RICHARD J. PETERSEN et al., Plaintiffs and Appellants, v. DOROTHY E. HARTELL, as Administratrix, etc., Defendant and Respondent.
S.F. No. 24673
Supreme Court of California
Oct. 21, 1985
102 Cal. 3d 102
James L. Larson for Plaintiffs and Appellants.
John R. Hetland as Amicus Curiae on behalf of Plaintiffs and Appellants.
Anthony E. Graham for Defendant and Respondent.
OPINION
REYNOSO, J.-This appeal by plaintiff vendees who wilfully defaulted in making payments under an installment land sale contract requires us to reconsider such vendees’ right to completion of performance. Though we upheld specific performance in MacFadden v. Walker (1971) 5 Cal.3d 809
As will be explained, we conclude that where the seller of land retains title only as security for amounts payable under an installment sale contract, a vendee who wilfully defaults in one or more payments after having paid a substantial part of the purchase price nonetheless retains an absolute right to redeem the property by paying the entire balance of the price and any other amounts due. If the seller seeks to quiet title on account of the default, the right of redemption may be exercised before judgment or within a reasonable time thereafter set by the court. If the contract on its face “does not require conveyance of title within one year from the date of formation of the contract” (
I
Defendant is administratrix of the estate of Juanita Gaspar who, upon the death of her first husband in 1946, succeeded to sole ownership of a 160-acre tract of unimproved land southeast of Fort Bragg in Mendocino County. In the late 1960‘s she entered into agreements with three of her grandchildren to sell small portions of the land at $1,500 per acre, with no down payment and monthly installments of $50 or less. The agreement now relied
Although the contract was drafted by Richard Petersen, who was then a recent law school graduate, the trial court found that no undue influence or overreaching was employed by either of the Petersens in the preparation or execution of the agreement. The price of $1,500 per acre was set by Mrs. Gaspar, who wished to give her grandchildren the opportunity to acquire small portions of her property. She was dependent, however, on income from the land contract payments, along with her social security benefits, to make ends meet.
The Petersens missed occasional payments in 1968, 1969, 1971, and 1972. Of the 65 payments due from November 1967 through March 1973, they made 58 payments totaling $2,900. In April 1973 the couple separated and their payments ceased. Kathy Petersen testified that about that time she spoke about the separation to her grandmother, who said it was important to take care of the children first and that she (the grandmother) would “get by.”
In September 1975 Kathy Petersen sent Mrs. Gaspar a check for $250 as “back payments.” Mrs. Gaspar‘s attorney then wrote the Petersens, stating that Mrs. Gaspar elected to terminate the contract. In February 1976 Mrs. Gaspar wrote to Kathy Petersen, returning the latter‘s check and explaining that she considered the contract broken. In September 1976 Richard Petersen wrote to the attorney requesting reinstatement of the contract and a statement of the amounts due, and enclosing a $250 money order, which the attorney promptly returned on instructions from Mrs. Gaspar.
In October 1976, Mrs. Gaspar died. Kathy Petersen then assigned all her interest under the contract to Carol Ranta as trustee for the two minor children of the Petersen marriage. Thus, the plaintiffs in the present action are Richard Petersen and the two children, who appear through Ranta as their guardian ad litem. By their amended complaint against Mrs. Gaspar‘s administratrix, plaintiffs seek specific performance, declaratory relief, damages, and the quieting of title to an easement of necessity to connect the property with a public road. They further tender the entire balance due under the contract on condition that defendant deliver a good and sufficient deed.
