24 P.2d 471 | Cal. | 1933
On January 6, 1927, the respondents Kelly and wife agreed to sell to the appellant certain real property located in Watsonville, together with the improvements thereon for the sum of $24,000, payable $5,500 cash, $600 on April 6, 1927, and $600 every six months thereafter until the whole was paid, together with interest on deferred payments at the rate of six per cent per annum, interest payable quarterly. The written instrument evidencing the contract of the parties required appellant to provide fire insurance, and in the exact language thereof said she would "cause the improvements on said premises to be insured against loss by fire, in the sum of $4000.00, loss if any payable to the parties hereto as their interests may appear, and pay all premiums to become due on account of said insurance. In the event that said second party shall fail to effect said insurance as hereinabove provided, first [party] may purchase said insurance and charge the cost thereof to the said second party. The premiums on said *545 insurance to be added to the next installment of principal or interest to become due on account of this agreement, and be paid therewith." The appellant entered into possession of the premises under the agreement. On October 6, 1929, she made default in the payment of the installment of principal and interest due on that date amounting to $841.50. On December 6, 1929, a fire destroyed one of the buildings, which was insured for the sum of $2,000, the policy being made payable, in case of loss, to appellant and respondents and the Bank of Italy Savings and Trust Association, as their interests might appear. The banking concern had loaned some money on the property, the note therefor having been signed by both the Kelleys and Mrs. Smith.
In order to clarify the situation with respect to the proceeds of the policy, it is necessary to recite that appellant was leasing from respondents other and different property for hotel purposes, and according to the claim of respondents was in default in her payments of rental therefor. Regardless of the merits of that contention, which was not tried in either of the present cases, the respondents caused an attachment to be levied upon the interests of appellant in the proceeds of the policy amounting to the sum of $1300, that being the amount at which the loss by fire was adjusted.
During the latter part of January or the early portion of February the fire chief of Watsonville notified Mr. Kelly, one of the respondents, that the burned improvements constituted a fire hazard and that the building would have to be razed and the debris removed. Kelly replied that the matter should be referred to Mrs. Smith, as she was the owner of the property. Consequently on February 17, 1930, the fire chief sent a similar notice to her, inclosing a copy to Kelly. Thereafter in a conference between them, Mrs. Smith informed Kelly that a Mr. Whitsett had a man named Manning who would do the work for the lumber he could salvage. Mr. Whitsett had been representing Mrs. Smith as a real estate agent. Mr. Kelly instructed his representative, a Mr. Taylor, to contact Mr. Whitsett for the purpose of having the buildings razed by Mr. Manning. This was done and during the early part of March, 1930, the partially destroyed building was torn down and the debris removed. On February 16, 1930, Mrs. Smith being still in *546 default and having also failed to pay the installment of interest due on January 6, 1930, the respondent Kelly served a notice on her requiring her to fulfill all the covenants of the contract and to pay the delinquencies mentioned, together with certain unpaid taxes on or before April 16, 1930, or in the event of her failure so to do he would forthwith forfeit and cancel the contract and all her rights thereunder. Appellant made no payment and on April 18, 1930, respondents Kelly commenced the first action involved herein to quiet title to the property. The appellant Smith answered, denying that her claim was without right and alleging the contract and by way of cross-complaint she alleged that there had been a complete failure of consideration for three reasons, as follows: (1) The failure of respondents to either repair the building or credit her with the proceeds of the fire insurance; (2) the tearing down of the improvements without her consent and (3) the disposal of the materials realized from razing the buildings without her consent, and sought recovery of the sum of $12,500 which she said she had paid on account of the contract. The second action was commenced by Mrs. Smith, alleging that the buildings were torn down without her consent, and the rentals she had been receiving thereby caused to cease, and that the consideration for the contract had entirely failed, and praying for judgment in the sum of $12,011.85.
The actions were consolidated and judgment entered for plaintiffs in the quiet title action and against defendant upon her cross-complaint, and another judgment denying any recovery to the appellant, the plaintiff in the second cause of action. Two appeals are prosecuted from the judgments so entered.
