Maginnis v. Knickerbocker Ice Co., 88 N.W. 300

Marshall, J.

The statement of facts shows that, though there was no controversy but 'that Uhen conveyed the land to Boyle upon conditions subsequent which were breached, and reclaimed the property by a distinct assertion of his rights — so far as a reclaimer thereof was possible under the circumstances — before the conveyance to appellant, it was held that his first grantee was the owner of the property and entitled to recover costs of the appellant. That conclusion vtas reached upon several grounds which we will consider.

The principal reason suggested, why it was supposed appellant was not entitled to recover, is that a court of equity will not exercise its jurisdiction to declare or aid a forfeiture, but leave the parties to their remedy at law. We are unable to perceive how that principle applies to this case. Appellant did not seek by her suit to reclaim the property in controversy. Her complaint and the evidence in support of it, at every point, repel any such idea. The pleading distinctly declared that plaintiff was the absolute owner of the property in dispute and in possession thereof. To establish the truth thereof, proof was made that her grantor, under whom all parties to the suit claimed title, sold the.property upon conditions subsequent to the grantor of the ice company; that such conditions were breached; and that such grantor made re-entry for the purpose of enforcing a forfeiture of the property to him, and then made a conveyance thereof to appellant. There can be no question but that such circumstances caused the title conveyed to Boyle to revert to Uhen if his entry was rightful. Gilchrist v. Foxen, 95 Wis. 428. The learned circuit judge seems to have supposed, and' counsel for respondents now maintain, that the evi-dentiary facts showing title in appellant, notwithstanding the paper title in the ice company, should have been pleaded. Manifestly, that is a mistake. If one sells and conveys real estate upon condition subsequent, and the title thereto thereafter reverts to him, he may then invoke judicial remedies in respect thereto, pleading his title in general terms the same as if that title were dependent upon any other circumstances. It follows that the judgment appealed from cannot be sustained upon the theory that the action was brought for the purpose of forfeiting the title to the property for nonperformance of the conditions subsequent. It was instituted upon the theory that the title had been already reclaimed and was vested in appellant, and the respondents must stand or fall on the facts in that regard. The court further grounded the judgment on the doctrine that equity will, in some cases, intervene where there has been a failure to perform a condition subsequent, and prevent a forfeiture. Here there was failure again to perceive, as it seems, that the rule mentioned is one invoked to prevent, not to defeat a forfeiture after it has occured. Unless one keeps in mind the peculiar doctrine of equity in respect to this matter he may be misled by the expressions of courts and text-writers as well. In Donnelly v. Eastes, 94 Wis. 390, 396 this language was used:

“ If there were a rightful entry for condition broken, so that the estate revested under the terms of the deed, or even if the title revested under the terms of the deed without a re-entry, the court is yet not powerless to relieve the defendant from the consequences thereof.”

