Opinion
August Term, 1853.
A. bound himself to B. to buy certain lands, and to let B. have one-third thereof, provided the latter paid one-third of the price in three years. Afterwards A. made a contract with the owner of those lands, and took his bond to make title to them. Subsequently they rescinded the contract; whereupon, after the expiration of three years from the date of the contract between A. and B., C. purchased the lands in question without notice that B. put up any claim to them: Held,
1. That B. had no equity, upon the pretence of a claim upon A. as owner of these lands, under the contract above stated, to pursue them into the hands of C.
2. The maxim, "In equity time is not of the essence of a contract," does not apply to bargains like the above.
3. The obligation of A. to B. was merely personal, and did not attach to the land; the relief of the latter therefore sounds in damages.
CAUSE removed from the Court of Equity of RUTHERFORD, at Spring Term, 1853.
N.W. Woodfin, for the plaintiff.
Avery and Bynum, for the defendant.
The bill charges, that William and John C. Johnson were the owners of a valuable tract of land, and that plaintiff procured a lease thereon for "mining purposes," wherein it was stipulated that he should have the privilege of continuing his operations upon said lands in search of gold for twelve months after the sale thereof by the proprietors, in case (257) a sale of the same should be effected before the expiration of plaintiff's term therein; and that afterwards, to wit: — on 5 November, 1844, the defendants Thomas J. Forney and James H. Forney contracted in writing, that they would purchase the lands of the said William and John C. Johnson, and that plaintiff should be entitled to the one undivided third part thereof, upon his paying one-third of the costs of the purchases, provided that plaintiff complied with his part of the contract within three years from the date thereof. The bill further charges that the defendants, shortly thereafter, purchased the lands in question, and held them jointly for some time, but that subsequently the defendant James purchased the interest of the defendant Thomas in said lands, and became the sole owner thereof. That within three years from the date of said contract the plaintiff offered, through his agent W. F. McKesson, to pay to the defendant, James H. Forney, the one-third part of the purchase money for said lands, and demanded a conveyance of the one undivided third part thereof; but that the defendant James refused to accept the money, and denied the right of plaintiff to claim an interest in said lands. The bill further alleges that the name of the defendants James was affixed to the contract by the defendant Thomas as agent of said James, and that defendant Thomas was fully authorized and empowered to execute said contract on behalf of the defendant James, and to sign his name thereto. The prayer of the bill is, that defendant James H. Forney convey to plaintiff the one undivided third part of the lands in controversy.
The defendants answer severally. The defendant Thomas admits the execution of the contract by him on his own behalf, and likewise admits that he affixed the name of the defendant James to said contract, but denies that he had any authority for doing so, or that he was empowered by the defendant James to execute said contract on his behalf. He further states that the lands in question originally constituted one tract, but that the said William and John C. Johnson made partition thereof by parol, and established a conditional line between them, and thereafter claimed and occupied their respective parts of said lands, according to the terms of said parol division. He (258) further states, that shortly after 5 November, 1844, he purchased the "William Johnson part" of said land at the sum of $2,500, and executed his individual notes therefor, and said William Johnson executed to him, (the defendant Thomas alone,) a bond for title; that he purchased said lands with a view to mining purposes only, and finding, after operating thereon in search of gold, that said lands were not valuable as a mine, he concluded to rescind his contract with William Johnson for the purchase thereof, and thereupon surrendered to said William Johnson his bond for title, and said Johnson gave up his (defendant's) notes given for the purchase money, which were then cancelled.
The defendant James H. Forney denies the execution of the contract by him as alleged in the bill, and avers that the defendant Thomas had no authority whatever to sign his name to said contract, or, to contract for him with plaintiff or any one else in any matter relating to the purchase of said lands. He further denies that he had any interest in the original purchase made by the defendant Thomas of the "William Johnson part" of said land, or that he acquired any interest in William Johnson's part of said land until after the original contract on the part of the defendant Thomas for the purchase thereof had been rescinded. He further states, that after the purchase by the defendant Thomas of the "William Johnson part" of said land, he (the defendant James) purchased for his own exclusive use and benefit the "John C. Johnson part" of said land, and gave his individual notes to secure the payment of the purchase money, upon the said John C. Johnson's executing to him a bond for title, and that neither plaintiff nor defendant Thomas were interested in said purchase. He admits, that after he purchased the "John C. Johnson part," but before he acquired any interest in the "William Johnson part" of said lands, the plaintiff claimed an interest therein under the contract alleged in the bill, and offered to pay, through his agent McKesson, the one-third of the purchase money, and that he refused to accept the money, averring at the time that the obligation referred to had no binding force or validity against him. He further states, that after the contract between the defendant Thomas and the said William Johnson had been rescinded, and the papers relating thereto had been cancelled, he (259) purchased in his own right, and for himself, the said "William Johnson part" of said lands from said Johnson, and now holds the same under a deed of conveyance duly executed.
The plaintiff has failed to prove his allegation that the defendant Thomas was authorized by the other defendant James to execute in his own name the contract which the bill seeks to enforce. Consequently, in regard to the land called the "John Johnson part," which was purchased originally by the defendant James, and with which the other defendant never had any connection or concern, the plaintiff's equity is not established.
