Court Opinion

ID: 9847287
Source: CourtListenerOpinion
Date Created: 2023-09-24 03:57:13.919503+00
Date Added: 2024-06-11T09:17:06.132732
License: Public Domain

MOSK, J.
I dissent.
The majority misread precedent and rely on questionable “policy” to reach a result that flouts what is undeniably equitable. Our long history of *122cases holds that when a vendee in an installment land sale contract wilfully defaults, it is in the trial court’s discretion to weigh the equities and discern whether redemption is warranted. The trial court reacted properly to the overwhelming evidence and exercised its discretion to deny specific performance to vendees who have been wilfully untrustworthy and derelict in the performance of contract duties.
The majority place principal focus on a line of cases beginning with Keller v. Lewis (1878) 53 Cal. 113. There they find authority for their holding that a wilfully defaulting vendee has an unqualified right to the equity of redemption with respect to an installment land sale contract. However, a careful examination of the Keller line reveals that an absolute right was never contemplated. In each of the cases in the series the vendee was given a time in which to perform, but the temporal requirement was either at the behest of the vendor or was the result of the court’s examination of the equities of the case.
It is true that in Keller we recognized the benefits of allowing a vendee to comply with the contract. But far from creating an absolute right to perform we held such relief proper “[u]nder the circumstances of this case, as presented by the pleadings and evidence.” (Id., at p. 118, italics added.) The vendees in Keller had bought the land on the vendor’s claim that his title was perfect and their possession would be undisturbed, yet they were “annoyed by various persons claiming adversely.” Therefore their default, though wilful, was excusable.
In Kornblum v. Arthurs (1908) 154 Cal. 246 [97 P. 420], the majority declare, the equities weighed against the vendee yet the court granted the vendee a right to redemption. However, in Kornblum the vendee brought suit for rescission and repayment of past installments. The vendor did not oppose the judgment allowing the vendee the opportunity to perform. Indeed, since in the interim the real estate market had collapsed it was in the vendor’s best interests to have the vendee perform.
The majority also cite: (1) Cross v. Mayo (1914) 167 Cal. 594 [140 P. 283] (in that case the vendor asked the court to fix a time for the vendee to perform before foreclosing his rights in the property); (2) Odd Fellows’ Sav. Bank v. Brander (1899) 124 Cal. 255 [56 P. 1109] (there the vendee, not the vendor, challenged the trial court’s judgment allowing time to perform); (3) Southern Pacific R.R. Co. v. Allen (1896) 112 Cal. 455 [44 P. 796] (again, it was the vendor who sought a judgment foreclosing the vendee’s interest after allowing time to perform); (4) Fairchild v. Mullan (1891) 90 Cal. 190 [27 P. 201] (in that case the vendor did not challenge the trial court’s allowance of time to perform).
*123Thus we have never held that a wilfully defaulting vendee must be permitted an additional opportunity to perform on an installment land sale contract. Rather, the right to redeem is dependent on the facts, and the trial court has discretion to weigh the equities of the case to determine the just result. (Bartley v. Karas (1983) 150 Cal.App.3d 336, 344 [197 Cal.Rptr. 749]; Kosloff v. Castle (1981) 115 Cal.App.3d 369, 376 [171 Cal.Rptr. 308]; Kay v. Kay (1961) 188 Cal.App.2d 214, 219 [10 Cal.Rptr. 196]; Scarbery v. Bill Patch Land & Water Co. (1960) 184 Cal.App.2d 87, 103, 106 [7 Cal.Rptr. 408]; Petersen v. Ridenour (1955) 135 Cal.App.2d 720, 728-730 [287 P.2d 848]; see also MacFadden v. Walker (1971) 5 Cal.3d 809, 814 [97 Cal.Rptr. 537, 488 P.2d 1353, 55 A.L.R.3d 1] [“wilfully defaulting vendees (are entitled to) specific performance in proper cases” (italics added)].) The majority, while claiming to respect stare decisis, actually renege on the clear holdings in prior cases to forge an unprecedented new rule. They have denied the right of this trial court to exercise its discretion.
Reliance is placed on the policy against forfeitures. (Freedman v. The Rector (1951) 37 Cal.2d 16, 20 [230 P.2d 629, 31 A.L.R.2d 1]; Barkis v. Scott (1949) 34 Cal.2d 116, 122 [208 P.2d 367].) But two kinds of forfeitures are presented when a vendee party to an installment land sale contract defaults and title is quieted in the vendor: the loss of installments previously paid and the loss of the benefit of the bargain. (See Kosloff v. Castle, supra, 115 Cal.App.3d 369, 376.) The policy against forfeitures prevents a court from quieting title in the vendor unless he refunds to the vendee the excess of previously paid installments above his damages from the default. (Freedman v. The Rector, supra, 37 Cal.2d at p. 22.) However, there is no such application of the policy against forfeitures to the loss of the benefit of the bargain. In fact, our cases have specifically held otherwise.
