Lead Opinion
On August 1, 1932, Strоng and Shell entered into a written contract which recited that Strong had purchased seven quarter sections of land situated in Wichita County, Kansas, and had paid therefor $9,600, and that Shell was desirous of obtaining a one-half interest in the profits that might be derived from the use or sale of such land. It provided that Shell should pay one-half of all taxes on the land becoming due and payable for the year 1932 and succeeding yеars during the life of the contract; that Shell should have a one-half interest in all the profits realized from the land during the life of the contract, either from crops or from the sale of the land; that Shell should have an option to purchase, for $4,800, a one-half interest in the land at any time during the life of the contract, and that upon the exercise of such option, Strong would convey a one-half interest in the land to Shell, or such person as Shell might designate, by a good and sufficient warranty deed; and that the contract should continue for a period of five years from August 1, 1932.
Shell managed and rented the land and collected the income therefrom from the date of the contract until the year 1936. Thereafter, Strong managed the land. During the term of the contract, each paid one-half of the taxes and one-half of the incidental expenses and received one-half of the net income. On or about August 1, 1934, the parties made a settlement of the interest due from Shell to Strong, and Shell was given credit for the amount of interest which had accrued to that date. Shell made no direct payments of interest after August 1, 1934, but on or about October 15, 1936, Strong received $478.18 as a bonus under an oil and gas mining lease on a portion of the land, and after deducting an expense item of $1.50, credited one-half of the remainder, or $238.34, on interest due from Shell. Shell consented to such application of the bonus money.
On July 31, 1937, Shell tendered to Strong $5,373.87, and demanded a deed to_ an undivided one-half interest in the land. Strong refused to accept the tender and refused to convey the one-half interest to Shell. The sum tendered included the agreed price of $4,800 and the balancе of
On July 31, 1942, Shell brought this action against Strong seeking specific performance of the contract to convey an undivided one-half interest in the land.
Strong filed an answer in which he set up a number of defenses. At the pretrial conference, all of such defenses were abandoned except laches.
At the trial, evidence was introduced with respect to the value of the land on July 31, 1937, and July 31, 1942, and the intervening period. The trial court found that there was no material difference in the value of the land on July 31, 1937, and July 31, 1942; that there was a decrease in value between July 31, 1937, and the early part of 1939, and that in 1940 the land began to increase in value. The trial court concluded, as a matter of law, that Shell had abandoned the contract and was barred from relief in equity by laches. Shell has appealed.
Lapse of time alone does not constitute laches.
Since laches is an equitable defense, its application is controlled by equitable considerations.
A court of equity is not bound by the statute оf limitations, but, in the absence of extraordinary circumstances, it will usually grant or withhold relief in analogy to the statute of limitations relating to actions at law of like character. Under ordinary circumstances, a suit in equity will not be stayed for laches before, and will be stayed after, the time fixed by the analogous statute, but if unusual conditions or extraordinary circumstances make it inequitable to allow the prosecution of a suit after a briefer, or to forbid its maintenance after a longer, period than that fixed by the analogous statute, a court of equity will not be bound by the statute, but will determine the extraordinary case in accordance with the equities which condition it. When a suit is brought within the time fixed by the analogous statute, the burden is on the defendant to show, either from the face of the complaint or by his answer, that extraordinary circumstances exist which require the application of the doctrine of laches. On the other hand, when the suit is brought after the statutory time has elapsed, the burden is on the complainant to aver and prove circumstances making it inequitable to apply laches to his case.
By waiving the other defenses asserted in the answer and urging only laches as a bar to relief, Strong conceded he had no other defense to the action. It is clear, therefore, that in refusing to accept the tender and convey a one-half interest in the land to Shell, Strong breached the contract. Strong stood before the court, admitting that he had breached the contract and asking the court to condone the breach and deny Shell any relief in equity solely because Shell had waited until the last day of the analogous statute of limitations to commence the action and because, although there was no substantial difference in the value of the land on the date of the tender and on the date of the commencement of the action, there had been some fluctuation in value during the intervening period.
Strong did not deny that the contract was valid and enforceable against him. He did not deny his obligation to convey. In that sense, he did not repudiate the contract. He simply refused to accept the tender and make the cоnveyance.
The record is devoid of any proof that Strong either acted or refrained from acting to his prejudice in reliance upon a belief that Shell would not insist on performance of the contract.
While farmlands in Kansas fluctuate in value, increasing in value during periods of ráinfall adequate for the growing of crops, and decreasing in value during periods of drought, such lands are not comparable with undeveloped mining properties, the exploration of which may prove them to be of great value or to be practically worthless, or with other properties highly speculative in character.
It is a general rule that the mere fact that the value of the land, which is the subject of the contract, has increased or diminished since the contract was executed will not warrant a court in refusing to grant a decree of specific performance, in the absence of a showing that the plaintiff in bad faith delayed bringing his action in order to speculate on a change in value to his advantage.
Strong wholly failed to establish any prejudice to him as the result of the delay in the commencement of the action. While the land did fluctuate in value in the interim, since the value of the land at the time of the tender and at the time suit was commenced was substantially the same, Strong suffered no disadvantage from the delay.