II
In MacFadden v. Walker, supra, 5 Cal.3d 809, this court affirmed a judgment for specific performance in favor of a vendee whose default in monthly payments we found wilful as a matter of law. The trial court had found the default to be neither wilful nor grossly negligent and so had granted relief under
To resolve that issue, MacFadden turned to Freedman v. The Rector (1951) 37 Cal.2d 16 [230 P.2d 629, 31 A.L.R.2d 1], explaining that there, “we held that section 3275 is not the exclusive source of the right to relief from forfeiture. We concluded that the prohibition of punitive damages for breach of contract (
Having established the propriety of “awarding even wilfully defaulting vendees specific performance in proper cases” (id., at p. 814) the MacFadden opinion explained why specific performance had properly been granted to the vendee before it. “[W]e are here dealing with an equitable remedy that is carefully hedged around with protections to the person against whom it is invoked. The contract must be just and reasonable, and the consideration adequate (
Unlike the trial court in MacFadden, the trial court below denied plaintiff vendees specific performance. Since that remedy is discretionary (Pasqualetti v. Galbraith (1962) 200 Cal.App.2d 378, 382 [19 Cal.Rptr. 323]; Lind v. Baker (1941) 48 Cal.App.2d 234, 245 [119 P.2d 806]), we must consider whether the denial was an abuse of discretion and, if not, whether plaintiffs are entitled to relief on some other ground.
To be entitled to specific performance of a contract, a plaintiff must plead and prove that the contract is just and reasonable and the consideration adequate, as required by section 3391 (fn. 2, ante). (Lucientes v. Bliss (1958) 157 Cal.App.2d 565, 568 [321 P.2d 526].) Yet here, the trial court‘s findings of fact and conclusions of law fail to decide those issues even though they were properly raised in the complaint. There are indications in the findings and the trial court‘s memorandum of intended decision, however, that had the court reached those issues, it would have resolved them in plaintiffs’ favor. The court did find that “[n]either Richard nor Kathy Petersen employed any undue influence, overreaching, or unfairness in the preparation or execution of the agreement” and deleted a proposed finding that the plaintiffs were guilty of unclean hands. The court also found that the decedent seller was motivated by a desire to give her grandchildren the opportunity to acquire small portions of her property. In its memorandum, the court observed that the decedent essentially set the contract‘s terms, including the price, and had become “knowledgeable about the perils of selling property” through selling off portions of her acreage in earlier years without the services of lawyers, real estate agents, or title companies. We note that adequacy of consideration is tested as of the time the contract is formed and that its determination should take into account not only the value of the property being sold but also the relationship between the parties and the object to be obtained by the contract. (Meyer v. Benko (1976) 55 Cal.App.3d 937, 945 [127 Cal.Rptr. 846]; Henderson v. Fisher (1965) 236 Cal.App.2d 468, 474 [46 Cal.Rptr. 173].) Accordingly, we infer that the trial court omitted any determination that the contract was just and reasonable and the consideration adequate not because of any lack of support for those conclusions in the record but because, in the court‘s view, those determinations would not have altered the court‘s ultimate conclusion that specific performance should be denied.
The memorandum of intended decision recites seven factual differences between the present case and MacFadden v. Walker, supra, 5 Cal.3d 809. One of the stated differences is that the vendee in MacFadden had taken possession of and made improvements on the property. Another is that the MacFadden vendee had paid a larger proportion of the purchase price.
We consider both of those differences immaterial. Here the land was unimproved and unoccupied, and the contract was silent on the right to possession. Under those circumstances, the Petersens’ payment of $2,900 out of a purchase price of $9,162 constituted sufficient part performance to qualify them for equitable relief regardless of possession. (Barkis v. Scott (1949) 34 Cal.2d 116, 122 [208 P.2d 367].)
The other five distinctions from MacFadden listed by the trial court deal with differences in the nature and extent of, and the circumstances surrounding, the defaults of the MacFadden vendee as contrasted with those of the Petersens as described in the findings. The materiality of those differences in the eyes of the trial court is not made explicit. It may be thought to relate to the court‘s express conclusion that the decedent seller “had no assurance that she would receive the benefit of the bargain.” (See §§ 3386, 3392, set out at fn. 3, ante.) The Petersens’ conduct in connection with defaults might well have a bearing on the seller‘s assurance of future performance if plaintiffs were seeking reinstatement of the contract, tendering only delinquent payments rather than the full balance of the purchase price. But where, as here, the relief sought is contingent upon plaintiffs’ paying all amounts due or to become due under the contract, the judgment granting that relief will make the seller whole. (See
The more likely connection between the findings of the Petersens’ derelictions as to payments and the denial of specific performance is that the trial court weighed the seriousness of plaintiffs’ defaults against them in a balancing of equities. That that was the court‘s theory seems likely from its citation of Kosloff v. Castle (1981) 115 Cal.App.3d 369 [171 Cal.Rptr. 308], where the Court of Appeal declared that whereas the wilfully defaulting vendee‘s right to restitution of installment payments made in excess of the seller‘s damages is unqualified, such vendee‘s right to specific perform-
If that theory were correct, there would be ample basis in the evidence and findings to support the denial of specific performance. The Petersens’ monthly payments were erratic and delinquent almost from the beginning even though the seller made clear her need of the payments for her support. By April 1973 the Petersens had made only 58 out of the 65 payments then due, and their first attempt to reinstate the contract was not until 29 months later, when they tendered only $250 out of the $1,800 that was by then overdue and unpaid.
