Opinion
No. 20637
Decided June 16, 1947.
Specific performance — Contract for sale of real property — Purchase-money mortgage to secure balance due — Due date for balance not named — Defense of indefiniteness not sustained — Obligation presumed due on demand.
A contract for the purchase of real property, in which the vendor agrees to take back a purchase-money mortgage for a part of the purchase price and the agreement fails to provide for the due date of such obligation, will be specifically enforced at the instance of the vendee and in such action the defense of indefiniteness cannot be sustained for the reason that under such facts it will be presumed that the parties intended the obligation of the mortgage to be payable on demand.
APPEAL: Court of Appeals for Cuyahoga county.
Mr. Stanley E. Lloyd and Mr. W.P. Strangward, for appellant.
Mr. Philip Novitch, for appellees.
This action comes to this court on questions of law from a decree for the defendants in an action for specific performance in the Common Pleas Court.
The defendants entered into a written contract with one Clifton Corprew, whereby the defendants agreed to sell their property located at 2332-34 East 57 street, Cleveland, Ohio, to Corprew for $5,300; $100 down and $2,400 to be escrowed with I.S. Hurwitz, Standard building, within 30 days; the sellers to take back a first mortgage for the balance of the purchase price at six per cent interest. The purchaser was to pay the taxes for 1944 and thereafter.
Clifton Corprew assigned all his right, title and interest in and to the contract to the plaintiff. The plaintiff proceeded to carry out the terms of the agreement. The defendants refused to proceed unless the original buyer obligated himself upon the mortgage and when he agreed to do so, the defendants then demanded payment in full. This new demand was verbally made. When the purchaser agreed to meet such demand, the defendants then refused to proceed with the transaction and claimed that the contract was too indefinite to be enforced. The reason assigned for not proceeding to transfer the property under the claim of indefiniteness, was that the due date and terms of payment of the mortgage were not provided for by the agreement.
There can be no question that under the agreement between the parties, the defendants were entitled to the credit of Clifton Corprew on the mortgage securing the balance of the purchase price. The contract did not provide against assignment, and therefore the benefits of the contract were assignable.
The fact that there was an obligation imposed on Corprew to sign and deliver a mortgage to the sellers to secure the payment of a part of the purchase price, and that the assignment could not relieve him of that obligation, cannot affect the plaintiff's right to procure by assignment all the benefits of the contract. The evidence is uncontradicted that in carrying out the purchaser's obligations under the agreement, Corprew offered to lend his credit on the mortgage so that the tender of performance included every right to which the defendants were entitled.
The demand of the defendants for payment in full of the entire purchase price, which offer was accepted by the plaintiff, was, in fact, an offer to make a new contract which not being in writing was unenforceable, so that the obligations of the earlier contract remained in full force and effect.
There is, therefore, but one defense to the plaintiff's action for specific performance and that is: Was the failure to provide for the due date and payments on the purchase-money mortgage such a circumstance as made the contract unenforceable because of indefiniteness?
In considering this question it must be kept in mind that the defendants through their agent drew the contract. They are seeking to avoid legal responsibility under such contract because it is claimed to be too indefinite to enforce. A court of equity should not assist a party to avoid legal responsibility under the terms of a written contract which they drew, unless to do so would, in fact, require the court to make a new contract for the parties, or include terms which the parties did not include therein. But, if a contract for the sale of land is sufficiently definite so that the obligations of each of the parties can be determined from the instrument without adding other terms by parol testimony, a court of equity will, if all the other facts necessary in a specific performance action are present, decree specific performance.
The only obligation upon the defendants under the terms of the written contract, is to transfer the title to the property described therein to the plaintiff. The plaintiff agrees to pay $2,500 in cash which he has legally tendered, and to give back a purchase-money mortgage for the balance due with interest at six per cent.
Where no time is fixed for the payment of an obligation and the debt is to be represented by a negotiable instrument, the courts will presume that the parties intended that the time of payment would be upon demand. The principle is the same as that provided for in the Negotiable Instrument Code of Ohio. Section 8112, General Code, provides:
"An instrument is payable on demand
* * * * *
"2. In which no time for payment is expressed."
In 7 American Jurisprudence, 870, Section 145, under the general heading, "Bills and Notes" it is provided:
"It is no objection to the validity of an instrument that it has no time of payment mentioned. Nor does the failure to specify the time of payment make it nonnegotiable, since where no date is mentioned, it is payable on demand."
See, also, 10 Corpus Juris Secundum, 742, Section 247.
The application of that principle to a contract for the sale of real estate in which the vendor, defendant, agreed to take back a purchase-money mortgage in which the due date of the obligation of the mortgage was not provided for has been followed in two New Jersey cases.
In Green v. Richards (1872), 23 N.J. Eq. 32, the court said:
"The only material part of this contract that is not definite, is the credit to be given on the mortgage, and whether with interest or not * * *. Here there is no agreement for any time. The purchaser is not entitled to any credit. In such case the mortgage should be made payable on demand and it is the duty of a court of equity, in order to prevent a fair and just agreement from being defeated by a mere technical objection, to presume that such was the intention of the parties, and to give the agreement that construction. This makes the written agreement certain in all its parts."
Also, in the case of Luczak v. Mariove (1921), 92 N.J. Eq. 377, 112 A. 494, affirmed in 1922, 93 N.J. Eq. 501, 116 A. 925, the court said:
"In the absence of definite terms in the contract, a court of equity will, if necessary, presume it to have been the intention of the parties that the mortgage should be made payable on demand (Green v. Richards, 23 N.J. Eq. 32) and will also presume, in the absence of a specified rate of interest, that the mortgage carries the legal rate of interest after demand. And, if the omission of these terms from the contract be attributed to the negligence of the parties, such negligence on the part of the defendants will not be permitted to defeat specific performance."
We conclude, therefore, that the plaintiff was entitled to a decree of specific performance and the decree of the trial court is reversed and the cause remanded with instructions to enter such decree for the plaintiff.
Insofar as this holding is in conflict with a prior judgment of this court in the case of Bentley v. Miller, 18 C.C., 865, 9 C.D., 851, we are not disposed to follow the law of that case.
Decree reversed.
HURD, P.J., and MORGAN, J., concur.