Opinion
Page __
__ Cal.App.2d __ 224 P.2d 481 FREEDMAN v. RECTOR, WARDENS & VESTRYMEN OF ST. MATTHIAS PARISH OF LOS ANGELES. Civ. 17615. California Court of Appeals, Second District, Third Division Dec. 1, 1950.Hearing Granted Jan. 29, 1951.
Subsequent opinion 230 P.2d 629.
Rehearing Denied Dec. 22, 1950.
Blase A. Bonpane, L. H. Phillips, Los Angeles, for appellant.
Steiner A. Larson, Los Angeles, for respondent.
SHINN, Presiding Justice.
Plaintiff brought this action for specific performance of an agreement to sell real property or, in the alternative, for damages. Plaintiff is a real estate broker and salesman of some 20 years experience. Defendant, a religious corporation, owned lots 54 and 55 of a certain tract in Los Angeles. On October 8, 1947, through one, Urban, a broker, plaintiff agreed to purchase the lots for $18,000 of which $2,000 was paid down and $16,000 was to be paid within 30 days. An agreement in the form of a deposit receipt for the $2,000, and stating the terms and conditions of purchase was signed by both parties. $2,000 was paid at that time of which $900 was retained by the broker as a commission and the balance deposited in escrow with a bank. Both parties deposited their signed escrow instructions. The first agreement read, in part, [224 P.2d 482] 'If the owner does not approve or cannot convey the property as herein provided within 30 days the said deposit shall be returned to the purchaser, but if the conditions of this agreement can be fulfilled by the seller, and the purchaser fails to complete the purchase, the deposit shall be forfeited as agreed compensation for services rendered in connection with this sale.' It read further 'subject to conditions now of record' etc. The escrow instructions called for compliance by both parties on or before November 10, 1947, and read: 'If the conditions of this escrow have not been complied with at the time provided herein you are notwithstanding to complete the same as soon as conditions (except as to time) have been complied with, unless I shall have made written demand upon you for the return of money and/or instruments deposited by me.' The instructions also provided that title was to be shown in the buyer 'free from all encumbrances except all taxes for the fiscal year 19 47/48 * * * covenants, conditions, restrictions, reservations, rights, rights-of-way, easements, and the exception of water on or under said land now of record, if any.' At the time plaintiff signed his escrow instructions he read from defendant's policy of title insurance that the title was subject to: (1) Covenants, conditions and restrictions imposed by deed recorded in book 2177, page 288, official records, affecting the north 10 feet and the west 10 feet of lot 55 and all of lot 54; (2) covenants, conditions and restrictions affecting the south 65 feet of the east 155 feet of lot 55, created by agreements, reference being made to the records of these instruments; (3) an easement in favor of the City of Los Angeles over the rear 5 feet of the north 10 feet and the west 10 feet of lot 55 and all of lot 54 for pole lines and conduits, reference being made to the record of this instrument. Plaintiff made no objection to these limitations upon a clear title, expressed his ability to have them removed, and signed the escrow instructions.
Defendant complied in all respects with its obligations and the escrow would have been closed within the time limited if plaintiff had furnished compliance on his part.
He did not do so but, upon the contrary, engaged in a series of delays, objections, excessive demands and new proposals none of which was acquiesced in or accepted by defendant. Although the escrow instructions provided for performance on or before November 10th plaintiff did not deposit the balance of the purchase price in the escrow. On several occasions he refused to complete his purchase and demanded the return of his $2,000 payment. On December 27th defendant cancelled the escrow and withdrew its deed. Immediately thereafter it sold the property to a third party. On January 2, 1948, plaintiff made a gesture toward a tender to the escrow of $16,000, which the escrow holder did not accept.
It was alleged in the complaint that plaintiff had fully complied with the terms of his purchase agreement, that defendant had failed to comply upon its part, had sold the property to a third party, and abandoned its agreement with plaintiff. Defendant denied breach of the agreement on its part and alleged failure of compliance on the part of plaintiff. It was clearly established by the evidence that plaintiff did not comply or attempt to comply with the agreement. His entire argument on the appeal is that defendant waived performance within the time specified in the agreement and could not place him in default without demanding performance on his part within a reasonable time. Upon this point he relies upon the rule stated in Gonzalez v. Hirose, 33 Cal.2d 213, 216, 200 P.2d 793, 795: 'Since the law looks unfavorably upon forfeitures, waiver of the time clause will be deemed to be a waiver of the forfeiture unless the time element is first reestablished by definite notice.' He also contends that the court should have relieved him of his default under the provisions of section 3275, Civil Code, which reads: 'Whenever, by the terms of an obligation, a party thereto incurs a forfeiture, or a loss in the nature of a forfeiture, by reason of his failure to comply with its provisions, he may be relieved therefrom, upon making full compensation to the other party, except in case of a grossly negligent, willful, or fraudulent breach of duty.'