The issue, therefore, is whether plaintiffs, despite their wilful defaults in payments, now have an absolute right to a conveyance of the property in exchange for payment of the entire balance of the purchase price (together with interest and any other damages) in light of their substantial part performance and the seller‘s notice of election to terminate the contract on account of such defaults.
III
Although we treated factors mitigating the seriousness of the vendee‘s default as relevant in upholding the judgment of specific performance in MacFadden v. Walker, supra, 5 Cal.3d 809, 813, we took care to explain that “[s]ince we have concluded that Mrs. Walker [the vendee] is entitled to the remedy of specific performance, we need not decide whether she might also be entitled to some other remedy under the law governing security transactions” (id., at p. 816).
For at least a century in this state, a seller of land being sold under an installment contract who sues to quiet title because of the vendee‘s default in installment payments has been required to give the vendee a reasonable opportunity to complete performance. In Keller v. Lewis (1878) 53 Cal. 113, 118, this court explained: “It is a universal rule in equity never to enforce either a penalty or forfeiture. (2 Story‘s Eq., 1319, and cases cited.) On the contrary, equity frequently interposes to prevent the enforcement of a forfeiture at law. In the view of a Court of Equity, in cases like the present, the legal title is retained by the vendor as security for the balance of the purchase money, and if the vendor obtains his money and interest he gets all he expected when he entered into the contract. True, he is not bound to wait indefinitely after the failure of the purchaser to comply with the terms of his agreement. If the payments are not made when due, he may, if out of possession, bring his ejectment and recover the possession; but if he comes into equity for relief, his better remedy, in case of persistent default on the part of the vendee, is to institute
In subsequent decisions this court has continued to uphold that procedure for giving the vendee an opportunity to complete performance as “in consonance with equity.” (Kornblum v. Arthurs (1908) 154 Cal. 246, 249 [97 P. 420]; accord, Cross v. Mayo (1914) 167 Cal. 594, 605 [140 P. 283]; Odd Fellows’ Sav. Bank v. Brander (1899) 124 Cal. 255, 257 [56 P. 1109]; Southern Pacific R. R. Co. v. Allen (1896) 112 Cal. 455, 462 [44 P. 796]; Fairchild v. Mullan (1891) 90 Cal. 190, 194 [27 P. 201].) There is no indication in those cases that the provision for a right of redemption in a decree that would otherwise foreclose the vendee‘s rights in the land was contingent on any showing of facts that would mitigate the wilfulness or seriousness of the vendee‘s default. To the contrary, in Kornblum v. Arthurs, supra, 154 Cal. 246, this court approved a provision for redemption by a vendee whose suit for rescission was held barred by laches because he had purchased the lot in question on speculation, been granted an extension of time for an additional payment, and only then, after the real estate market had partially collapsed, sought rescission.
In those early cases, however, the vendee who failed to exercise the right to redeem by completing the payments forfeited payments already made, apparently without regard to whether the amounts paid exceeded the seller‘s damages. (Cross v. Mayo, supra, 167 Cal. 594, 606; Kornblum v. Arthurs, supra, 154 Cal. 246; Odd Fellows’ Sav. Bank v. Brander, supra, 124 Cal. 255, 257-258; Southern Pacific R. R. Co. v. Allen, supra, 112 Cal. 455, 462; see Glock v. Howard & Wilson Colony Co. (1898) 123 Cal. 1 [55 P. 713].)
