85 Vt. 167 | Vt. | 1911
On the first day of September, 1906, Henry A. McLean and Hattie T. McLean, the petitioners herein,, referred to in the contract mentioned hereafter as H. A. McLean. & Co., conveyed to the Windham Light and Lumber Company,, one of the defendants, hereinafter called the Windham Company,, certain real estate in Jamaica which included timber lands; and a saw mill. On the same day the Windham Company executed to the McLeans a mortgage of said premises to secure-the sum of $17,000, specified in four notes; one for $7,500, payable December 1, 1906; one for $3,200, payable March 1, 1907; one for $3,200, payable June 1, 1907; and one for $3,100 payable September 1, 1907. On the 26th day of March, 1907, the first note having been paid when due, and the second note being then past due and unpaid, the Windham Company sold to the Jamaica Lumber Company, the other defendant, hereinafter called the-Jamaica Company, the timber standing on certain of the incumbered lots and the logs and lumber in the mill yard; which sale-was evidenced by a deed of the standing timber and a written contract between the parties. The construction and effect of this contract are the principal matters in dispute.
The contract fixes the prices to be paid by the thousand feet, and provides that payment shall be made to H. A. McLean & Co., or their assigns of record, as the three unpaid notes of the Windham Company held by them become due, and proceeds as follows: “It being distinctly understood and agreed that, each and every note after being paid shall be marked as cancelled and immediately returned to” the Windham Company, and that “a partial release from the mortgage * *' securing, said notes shall, at the time of payments, be entered for record at the office of the town clerk.” It is provided further that upon the delivery of the contract and deed, the Jamaica Company-shall pay to the Windham Company the difference between the amount to be paid to H. A. McLean & Co. on the first note, and $4,000. The contract then provides for the selection of' surveyors, “who are to measure all the timber purchased from time to time as mutually agreed except the lumber sawed,” and to measure this lumber when loaded, and whose measurements are to be the basis of settlement. It is also provided that, the Windham Company shall pay to the Jamaica Company
The Jamaica Company did not terminate the contract as permitted by its terms, but continued the cutting and made all the payments except the last. There was in fact an insufficiency •of timber amounting, as found by the chancellor, in general terms, to several hundred dollars. The Jamaica Company did not become satisfied of this fact until sometime in August. The chancellor has found that it might have become satisfied of it within the time limited, in the exercise of due diligence, ■by going through the several lots and estimating the amounts.
Prior to August 31, Henry A. McLean had negotiations ’with Piper, attorney of the Windham Company, regarding a
When McLean and Piper returned to Jamaica on the. evening of the second, Piper told Hollenbeck, a partner in the-Jamaica Company, that its note was dated on Sunday, and that, it would be returned to the Company; and Hollenbeck saw McLean the same evening, and told him that they were going, short of lumber and did not want him to meddle with the property. Neither McLean nor Piper informed Hollenbeck of what, had taken place at Brattleboro that day. The chancellor has. found that some time previous to this, and pending the nego
On the tenth day of September, Hollenbeck and his solicitor, C. C. Fitts, met McLean and his. solicitor, E. B. Gibson, .and Fitts then told Gibson that the Jamaica Company was ready to pay the note, if the McLeans would assign to it the note and mortgage without recourse. McLean declined to ■assign, and commenced this foreclosure proceeding the same day, and obtained an injunction thereon against the Jamaica Company on the following day. On the 17th the Jamaica ■Company moved for a dissolution of the injunction, and also tiled a motion to be subrogated to the rights of the petitioners as against the Windham Company, and furnished a copy of this motion to the petitioners’ solicitors. On the same day the chancellor ordered a suspension of the injunction upon payment to the clerk of the amount claimed to be due. On the 18th the Jamaica Company paid to the clerk the amount due •on the mortgage with costs. The petitioners took this money •from the clerk on the 21st and went directly to the town clerk’s office and discharged the mortgage. On the 24th McLean met D’Arcy and A. P. Carpenter, an attorney of the Windham Company, at Greenfield, Mass., and paid the $2,000 remaining due on his purchase, and received newly prepared deeds of the property. The sum paid was deposited with Carpenter to protect McLean. The deeds were immediately forwarded to the town •clerk of Jamaica, and were received and filed for record in the afternoon of the 25th. The cross-bill of the Jamaica Company, in which the McLeans and the Windham Company are made •defendants, was served on Henry A. McLean in the evening •of the same day. This prayed for an order restraining the ■defendants therein from completing their trade and from changing in any way the record title of the mortgaged property, and for -a final decree reinstating the mortgage and subrogating the Jamaica Company to the rights of the McLeans under it.
