Court Opinion

ID: 5502198
Source: CourtListenerOpinion
Date Created: 2022-01-10 03:02:10.415979+00
Date Added: 2024-06-11T08:33:57.939559
License: Public Domain

Merwin, J.
It is not claimed that any default has been made, .except in failing to make the payments on the Fowlston mortgage upon the days they became due. We must therefore assume that in other respects the defendant Shaw has fully performed the contract upon his part. The theory of the plaintiff is that the failure of Shaw to make any payment to Fowlston at the exact time it became due gave immediately to her the right to recover back the full amount of the consideration that she parted with upon receiving the bond and mortgage, and that this right was not taken away or affected by any subsequent performance by Shaw. The transaction between the plaintiff and defendant Shaw was, in substance, that plaintiff paid and transferred te Shaw certain money and property of an agreed value, and Shaw, in consideration thereof, agreed to furnish plaintiff with a room, board, fuel, and light during her natural life, and also pay her annually, during her life, interest at 3 per cent, per annum upon the amount of the consideration, at the agreed value. To secure those things to the plaintiff the defendant gave to plaintiff a mortgage upon his farm, which was at the time incumbered by a prior mortgage. In order to protect plaintiff’s security against being interfered with by this mortgage the defendant agreed to make promptly the payments on the prior mortgage as they became due. Then came the provision that, in case of default in the performance by defendant of any of these agreements, there should immediately become due to the plaintiff the full consideration, with interest from date of the default. According to the wording of the bond, it made no difference whether the default was great or small, or whether it was the first year of the contract or the last year of the plaintiff’s life. If he fully performed during the whole period, he then became absolute owner of the property or fund that he had received of plaintiff, and was in possession of. The right of ownership dated from the time he made the contract and undertook its performance; and any condition which operated after-wards to take away or destroy this right, in effect, deprived the defendant of something of value, which he otherwise would have possessed. Such condition was therefore in the nature of a forfeiture. Shaw, by his performance of the provisions of the contract for several years, had rendered to plaintiff *624the compensation, in part, which she was to have for the money and property she gave to the plaintiff. In this view the casejs; in principle, somewhat analogous to the sale of real estate by contract, which by its terms is to become void on failure by the vendee to perform in any respect. After part performance the vendee has ordinarily equitable rights, although the legal title is absolute in the vendor by reason of lack of strict performance. 2 Story, Eq. Jur. § 1315. In such cases the title is deemed to be held as security.
We are referred by the learned counsel for plaintiff to many cases where, in a security for a loan payable on time, there has been a provision that if the interest was not paid promptly, or at a certain fixed time, the whole debt should become due, and it has been held that no relief would be given from the effect of a default in the payment of interest at the prescribed time, and that it was not a case of forfeiture. Those cases do not apply here. The money and property advanced by plaintiff were not, at all events, to be returned. It was, therefore, not a loan. Payne v. Gardiner, 29 N. Y. 167. Nor does the case of Trustees, etc., v. McKechnie, 90 N. Y. 618, apply. In that case the question was whether the event, upon the happening of which certain moneys advanced to the Ontario Female Seminary should be returned, had in fact happened. No question was made as to the liability, provided the event in question had happened. Nor does the case of Thompson v. Hudson, L. R. 4 H. L. 1, help us. There it was held that the reservation of a right to have full payment of money actually due on an existing contract, should there be a failure to pay a smaller sum on a day certain, cannot be treated as a penalty,. In substance, the creditor offered to compromise on certain terras, the debtor did not comply with the terms, and thereupon the creditor was remitted to his original rights. He got nothing beyond his debt. In Giles v. Austin, 62 N. Y. 486, relief was given from a forfeiture in a lease incurred by the failure of the tenant to pay taxes and assessments. The rule is there laid down that where the covenant is simply for the payment of money the forfeiture is regarded as a security merely for such payment, and equity will not allow it to be enforced after the party has obtained all that it was intended to secure to him. Mere' delay is not a bar, if no new rights have intervened, or the position of the parties been changed. A similar doctrine was applied in Noyes v. Anderson, 124 N. Y. 175, 26 N. E. Rep. 316. In that case there was an agreement by the owner of a mortgage with the owner of the equity of redemption that he would not enforce the mortgage during the life of the latter, provided, among other things, that no taxes or assessments on the premises remained unpaid and in arrears for more than 30 days. Default was made in the payment of a sewer assessment, and thereupon foreclosure of the mortgage was commenced. It was held that the default would result in a forfeiture, from which or its consequences a court of equity had power to relieve'; it being said that a court of equity has power to relieve a party against forfeiture or penalty incurred by the breach of a condition subsequent, where no willful neglect on his part is shown, upon the principle that a party having a legal right shall not be permitted to avail himself of it for the purpose of injustice or oppression. A similar view was taken by Judge Daniels in Shaw v. Wellman, (Sup.) 13 N. Y. Supp. 527. In Steele v. Branch, 40 Cal. 3, failure by the vendee in a land contract to strictly perform his covenant to pay a prior mortgage was held not to be fatal to the rights of the vendee, although by the terms of the contract such failure made it void; it appearing that the vendee acted in good faith, and the vendors were not damaged thereby. In Henry v. Tupper, 29 Vt. 358, it was held that a court of equity might, in its discretion, give relief from a forfeiture occasioned by the breach of an agreement for support. In 1 Pom. Eq. Jur. § 451, the general doctrine is laid down as follows: “In the absence of special circumstances giving the defaulting party a higher remedial right, a court of *625equity will set aside or otherwise relieve against a forfeiture, both where it is incurred on the breach of an agreement expressly and simply for the payment of money, and also on the breach of an agreement of which the obligation, although indirectly, is yet substantially a pecuniary one.” See, also, 2 White & T. Lead. Cas. (4th Ed.) 2044.
In the present case it is conceded that long before the commencement of the action, and before the giving of any notice by the plaintiff that she intended to foreclose, the defendant Shaw paid to Fowlston all that was due. So that when this action was begun there was no actual default. All payments of interest due the plaintiff liad been promptly made, and the court, among other things, found that such interest was accepted by plaintiff with full knowledge of the facts, and that, therefore, she waived her right to claim a forfeiture. It may be, as claimed by plaintiff, that the evidence does not fully warrant the finding that she had full knowledge of the facts. Stili, presumptively, she was living upon the premises, and must have known to some extent of the improvements going on. Apparently, if she had made inquiry, she would have found out that the payments were not being promptly made. If she did not inquire, it would indicate that she did not deem knowledge in that respect of vital importance; and so it would if she did inquire, and found out the situation, and still received her payments without question. Her acquiescence, in either aspect of the case, while it might not be a waiver, would have some bearing on the character or intent of the original transaction, and on the propriety of giving defendant relief. It is quite clear that the plaintiff’s security was not impaired. It may also be said with a good deal of force, as an inference from the conceded facts, that the provision making the original amount collectible was intended only as security, so far, at least, as it related to the payment of the prior mortgage. It seems to me that a proper case was presented for the exercise of the equitable power of the court, and that the special term did not err in giving defendant relief from the forfeiture, and in refusing to grant foreclosure of plaintiff’s mortgage. The judgment should therefore be affirmed. All concur.