Thereafter, this court decided that even a wilfully defaulting vendee may be entitled to restitution under section 3369, which provides that “[n]either specific nor preventive relief can be granted to enforce a penalty or forfeiture in any case.” That section “precludes the court from quieting the vendor‘s title unless he refunds the excess of the part payments over the damage caused by the vendee‘s breach.” (Freedman v. The Rector, supra, 37 Cal.2d 16, 22.) Such restitution is a matter of right for the wilfully defaulting vendee who proves that the payments made to the seller exceed the amount necessary to give the seller the benefit of his bargain. (Honey v. Henry‘s Franchise Leasing Corp., supra, 64 Cal.2d 801, 805; Bartley v. Karas, supra, 150 Cal.App.3d 336, 345, fn. 5; Kosloff v. Castle, supra, 115 Cal.App.3d 369, 376.)
We think that as a matter both of stare decisis and of sound public policy, a vendee who has made substantial payments on a land installment sale contract or substantial improvements on the property, and whose defaults, albeit wilful, consist solely of failure to pay further amounts due, has an unconditional right to a reasonable opportunity to complete the purchase by paying the entire remaining balance plus damages before the seller is allowed to quiet title. We read Keller and its earlier progeny as so holding. As Keller itself observes, “the legal title is retained by the vendor as security for the balance of the purchase money, and if the vendor obtains his money and interest he gets all he expected when he entered into the contract.” (53 Cal. at p. 118.) To that statement we add that the seller may be entitled to damages in addition to interest.4 Whatever the amounts due, their payment in full makes the seller whole regardless of the nature of the vendee‘s defaults in payments.
In the present case, of course, the seller did not sue to quiet title but instead gave the vendees written notice of election to terminate the contract because of their failure to make timely payments. When plaintiffs sued for specific performance, defendant merely answered, praying that plaintiffs take nothing. Thus, the right of redemption asserted by plaintiffs
If Mrs. Gaspar had been entitled to foreclose the Petersens’ interest in the land by a unilateral declaration of termination on account of wilful default, leaving the Petersens with only a right to monetary restitution of payments in excess of seller‘s damages, there would appear no basis for allowing plaintiff vendees to enforce an absolute right of redemption in an action in which defendant sought no affirmative relief. Arguably supporting the trial court‘s apparent conclusion that the seller had such a right of nonjudicial foreclosure were (1) the absence of equities requisite to a vendee‘s right of specific performance under MacFadden and (2) facts that appear to have empowered the seller to convey to a bona fide purchaser: the contract was not recorded; the land was unoccupied; and the seller paid the property taxes.
Other circumstances, however, both factual and legal, lead us to conclude that Mrs. Gaspar had only a security interest (see Note, Contracts: Forfeiture Clauses: Relief to Vendee in Default in California (1952) 40 Cal.L.Rev. 593, 597), and that the vendees’ right to purchase the property by completing payment of the purchase price and any other amounts due could be terminated only by a foreclosure sale5 or by strict foreclosure, i.e., a judicial proceeding quieting the seller‘s title against the vendees’ right of redemption. Seller‘s counsel acknowledged at least the possibility that such foreclosure might be necessary by (1) accompanying the formal notices of termination with requests for a quitclaim deed and (2) including in the judgment prepared for, and signed by, the trial judge, a provision that “plaintiffs have no right, title, or interest in” the property.