The chancellor filed a decree sustaining the claims of the Jamaica Company, and appointed a special master to find the -difference between the amount paid by the Jamaica Company
It appears from the above statement that the relation between the Windham Company and the McLeans was that of mortgagor and mortgagee, and that the obligation secured was the payment of a certain indebtedness in installments; that the Jamaica Company bought of the mortgagor an interest in the incumbered property upon an undertaking to pay this indebtedness as it became due, with further provisions of obligation and limitation, — all evidenced by a writing to which the McLeans were not a party; and that Henry A. McLean, one of the mortgagees, subsequently bought the mortgagor’s equity in the property.
The Jamaica Company claims to be subrogated to all the rights which the orators obtained by their mortgage from the Windham Company. The orators claim all the rights of the Windham Company through Henry A. McLean’s purchase of that company’s equity. So the case turns upon a determination of the rights of the Windham Company under its contract with the Jamaica Company. The orators contend that the agreement of "the Jamaica Company, except for the right of recission, was an unconditional undertaking to pay the three remaining notes, and thus free the property of the Windham Company from incumbrance; and that in completing the payment after the failure to exercise its option it did no more than the contract required, and so is not entitled to subrogation. The Jamaica Company contends that the extent of its payment on the mortgage was to depend upon the amount of lumber ■obtained; that the provision limiting the time for taking advantage of an insufficiency of lumber is not of the essence of the agreement, and that its failure to give the stipulated notice -does not disentitle it to relief in equity; that the payment to the clerk of the amount of the last note was not a payment of the note otherwise than in support of its claim to subrogation and to procure a suspension of the injunction; and that Henry
It is clear that McLean took his deed with notice of the-claims of the Jamaica Company. It is also clear that the Jamaica, Company’s payment to the clerk was not a payment of the note-in acknowledgment of an unconditional obligation to pay it. But that Company, after becoming satisfied that there was an insufficiency of lumber, undertook to pay the last note on the day it became due, and was prevented from paying it solely by an accident. The orators argue that this was an interpretation of the contract by the Jamaica Company which the Court will follow in determining its rights.- But it is not every act of a party indicative of an understanding of the contract in accord with the claim of the other party that will be given this effect. One who goes beyond the requirement of his contract, in circumstances of doubt ought not from that fact alone to have his act given the effect of a concession. In this case, the Jamaica Company might reasonably consider, after its failure to terminate the contract within the time limited, that its safest course was to pay the amount of the remaining note at its maturity, and proceed with the cutting until the timber was exhausted; and having thus reimbursed itself as "far as possible, and demonstrated the fact and extent of the insufficiency, seek such remedy as the case might then afford.
The orators contend further that any construction of the contract which would give the Jamaica Company the right of subrogation is made impossible by the express provision that each note when paid shall be marked as cancelled and returned to the Windham Company, and that a corresponding partial-release of the mortgaged premises shall be filed for record at. the time of each payment. But we think this provision cannot be viewed apart from the other stipulations of the contract,, and be accepted as a conclusive expression of the intention of the parties. It is true that if the procedure agreed upon by the parties to the contract were carried out by the McLeans, each note would be cancelled on payment and a proportionate part of the security be discharged. But the contract which provides; for this final disposition of the notes ■ and security is equally explicit regarding further rights of the Jamaica Company
It is also claimed by the orators that the character of the payments made in taking up the notes is definitely determined by the further provision that upon the delivery of the contract the Jamaica Company shall pay to the Windham Company, in addition to such sums, the difference between the amount of the first note and four thousand dollars. The reasoning seems to be that the payment of this difference is an unconditional payment of a fixed amount; that the sums to which this is an? “addition” must have been considered to be of the same character; and that this is inconsistent with the theory of payments depending finally upon the sufficiency of the lumber. But the Jamaica Company contends that this payment is not a; payment in addition to the total as determined by the thousand feet, but an advance payment thereon, to be credited to the Jamaica Company in the final settlement. This view is favored by the fact that the payments to be made on the notes are spoken of as “advances.” Whatever weight the orators’ argument on this point may be entitled to when considered in connection with the entire contract, it is clear that the provision cannot be relied upon as of controlling effect.