That was said having in mind that, regardless of the express intent of the parties, or the intention inferable from the language used by them, applying strict legal principles thereto, which would effect a reversion of the title, a court of equity may, in some circumstances, bold the real contractual intent not to be according to the literal meaning of such language or within the reasonable scope thereof according to the ordinary rules for the construction of contracts, but that the .condition was created as a mere security for the performance of an obligation resting upon the grantee, and give effect. thereto in opposition to the expressed intent of the parties. By such arbitrary rule of construction the title which would be in the grantor at law is held to be still in the conditional grantee, and so subject to control in equity that the conditional grantor may be compelled to accept compensation in money for the damages suffered by nonperformance of the condition in lieu of an enforcement of his legal rights, the theory being all the way through that there has been no real violation of the contractual intent of the parties. The rule followed in such a case is the one which is supposed to justify courts in saying that parties, in stipulating for the payment of a specific sum as damages for breach of a contract, did not mean what they said, but intended the sum named to stand as security against loss from such breach, and the recoverable damages therefor to be. limited to enough to adequately measure such loss. 2 Story, Eq. Jur. (13th ed.), §§ 1314, 1315. The process by which courts thus turn a contract which parties say they made into what the law says on the subject was treated at considerable length in Seeman v. Biemann, 108 Wis. 365. An eminent text-writer is there quoted, in effect, thus: c Parties may contract for stipulated damages at their pleasure, but such damages only as the law says are liquidated, according to the artificial rules which have been adopted to justify courts in saying what parties intended, are in fact to be regarded as such damages.’ So, as regards a condition subsequent in a deed, regardless of the intention of the parties as indicated by the fair meaning of their language, in certain cases, to prevent the great hardship which would flow from giving effect to the strict legal contractual intent, the court will, by construction dependent upon no reason which can be easily assigned, other than a long line of precedents grounded wholly upon the arbitrary power of the court, say that they intended something else, and by that means, in theory, not take title from the grantor upon condition after it has reverted to him by breach of condition and assertion of his right, but hold' that the title still remains in the conditional grantee in harmony with the judicial intention, we may call it, and in that way save his adversary from the consequences of his fault, preserving the title to the property in him notwithstanding such fault, giving the grantor a money consideration for his damages. While, viewing the situation from the legal rights of the parties, relief is granted after forfeiture if at all, as said in Donnelly v. Eastes, 94 Wis. 390, the absurdity is avoided by the arbitrary holding that no such forfeiture has Occurred because the parties intended otherwise, regardless of what they said on the subject. The origin of such arbitrary dealing with contracts in violation of the general rule that courts cannot make contracts for parties — can only interpret them so far as to determine what the parties intended, and enforce such intent, not going for their purpose outside the reasonable scope of the language they saw fit to use to express it — is involved in much obscurity, but it is one of the oldest doctrines of equity jurisprudence, and, although the reason for it is difficult to discover in the light of what judicial remedies are ordinarily supposed to stand for, it has many vigorous defenders. Judge Story, in his work on Equity Jurisprudence (vol. 2, § 1316), says:

“ Law, as a science, would be unworthy of the name if it did not, to some extent, provide the means of preventing the mischiefs of improvidence, rashness, and blind confidence and credulity on the one side, and of skill, avarice, cunning, and a gross violation of the principles of morals and conscience on the other. There are many cases in which courts of equity interfere upon mixed grounds of this sort. There is no more intrinsic sanctity in stipulations by contract than in any other solemn acts of parties which are constantly interfered with by courts of equity upon the broad ground of public policy or the pure principles of natural justice.”

That was said by the learned author with reference to situations not involving any fraud, either in fact or in law.

The rule of equity discussed is not one of universal application. It does not extend beyond situations where there is some room for saying the conditions were inserted to stand as security, either for the payment of money or the performance of some promise, damages for a breach of which are susceptible of ascertainment by some definite rule, and the doing of the particular thing, or the doing thereof at a particular time, was not the principal object secured by the condition. 2 Story, Eq. Jur. (13th ed.), § 1321; 2 Washb. Real Prop. (5th ed.), 24; Gates v. Parmly, 93 Wis. 294; Nelson v. Stephens, 107 Wis. 136; Donnelly v. Eastes, 94 Wis. 390. Courts and text-writers acknowledge the limitation mentioned to be distinctly marked. This language is used in 2 Story, Eq. Jur. (13th ed.), § 1321:

“ It is admitted, indeed, that where the condition or forfeiture is merely a security for the nonpayment of money, there it is to be treated as a mere security and in the nature of a penalty, and is accordingly relievable. But if the forfeiture arises from the breach of any other covenants of a collateral nature, as for example of a covenant to repair, there, although compensation might be ascertained, . . . yet it has been held that courts of equity ought not to relieve, but should leave the parties to their remedy at law.”