Finally, we think that to retain specific performance under MacFadden v. Walker, supra, 5 Cal.3d 805, as the utmost remedy available in a suit initiated by a wilfully defaulting vendee unduly burdens courts and litigants with time-consuming and expensive legal proceedings. The present case is illustrative. To settle a dispute over land sold for a total price of only $9,162 required two days of nonjury trial in which eight witnesses (only two of whom were parties) testified to circumstances bearing on whether the vendees’ defaults were sufficiently egregious to bar them from specific performance under MacFadden. Yet, as already explained, if defendant seller had sued to quiet title, plaintiffs would have been entitled as a matter of right to a conveyance of title in exchange for payment of the balance of the purchase price with interest and damages. Such redemption by plaintiff would give defendant the entire benefit bargained for, free of any dependence on further performance by plaintiff vendees. The outcome will be no less fair to both parties if, as we hold, the vendees under a real property sales contract, as defined in section 2985, are entitled to judicial enforcement of the same absolute right of redemption in response to the seller‘s notice of election to terminate the contract for default in payments. The complaint initiating the vendee‘s action for that purpose, rather than being designated as one for
Accordingly, we conclude that plaintiffs are entitled to a conveyance of title to the property in exchange for payment of the entire remaining balance due under the contract together with interest and any consequential damages as determined by the court. Should plaintiffs fail to make such payments within a reasonable time fixed by the court, the adjudication that plaintiffs have no further interest in the property should become effective only upon defendant‘s payment of the sums due to plaintiffs as restitution. Statements in Bartley v. Karas, supra, 150 Cal.App.3d 336, and Kosloff v. Castle, supra, 115 Cal.App.3d 379, inconsistent with this conclusion are disapproved.
The judgment is reversed.
Grodin, J., Broussard, J., and Kaus, J.,* concurred.
BIRD, C. J., Concurring and Dissenting.-I agree with the majority that an unconditional right of redemption exists for most wilfully defaulting vendees under security device installment land sale contracts.
However, there is no reason to deny the right of redemption to vendees whose payments prior to default amount to less than “a substantial part of the purchase price.” (Maj. opn., ante, at p. 106.) This court has under certain circumstances treated substantial partial payment as a prerequisite to relief from forfeiture. However, the substantial partial payment requirement has been applied only where the relief granted to the defaulting vendee was not redemption but reinstatement of the contract upon payment of delinquent amounts. (See, e.g., Barkis v. Scott (1949) 34 Cal.2d 116, 118, 122 [208 P.2d 367]; see also Cross v. Mayo (1914) 167 Cal. 594, 596, 605 [140 P. 283].)
By contrast, proof of substantial partial payment has not been held to be a prerequisite to redemption, in which the vendee pays the full balance of the purchase price in exchange for immediate conveyance of title. (Keller v. Lewis (1878) 53 Cal. 113, 118; see also Kornblum v. Arthurs (1908) 154 Cal. 246, 249 [97 P. 420]; cf. Odd Fellows’ Sav. Bank v. Brander (1899) 124 Cal. 255 [56 P. 1109] [defaulting vendee who had paid only 6 percent of purchase price held entitled to right of redemption].)
*Retired Associate Justice of the Supreme Court sitting under assignment by the Chairperson of the Judicial Council.
MacFadden quoted at length from Barkis, in which substantial part payment was held to be a prerequisite to reinstatement. (MacFadden, supra, 5 Cal.3d at p. 814.) Without discussing the differences between reinstatement and redemption, the court opined that the fact that the vendee had previously paid a substantial part of the purchase price assured that the rest of the purchase price would be paid if the vendee were granted specific performance. (Id., at p. 815.)
This assurance was clearly not essential to the holding. As in this case, the vendee had deposited with the court the full balance of the purchase price with interest. (Id., at p. 812.) No further assurance of payment was necessary. Thus, MacFadden does not stand for the proposition that substantial partial payment is a prerequisite to redemption.
A requirement of substantial partial payment is not only unnecessary as a matter of stare decisis, it is also practically unnecessary to protect the vendor‘s interest. As the majority acknowledge, ” ‘the legal title is retained by the vendor as security for the balance of the purchase money, and if the vendor obtains his money and interest he gets all he expected when he entered into the contract.’ ” (Maj. opn., ante, at p. 114, quoting Keller v. Lewis, supra, 53 Cal. at p. 118; see also maj. opn., ante, at p. 111.) That statement holds true whether or not a substantial part of the purchase price has previously been paid.
The majority also fail to discuss the cogent arguments raised by Professor Hetland, who appeared as amicus curiae for plaintiffs. Professor Hetland argues that the installment land sale contract, when employed as a security device, is the functional equivalent of a mortgage or deed of trust and should generally be subject to the same rules. This view has much to recommend it.