But the orators contend that the mere fact that the contract contains a provision permitting the Jamaica Company to terminate it at a certain time, if then satisfied that there was
The orators insist, moreover, that no effect is given to this provision unless the contract is construed as they claim; but we think this is a mistaken view. The contract, except for the right to terminate, requires the Jamaica Company to advance considerable sums at intervals of three months and before receiving corresponding returns from the lumber, with its right to receive interest on these sums limited to a brief period; leaves it subject to a foreclosure of its interest on a failure to meet any payment when due, and liable to an injunction of its cutting at any time as an impairment of the security; and subjects it to the possibility of a payment in excess of the amount due on its purchase, which, on its construction of the contract, is to be recovered of the Windham Company after final settlement by such remedy as may then be available. Looking to these considerations alone, circumstances are conceivable in which the privilege of withdrawing from the contract before making the second payment, on its own judgment as to the probable result of the cutting, might be a substantial advantage to the Jamaica Company. So the construction contended for by that Company is not at variance with the rule which requires that a contract be so construed, if possible, as to give some ■effect to every part.
In looking at the contract as a whole we find a noticeable absence of clauses which might naturally have been inserted, some of which would have pointed directly to one conclusion
The Jamaica Company contends that the provision for terminating the contract is simply a privilege given it in consideration of the agreements on its part. The argument of- the orators would make the provision an element of the consideration for which the Windham Company conveyed the property. The fact that the provision for a withdrawal on notice is in the contract shows plainly enough that the sufficiency of the timber to satisfy the mortgage had been a matter of discussion between the parties. If the negotiations resulted in such an understanding as is claimed by the orators, it is evident that the Jamaica Company might desire a better opportunity to judge of the amount of the timber before becoming holden irrevocably for the full payment of the mortgage. It is equally evident that if a privilege of this nature were to be granted, the Windham Company might desire to have a time limit placed upon the privilege, the passing of which without action would determine that the property was finally disposed of and its mortgage provided for. But if the understanding reached was that claimed by the Jamaica Company, we have seen that there were then substantial grounds on which that Company might desire the privilege of terminating the contract. Whichever view may be taken, it is clear that the provision in question is not an undertaking
If we look solely to this particular clause, and determine the scope of the provision by its letter, the course of the argument is plain. • The language of the provision covers only the right to terminate the contract, and the failure to terminate the contract could add nothing to the obligations imposed by it. It would follow from this that if the Jamaica Company is now liable for the full payment of the mortgage it is because the other provisions of the contract made it so, and not because this provision introduced any new obligation, nor because the failure to act under it wrought any change in the contract as framed. Then, if the general provisions of the contract were held not to extend the ultimate liability of the Jamaica Company beyond the value of the lumber obtained, the case would be disposed of without reaching the question presented by the Jamaica Company concerning time as the essence of the contract.
But the matter cannot be thus disposed of without further consideration. Ordinarily the language of a particular provision is to be construed in the light of its purpose, and the purpose is to be gathered from a consideration of the contract as a whole. The general provisions of this contract were framed upon the supposition that there was lumber enough to provide for the mortgage, and evidently contemplate a full payment of the mortgage by the Jamaica Company and a reimbursement of the Company from the lumber when cut and measured. A question having arisen as to the possibility of an insufficiency of lumber, a further provision was inserted for the relief of the Jamaica Company in that event. This provision did not take the form of a contingent modification of the terms already agreed upon, but gave the purchasing Company the right to terminate the contract on its later judgment regarding the quantity of lumber. The nature of the risk arising under the contract which the parties had in mind in making this provision was not expressed in words; so the clause affords no certain guide to the meaning which the parties attached to other parts of the contract.
