarged, inasmuch as Shurtz did not receive formal notice that the seller .intended to enforce the time condition of the prior contract, is without merit. The mere fact that a payment was accepted delinquent in 1946, is not sufficient to constitute a waiver of the condition. Sec. 300, Restatement of Contracts, defines the rule as being:
“Acceptance of defective performance of a condition or promise does not operate as an assent to receive further similar performance except where successive acceptances of such performance justify the belief that performance of that character is satisfactory, and induced thereby the party rendering performance materially changes his position.
“Acceptance of defective installments of performance is insufficient evidence to justify a belief that such performance is satisfactory, unless a reasonable person would infer from successive acceptances that performance of that character was satisfactory. This is a question the answer to which depends on the differing facts of each case.”
In the instant case, only one payment out of the three made was accepted late, *129and all subsequent payments were made on time. That the late payment was not satisfactory to t'he seller is evidenced by the fact that he required an additional $50 as consideration for reinstating the contract at that time. There is no evidence that Johnson, the appellant, was misled by this transaction which occurred three years prior to the time when he acquired an interest in the contract and assuredly, he was not led by it into breaching his own contract with Wright and Shurtz. The facts of this case indicate that there was no waiver of the time condition of the contract.
In Christy v. Guild, supra, we recognized the principle that acceptance of delinquent payments may well result in a waiver of the ordinary “time is of the essence” clause since by such conduct the vendor has led the vendee into the belief that the vendor will continue to waive the strict performance of the contract. Such a situation does not here exist, regardless of the effect of the provision of the contract that acceptance of late payments will not constitute a waiver of the rights to payment on specified dates, for the vendee was not misled into such belief by the vendor.
The judgment is affirmed with this modification: that the note of Lewellen held by the plaintiff be surrendered for cancellation. See Foxley v. Rich, supra. The rights of the defendants under the Uniform Real Estate Contract entered into by them are not before us, the cross-complaint of Johnson have been dismissed by him without prejudice.
Costs to respondent.
WOLFE, C. J., and WADE, J., concur.
CROCKETT, J., dissents.
HENRIOD, J., does not participate herein.