77 Wash. 325 | Wash. | 1914
In July, 1910, J. H. Miller and Noyes Moulton, with their respective wives, entered into a contract for the sale and purchase of eighty acres of land, in Chelan county, for $10,000, one dollar of which was paid on the day the contract bears date, and the balance was payable on or before three years, with semiannual interest on deferred payments at eight per cent. Time was made of the essence of the contract. It was provided that, in case of the vendee’s default, they should forfeit all payments made under the contract. The Moultons were, on this date, the holders of a contract for the purchase of 160 acres of land in Douglas county, known in the record as the Underwood contract, and the contract for the Chelan county lands provided that the Moultons “as part of the consideration of this contract and as security for the performance of the same, hereby assign, sell and set over to said parties of the first part [appellants] that certain contract from Julia A. Underwood,” etc.
Respondents made default in the fourth interest installment, and appellants, electing to forfeit the Chelan county contract, served notice of such forfeiture, and began this action to obtain a decree of forfeiture. Respondents answered, admitting the default in the payment of interest and receipt of the notice of forfeiture, and alleged the Underwood contract was pledged only as security for the performance of the Chelan county contract, and that appellants, having elected to forfeit the Chelan county contract, had' rescinded the same, and thus lost their right and interest in the Underwood contract; and prayed for a decree returning the same to them. The cause coming on to be heard, both parties announced they had no evidence to offer, but relied for judgment on the admissions in the pleadings. The court, after hearing respective counsel, then entered its decree,
The land described in the Underwood contract was valued by the parties at $7,500, and it was one of the stipulations in the Chelan county contract that the Moultons might at any time sell the land covered by the Underwood contract at not less than $7,500, in which case the proceeds of such sale were to be applied as payment upon the Chelan county contract. It was also provided that, in case respondents should become entitled to a deed to the land described in the Underwood contract prior to the full performance of the Chelan county contract, such deed should issue to appellants. It is clear to us that it was the intent of both parties that the Underwood contract was turned over merely as security for the full performance of the Chelan county contract; for, had it been intended otherwise, we fail to see how appellants could obtain a default in the payment of interest upon $9,999 as then being due upon the Chelan county contract. The Chelan county contract would, in this view, have also recited a receipt for more than the one dollar at the time of its execution ; for whether $7,500 was or was not the true value of the Underwood contract, it had some value, and had it been given and received as part payment, such value would have been expressed in the consideration paid at the time of entering into the Chelan county contract.
“If the principal agreement contains provisions for the performance or nonperformance of several acts of different degrees of importance, and the stipulated sum is to be paid on the violation of any or all of them, and the sum will in some instances be too large, or if from an examination of the written agreement it is uncertain whether it was the intent of the parties that the stipulation was intended as liquidated damages, or as a penalty, it should be treated as a penalty.”
Applying this rule, we must treat the Underwood contract as a penalty, and the same result would be reached as if we regarded it as security only.
For these reasons, the judgment is affirmed.
Crow, C. J., Parker, Fullerton, and Mount, JJ., concur.