Opinion by
This is an appeal from the final decree of the Court of Common Pleas of Montgomery County, dismissing the complaint in equity of appellant Carsek Corporation. Appellant had sought reformation of a deed and purchase-money mortgage, or payment to it of some $49,000, or other appropriate relief.
.. On. May ll, 1964, James C. Scully entered into a contract to purchase a 57 acre tract of land in Upper Gwynedd Township, Montgomery County, from the appellee, Stephen Schifter, Inc. (hereinafter Schifter) for the purpose of constructing a housing development thereon. Later Carsek, Inc. (hereinafter Carsek) was incorporated with Scully as its president and Carsek was recognized as Scully’s nominee by appellee. The price agreed upon was $200,000 — $25,000 in cash on or before settlement .and the balance of $175,000 to be paid in four years time, secured by a purchase-money mortgage. However the Agreement of Sale had one very unusual feature bearing on the purchase price. This was the “upset” provision in Paragraph Seven: “Prior to settlement hereunder, Buyer will have prepared by the Registered Engineer who has prepared the plan of subdivision described hereinabove, 1 a list of (quantities’. The ‘quantities’ shall set forth all costs for all street improvements necessary to fully improve all ninety lots as the plan will show. This list of ‘quantities’ will include street-grading, curb, water lines, (and all water company requirements such as fire hydrants, etc., if paid by developer), sidewalks, *553 street paving, sanitary sewer lines, sanitary laterals, manholes, storm sewer pipes, culverts, storm sewer man-holes, to consider each lot (including those facing Hancock Road and North Wales Road) fully improved. If these ‘quantities’ exceed $160,000, Seller will absorb the amount over $160,000, by deducting the overage amount from the consideration being paid by Buyer for the land at settlement. Except that Seller may contest the ‘quantities’ and the amounts in dollars by providing bid(s) from reliable contractor(s) for the item(s) of the work required, and if it (they) are less than the engineer(s) estimate(s), Buyer will agree to accept this lower price or prices.”
Pursuant to an addendum to the agreement, two double sized lots were conveyed by Schifter to Carsek, on September 11, 1964, for $20,000 to enable Carsek to build sample homes thereon, leaving an unpaid balance of $180,000 under the original agreement.
Meanwhile, shortly after execution of the agreement of sale, Carsek engaged Bernard V. Pannone, a registered professional engineer, to develop a subdivision plan of the tract. Several plans were prepared and submitted to Upper Gwynedd Township authorities and a plan dated July 27, 1964, containing 90 lots and known as Rexdale, was approved. Pannone calculated the “quantities” of the street improvement required to develop the entire tract in accordance with the plan dated July 27, 1964, and gave those calculations to Carsek’s representative during the summer of 1964. From those calculations Carsek’s representative, Walter Hewchuck, prepared tabulations of the estimated improvement costs for the Rexdale subdivision. The complete estimates for the cost of improving Section One of the development were given to appellee’s agent, E. Thomas Flood, II, on December 1, 1964. On that date, settlement, set in the Agreement of Sale to occur *554 no later than December 11, 1964, was postponed until January 11, 1965. A complete tabulation of the total estimated improvement costs for the entire subdivision, totalling $217,230.00, was not submitted to appellee or its agent- until some forty-five days after settlement.
The settlement took place on January 11, 1965. Attending were several representatives of Carsek, Flood representing Schifter, and representatives of the title insurance company. The Chancellor found that Scully mentioned to Flood that credit for improvements would be expected and Flood replied that there would not be any problem about it. Carsek paid $5,000 in cash at settlement, and gave a purchase-money mortgage and note for $175,000, receiving in return a deed reciting a $180,000 consideration.
About forty-five days after settlement Carsek requested credit for the projected cost of street improvements above $160,000, but Schifter refused to consider any credit since settlement had already passed. Subsequently formal demand for $49,161.00 was made by Carsek and refused by Schifter.
Appellant then brought suit in equity requesting that the. deed and purchase-money mortgage be reformed to reflect the adjusted consideration agreed upon by the parties. The Chancellor held that Paragraph Seven of the agreement of sale required that the cost estimates be submitted prior to settlement, and that, having failed to submit the estimates prior to settlement, plaintiff was not entitled to any relief. We disagree.