[224 P.2d 483] The complaint, as we have stated, alleged full compliance on plaintiff's part. It did not allege waiver by defendant of the time element for performance nor did it allege any facts which would have furnished a basis for relief from plaintiff's default and consequent forfeiture. However, the action was tried upon the theory that the pleadings were sufficient to embrace all equitable as well as legal issues that might be developed from the entire evidence. It will, therefore, be considered on the appeal that plaintiff pleaded not only performance upon his part but also waiver by defendant of strict performance within the time stipulated in the agreement.
The court found: 'It is true that plaintiff did not perform the conditions of his contract with defendant requiring him to pay the balance of the purchase price and it is true that plaintiff wilfully defaulted and refused to make the payment when due.' It was also found that defendant acted in good faith, did not abandon the contract without just cause or reason and 'that the defendant did nothing that would amount to an implied or expressed waiver of the terms of the contract, or which, in effect, would extend the time for the performance of the contract by the plaintiff or which would invoke an estoppel on the defendant.' The judgment was that plaintiff recover nothing and that the sum of $2,000 paid by plaintiff on account of the purchase be retained by defendant. The findings we have quoted are sufficient to support the judgment. The question then is whether these findings have support in the evidence.
The court made 26 findings, most of which described the conduct of the parties subsequent to the opening of the escrow. There was evidence and, in most instances, a specific finding of the following facts: Before the escrow agreement was entered into plaintiff had knowledge of the covenants, conditions and restrictions and the easement which affected the title to the property and he understood that title was to be conveyed subject thereto; on or about October 28th plaintiff informed the broker, Urban, that he would not complete his purchase and demanded the return of $2,000. Plaintiff at that time was endeavoring to find other buyers for the property. Urban endeavored to persuade plaintiff to agree to a 30-day extension of the escrow and to request defendant's consent to an extension if plaintiff desired one. Plaintiff declined to agree to an extension. Plaintiff endeavored through the broker to get a lower price on the property and requested the broker to waive his commission. On or about November 7th, the escrow holder notified plaintiff that the balance of the purchase price was due November 10th and demanded deposit thereof; on November 10th plaintiff demanded of the escrow holder cancellation of the escrow, the return of his money, and announced that the would not complete his purchase; on or about November 12th, defendant notified the escrow holder not to release any money to plaintiff and defendant notified plaintiff through the escrow holder that if he required an extension of time and requested such extension defendant 'might arrange to keep the matter open until November 22nd;' plaintiff made no request for an extension of time. On or about November 20th the escrow holder again wrote plaintiff requesting a deposite of the balance due; on November 21st plaintiff asked the broker to obtain a reduction in price of $500. Plaintiff was told that the price would not be reduced but he might get an extension of time if he paid in $3,000 within two or three days as evidence of good faith. Plaintiff did not agree to this condition or request an extension of time. He was told at that time that Urban would advise defendant to cancel the escrow and claim plaintiff's $2,000; on November 28th he demanded of the escrow holder, the broker and defendant, that the escrow be cancelled, his deposit returned within five days, and threatened to take action if his demands were not complied with. He asserted that he was entitled to a conveyance free from all covenants, conditions and restrictions. He complained because there were colored people living in the neighborhood, although it appeared from [224 P.2d 484] his own testimony that he had investigated those conditions before he agreed to purchase the property; on December 5th plaintiff proposed to defendant that the lots be sold separately, one to a customer he had found, and the other to himself. The proposal was rejected; on December 14th plaintiff proposed to defendant, in writing, that he would buy the inside lot for $5,000 and that defendant could sell the corner lot to someone else who did not mind the 'race conditions'; on December 18th Urban told plaintiff that he, plaintiff, could not keep the property tied up as he had been doing and unless he put up his money in the next two or three days he would advise the church to cancel the escrow instructions and declare a forfeiture of $2,000; plaintiff was notified by the broker 'that he would be forfeited out if he, the plaintiff, did not put up the balance of the purchase price within two or three days, and plaintiff stated to him as he walked out of the room where they were talking, that he would put it up that day or the next day or maybe not at all'; on December 19th plaintiff was still insisting that the title be cleared of the