We are of the opinion that Strong wholly failed to establish any basis for the application of the doctrine of laches.
The judgment is reversed and the cause remanded with instructions to enter judgment awarding Shell specific performance of the contract.
Notes
Calkin v. Hudson,
McGill v. National Bank of Topeka,
In Kansas Electric Utilities Co. v. Bowersock,
“It has been said that:
“ ‘Laches in legal significance is not mere delаy, but delay that works a disadvantage to another.’ * * * ”
In Harris v. Defenbaugh,
“ ‘Laches does not, like limitation, grow out of the mere passage of time; but it is founded upon the inequity of permitting the claim to be enforced — and inequity founded upon some change in the condition or relations of the property or the parties.’ * * * A large number of eases are cited where laches is held to be a defense, but they all proceed upon the theory that not mere delay, but delay that works a disadvantage to others, must be shown before the doctrine can be invoked.”
Columbian National Life Ins. Co. v. Black, 10 Cir.,
Winget v. Rockwood, 8 Cir.,
Winget v. Rockwood, 8 Cir.,
See, also, Harris v. Defenbaugh,
Backus-Brooks Co. v. Northern Pac. R. Co., 8 Cir.,
Cf. Russell v. Todd,
Franklin Telegraph Co. v. Harrison,
Anderson,
See, also, Indiana & Arkansas Lumber & Mfg. Co. v. Brinkley, 8 Cir.,
Dissenting Opinion
(dissenting).
I cannot consent to the reversal of judgment of the chancellor in this case. It is a cardinal principle of equitable jurisprudence that one who seeks specific performance of a contract must show that he has bеen “prompt, ready, able and eager to perform and abide by the same” — equity aids only the diligent, not the ones who slumber on their rights. Furthermore, an
If a party to a contract fails to assert his rights under it for such a length оf time as to give the impression that he has waived or abandoned it, or has acquiesced in the other party’s repudiation of it, he will be denied specific performance. See Specific Performance as a Matter of Right,
The land in question was leased for oil and gas in 1936 — “there was an oil boom in 1937 and royalty could be sold.” The trial court found, and it is not disputed, that when on July 31, 1937, the tender was made under the contract, the land was of greater value than the contract price. Shell had the legal right to exercise his option to purchase by appropriate tender at any propitious time during the contractual period, but after the refusal of the tender he could not choose the most advantageous time to enforce his tender in a court of equity. Following the “oil boom” in 1937 there was a “material decrease” in the value of the land, but in 1940 the land began to increase in value and continued to increase because of good crops until the trial date. When in 1942 the land had increased $5,000 in excess of the nurchase price the appellant decided to compel performance of the contract, and brought this suit in equity for that purpose just one day less than five years from the date of its repudiation. Based on these undisputed facts the trial court held that the unexplained failure of the appellаnt to seek relief after repudiation for five years, lacking one day, indicated an abandonment of the contract and his acquiescence in its repudiation by the appellee.
Since specific performance rests largely within the sound discretion of the trial court, we have not the right to override its judgment unless from all the facts we must say that the trial court acted arbitrarily. We should not reverse simply because as the trier we might have appraised the facts differently and drawn different conclusions therefrom. From my own appraisal of the facts, I am unable to say that the trial court arbitrarily closed its doors to one who came with clean hands, was diligent and otherwise without fault.
I would affirm the judgment.
Lead Opinion
On Petition for Rehearing.
In the instant case, the defense of laches was based solely on the lapse of time and the action was brought within the period оf the analogous statute of limitations. In the time that intervened between the tender and the commencement of the action, no change in the situation occurred that was detrimental to Strong. Strong did not deny that he was obligated under the contract. He merely refused to deed an undivided one-half interest in the land to Shell, as he was obligated to do. Instead of performing in accordance with the terms of the cоntract, he offered to divide the land and convey to Shell a full title to one-half thereof.
We think the cases cited in the petition for rehearing are distinguishable from the instant case. In Fowler v. Marshall,
“We do not wish to be understood as holding that the mere lapse of time, * * * would of itself be sufficient to defeat plaintiff in error’s recovery, but only refer to it as one of the matters which contribute to justify an upholding of the decision.”
In Agens v. Koch, 74 N.J.Eq. 528,
Livermore v. Beal,
In Superior California Fruit Land Co. v. Grossman,
In Alexander v. Phillips Petroleum Company, 10 Cir.,
“Laches consists of two elements, inexcusable delay in instituting suit and prejudice resulting to the defendant from such delay. Its existence depends upon the equities of the case, and not merely upon the lapse of time.”
Ketcham v. Owen, 55 N.J.Eq. 344,
Marsh v. Lott,
“It is undoubtedly true that when an express statute of limitation applies to a suit in equity, mere delay to commence the suit for a period less than that of the statute of limitations is never a reason for dismissing the proceeding. Lux v. Haggin, 69 Cal. [255] 267,
In Schaffer v. Latta, 113 N.J.Eq. 589,
Since, in the instant case, no change in conditions occurred between the tender and the commencement of the action which created equities in favor of Strong, and the defense of laches rested solely on the lapse of time, we adhere to our former decision.
The petition for rehearing is denied.