The subject was discussed at some length in Klein v. Insurance Co. 104 U. S. 88, where it was held that the doctrine, that the consequences of nonperformance of a condition precedent are relievable in equity upon the basis of a money compensation for damages suffered, has no application to a case where the condition was inserted in the contract to secure sometbing other than the payment of money or something having a distinct money value, which was made a principal and essential thing. The case before the court involved the question of whether equity can relieve from the consequences of failure to make payment of a renewal premium upon an insurance policy, the contract stipulating the effect thereof to be to render the policy void. It was contended on the one side that the damage to the company by reason of being out of the money a short time was easily ascertainable, and that, as compensation could be made therefor, equity had jurisdiction to say that the insurance company should take that compensation instead of what was its right under the terms of the insurance contract. The decision was adverse thereto, because the condition was not inserted merely to secure payment of money, but to secure prompt payment in accordance with a general policy of the company, and because the injurious consequences of a violation thereof could not be measured by any definite rule.

It is not strictly accurate to say, expressly or by inference, that relief from a breach of condition subsequent can be granted merely because a stipulation for a forfeiture was inserted in the contract as a security. Nelson v. Stephens, 107 Wis. 145. It must stand as security for the payment of money or for the performance of something the breach of which can be definitely measured in money, the doing of the particular thing, or the doing of it at a particular time, not being by the contract expressly made material, or, in other words, of the essence thereof. There is no better illustration of this than the ordinary agreement to pay a certain sum of money at a particular time upon a land contract, coupled with a condition of forfeiture in case of the nonpayment according to the agreement. Ordinarily it is held that the payment of the money is the principal thing. Therefore, equity will give compensation for the breach as to time by the usual rules for measuring loss caused by a breach of an agreement as to time in the payment of money. But if the contract expressly and unequivocally makes time of payment the principal thing the condition was inserted to secure; equity will not relieve from a breach thereof though no real pecuniary loss be suffered thereby by the person entitled to the benefit of the condition. In Gates v. Parmly, 93 Wis. 294, this language was used: “It would seem that where the condition is security for the payment of money or the performance of any particular act, relief may be granted.” The broad statement was unnecessary to the decision of the case in which it was used and may be misleading. Manifestly, courts have not yet gone so far as to hold that equity can relieve from the consequences of the breach of a condition wherever it stands as security for the performance of some act. It cannot if the act itself is of the essence of the contract, the principal thing; and it cannot if the damages caused by the breach are not susceptible of accurate determination by calculation, substantially the same as if the act were the mere payment of money.

It is said by Judge Story that the English courts hold that in all cases of forfeiture for the breach of any covenant other than the covenant to pay rent, no relief ought to be granted in equity unless upon the ground of accident, mistake, fraud, or surprise, although the breach is capable of a just compensation. 2 Story, Eq. Jur. (13th ed.), § 1323. A somewhat broader doctrine than that has prevailed in the courts of this country, care being exercised, as indicated in Klein v. Insurance Co. 104 U. S. 88, not to substitute a contract of their own for the one the parties made so as to prevent them from having the thing made by them the very essence of their agreement. Probably as valuable a discussion of the scope of the rule, as recognized generally in this country, as can be found, is in the opinion of Redfield, C. J., in Henry v. Tupper, 29 Vt. 358. In Grigg v. Landis, 21 N. J. Eq. 494, it was held that a court cannot relieve from the consequences of the breach of a condition subsequent that certain improvements shall be put upon granted, premises within a specified time, it appearing that time was made by the contract a principal thing; that the condition of forfeiture in such a case is not made merely to secure the making of the improvements, but the making of them within a particular time agreed upon. In discussing the subject the court said:

‘ It not to be supposed that a court of equity will lightly dispense with contracts made between competent parties, and substitute other agreements more in accordance with variable rules of right and conscience. Such contracts will be enforced according to the intention of the parties expressed and implied, unless it can be shown that thereby some hardship or wrong, not within the presumed contemplation of the parties at the time, will result from such enforcement.’

