Court Opinion

ID: 6883816
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:22:48.69353+00
Date Added: 2024-06-11T16:05:39.583526
License: Public Domain

HANEY, Circuit Judge
(dissenting).
The majority opinion is written on the basis of a holding that the contract of sale had not been forfeited when relief *12in bankruptcy was sought, and therefore passed under the exclusive jurisdiction of the bankruptcy court pursuant to 11 U.S.C.A. § 203, sub. n. That section places under the jurisdiction of the bankruptcy court “all real orpersonal property, * * * including among others, contracts for purchase, contracts for deed, or conditional sales contracts * * *.”
Appellees insist, and the majority holds, that when the bankruptcy proceedings were commenced, they were the owners of real or personal property, including the contract for purchase or conditional sales contract, or an equity or right in such property. If the contract of sale was forfeited prior to commencement of the bankruptcy proceedings, then the contract was no longer in existence, and appellees owned no real or personal .property therein. Whether they owned any other right in the contract will be hereafter discussed. Appellees do not contend that they owned anything, except possibly by inference a right to be relieved of the forfeiture, if the contract of sale actually was forfeited prior to commencement of the bankruptcy proceedings. What they contend is that no forfeiture occurred. Therefore, we must first determine whether there was or was not a forfeiture prior to commencement of the bankruptcy proceedings.
First. It is conceded that the law of Washington is to be applied in determining what rights appellees had under the contract of sale. Notwithstanding such concession, and Erie Railroad v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487, the majority do not discuss or apply Washington law as to what is sufficient to constitute a forfeiture.
Second. The majority, with no reference to Washington law, assert that “the notice does not purport to declare forfeiture but only an intention so to do at the end of' thirty days if payments are not made before that time. It did not amount to a declaration that at the end of thirty days the rights of the vendees would be forfeited. It could not be held to result in immediate, complete forfeiture, because the contract allowed a thirty-day period during which the vendee would have the opportunity to make the payment in default”. No one contends here that there was an immediate forfeiture upon giving the notice.
The- contract of sale provided in part: “Should the purchaser fail to make the payments * * * the same shall constitute a forfeiture of this agreement and thereupon the vendors, at his option, may declare such forfeiture by written notice to the purchaser, and at the expiration of thirty days, the terms of this agreement meanwhile not having been complied with, the vendors may enter into said premises and take possession of them * if: #
The notice of appellant stated in part: “ * * * that unless the payments now in default under the terms of the sale agreement and contract hereinafter referred to be made on or before August 24, 1940, the undersigned * * * will elect to declare a forfeiture and cancel the said contract and that upon such election being made, all of your rights under said contract will cease and determine * * * and you will forthwith be required to surrender possession of the premises in said contract described.”
The notice concluded with the following statement in part: “You and each of you are further hereby notified that you are not to sell, encumber, remove or otherwise dispose of any of the personal propérty * * * during the pendency of this notice of forfeiture.”
It is said in Harris v. Seattle Land & Imp. Co., 122 Wash. 323, 211 P. 282, 284, 214 P. 1066: “No special form of notice is necessary, provided the defaulting purchaser is fairly apprised of the intention of the seller to claim default and is no longer lulled into security by failure of the seller to act”. Certainly, the notice here meets that test. While it is true that a simple demand for past due payments is not notice of forfeiture (Shaw v. Morrison, 145 Wash. 420, 260 P. 666), the notice here went much further. Appellees could not be misled because the notice demanded immediate possession of the property! at the end °f the thirty day period, something which could not be done under the terms of the contract until the vendors had declared “such forfeiture”.. Appellees therefore knew that since possession was demanded at the expiration of 30 days, the notice must have been a notice of forfeiture.
