80 F. 604 | 6th Cir. | 1897
The Tennessee Coal, Lumber & TanBarlt Company on the 8th day of November, 1889, being then the owner of a large tract of lands lying in Morgan county, Tenn., the title to some parcels of which rested under clouds arising from the claims •of other parties, and having in contemplation the purchase of certain other inlying parcels, entered into a contract with the East Tennessee Land Company for the sale to the last-named company of all of the said lands for the agreed price of $10 per acre, amounting in the whole to the sum of $125,000. A part of the purchase price was paid down, and it was stipulated in the contract that the balance should be paid in installments, with interest from the date thereof. It was further provided in the contract that the parties should meet at Knoxville on the following Í5th day of January for the purpose of executing the deed and the notes to be given for the deferred payments. At the last-mentioned date the parties met as agreed, and in execution of the contract a deed was executed for the whole of the above-mentioned tract by the Tennessee Coal, Lumber & Tan-Bark Company to the East Tennessee Land Company, in which certain •other parties joined as grantors, who held the legal title to, or had claims upon, certain parcels of the lands sold. This deed, after acknowledging the receipt of the sum of $12,000, which had already been paid, stated that the further consideration of the deed was $113,000, to be paid in three installments, evidenced by notes for that amount, and due as follows: The first, for $31,000, due April 15, 1890; the second, for $41,000, due July 15, 1890; and the third, for $41,000, due January 15,1891,—each bearing interest from November
“$41,000. Knoxville, Tenn., January 15, 1890.
“On or before the 15th clay of July, 1890, the East Tennessee Land Company promises to pay to the order of the Tennessee Coal, Lumber and Tan-Bark Company forty-one thousand dollars, with interest from November 8, 1889, value received in deed bearing date January 15, 1890, from the Tennessee Coal, Lumber and Tan-Bark Company and others to the East Tennessee Land Company, conveying four tracts of land in Morgan county, Tennessee, known as ‘Entries Numbers 1,969, 1,968, 1,959, 2,314,’ and this note is secured by lien expressly retained in, and is subject to all equities of, said deed; but this note is based on a purchase price of ten dollars per acre, as recited in said deed, and is given for one-third of the purchase money, less six hundred and sixty-six and sixty-six one-hundredths dollars (paid in cash previously to the execution of the said deed, and credited on second payment!, under contract dated November 8th, 1889, that said land is to be paid for in three payments, and any abatement or increase in purchase money that may be brought about by determination of acreage by more careful surveys shall apply proportionately to each note, and any overpayment shall apply on the note next falling due.
“Land adversely owned, or in litigation, or in adverse possession, shall not be paid for until such adverse claims be removed of record.
“East Tennessee Land Company,
“By Frederick Gates, General Manager.”
These notes were subsequently assigned by the Tennessee Coal,. Lumber & Tan-Bark Company to Leon Jourolmon and Hu. L. McClung, the petitioners herein, as trustees. The parties who represented the East Tennessee Land Company in this purchase were Frederick Gates and J. W. Scott. These persons were cognizant of the state of the title of the lands conveyed; Scott being a practical surveyor and abstracter of titles, living in the county of Morgan, in which the lands were located. It was well known to these parties that the title to some parts of these lands was in litigation, and that, with respect to others, the title was yet to be acquired by the Tennessee Coal, Lumber & Tan-Bark Company; and it was understood that the title to all the lands covered by the deed of the Tennessee Coal, Lumber & Tan-Bark Company, which was not then perfect, was to be cleared of adverse claims, or bought in, and it was therefore stipulated in the three purchase-money notes that the “land adversely owned, or in litigation, or in adverse possession, shall not be paid for until such adverse claims be removed of record.” Possession was at once delivered of all the lands, and the Tennessee Coal, Lumber & TanBark Company proceeded to acquire and perfect the title to such as it
It is the general rule that, where one party recovers judgment against another for a sum of money due upon a contract wherein there is no stipulation in regard to interest, the court will award interest at the legal rate from the time when the money became due and payable. In such a case the interest is awarded as damages consequent upon the breach of the defendant in failing to perform his obligation. The judgment in respect to that branch of the damages does not rest directly upon the obligation itself, but stands upon the footing of those damages which in other cases are found to be the result of the defendant’s fault. Consequently the rule has its exceptions, and as in other cases where there are reasons founded on the conduct of the plaintiff, or other special circumstances existing in the case, and the justice of the situation requires it, interest will be denied. This exception prevails both in courts of law and equity. Thus, in the case of Redfield v. Iron Co., 110 U. S. 174, 3 Sup. Ct. 570, which was an action to recover money alleged to have been illegally exacted for customs dues, and where the plaintiff had been guilty of laches in prosecuting his claim, it was held that, although he was entitled to recover the money illegally exacted, he should not be
“Interest is given on money demands as damages for delay in payment, being just compensation to the plaintiff for a default on the part of his debtor. Where it is reserved expressly in the contract, or is implied by the nature of the promise, it becomes part of the debt, and is recoverable as of right; but, when it is given as damages, it is often matter of discretion. In cases like the present, of recoveries for excessive duties paid under protest, it was held in Erskine v. Van Arsdale, 15 Wall. 75, that the jury might add interest, the plaintiff ordinarily being entitled to it from the time of the illegal exaction. But where interest is recoverable, not as part of the contract, but by way of damages, if the plaintiff has been guilty of laches, in unreasonably delaying the prosecution of his claim, it may be properly withheld. Bann v. Dalzell, 3 Car. & P. 376; Newel v. Keith, 11 Vt. 214; Express Co. v. Milton, 11 Bush, 49.”