From what has been said it seems clear that the doctrine, that a court of equity may relieve a party from the consequences to him of his breach of a condition subsequent, does not apply to the facts of this case. The condition was not inserted in the deed to secure the payment of money, nor the performance of any act that could be substantially performed by the payment of money damages. The condition was not only to inclose the granted premises by a good and sufficient legal fence, but it was to maintain the same forever. The grantee agreed to put in culverts where the cross drainage ditches were intercepted by the railway roadbed, and put in a suitable crossing where • desired by the grantor, with substantial gates in the side fences, and, by inference, to maintain such connecting culverts, crossing, and gates perpetually. There is no rule by which damages for failure to do those things can be accurately measured in money. Moreover, it is manifest that the performance of the acts mentioned was made a principal thing, a matter of the very essence of the contract. The learned court said that no pecuniary loss 'accrued to the grantor by reason of the default of the grantee, and therefore he would hold that equity would shield the respondents from the effects of the default. The fact that no damages accrued to Uhen, which the court could recognize and measure in money, notwithstanding evidence showing a clear breach of the conditions of the deed, should have prevented, rather than called for, an application of the rule mentioned. In Wafer v. Mocato, 9 Mod. 112, it was said:

‘If a man makes a lease for life upon condition that the lease shall be forfeited if the lessee assigns or aliens it without license, and afterwards the lessee doth assign it without license, that is a forfeiture; and such a forfeiture against which the court cannot relieve, because it is not known what shall be the measure of damages; for the court never relieves but in cases where it can give some compensation in damages, and where there is some rule to be the measure of such damages, to avoid being arbitrary.’

That was quoted with approval in Sanders v. Pope, 12 Ves. 281, and is found often referred to in American decisions. The idea running through all the authorities is that one of the essentials to the application of the doctrine, that a court of equity may relieve from the consequences of a breach of a condition subsequent, is that the damages flowing from the breach must be such that the court can measure the same in money by some established rule.

If the breach of such a condition as those involved in this case could be under some circumstances dealt with by a court of equity, so as to save the wrongdoer from the legal consequences thereof, respondents would still have difficulty, for equity does not use its jurisdiction to save a party in such a case, if his default was wilful or inexcusable. 1 Jones, Real Prop. § 732. The doctrine applies that he who seeks equity must apply with clean hands.' There must be grounds for equitable relief falling within the scope of the jurisdiction of the court, and the circumstances of the particular situation must be such as to excite a court of conscience to activity. ITow does this case stand tested by that rule? Neither Boyle nor his grantee, the Knickerbocker Ice Company, constructed or attempted, to construct the connecting culverts to preserve the usefulness of the cross drainage ditches. The failure was not caused by any mistake, nor was it the result of mere negligence. The obligation of the deed was intentionally disregarded. Uhen called Boyle’s attention to such obligation at tbe time be was preparing the granted premises for the railroad track. ITe was informed, in effect, that the culverts would not be put in because the purpose thereof could be served in another way. It is no answer to the neglect to construct culverts to say that the ditches made on either side of the granted premises, and the connection thereof with the cross drainage ditches, served the purpose of the culverts. The grantor was entitled to have just what he bargained for. The agreement to inclose the granted premises was not performed, though Boyle and his grantee, the ice company, were requested -time and again to do so, attention being called at one time to the fact that the granted premises could be reclaimed for the default in that regard. Though in June, 1899, Uhen consented to a delay in the construction of the fence till after harvest time, upon condition of its being then constructed, no attempt was made to fulfil that condition. In November, 1899, the railroad company inclosed the center seventeen feet of the premises, being that portion theretofore leased to it by the ice company. That was not a substantial compliance with the conditions of the deed. On the contrary, it was a wilful disregard thereof. It was a distinct declaration to Uhen that the defendants proposed to build the fence in such manner as they saw fit, instead of to inclose the thirty-three-foot strip of land according to the terms of the deed. Such a disregard of the rights of Uhen, in, the absence of proof of a waiver thereof on his. part, leaves respondents in no situation to be recognized in a court of equity.