In Barkis v. Scott, supra, 34 Cal.2d 116, 122, we discussed Henck v. Lake Hemet Water Co. (1937) 9 Cal.2d 136 [69 P.2d 849], in which “the only forfeiture that was involved was a loss of the benefit of the bargain, and the situation was therefore analogous to that where the contract is still wholly executory and no substantial expenditures have been made in reliance on it.” We went on to emphasize that “It is settled that in such situations relief from default cannot be granted . . . . ” (Italics added.) In Honey v. Henry’s Franchise Leasing Corp. (1966) 64 Cal.2d 801, 804 [52 Cal.Rptr. 18, 415 P.2d 833], we held that “When a vendee has materially breached his contract, the vendor has an election to rescind or to enforce the contract. [Citations.] The defaulting vendee, however, has no such election. Otherwise, the contract of sale would in effect be a lease with an option to purchase. The vendee would receive the benefit of any increase in value of the property, and the vendor would bear the entire risk of any decrease *124in its value. Such protection to a defaulting vendee would go beyond that provided by anti-deficiency legislation, which places the risk of depreciation in value on the vendor only to the extent that the value of the property may decrease below the amount still owing on the contract.”1 (Italics added.)
Thus precedent and policy mandate against providing redemption to vendees defaulting on their installment land sale contracts. We are urged by amicus curiae Professor Hetland that such a remedy should nevertheless be granted because it is available to mortgagors and trustors under deeds of trust. He maintains that installment land sale contracts are functionally equivalent to these devices, and thus the remedies available to the vendor and vendee in each case should be the same. While there is a surface appeal to this argument, it ignores a basic and fundamental difference between installment land sale contracts on the one hand arid mortgages and deeds of trust on the other—the transfer of title.
Civil Code section 2924 defines a mortgage as “Every transfer of an interest in property, other than in trust, iriade only as a security for the performance of another act . ...” By contrast, Civil Code section 2985 defines a real property sale contract as “an agreement wherein one party agrees to convey title to real property to another party upon the satisfaction of specified conditions set forth in the contract . . . .” “In comparing the remedies for breach of the installment land contract with the remedies under a mortgage or deed of trust, the important distinction is that title does not pass to the buyer under the contract until the contract is fulfilled. In contrast, the mortgagor or the trustor under a deed of trust receives immediate title and then hypothecates the property as security for the unpaid balance of the purchase price (the mortgage or deed of trust may secure any obligation, not just the unpaid purchase price, whereas the installment land contract can only be used as a security device by the seller to secure the balance of the purchase price).” (Graham, The Installment Land Contract in California: Is It Really a Mortgage? (Cont.Ed.Bar 1981) 4 Real Property L. Rep. 117, 118.)
The holding of title is significant for a number of reasons. First, the rights and remedies that attend ownership are distinctive. When the buyer acquires title, he obtains an equity in the land that can be extinguished only by a private or judicial sale; without title the buyer has only his contract. Second, when title or possession passes, the risk of loss passes. (Civ. Code, § 1662.) Third, since the remedies available to parties for different types of land sale *125arrangements have been varied—that is, until today—the parties could choose among them the form of agreement that best suited their needs. If they chose to enter an installment land sale contract, they knew that should the wilfully defaulting vendee request redemption, the court would weigh the equities to determine whether such relief was just. If the parties chose to provide the vendee with an absolute right to redemption, other land sale devices were available.
As the majority readily admit, the equities in the case at bar weigh heavily against the vendees. “The Petersens’ monthly payments were erratic and delinquent almost from the beginning even though the seller made clear her need of the payments for her support. By April 1973 the Petersens had made only 58 out of the 65 payments then due, and their first attempt to reinstate the contract was not until 29 months later, when they tendered $250 out of the $1,800 that was by then overdue and unpaid.” (Ante, p. 112.)
As between the deliberately defaulting vendees and the elderly vendor who desperately needed the modest payments on the contract for her very survival, the equities clearly favor the latter. I am mystified at how the majority can conclude the ends of justice compel their callous result and rejection of the trial court’s rational exercise of discretion. There being no reason to overturn our prior cases and ignore the policies clearly articulated therein, I would affirm the judgment denying the vendees specific performance.
Lucas, J., concurred.

In MacFadden v. Walker, supra, 5 Cal.3d 809, 814-815, we held that because neither party in Honey sought specific performance, the above-quoted language does not preclude such a remedy. However, it does not indicate that the policy against forfeitures requires specific performance; rather, the policy has no bearing on loss of the benefit of the bargain.