In regard to the land called "the William Johnson part," although the defendant James entered into no direct obligation, it remains to be seen whether he has not made himself indirectly liable to the plaintiff's equity.
The defendant Thomas had bound himself to purchase the Johnson land, and to let the plaintiff have one-third part thereof, provided he paid one-third part of the price in three years — in the words of the deed — "but this is to be closed within the term of three years, or said Willis forfeits his interests." Afterwards, the defendant Thomas makes a contract with William Johnson for his part of the land at the price of $2,500, and takes William Johnson's bond to make him a title upon the payment of the purchase money. In a year or two afterwards this contract is rescinded by the parties, because, as the defendant Thomas Forney says, he found, after fair trial, the land was not worth working as a gold mine, he had no wish to rent it as a farm, and he was not able to pay for it. After the contract was rescinded, and the notes of the defendant Thomas for the purchase money and the bond of William Johnson for title had been cancelled, and after the expiration of three years from the date of the obligation of the defendant Thomas to the plaintiff, the defendant James Forney bought the "William Johnson part of the land" from the said William, at a full price, but with notice that the plaintiff insisted (260) upon his equity growing out of an old "mining lease" that he held on the land, and the obligation of the defendant Thomas, under which he was entitled to the benefit of one-third of the purchase.
The plaintiff insists by force of this obligation, if the defendant Thomas had completed his purchase, he would have held one-third of the land in trust for him. He then infers, that as soon as the defendant Thomas made the contract, an equity arose in his favor which attached to the land, put it out of the power of the defendants Thomas and William Johnson to rescind the contract without his consent, and gave him an equity to follow the land in the hands of William Johnson or of any person to whom he might have conveyed, with notice of the plaintiff's claim. In reply to the objection that the defendant James did not purchase the land until after the plaintiff's right as against the defendant Thomas had been lost by the expiration of three years, (the time agreed on,) the plaintiff relies on the maxim, "in equity, time is not of the essence of contract."
In equity, one who makes a contract with the owner of land for the purchase thereof, is considered the owner of the equitable estate, and the vendor holds the legal estate only to secure the payment of the purchase money, subject to which he is a mere trustee for his vendee. The case made by the plaintiff does not come within the operation of this principle of equity; for the plaintiff made no contract with the owner of the land — there was no privity between them. The plaintiff incurred no sort of liability to William Johnson, and consequently had no ground to insist that Johnson became a trustee for him, and acted against conscience in rescinding the contract which he had made with the defendant Thomas, when he found he could not pay the purchase money.
Whether the plaintiff has cause of complaint against the defendant Thomas for rescinding the contract will be inquired of below, but it would be a curious result of the application (or rather misapplication) of the principles of equity, if William Johnson, by reason of a contract made with Thomas Forney, in which the plaintiff was not known and by which he incurred no liability, had placed himself in the predicament of not being able to rescind the contract and take back his land, and either keep it himself or sell it to some one else, (261) clear of incumbrance.
We are also of opinion that the case made by the plaintiff does not come within the application of the principle that "in equity, time is not of the essence of a contract," the aid of which he is compelled to invoke in order to make out his supposed equity against the defendant James, who did not purchase the "William Johnson part" until after the expiration of three years from the date of the obligation entered into by the defendant Thomas. If a creditor has his debt secured by a parol bond or by a mortgage, or if a vendor retains the legal title to secure the purchase money, it is considered in equity that time is immaterial, and the parties are supposed to be willing to let the debt stand upon the security unless judgment is taken on the bond, the mortgage is foreclosed or a specific performance is required. But the principle does not apply to a case where A., being about to purchase land, agrees to let B. have one-third of it, provided he will aid in raising the funds to pay the purchase money. In such a case, if the time in which the aid is to be rendered be expressly agreed on, and the party neglects to advance his portion of the purchase money, and thereby puts the burthen of raising all the funds upon the other, he cannot, in conscience, insist upon a right to stand off until the struggle is over, and at any time when he sees proper, come forward and claim a share. Time is, in such cases, of the essence of the contract, and assistance in raising the purchase money is presumed to have been a principal inducement for allowing a participation in the bargain.
The testimony of Mr. McKesson in reference to his offer to pay the defendant James the amount due from the plaintiff has no bearing, for it was made before the defendant James had purchased the "William Johnson part," and in regard to the "John Johnson part" we have seen the plaintiff has established no equity.
In regard to the defendant Thomas, his obligation to the plaintiff was merely personal, and did not attach to the land, because, by rescinding the contract with William Johnson, he never acquired a fund which the plaintiff can follow in this Court: his relief, therefore, sounds in damages, and if he has a right to recover damages because the defendant Thomas rescinded the contract with William Johnson, without the consent of the plaintiff, the remedy is by an action at (262) law. There is no ingredient of equity involved in it.
The bill must be dismissed, but without costs as to the defendant Thomas Forney.
PER CURIAM. Bill dismissed accordingly.