However, vendors have been on notice for nearly 15 years that this court was considering a change in the law which would “complete the land sale reform initiated by Barkis v. Scott, supra, 34 Cal.2d 116, and ending prematurely with MacFadden v. Walker, supra, 5 Cal.3d 809, by . . . holding that the land sale contract is a mortgage under
trustor or mortgagor . . . at any time within three months of the recording of the notice of default under such deed of trust or mortgage, if the power of sale therein is to be exercised, or, otherwise at any time prior to entry of the decree of foreclosure, may pay to the beneficiary or the mortgagee . . . the entire amount then due under the terms of such deed of trust or mortgage and the obligation secured thereby (including reasonable costs and expenses . . . which are actually incurred in enforcing the terms of such obligation, deed of trust or mortgage, and trustee‘s or attorney‘s fees . . .), other than such portion of principal as would not then be due had no default occurred, and thereby cure the default . . . and . . . all proceedings theretofore had or instituted shall be dismissed or discontinued and the obligation and deed of trust or mortgage shall be reinstated and shall be and remain in force and effect, the same as if no such acceleration had occurred.” (Italics added.)
Specifically, the court observed that the law governing mortgages “affords even the wilfully defaulting debtor an opportunity to cure his default before losing his interest in the security.” (MacFadden, supra, 5 Cal.3d at p. 816, italics added; see also County of Los Angeles v. Butcher (1957) 155 Cal.App.2d 744, 747 [318 P.2d 838] [“it is clear that where parties enter into a written contract for the purchase and sale of real property pursuant to which the . . . seller retains the legal title as security for the purchase price, the [seller] ‘has no greater rights than he would possess if he had conveyed the land and taken back a mortgage’ “].)
The predominant use of installment land sale contracts has been to finance the purchase of housing by low income families and individuals unable to qualify for conventional mortgage financing or government loan guarantee programs. (See Note, Reforming the Vendor‘s Remedies for Breach of Installment Land Sale Contracts, supra, 47 So.Cal.L.Rev. at pp. 193-198.)
Providing installment contract vendees the same protections that are afforded to mortgagors would eliminate some abusive practices of vendors, who have exploited the lack of legal sophistication and limited capacity to litigate of their low-income clients. (See id., at pp. 197, fn. 36, 205-206, 211.) Most important, defaulting vendees would be able to avoid the loss of their homes by paying only the delinquent amounts.4 Under the majority‘s holding, a wilfully defaulting vendee may avoid this fate only by paying the outstanding balance in full. This is an unjustifiably harsh burden to place on the low-income and middle-income families and individuals who will be most affected.
MOSK, J.-I dissent.
The majority misread precedent and rely on questionable “policy” to reach a result that flouts what is undeniably equitable. Our long history of
The majority place principal focus on a line of cases beginning with Keller v. Lewis (1878) 53 Cal. 113. There they find authority for their holding that a wilfully defaulting vendee has an unqualified right to the equity of redemption with respect to an installment land sale contract. However, a careful examination of the Keller line reveals that an absolute right was never contemplated. In each of the cases in the series the vendee was given a time in which to perform, but the temporal requirement was either at the behest of the vendor or was the result of the court‘s examination of the equities of the case.
It is true that in Keller we recognized the benefits of allowing a vendee to comply with the contract. But far from creating an absolute right to perform we held such relief proper “[u]nder the circumstances of this case, as presented by the pleadings and evidence.” (Id., at p. 118, italics added.) The vendees in Keller had bought the land on the vendor‘s claim that his title was perfect and their possession would be undisturbed, yet they were “annoyed by various persons claiming adversely.” Therefore their default, though wilful, was excusable.
In Kornblum v. Arthurs (1908) 154 Cal. 246 [97 P. 420], the majority declare, the equities weighed against the vendee yet the court granted the vendee a right to redemption. However, in Kornblum the vendee brought suit for rescission and repayment of past installments. The vendor did not oppose the judgment allowing the vendee the opportunity to perform. Indeed, since in the interim the real estate market had collapsed it was in the vendor‘s best interests to have the vendee perform.