In the first place, we cannot agree with the Chancellor that time was of the essence of this contract. “It is a well-established general principle in equity that time is not ordinarily regarded as of the essence in contracts for the sale of real property unless it is so stipulated by the express terms thereof, or it is nec
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essarily to be so implied.” 55 Am. Jur., Vendor & Purchaser, Sec. 110;
Knable v. Bradley,
Nor do the circumstances necessarily imply that time is of the essence. On the contrary, they provide a strong indication that time was not to be of the essence. One of those circumstances is the type of performance required. Appellee relies heavily on the language of the agreement providing that the credit for the estimates above $160,000 should be deducted from the consideration being paid by buyer at settlement as indicating that time must be of the essence. Although we have found no Pennsylvania cases directly in point, at least one jurisdiction has decided this precise issue and held that a requirement that a credit be given against a designated payment does not make time of the essence. In
Gault v. Branton,
The first note was due more than a year later, on December 1, 1947. The plaintiff paid the note when due, in full, and without protest, since he did not yet have the survey. He also paid, in full, the notes due in the years 1948 through 1952. He finally brought suit in 1953, seeking a reduction of the purchase price on the basis of a survey which established that the acreage was less than that specified in the agreement of sale. The Court granted the reduction, stating: “In the absence of an express stipulation in the contract, or a clear indication of intent, in equity time is not ordinarily regarded as of the essence of a contract. ... In this case the parties failed to make time of the essence for the performance of the supplemental contract, and we would not be warranted in implying that they had that intent.” 222 Miss, at 125. The due date of the first note in Gault is like the settlement date in the instant case. The Gault court did not require the credit prior to the due date of the first note, even though the supplementary agreement provided that the adjustment would be “added to or taken from the amount of the first note.” Nor should we create *557 a forfeiture by holding time to be of the essence merely because the credit was to be subtracted from the purchase price.
Particularly is this so when other features of the performance required would indicate that time was not to be of the essence. Appellant had to secure approval of a plan by the Township, get various clearances from sewer and water authorities, and then have prepared estimates of improvement costs. With all the uncertainties inherent in gaining governmental approval, it would be unreasonable that time should be of the essence. See Cochrane v. Szpakowski, supra.
Furthermore, appellant’s delay really resulted in no harm to appellee. The Chancellor stated that time was of the essence “because, otherwise, final settlement would have been held and defendant still would have been uncertain as to the net consideration it would ultimately receive for its property.” Yet this hardly constitutes harm cognizable by a court of equity. Neither party had the right to rescind the contract regardless of what the estimates totalled. When appellee made the agreement, it left itself open to an uncertain purchase price. A month or two more of uncertainty is scarcely the harm required in order that it be inferred that time is necessarily of the essence. Moreover, the delay resulted in no loss whatsoever of cash in hand, since appellee took a four-year purchase-money mortgage. As for the right to submit counter-estimates, appellee had ample opportunity to do that when appellant submitted its estimates, but absolutely refused to do so, preferring to rely on its view that appellant’s action came too late. Any harm resulting from failure to submit counter-estimates was self-imposed. 2
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Whereas appellee suffered virtually no harm from a slightly delayed performance, it would work a tremendous forfeiture to deny appellant the relief sought. This Court has always sought to avoid forfeitures, and has interpreted contracts in such a way as to effectuate that purpose. Cf.
Knable v. Bradley,
supra;
Reilly v. City Deposit Bank, 322
Pa. 577,
Nor is appellant’s contract right to a credit against the purchase price extinguished by virtue of the fact that settlement was completed. Appellee urges that the agreement of sale merges into the deed, and that therefore no recovery can be predicated upon the earlier agreement. While appellee states the general rule, that rule is subject to certain exceptions under the umbrella of which the instant situation falls. Merger is said to be the rule, except when the intention of
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the parties is otherwise, or where the stipulations in the contract sought to be enforced are collateral to the functions performed by the deed. Anno:
Merger of Contract in Deed,
Most of the cases dealing with contractual provisions providing for adjustments in consideration have concerned the vendee’s obligation. The Pennsylvania cases are in this category. For instance, in
Wilson v. Pearl,
Similarly, Judge Eevin, later President Judge of the Superior Court, in
Douglass v. Laughlin,
While, as stated above, these cases imposed an additional obligation upon the vendee, we see no reason why the same principle should not apply to an adjustment imposed upon the vendor. In a case almost on all fours with the instant case, the New Jersey Superior Court held there was no merger. In
Tunkel v. Filippone,
Thus, in accordance with the agreement of sale, appellant is entitled to receive credit for improvement costs over |160,000. Inasmuch as the actual costs have *562 proven to be slightly lower than the estimates, appellant should recover only those actual costs plus any estimated costs yet remaining.
The decree is reversed and remanded for proceedings consistent with this opinion, costs to be borne by appellee.
Notes
Paragraph Two provides in part:
“It is understood that Buyer will promptly after the execution by 'all parties of this Agreement of Sale, order from a registered professional engineer, a' plan of subdivision of this tract, which’ plan will conform in every way to the zoning requirements of Upper Gwynedd Township, as above described.” (Footnote added)
In any event, it is very doubtful that there was any harm from failure to submit counter-estimates. It was to the best in *558 terest of appellant, which could hardly be sure of winning this lawsuit, to' keep the actual costs as low as possible.