It is suggested that Uhen waived performance of tbe conditions of tbe agreement, and that his re-entry was not rightful on that account. It is elementary that a person circumstanced as he was may lose the benefit of the condition of his grant by an express or implied waiver thereof. Andrews v. Senter, 32 Me. 394; Ludlow v. N. Y. & H. R. Co. 12 Barb. 440; Guild v. Richards, 16 Gray, 309; Hubbard v. Hubbard, 97 Mass. 188; Sharon I. Co. v. Erie, 41 Pa. St. 341; Grigg v. Landis, 21 N. J. Eq. 494; Bonniwell v. Madison, 107 Iowa, 85; 1 Jones, Real Prop. § 699. However, the record before us does not disclose evidence to establish a waiver. Mere silence or delay is not sufficient for that purpose any more than to create an estoppel which will prevent the assertion of a right. That was all there was in this'case. Where the benefit of a condition subsequent has been adjudged lost by silence or delay, the person failing to perform .relied upon the attitude of his obligee as evincing consent, and incurred expense or placed himself in such a situation by reason thereof that a change of the apparent position of such obligee, -if given effect, would seriously prejudice-the obligor. Ludlow v. N. Y. & H. R. Co., supra, is a good illustration. The plaintiff conveyed land for right of way, to a railway company, upon condition of its road being completed over the premises on or before a particular day named in the conveyance. The condition was not satisfied. The grantor failed to claim the benefit of the condition for two years after the breach. He kept silent during that time as to any intention to claim a forfeiture, and in the meantime, to his knowledge, the grantee actually constructed the road as provided in the grant. The court held that the condition of the grant was waived by the conduct of the grantor, not because bf mere delay or silence, but because such conduct induced the grantee to expend money which would be lost if he were allowed to reclaim the property. In Hubbard v. Hubbard, 97 Mass. 188, the conditional grantor received benefits from the grant after the breach, keeping silent as to any purpose to insist upon a forfeiture. In Gray v. Blanchard, 8 Pick. 284, 292, it was said that mere indulgence alone is never construed into a waiver of a breach of condition. In Grigg v. Landis, 21 N. J. Eq. 494, a breach of a condition as to making improvements upon the granted premises was held waived because the grantee, relying upon indulgence in that there was delay in claiming a forfeiture, and silence as to any intention in that regard, conveyed the property to another, who in good faith made the improvements agreed upon and made payments of the p'urchase money to the grantor, who received- the same, but without knowledge of the breach of the condition.

Further discussion of this branch of the case, or citation of authority, seems unnecessary. There is some ground for saying that the demand for the construction of the fence, long after the breach in respect to the culverts, indicated a purpose to submit permanently to the method adopted by the grantee for conducting water from the cross drainage ditches off from the grantor’s land, so that, if such demand had been complied with, all the conditions of the deed would be deemed waived. Put the fence was not constructed. The act of building a fence inclosing the center seventeen feet of the premises was such a manifestly intentional disregard of the obligations contained in the deed, that the grantor lost no rights merely by not objecting thereto. It has never been held that an open, intentional violation of the obligations of a grant is sufficient in equity, coupled with mere silence on the part of the obligee, to constitute a waiver of strict performance.

