Opinion
Submitted November 16th, 1925.
Determined December 4th, 1925.
1. In a contract for the sale of land, which stipulated that settlement should be made "on or before" a specified date, and that possession should be delivered to the vendee at the time of settlement, it was held that the provision for settlement before the specified date and the delivery of possession to the vendee at the time of settlement embodied the idea that any settlement before that date should be through the voluntary co-operation of the parties.
2. In a contract for the sale of land, which stipulated that settlement should be made "on or before" a specified date, and that possession should be delivered to the vendee at the time of settlement, it was held that a bill filed by the vendee for specific performance before the specified date was prematurely filed and should be dismissed.
On bill for specific performance. On hearing on motion to strike out bill.
By the bill of complaint filed herein complainants, as vendees, seek specific performance of a contract for the sale of real estate. Defendants have moved to strike out the bill on the ground that its averments disclose that it has been prematurely filed.
A copy of the agreement is annexed to and made a part of the bill. It bears date July 25th, 1925. The purchase price agreed upon is $39,000, payable as follows: $1,000 at the time of signing the agreement; an additional $1,000 within thirty days from the date of the agreement; $1,000 additional within sixty days from the date of the agreement; $9,400 by the assumption of a first mortgage now on the property; "$6,000 in cash at the time of final settlement as hereinafter provided"; the balance of the purchase price by a second mortgage of specified terms to be executed by the vendees. The time for settlement is provided for by the following clause:
"Said settlement to take place on or before January 2d 1926, or the deposit herewith made or any future deposits made on account hereof, at the option of the seller, shall be forfeited as liquidated damages or shall be applied to the purchase price." * * * "Possession of the premises to be given on the day of final settlement."
The bill was filed October 10th, 1925, and discloses that the $3,000 cash payments have been made and that complainants are now desirous of making final settlement, and are now prepared to pay the final cash installment and execute the purchase-money second mortgage, but that defendants refuse to make settlement until January 2d 1926. Accordingly, the only question for determination at this time is whether defendants have obligated themselves to make final settlement before that date. If not the bill cannot be entertained.
Mr. Raymond L. Siris, for the motion.
Mr. Lewis Starr, opposed.
I am unable to read the clause of this contract touching the time for settlement as the equivalent of a clear and specific stipulation that the vendees shall enjoy the option to require settlement at a time prior to January 2d 1926.
It will be observed that the clause is framed in the alternative and may be reasonably understood as intended as no more than a stipulation that unless settlement should be made by the vendees on or before the date named the vendors, at their option, should be privileged to appropriate the prior payments as liquidated damages or treat them as payments on account of the purchase price.
Other clauses of the contract may be said to strengthen that view. By the terms of the contract the vendors are required to convey the property free from encumbrances or liens, except the first mortgage, the payment of which vendees are to assume; until that conveyance is made the purchase-money second mortgage cannot be executed by vendees. So, too, is possession to be given on the day of final settlement. These are important duties, the time for the performance of which is demonstrated by common experience to be of substantial concern to a vendor. In these circumstances it should not be for a vendee to determine when it may be possible or convenient for his vendor to make title or deliver possession, in the absence of a stipulation clearly conferring that right.
It is suggested in behalf of complainant that a promissory note payable on or before a specified date contemplates the privilege of payment before the specific date. That is because the payment of the debt is the only obligation of such a contract. It has also been held that a contract for the sale of land in certain circumstances may be specifically enforced against the vendor before the day named for performance, but that was only after the contract had been wholly repudiated by the vendor. Stein v. Francis, 91 N.J. Eq. 205. Here there has been no repudiation further than a refusal to perform before the day specifically named. Wall v. Simpson, 6 Marsh. J.J. (Ky.) 155, has been cited in support of the bill; but in that case, while the vendee agreed to pay on or before a specified date, the vendor was not required by his contract to surrender possession at the time of final payment, and the provision in the contract for the vendor to retain possession for a specified time after the vendee should have paid the full purchase price was by the court treated as intended for the protection of the vendor in case of payment before the specified date.
I entertain the view that in a contract of this nature in which the vendor has active duties to perform at the time of settlement, such a delivery of possession or other duties which may make the time of settlement of substantial importance to him, a general provision for settlement on or before a specified day may be reasonably understood as embodying the idea that any settlement before the specific date named shall be through the voluntary co-operation of the parties, in the absence of a stipulation which clearly imports a contrary intent, and that the clause here in question, especially in view of its structural characteristics, when considered in its relation to the other provisions of the contract, cannot be said to clearly entitle either party to require performance before the specific date named.