As security holders, the orators are entitled only to payment of the mortgage indebtedness. If they are entitled to anything more, it must be by virtue of Henry A. "McLean’s purchase of the Windham Company’s equity. But this purchase having-been made with knowledge of the Jamaica Company’s contract and claim, the orators can stand in no better position than the Windham Company did. So the orators’ rights are to be measured by the obligations of the Jamaica Company to the Windham Company as evidenced by this contract; and the situation in which the Jamaica Company was left by its failure to give the
The Jamaica Company treats the case as presenting the ordinary question whether time is of the essence of the contract, and refers us to the rule as given by Pomeroy, which reads as-follows: “In all ordinary cases of contract for the sale of land, if there is nothing special in its objects, subject-matter, or terms, although a certain period of time is stipulated for its completion, or for the execution of any of its terms, equity treats the provision as formal rather than essential; and permits a party, who has suffered the period to elapse, to perform such acts after the prescribed date, and to compel a performance by the other party notwithstanding his own delay.” 3 Eq. Jur. §1408. It is well settled, however, that the rule will not be applied when the contract plainly discloses an intention to make exact performance as regards time an essential element of the contract; nor when the failure to perform according to the requirement was wilful and intentional, or the delay unreasonably prolonged; nor when the party entitled to performance has been so injured that complete reparation is impossible.
It may be helpful to state more fully the principal rules by which courts are governed in applying this doctrine. The general rule in equity is that time is not of the essence of the contract, and equity will not treat it as of the essence of the contract unless it affirmatively and clearly appears that the parties so regarded it. 1 Sug. Vend. 8 Am. Ed. 410; Secomb v. Steele, 20 How. 94, 15 L. ed. 833. It may be made essential by an express stipulation of the parties; oran intention to make it so may be implied from the nature of the property or the avowed object of the seller or purchaser. Ahl v. Johnson, 20 How. 511, 15 L. ed. 1005. It is not enough that a specific time be-named in the contract; the court is to look at the whole scope-of the transaction to see whether the parties really meant the-time named to be of the essence of the contract. Wald’s Pollock on Con., Williston’s Ed. 627. It may be made such by a dear-manifestation of the intent of the parties in the contract itself, or by a change in the value of the land or other circumstances; which would make a decree for a specific performance inequitable. Barnard v. Lee, 97 Mass. 94.
The real question is, what is the performance which the contract requires? The thing required is the payment of the mortgage as the notes become due. But what is the nature of the payment? Is it a payment on account, for which the Jamaica Company is entitled to credit in the final settlement?' Or is it a payment required of the Jamaica Company without reference to the amount of the lumber? Is the obligation of the Jamaica Company after the failure to exercise its option the same as before? The performance previous to the day fixed is upon the assumption that there will be lumber enough to reimburse the Company, and the Company is to continue cutting until reimbursed. But if the lumber had then proved insufficient, would the Windham Company have been chargeable with the deficiency? At the time fixed, the Jamaica Company could terminate the contract on the ground of an insufficiency
In seeking the intention of the parties regard must be had to the subject-matter of the contract as well as its language. The principal subject-matter of this contract was a sale of the timber ■standing on certain lots. There was no undertaking on the part of the purchaser to pay a certain amount for the timber as it stood. The agreement, unless impliedly modified by the provision regarding the mortgage, is to pay for all the lumber by the thousand feet at prices specified. The measurements of ■chosen surveyors are to be the basis of settlement. The mortgage covering the property is to be paid by the purchaser as the installments become due without regard to the amount then cut and measured. It would not be known with certainty whether there was lumber enough to cover the payments made on account of the mortgage until the final settlement. The Jamaica Company bought nothing but the standing timber. Its entire interest in the contract was in the gains to be acquired by the cutting, sawing and marketing. When the timber was removed the entire realty belonged to the Windham Company. If the Jamaica Company paid the mortgage, and the amount was more than the value of the lumber, it freed the property of the Wind-ham Company from incumbrance, but acquired nothing for ■itself. If the provision for terminating the contract is given the effect claimed by the orators, the transaction will lose its distinctive character as a sale for a consideration depending upon the amount of the property; the agreement to pay so much per thousand feet must yield to the agreement to pay the mortgage; and the Jamaica Company will then pay for the standing timber at rates about twenty per cent in advance of the scale of prices .agreed upon.