The only other ground upon which judgment was awarded to respondents is that the premises in controversy were entered upon by consent of the ice company and the railway track laid down and devoted to public purposes, and that the only remedy of appellant, if she possesses any, is under the statute in respect to the enforcement of the rights of a landowner in case of the occupancy thereof by his consent,, express or implied, by a railway company, without its having compensated him therefor. Manifestly, that does not apply to the facts of this case, for two reasons: first, the track in question was laid down and operated for purely private purposes; second, the entry for that purpose is referable to an express contract. There was no intention, at the time of constructing the road, or thereafter, to devote-it to any purpose other than the private use of the ice company. The evidence is all one way on that subject. It is absolutely essential to the right to exercise the power of' eminent domain that there be a tona fide intention to devote the property, when acquired, to public use. Chicago & N. W. R. Co. v. Morehouse, ante, p. 1. The learned circuit court, in an opinion filed, seems to have had that in mind, and comprehended that the spur track in question was a purely private affair, and that, without a change in the attitude of the railway company in respect thereto, it could not, by adversary proceedings, acquire the right to continue the track if the title to the right of way were found to be in appellant; but the undisputed evidence as to the character-of the way was lost sight of in making up the findings. In the opinion it is said, in effect: True, there can be no right of way secured by condemnation in the existing circumstances, but, though the track is now but a private way, it is. competent for the railway company to make it a public way and to invoke the power of eminent domain to.acquire a property right in the premises for that purpose, and that is-sufficient to warrant a court of equity in refusing to aid appellant to secure the undisputed enjoyment of-her property. That is the idea we gather from the opinion. The mere-statement of the proposition is sufficient to condemn it. It. has often, been held that if the owner of real estate permits a railway company to occupy the same with a public railway track, he will be deemed to have consented to take, as compensation for the permanent use thereof, what he can obtain by the procedure laid down by the statutes for the protection of his constitutional rights. But it has never been held, and it would be manifestly absurd to hold, that consent can be obtained, expressly or by implication, for the occupancy of laud by a railway company for a private purpose, and the possession thus obtained be referred to as evidence of consent to the occupancy of the property for public purposes, so as to render the doctrine mentioned applicable.

It follows from what has been said that at the time of the commencement of this action appellant was the owner in fee simple and in possession of the premises described in the complaint, and that, under existing circumstances, she was entitled to invoke the jurisdiction of equity to quiet her title thereto against the defendants and to enjoin them from interfering with her possession thereof. The case seems clear upon all the points involved.

By the Court.— The judgment of the circuit court is reversed, and the cause remanded with directions to render judgment in favor of the plaintiff according to the prayer of the complaint.

Cassoday, C. J.

I do not understand this to be a bill in equity brought by the defendants, or either of them, to relieve themselves from a forfeiture. On the contrary, I understand it is a bill in equity filed by the plaintiff to have a forfeiture adjudged in her favor, and to enforce the same. The complaint alleges that at the times mentioned the plaintiff was the owner in fee simple and in the possession of the premises described. Each of the answers denies such allegations, and alleges that at all such times the defendant ice company was the owner in fee simple and in the exclusive possession of such premises. Such was the controversy between the parties. At the close of the testimony the plaintiff requested the court to find that January 4, 1900, Boyle’s grantor made re-entry in person upon the land in question, and declared the title thereto forfeited for noncompliance with the condition subsequent in the deed, and took possession of the same, and thereupon conveyed the 'same to the plaintiff. The trial court refused to so find, presumably upon the ground that this court had repeatedly held that “courts of equity will not take jurisdiction of a case for the purpose of aiding or enforcing a forfeiture, but will leave the complainant to his remedy at law.” Clark v. Drake, 3 Pin. 228; Lawe v. Hyde, 39 Wis. 345; Mills v. Evansville Seminary, 47 Wis. 354; S. C. 52 Wis. 669; S. C. 58 Wis. 135; Hagerty v. White, 69 Wis. 317, 326. In my judgment it is not the case of a party in the exclusive possession of land after the breach of condition subsequent, and then filing a bill in equity to quiet the title and protect such possession. To my mind the trial court properly relegated the plaintiff to her remedy at law.

Case Details

Case Name: Maginnis v. Knickerbocker Ice Co.

Court Name: Wisconsin Supreme Court

Date Published: Dec 17, 1901

Citations: 88 N.W. 300; 112 Wis. 385; 1901 Wisc. LEXIS 133; 69 L.R.A. 833

Court Abbreviation: Wis.