The passage above quoted was repeated with approval by the supreme court in giving judgment in Redfield v. Bartels, 139 U. S. 694, 701, 11 Sup. Ct. 683. And in U. S. v. Sanborn, 135 U. S. 271, 10 Sup. Gt. 812, the supreme court, having this subject under discussion, said:
“In Redfield v. Iron Co., 110 U. S. 174, 3 Sup. Ct. 570, the question was whether the plaintiff was entitled, under the circumstances of that case, to recover interest; the action being against a collector to recover damages for an illegal exaction of customs dues. The court, after observing that interest is recoverable as of right, when reserved expressly in the contract, or when implied by the nature of the promise, said: ‘But where interest is recoverable, not as part of the contract, but by way of damages, if the plaintiff has been guilty of laches, in unreasonably delaying the prosecution of his claim, it may be properly withheld.’ ”
And the court, applying the rule, held that the government was precluded from recovering interest upon a sum which had been paid to the defendant under a misapprehension of the secretary of the treasury, where there had been a long delay in the assertion of the right to recover the money, and no showing of any reason or excuse for the delay. In the case of Erskine v. Van Arsdale, 15 Wall. 75, which was cited by the court in Redfield v. Iron Co., 110 U. S. 174, 3 Sup. Ct. 570, it whs held that interest might properly be awarded by way of damages from the time of the illegal exaction; the facts not showing that any fault could be imputed to the plaintiff. These cases afford pertinent illustrations of the general rule, and of the exception to it, in cases where the question of interest arises upon the assessment of consequential damages; and they indicate the grounds in general upon which, in such cases, interest should be awarded or withheld. And see M’Cormick v. Crall, 6 Watts, 207, 212. But the question of interest in case of suit brought upon a contract wherein the payment of interest is made the subject of express stipulation, and is thereby made part of the obligation, stands upon a different ground. In such a case it is made a matter of agreement between the parties. They are supposed to have considered all the circumstances bearing upon tire propriety of their stipulation, and this term of the contract is as binding as any other. The courts have no just right or authority to annul the agreement which the parties have, in contemplation of the circumstances in which they were dealing, seen fit to make. The distinction is clearly stated in the passages above cited from the opinion of the court in Redfield v. Iron Co., supra, and in U. S. v. Sanborn, supra. To this general
“In the computation of interest upon any bond, note, or other instrument or-agreement, interest shall not he compounded, nor shall interest thereon he construed to hear interest, unless an agreement to that effect is clearly expressed: in writing.” Gen. Laws 1868, pp. 62, 63.
And it was objected by the township that therefore interest could not be recovered upon the coupons; but it was held by the court that, in view of the then existing law, the agreement, when made, became a fixed stipulation, and part of the contract, and that the statute was. invalid in so far as it impaired the binding effect of the agreement-in respect of the interest, and directed judgment to be entered upon the basis of the law existing at the date of the issue of the bonds.
We therefore conclude that the court erred in respect of the rule which it applied, and that this being a suit upon a contract, the-validity of which was not questioned, and it not being claimed that the contract in any wise misrepresents the agreement of the parties, the court had no alternative but to give it effect according to its terms. The stipulation found at the end of the notes, that “land adversely owned, or in litigation, or in adverse possession, shall not
' “That a purchaser, in the undisturbed possession of the land, will not be relieved against the payment of the purchase money on the mere ground of defect of title, there being no fraud or misrepresentation, and that in such a case he must seek his remedy at law on the covenants in his deed.”
And this is the settled rule of law in Tennessee, the state where the land is, and whose laws control the conveyance of it; the rule in that state 'being that:
' “When the purchaser of land has taken a deed with covenants of general warranty, under which he has been let into possession, he cannot, in the absence of fraud, before eviction, on the ground merely of defect of title in the vendor, •claim in equity to have the contract .rescinded, or to resist the payment of, or have refunded, the.purchase money. He must in such case be left to his remedy at law on the covenants of warranty in his deed.” Barnett v. Clark, 5 Sneed, 435; Merriman v. Norman, 9 Heisk. 269; Cohen v. Woollard, 2 Tenn. Ch. 686; White v. Ewing, 37 U. S. App. 365, 368, 16 C. C. A. 296, and 69 Fed. 451.
Much less could he disavow his obligation if he knew at the time <o'f taking his deed of such adverse claim, and the deed was in fact made upon the understanding between the grantor and the grantee that the grantor was to buy in the outstanding claim or title, which, when acquired, would inure to the grantee under the covenants of his deed. From these considerations it follows that the decree of the circuit court must be reversed and the cause remanded, with directions to enter a decree for the amount of the balance found to be due upon the three notes, of $31,000, $41,000, and $41,000, respectively, with interest to be computed from the 8th day of November, 1889.