94 Cal. 260 | Cal. | 1892
The plaintiff and the defendant Wilson entered into an agreement, bearing date September 1, 1888, by which the plaintiff agreed to sell and Wilson to purchase a tract of land in Los Angeles County for the sum of one hundred and eighty-two thousand dollars, payable in installments, of which the second, of fifty thousand dollars, was to be paid on or before ten years from the date of the agreement, and the third, of one hundred and twenty-five thousand dollars, on or before fifteen years from said date. Said installments were to bear interest at the rate of six per cent per annum, payable yearly; but it was provided that of said interest Wilson need pay only one thousand dollars for the first year, and only three thousand dollars for each of the second and third years. Other provisions not necessary to be mentioned here were made in the contract in reference to the payment by Wilson of interest and taxes, and for the expenditure by him of money in improving the land, and its subdivision and sale in parcel’s. The agreement provided that a writing, “ somewhat in the form of a promissory note,” should be executed by Wilson, “ expressing the terms of the obligation as to the payment of the second and third installments,” separate from and in addition to the contract, as “an additional evidence” of such obligation;
“ Los Angeles, Cal., September 1, 1888.
“ This obligation witnesseth as follows: On or before ten (10) years after this date, for value received, I promise to pay to Andrew Glassell of this city, or order, at this city, the principal sum of fifty thousand ($50,000) dollars; and also on or before fifteen years after this date, for value received, I promise to pay to said Glassell, or order, at said city, the further principal sum of one hundred and twenty-five thousand ($125,000) dollars, with interest on both sums from date until paid, at the rate of six per cent (6 per cent) per annum; interest to be paid yearly, except as hereby modified, to wit, for the first year, only one thousand ($1,000) dollars of the accruing interest on said two sums shall be required to be paid within that year [other provisions relating to the payment of interest omitted]. If default be made at any time for the space of six months in the payment of the interest as herein provided, the whole principal sums shall thereupon become due, at the option of Glassell. This note is given as an additional security fox the payment of the second and third installments, of purchase price, payable as per contract between the parties hereto of the same date herewith for sale, etc., of land in Los Angeles County, California, and any and all payments made by said Wilson to said Glassell on said second and third installments, as required by said contract, shall be considered for all intents and purposes as credits upon this obligation.”
At the same time the respondents herein executed to the plaintiff their obligation, written upon the same sheet of paper, and immediately after the above obligation of Wilson, as follows, to wit: —
The plaintiff and the defendants herein had made an agreement in September, 1887, for the purchase and sale
Wilson failed to make the expenditures agreed by him, or to pay the taxes on the land, or any of the interest provided by the installment note, and the plaintiff, on the 10th of September, 1889, and again, January 20, 1'890, gave him a written notice in the following terms: “ I have elected and do elect to claim and insist, and do hereby claim and insist, on the absolute forfeiture of all your interests, claims, and rights mentioned in or provided for in said contract, and you are especially notified that I now claim to be released from all obligations in law or equity to convey the real property mentioned in said contract, and that I claim that you have forfeited all right thereto, and to all moneys, promissory notes, and considerations therefor or for said contract paid or delivered to me under or pursuant to said contract, and that I retain and have and claim absolutely all the rights, property, and privileges provided for in said contract for my benefit in the event of your complete forfeiture therein provided for.”
The plaintiff also, “ upon the expiration of six months from and after the said September 1, 1889,” notified Wilson that he chose and elected to consider the whole of the principal sums named in the installment note as immediately due and payable. It is also alleged in the complaint that by reason of the failure of Wilson to comply with his obligations, as expressed in said agreement, the plaintiff has been damaged to the extent of fifty thousand dollars, and that he notified the respondents of such failure, and has demanded of them the payment of twenty-five thousand dollars, for which he prays
1. The allegations in the complaint in reference to the agreement of September, 1887, cannot be considered for the purpose of determining whether the plaintiff has any cause of action against the respondents arising out of the breach of the agreement of September, 1888. It is alleged in the complaint that the agreement of 1887 was canceled, and that those of 1888 were executed as a substitute for it. Even if its cancellation was upon the consideration that the others should be executed, the parties to the latter are bound only by the obligations which they have therein assumed.
2. The liability of the respondents is limited by the terms of their guaranty. Being only guarantors for Wilson, their liability can under no contingency be greater than his, or greater in extent than that which they have themselves assumed. Unless he is liable upon the contract which they have guaranteed, they cannot be held liable thereon, nor are they liable upon any contract or obligation which he may be under to the plaintiff that is not within the terms of their guaranty.
8. Upon the election by the plaintiff to rescind the contract by claiming a forfeiture by Wilson of all his rights under the contract, the contract itself and each of its provisions or terms ceased to be a subsisting or enforceable obligation against Wilson. The only right of action against him then remaining to the plaintiff was for damages for his breach of the contract. The plaintiff could not have a right of action on the contract, and at the same time one for its breach. An action for damages for the breach of a contract necessarily implies ■ that the contract has been terminated.
4. By the terms of their agreement, the respondents “guaranteed the payment of this note according to its terms and conditions,” to the extent of twenty-five thousand dollars, but limited this liability to the condition that the plaintiff should have “ the right to resort to this note,” and to them by reason of the failure of Wilson to comply with bis obligations as expressed in the contract “referred to in the note,” and of the forfeiture consequent upon such failure. The only provision in the contract relating to the right of the plaintiff to “resort to this note ” is the one which provides that, upon a rescission of the contract of purchase and the forfeiture of all Wilson’s rights under the contract, the plaintiff may “retain and own” the note, and also “the right to enforce the collection thereof as against said Wilson and the guarantors on said note ”; but only to the extent as expressed in the guaranty. Neither by this provision in the contract, nor by the installment note itself, was there imposed upon Wilson any other obligation than to pay
The obligation of the respondents, being subsidiary to that of Wilson, and being limited to such portion of his liability on the note as they had guaranteed, it follows that upon the termination of his liability thereon by virtue of the forfeiture claimed by the plaintiff, all liabi ity of the respondents to the plaintiff ceased at the same time. The plaintiff’s right of action against Wilson for damages arising from the breach of the contract of purchase is entirely independent of his right of action on the note, and as the respondents have not guaranteed any liability of Wilson for such damages, the plaintiff has shown no right of action against them.
5. The notice by the plaintiff to Wilson, after his notice that he elected to rescind the contract, that he elected to consider the whole of the principal sums named in the installment note as immediately due and payable, had no other effect than to hasten the maturity of the installments therein provided for, and didjiot affect the liability of the respondents. Upon the maturity of the forfeiture at the expiration of the six months’ grace allowed by the contract after such notice, their liability upon the note terminated with the liability of Wilson thereon.
We are of the opinion that the complaint fails to state a cause of action against the respondents, and that the court below correctly sustained their demurrer.
McFarland, J., De Haven, J., Sharpstein, J., Paterson, J., and Garoutte, J., concurred.
Rehearing denied.