In brief, the court found that appellant had made default in the payment of installments under the contract, and had thereby forfeited all right to the property and to the moneys theretofore paid on account of the contract, and, in substance, that the default had occurred October 6, 1929. Also it was found that respondents had not entered upon the property and razed the buildings without appellant's consent, but that the entry and work of destruction and removal of the debris was expressly consented to, authorized and directed by Mrs. Smith. It was further found that appellant had elected to and had affirmed the contract by *547 filing, on April 11, 1930, an action based on her ownership and possession of the real property (the subject of the contract) to recover from the respondents here and the city of Watsonville damages aggregating $30,250, for alleged trespass upon the property and the razing of the buildings, which said action, at the time of the trial herein involved, was still pending in so far as the respondents were concerned. There is also a finding that the destroyed buildings formed no material inducement to Mrs. Smith, for the execution of the agreement, but that said improvements were old and of no value whatsoever.
The appellant contends that she was not in default under the contract because strict compliance therewith had been waived by respondents by the acceptance previously of late payments, and that the notice to perform was not sufficient to require prompt payment by her, and that the partial destruction of the building, followed by its demolition, constituted a failure of consideration.
[1] The evidence does not disclose a waiver by the respondents of the terms of the contract. [2] But we cannot agree that the default which is found to have occurred on October 6, 1929, worked a forfeiture of her rights under the contract. The exact language of the agreement in this particular is as follows: "It is further understood and agreed that should the said second party fail to make any payment at the time and in the manner hereinbefore agreed, or fail to perform any covenant and condition on her part to be paid, kept and performed, then the said parties of the first part may terminate all the rights of second party under this agreement by notice personally served on the said second party, or mailed to her by registered mail addressed to her at Watsonville, California, and may re-enter upon said premises and remove all persons therefrom." Under this stipulation of the parties a notice of forfeiture was required which was not given until February 16, 1930, demanding performance on or before April 16, 1930. We entertain no doubt that the notice was sufficient to accomplish the desired purpose upon the expiration of the date specified. But it must also follow that there was no forfeiture or any attempted forfeiture prior to the expiration of the time designated. Hence, we are compelled to inquire into the effect of the fire upon the contract of the parties. We may ignore *548
the effect, if any, of the subsequent demolition of the buildings, because upon substantial testimony the court found that Mrs. Smith had consented thereto. We cannot, in like manner, accept the finding of the court that the buildings were old and of no value whatsoever and formed no material inducement to Mrs. Smith to enter into the contract. True, it is, according to the testimony, that the buildings were very old. Likewise, Mr. Kelly gave it as his opinion, while testifying, that the property was just as valuable, if not more so, with the buildings destroyed as with them standing. Yet the fact remains that Mrs. Smith had been receiving $100 a month rental therefrom and the insurance company adjusted the loss at $1300. It is obvious, therefore, that they were valuable as income producers and also had considerable intrinsic worth. [3] We are therefore faced with the question of whether under all the circumstances of the case the loss of the property by fire should fall upon the vendor so as to enable the vendee to rescind or at least to be entitled to a credit upon the payments due upon her contract. Had the legal title to the premises been conveyed to appellant at the time of the contract and respondents accepted back a mortgage or deed of trust for the balance of the purchase price there would be no question. It would readily be admitted that the loss should fall upon the holder of the legal title. Nor can it be gainsaid that the reservation of title in this particular case was designed to serve the same economic purpose as a mortgage or deed of trust. There is therefore strong reason, as was recently indicated in the case of Bank of Italy v. Bentley,
Next we refer to Conlin v. Osborn,
The case of Potts Drug Co. v. Benedict,
Higbie v. Shields,
In Wong Ah Sure v. Ty Fook,
In Kirtley v. Perham,
The observations just indulged bring us to a consideration of the case of Cooper v. Huntington,
We now come to the case which is most nearly in point, that ofLubarsky v. Chavis,
The discussion of the prior decisions should not be closed without a reference to Owen v. Pomona Land Water Co.,
There can be no doubt about the rule generally. In a note toSewell v. Underhill,
Judgments affirmed.
Seawell, J., Shenk, J., Curtis, J., Preston, J., Waste, C.J., and Spence, J., pro tem., concurred.