The majority also cite: (1) Cross v. Mayo (1914) 167 Cal. 594 [140 P. 283] (in that case the vendor asked the court to fix a time for the vendee to perform before foreclosing his rights in the property); (2) Odd Fellows’ Sav. Bank v. Brander (1899) 124 Cal. 255 [56 P. 1109] (there the vendee, not the vendor, challenged the trial court‘s judgment allowing time to perform); (3) Southern Pacific R. R. Co. v. Allen (1896) 112 Cal. 455 [44 P. 796] (again, it was the vendor who sought a judgment foreclosing the vendee‘s interest after allowing time to perform); (4) Fairchild v. Mullan (1891) 90 Cal. 190 [27 P. 201] (in that case the vendor did not challenge the trial court‘s allowance of time to perform).
Reliance is placed on the policy against forfeitures. (Freedman v. The Rector (1951) 37 Cal.2d 16, 20 [230 P.2d 629, 31 A.L.R.2d 1]; Barkis v. Scott (1949) 34 Cal.2d 116, 122 [208 P.2d 367].) But two kinds of forfeitures are presented when a vendee party to an installment land sale contract defaults and title is quieted in the vendor: the loss of installments previously paid and the loss of the benefit of the bargain. (See Kosloff v. Castle, supra, 115 Cal.App.3d 369, 376.) The policy against forfeitures prevents a court from quieting title in the vendor unless he refunds to the vendee the excess of previously paid installments above his damages from the default. (Freedman v. The Rector, supra, 37 Cal.2d at p. 22.) However, there is no such application of the policy against forfeitures to the loss of the benefit of the bargain. In fact, our cases have specifically held otherwise.
In Barkis v. Scott, supra, 34 Cal.2d 116, 122, we discussed Henck v. Lake Hemet Water Co. (1937) 9 Cal.2d 136 [69 P.2d 849], in which “the only forfeiture that was involved was a loss of the benefit of the bargain, and the situation was therefore analogous to that where the contract is still wholly executory and no substantial expenditures have been made in reliance on it.” We went on to emphasize that “It is settled that in such situations relief from default cannot be granted . . . .” (Italics added.) In Honey v. Henry‘s Franchise Leasing Corp. (1966) 64 Cal.2d 801, 804 [52 Cal.Rptr. 18, 415 P.2d 833], we held that “When a vendee has materially breached his contract, the vendor has an election to rescind or to enforce the contract. [Citations.] The defaulting vendee, however, has no such election. Otherwise, the contract of sale would in effect be a lease with an option to purchase. The vendee would receive the benefit of any increase in value of the property, and the vendor would bear the entire risk of any decrease
Thus precedent and policy mandate against providing redemption to vendees defaulting on their installment land sale contracts. We are urged by amicus curiae Professor Hetland that such a remedy should nevertheless be granted because it is available to mortgagors and trustors under deeds of trust. He maintains that installment land sale contracts are functionally equivalent to these devices, and thus the remedies available to the vendor and vendee in each case should be the same. While there is a surface appeal to this argument, it ignores a basic and fundamental difference between installment land sale contracts on the one hand and mortgages and deeds of trust on the other-the transfer of title.
The holding of title is significant for a number of reasons. First, the rights and remedies that attend ownership are distinctive. When the buyer acquires title, he obtains an equity in the land that can be extinguished only by a private or judicial sale; without title the buyer has only his contract. Second, when title or possession passes, the risk of loss passes. (
As the majority readily admit, the equities in the case at bar weigh heavily against the vendees. “The Petersens’ monthly payments were erratic and delinquent almost from the beginning even though the seller made clear her need of the payments for her support. By April 1973 the Petersens had made only 58 out of the 65 payments then due, and their first attempt to reinstate the contract was not until 29 months later, when they tendered $250 out of the $1,800 that was by then overdue and unpaid.” (Ante, p. 112.)
As between the deliberately defaulting vendees and the elderly vendor who desperately needed the modest payments on the contract for her very survival, the equities clearly favor the latter. I am mystified at how the majority can conclude the ends of justice compel their callous result and rejection of the trial court‘s rational exercise of discretion. There being no reason to overturn our prior cases and ignore the policies clearly articulated therein, I would affirm the judgment denying the vendees specific performance.
Lucas, J., concurred.