On the other hand, if the contract is construed as claimed hy the Jamaica Company the result to the Windham Company is not inequitable. There is no claim that the Windham Company lost, an opportunity for a better sale through the omission to give notice, or was unfavorably affected by changes in the situation. If it has lost anything, it is in the failure to have over two thousand dollars of its mortgage paid on account of property which did not exist.
It is clear that the clause specially under consideration gives the Jamaica Company the right to terminate the contract by notice at a certain time. If this provision were to be viewed simply as an option, independent of its place in a contract in process of execution between parties sustaining the relation of vendor and purchaser, it would seem that the lapse of the time without giving the notice would determine the privilege, and that a notice subsequently given would be of no avail. See Waterman v. Banks, 144 U. S. 394, 36 L. ed. 479. But this question does not arise, for the Jamaica Company has not undertaken to terminate the contract by giving the notice. If the contract plainly discloses an intention of the parties that the failure to terminate it for an insufficiency of lumber on the very day named should make the Jamaica Company chargeable with the removal of the incumbrance whatever the deficiency of lumber, then the time fixed is necessarily of the essence of the contract. But this is merely one of two opposite conclusions that may be arrived at from a consideration of the contract as a whole. The Jamaica Company stands upon the claim that by a fair construction of the contract the parties to it never contemplated that the purchaser should be or become absolutely
The original conception of the parties, as evidenced by the contract, was a sale of standing timber, to be paid for by the thousand feet when cut and measured; with an undertaking on the part of the purchaser to pay the mortgage covering the property in advance of the cutting, on account of the moneys-coming due to the seller. The payments on the mortgage are called “advances,” and are to draw interest until they are equalled by the value of the lumber measured. Thé parties were evidently dealing upon a supposition'that there would be at least lumber enough to make good the payments on the mortgage. But provision was made for the Jamaica Company’s withdrawal from the undertaking before making the second payment, if it became satisfied that there was an insufficiency of lumber. Various reasons for desiring this privilege, other than an understanding that the contract made it unconditionally liable, have already been suggested. The provision being in terms a privilege, the failure to act under it should not be held to charge the Jamaica Company with an increased liability without the support of some expression fairly indicative of such an intention. If we look upon the contract as entirely ambiguous the result will be the same. When the terms of a contract leave its meaning in doubt, the Court will ascribe to the parties an intention to enter into a fair agreement, and will adopt the construction which makes the contract equitable. Royalton v. Royalton etc. Co., 14 Vt. 311; Bell v. Bruce, 1 How. 169, 11 L. ed. 89. We think the failure of the Jamaica Company to become satisfied of the insufficiency of lumber within the time limited, and its consequent failure to give the notice, did not subject it to a liability inconsistent with the general theory of the contract.
It is said there is nothing to show that Mrs. McLean ever heard of this contract, or of any claim of subrogation by the Jamaica Company; and that she is entitled to hold her half of the money paid on the mortgage unaffected by subrogation. It is apparent from the manner in which the facts are presented that no question was made before the chancellor as to McLean’s authority to act for his wife. The fact is found that a part of the consideration of the purchase of the Windham Company’s equity was paid by a check of H. A. McLean & Co., and there is no suggestion in Mrs. McLean’s behalf that this was unauthorized. No distinction is made between the two in the findings bearing upon the matter of notice. The case states that the orators’ solicitors had notice of the Jamaica Company’s motion for subrogation, and that the orators afterwards took the money paid to the clerk and discharged the mortgage on the record. Enough appears to subject Mrs. McLean to the decree.
Decree affirmed and cause remanded_