Lead Opinion
Dеfendants, by written contract, agreed to buy real estate in Taos County, New Mexico, for $17,500, of which $8,000 was represented by defendants’ promissory note payable on or before two years from its date, and the rеmainder payable at $100 per month including interest. A deed was held in escrow to be delivered upon payment in full. The $8,000 note was secured by a mortgage upon other property of defendants. Within a few months, defеndants became in default in the monthly payments and plaintiffs gave written notice of their election to terminate and cancel the contract and to retake possession. Possession of the proрerty was redelivered to plaintiffs who commenced suit upon and foreclosure of the $8,000 note and mortgage upon its ■default. This appeal is from the judgment in plaintiffs’ favor and against defendants for the amount оf the note, interest and attorney fees, and decreeing foreclosure of the mortgage securing that note.
Plaintiffs contend that the note and mortgage (1) were given “in lieu” of a down payment on the purchase of the Taos real estate; (2) stand in the same position as any other payment made on the purchase; and (3) were forfeited upon cancellation of the contract by plaintiffs for ■default in the monthly payments. We do not so construe the purchase and sale contract between the parties.
The written contract commenced with a statement that sellers had only a contract of purchase for the real estate with a deed in escrow. There is a recital that purchasers (defendants) were unable to make á down payment but were willing to give a second mortgage on other propеrty, securing their promissory note of $8,000 made payable to sellers on or before two years from date. The contract provided that the purchase price of $17,500 should be payable, $8,000 by the promissory nоte secured by the second mortgage on other real estate, and the remaining $9,500 to be payable at the rate of $100 per month including interest. The contract provided' that upon default in such payments, the sellers (plaintiffs) might, at their option, upon thirty-days written notice, declare the contract null and void, anid retain all payments made under the contract as liquidated damages, and receive the deed baсk from the escrow agent.
While the contract of purchase and sale recites that purchasers are unable to make a cash down payment and that they are willing to execute the note and secure it by a mortgage on other real estate, we find nothing ambiguous in the language of the contract, nor anything in its language requiring the construction contended for by plaintiffs. The purpose, meaning and intent of the рarties to a contract is to be deduced from the language employed by them; and where such language is not ambiguous, it is conclusive. The court’s duty is confined to interpretation of the contract which the parties made for themselves and may not alter or make a new agreement for the parties. Fuller v. Crocker,
In our view, the contract, in this case, does not provide that sellers accepted purсhasers’ promissory note as part payment, but it represented a separate obligation of purchasers to pay one of the installments of the unpaid purchase price. It was, like other obligations of purchasers under the contract, one to make payment at the time provided. We think that purchasers’ default in payment of this note would have been such a default as would have authorized sellеrs to exercise their option to elect to rescind the contract and receive back their deed from the escrow agent, or enforce the agreement.
The parties to a contraсt may provide for its rescission upon any terms agreeable to them; Young v. Lee,
The trial court found as a fact thаt defendants only made five monthly payments, and that after written notice plaintiffs did elect to and did rescind the contract, and took possession of the real estate. Having declared a forfeiture, and elected to rescind the contract, it follows as a matter of law that there can be no recovery of the note representing an unpaid part of the purchase price. The rescission of the contract destroyed the consideration for the note which was given, not as payment, but as evidence of a payment to be made under the terms of the contract. Gray v. Mitchell (1934),
We have considered the decisions cited and relied upon by appellees and find them either distinguishable upon their facts or we decline to follow them.
Other points asserted and argued have either been resolved by what has been said, are unnecessary to decide, or are found to he without merit.
The judgment will be reversed and the cause remanded with instructions to enter a new judgment not inconsistent with this opinion.
It is so ordered.
Concurrence Opinion
(concurring specially).
While agreeing with the conclusiоn reached in the opinion, I have difficulty with the reasoning adopted in arriving there.
The opinion indicates there is no ambiguity in the contract and interprets the language used as being clear that the $8,000.00 note and mortgage were not intended as a down payment, but were in lieu thereof.
It seems to me that an ambiguity is present by virtue of the statement that purchasers are “not at this time able to make a down payment" but are “willing to give a second mortgage * * * for the sum of $8,000.00, which note and mortgage will be executed on the same date as this contract” and the language appearing in paragraph 1 that “ * * * $8,000.00 of which (the total purchase price of $17,500.-00) is being paid by the execution of a note and second mortgage. * * * ” (Emphasis supplied).
As already suggested, the contract is ambiguous as to the exact intent of the parties in the event of dеfault. It is universally recognized that forfeitures are not favored in the law, and this being true it follows naturally that ambiguous language in a contract will be construed, if possible, so as to avoid a forfeiture. I quote the following pertinent language from Ballard v. MacCallum,
“In the instant case we are not required to apply this doctrine (permitting relief from forfeiture provisions) and grant relief from express and unmistakable language compelling a forfeiture. The problem here is much simpler. We have two possible constructions, one of which leads to a forfeiture and the other avoids it. In such a case the policy and rule are settlеd, both in the interpretation of ordinary contracts and instruments transferring property, that the construction which avoids forfeiture must be made if it is at all possible.”
To like effect are Universal Sales Corp. v. California Press Mfg. Co.,
“Forfeitures are not favored either at law or in equity. A forfeiture from its nature implies the taking away from one of some pre-existing right, and this the courts will never do unless the equities of the situation are such therе is no way to avoid it.
“Not only so, courts are always slow and reluctant to declare or enforce a forfeiture, and in the interpretation of a forfeiture clause in a contract will strictly construe it аgainst the party who has invoked it and claims the right of forfeiture. * * * ”
If we analyze the forfeiture clause in the present contract wherein it states that “payments made hereunder” may be retained, to determine if the ambiguous provisions require or demand that the note be included thereunder, as “payments,” it becomes clear that the language used does not necessarily require such a result and, accordingly, we should detеrmine otherwise.
I would dispose of the case on this basis and not on the doctrine announced in Portner v. Tanner,
There is a line of cases holding that even where a check (or note) is given, upon termination of the contract, and resale of the property, there can be no recovery on the check (or nоte). The leading case so holding is Portner v. Tanner, supra. This case has been cited consistently and followed by a number of courts, and is relied upon by the majority. However, other courts-have come to a contrary conclusion. Typical is Branwell Inv. Co. v. Uggla,
For the reasons stated, I concur that the judgment should be reversed and the cause remanded.