Furthermore, notices of the kind given here have been held sufficient in Sleeper v, Bragdon, 45 Wash. 562, 88 P. 1036 and Bedtelyon v. Otis Orchards Co., 106 Wash. 151, 179 P. 96. In the first mentioned case [45 Wash. 562, 88 P. 1037], the court said *13that the notice given was “that, unless the payment was made on the last-named day, the contract would be canceled on that day” and held that the vendee “ * * * was thus notified in advance that the respondents had already elected and declared that the contract should be canceled on January 10th, unless she made the payment on that day or before. She therefore knew that, by her own act in defaulting, the cancellation was completed, and she was not entitled to any further notice * * (Italics supplied) In the second case the vendor advised the vendee “that you surrender your contract to us and we will return your notes unless you are in position to take care of your past-due payments without any further delay. We cannot allow this matter to run over thirty days from date of this letter” [106 Wash. 151, 179 P. 98], The court held that “rescission of the contract took place at the end of thirty days”. See also: Harris v. Seattle Land & Imp. Co., supra; Reese v. Westfield, 56 Wash. 415, 417, 105 P. 837, 28 L.R.A.,N.S., 956; Nagel v. Edmonston, 178 Wash. 577, 35 P.2d 64.
The majority make no attempt to distinguish these cases. They are pertinent and, I think, controlling. Erie Railroad v. Tompkins, supra, requires their application here regardless of whether we agree or disagree with the reasoning or result thereof.
Finally, the holding of the majority on this point confuses rather than clarifies the law. The only purpose of the notice is to enable the vendee to remedy his default. A further notice at the end of 30 days that the vendee had lost his rights serves no purpose whatever. It avails the vendee nothing to be told a fact of which he is already aware. The notice was couched in future language, undoubtedly to avoid liability as specified in Finch v. Sprague, 117 Wash. 650, 202 P. 257. Since non-payment of an amount due is sufficient ground for forfeiture (Sisson v. Durrant, 152 Wash. 382, 278 P. 174), and since the notice informed the vendees that possession was demanded at the end of 30 days, they knew the contract provision was being invoked. That was sufficient, and the vendees were “not entitled to any further notice”. Sleeper v. Bragdon, supra.
Third. The notice being sufficient it remains to be determined whether appellees had any rights after" the 30 day period mentioned in the notice. They had no rights in the property, and the contract of sale had terminated at the end of such period, unless they had a right to invoke the aid of a court of equity to relieve against the forfeiture, a subject of equity jurisdiction. That under Washington law, a court of equity may allow a vendee sufficient time within which to remedy his default, is not doubted. Wallis v. Elliott, 154 Wash. 625, 282 P. 928; Great Western Investment Co. v. Anderson, 162 Wash. 58, 297 P. 1087; Grosgebauer v. Schneider, 177 Wash. 282, 285, 31 P.2d 901. The question here, however, is whether the vendees had a right to obtain relief. On that question, it is said in 21 C.J. 34, § 12: “The decree of a chancellor is always a matter of grace and never the absolute right of a litigant. The propriety of affording equitable relief rests in the sound discretion of the court, to be exercised according to the circumstances and exigencies of each particular case. Of course this discretion is not an arbitrary one, but must be exercised in accordance with the fixed principles of equity jurisprudence. Under some circumstances, judicial discretion to grant relief becomes judicial duty to grant it. The grace which equity should bestow then becomes matter of right * * *” Here appellees point to no showing entitling them to the discretionary relief of the court. No such showing was made. Not having made such a showing, appellees had no absolute right to relief. In fact the state court at no time indicated that such showing had been made. Appellees therefore had no rights at all which came under the jurisdiction of the court below.
Fourth. Appellees brought suit in the state court to rescind the contract of sale because of fraud. Appellant filed an answer and cross-complaint alleging that he “caused to be served personally upon the plaintiffs * * * a notice of forfeiture of said sales agreement, copy of which notice of forfeiture is attached hereto * * * ” He prayed that the “contract between the parties be cancelled, held to be at an end and null and void * * * ” The prayer is not inconsistent with the holding that there was a forfeiture. See Sleeper v. Bragdon, 45 Wash. 562, 88 P. 1036, where the same sort of prayer was involved.
The order should be reversed.