above mentioned conditions, etc.; on December 27th defendant wrote the bank requesting cancellation of the escrow, return of its documents, and stating it made no demand for the monies on deposit; on December 28th plaintiff wrote defendant's clerk by regular mail saying he was leaving town for a few days and would pay the balance due January 2, 1948. By that time the title had been cleared of the conditions numbered 1 and 2 above described, but not of the easement in favor of the City of Los Angeles. Plaintiff did not withdraw his demand that this easement be relinquished. On December 29th the bank wrote defendant acknowledging its letter of December 27th and stating that its deed would be returned; on December 31st the bank wrote plaintiff, sending him by registered letter a copy of defendant's letter of December 27th; on January 2d plaintiff went to the bank, had in his possession what appeared to be a check which he held in his hand and put back in his pocket. The court found that plaintiff did not part with possession of it or attempt to hand it to anyone. The easement in favor of the City of Los Angeles was not relinquished until in April, 1948. There was evidence that plaintiff expected and endeavored to effect a sale of the property before he was required to complete his purchase. He repeatedly demanded conditions of the sale to which he was not entitled. He made use of these demands as an excuse for nonperformance while he was endeavoring to resell the property and he made persistent effort to obtain a reduction in the price. His belated tender, if indeed it was a tender, was made before he received a copy of defendant's letter of December 27th but after he learned that defendant was negotiating with others for a sale of the property. He did not at any time withdraw his demands nor agree to take title in accordance with the terms of his agreement. There was ample evidence to support the finding that he was guilty of a wilful breach of the agreement.
Defendant had good cause for withdrawing from the transaction. It had at all times complied with its agreement. Plaintiff had repeatedly refused to go through with the deal and demanded the return of his money and had not withdrawn these demands, nor agreed to comply with the agreement at the time defendant cancelled the escrow and withdrew its deed. It had a right to withdraw its deed under the terms of the escrow instructions. The purpose of limiting the time for performance was to give each party the right to refuse further performance upon default of the other. Under the original agreement, as well as the escrow instructions, either party had the right to withdraw from the agreement if the other failed to render performance within 30 days. Defendant's termination of the escrow and withdrawal of its deed was no more than an acceptance of plaintiff's offers to terminate the agreement. Although plaintiff had made a belated offer to render performance his offer was upon conditions more favorable to him than the ones agreed upon. As stated in Pothast v. Kind, 218 Cal. 192, 195, 24 P.2d [224 P.2d 485] 771, 772: 'It is well settled that performance must be made within the time limit of the escrow agreement. The failure to have the cash deposited with the escrow agent within the time limit provided by the agreement therefore entitled respondent [vendor] to the relief given him by both judgment.' (Declaration that the agreement was inoperative.) See also Pitt v. Mallalieu, 85 Cal.App.2d 77, 192 P.2d 24, and cases there cited.
There was also sufficient evidence to support the finding that defendant did not waive performance by plaintiff or expressly or impliedly extend plaintiff's time for performance. The fact that defendant exhibited patient forbearance does not furnish a basis for a claim of estoppel to assert its rights. Defendant did not at any time accept or agree to accept full or partial performance by plaintiff after the time limited. It rejected all of plaintiff's excessive demands and his proposals for reduction of the price. It did not waive any of its rights under the agreement. There was complete inaction on its part except for one letter written to the Department of Water and Power of the City requesting surrender of the easement. This letter was written November 3d because it was considered that it would accommodate plaintiff and also be of advantage to defendant to have the easement removed.
Plaintiff has cited numerous cases in which acceptance of partial performance after the time for performance had expired was held by trial courts, and affirmed on appeal, that strict performance as to time had been waived and a forfeiture would not be enforced in the absence of a demand upon the vendee for performance within a reasonable time. The cases are obviously not in point. Passive reluctance by a vendor to take advantage of his vendee's default may not be construed as a waiver of the vendor's rights under the agreement. Pitt v. Mallalieu, supra, 85 Cal.App.2d 77, 85, 192 P.2d 24.
It having been established that plaintiff defaulted in performance of his agreement, and the court having found on sufficient evidence that his failure to render performance was wilful, he cannot recover the payment he had made upon the agreement. Barkis v. Scott, 34 Cal.2d 116, 120, 208 P.2d 367.
The judgment is affirmed.
WOOD and VALLEE, JJ., concur.