Court Opinion

ID: 3408070
Source: CourtListenerOpinion
Date Created: 2016-07-05 19:24:52.018557+00
Date Added: 2024-06-11T13:49:01.877729
License: Public Domain

While concurring in the view that if a vendor under contract to convey land conveys it to a third person subject to the contract the second grantee is entitled to the purchase money outstanding on the contract unless there is an agreement to the contrary, I dissent from the conclusion that in the case at bar the $650 named in the promissory note is not a part of the purchase money outstanding on the contract and therefore did not pass to the Dowsett Company, Limited, the second grantee.
On principle it is sound that when there is a conveyance subject to an earlier contract to convey the whole or a part of the same land the second grantee to whom *Page 305 
is transferred the burden of conveying to the earlier purchaser should also receive the emoluments flowing from the contract to convey. In the instrument of March 31, 1927, the United Realty Company agreed to sell and the present defendant agreed to purchase a certain lot of land. The instrument dealt solely with the terms of the understanding and agreement of the parties whereby one was to sell and the other was to buy. The parties therein declared that the seller thereby agreed to sell to the purchaser "for and in consideration of the sum of $3750" the lot in question; and that the purchaser agreed to purchase said premises "for the said consideration of $3750, payable as hereinafter provided." These two statements are entirely unambiguous. If they stood alone there could not be the slightest doubt that the purchase price was $3750 and not any less sum. Next comes the statement that the purchaser, in consideration of the promises of the seller, agreed "to pay the sum of $3750, of which the sum of $750 as a deposit is now paid, the receipt of which the seller hereby acknowledges, the balance of $3000 to be paid as follows: in equal quarter-annual payments with interest at the rate of 7% per annum on all unpaid balances, the entire principal sum and interest to be paid on or before the expiration of six years from the date hereof." Here again is found a reiteration of the statement that the aggregate sum to be paid is $3750. It is true that it is recited that $750 "as a deposit is now paid." But the parties themselves have stipulated that in truth and in fact only $100 of the $750 was paid and that the promissory note now sued upon, for $650, was taken. The rule obtaining in most jurisdictions, and I think the correct rule, is that "in the absence of agreement or consent to receive it as such * * * a promissory note of the debtor * * * does not in itself constitute payment or amount to a discharge of *Page 306 
the debt, although it may postpone the right of action thereon until the maturity of the paper." 48 C.J. 610-612. The minority rule, to the opposite effect, is said to prevail only in Indiana, Maine, Massachusetts and Vermont. Ib. 612. There is nothing in this contract to show that the parties intended to give and receive the note as payment pro tanto or that the realty company intended thereby to take that sum of $650 out of the purchase price and to make it a separate transaction, or that it waived with reference to the $650 its rights under the contract. It is obvious, to my mind, that when the agreement of March 31, 1927, was drawn it was expected by both parties that the sum of $750 would be wholly paid "as a deposit." There is, however, no room for surmise or inference as to what actually happened. Both parties have stipulated, as a part of the evidence in the case, that only $100 was paid and that $650 was not paid. In the paragraph last above quoted the parties have expressly reiterated that "the entire principal sum" is "to be paid on or before the expiration of six years from the date hereof." The "entire" principal sum means the whole of it, nothing less.
Reading further in the instrument, the seller agreed, in consideration of the promises of the purchaser, to deliver to the purchaser possession of the premises upon execution of the document and secondly "to deliver * * * to the purchaser * * * a deed of the property * * * upon the payment in full of the purchase price, plus interest at the rate of 7% per annum, within the time hereinabove set forth." It seems to me that the statement that the undertaking was to deliver a deed "upon the payment in full of the purchase price" is likewise unambiguous and that the statement in the same sentence that the purchase price is to be paid "within the time hereinabove set forth" is not sufficient to indicate that the parties were then *Page 307 
for the first time taking the $650 out of the purchase price and leaving it a detached obligation of the purchaser. Instead of insisting upon the payment of the whole $750 at the time of the execution of the contract, the realty company was willing to receive a written promise to pay within one year from that date. That is the time named in the note, but that is the only change, so far as I can see, that was made. If the purpose of the parties had been to receive the note as absolute payment of $650 and thereby to render the realty company obligated to convey upon the payment of the remainder of $3000, even though the purchaser failed and expressly refused to pay the $650, how simple a matter it would have been to have said so by some apt language in the instrument defining the rights and duties of each of the two parties. The paragraph quoted in the leading opinion authorizing the seller under certain circumstances to sell the lot and to apply the proceeds in certain prescribed ways does not in my opinion require a different conclusion. The statement there is that this right of the seller to sell would accrue "if the purchaser shall fail to pay any one of the said installments either of principal or interest, * * * or if the purchaser shall fail to observe or perform any of the agreements herein contained and on her part to be observed and performed." One of the agreements which the purchaser undertook to observe and perform was the agreement to pay the whole of the purchase price. As long as the note is not paid that agreement is not performed. There is nothing in the paragraph immediately under consideration to indicate that the parties meant to say that the purchaser need not pay the $650 and would still be entitled to a deed without its payment.
The contract should be construed as a whole. In its essence it was nothing but an agreement to sell and to *Page 308 
buy a piece of land for the consideration of $3750. No other consideration is named anywhere in the instrument. The undertaking to convey was conditioned upon payment of the entire purchase price, not merely a part of it. If the realty company had not conveyed to the Dowsett Company and had, after the expiration of the one year named in the note, informed the defendant that it repudiated the agreement of March 31, 1927, and that it refused to convey to her under any circumstances and had subsequently sued the defendant upon the note for the recovery of the $650, can it be that it could have recovered judgment? I cannot take the view that under those circumstances the realty company would be entitled to recover the $650. The reason for its failure would be that there was a failure of consideration, that the promise to pay the $650 was in consideration of the realty company's agreement to convey, that both promises were a part of the same transaction and that the $650 was a part of the purchase price agreed upon by the parties and was not the subject of a detached and independent agreement.
As a part of the purchase price the note whereby the purchaser promised to pay the $650 in one year passed to the Dowsett Company and was by it released to the defendant as a part of the mutual releases effected by the instrument of July 11, 1928, revoking the agreement of March 31, 1927.
In my opinion the judgment under review, in favor of the defendant, should be affirmed. *Page 309