Opinion
No. 21183
Decided February 6, 1929.
Trial practice — Jury trial — Foreclosure of conditional land contract and personal judgment — Party limited to liquidated damages stipulated in contract upon breach.
1. Where a plaintiff prays a personal judgment and foreclosure of a conditional land contract, the defendant is entitled to have the issue of personal judgment if such issue is joined submitted to the determination of a jury, and a denial of that right by the trial court is error.
2. Where liquidated damages are provided for in a contract as compensation for a breach upon the part of one party to the contract, such contract provides the measure of damages and no further recovery may be had by the complaining party.
ERROR to the Court of Appeals of Allen county.
The plaintiffs in error in this court were the plaintiffs in the court of common pleas of Allen county, Ohio, in a suit to recover a personal judgment and foreclosure of a conditional land contract. On January 20, 1925, Mackenzie contracted to sell to Stuber, and Stuber contracted to purchase, certain real estate in Lima, Ohio, for the sum of $3,500, payable in monthly installments, with interest computed annually on unpaid balances. The contract contained many conditions relative to repairs, improvements, taxes, assessments, and insurance, which are not material to the present inquiry. The contract also contained provisions permitting additional payments and prohibiting assignment of the contract by the purchaser, and perhaps other matters which do not affect the legal question submitted to this court. Among other things, it was stipulated that:
"If any one of said installments, or the interest accrued thereon, shall not be paid within one month after falling due, then all of said installments remaining unpaid shall at once become due and payable at the election of the first party.
"In such event said second party agrees to yield up to said first party quiet and peaceful possession of said real estate, and the payments and improvements on said real estate shall be taken and considered as a fair rental for the use and occupation of said real estate and as liquidated and stipulated damages for the breach of this contract on the part of the second party and shall not be accounted for by said first party."
The contract contained the further stipulation that on payment of all installments and interest second party should receive a deed, but with the proviso that, "on failure of the party of the second part to pay the purchase money or any part thereof or the interest, taxes or assessments as above mentioned, then this agreement shall be void as it regards party of the first part, at his option."
The second party to the contract took possession and paid the installments for seven months, and during that period made certain repairs and improvements. Becoming in default, first party elected to declare all unpaid installments due and payable and in due time filed a petition containing two causes of action, the first claiming personal judgment for the amount of the contract less the installments paid, with interest, the second praying foreclosure of the conditional contract and for sale of the premises. The defendant answered, pleading that portion of the contract which permitted him to yield up quiet and peaceful possession, and which permitted the payments made to be regarded as liquidated and stipulated damages. Plaintiff filed a reply which admitted the payments made as alleged in the answer. The reply contained a general denial, which ordinarily would traverse that allegation in the answer relating to liquidated and stipulated damages, but, inasmuch as the contract itself, containing that stipulation, was attached to the petition filed by the plaintiff, it must necessarily be taken as true.
In that state of the pleadings the cause came on for trial and defendant demanded a jury, which was denied; thereupon the defendant moved for a judgment in his favor upon the pleadings. This motion was also overruled, and the case was heard by the court sitting in chancery and a personal judgment was rendered for the balance due, with interest, accompanied by an order of foreclosure and sale. Upon error being prosecuted to the Court of Appeals, that court reversed the judgment and entered final judgment in favor of the defendant. The petition in error in the Court of Appeals assigned as error the refusal to grant a jury trial and the holding of the common pleas that the amounts paid by defendant under the contract were not in the nature of liquidated damages and therefore not a complete discharge of liability upon the contract. A motion to certify the record was filed in this court and allowed.
Messrs. Mackenzie, Weadock, Mackenzie Landis, for plaintiffs in error.
Mr. B.F. Welty, for defendants in error.
The installment payments of $25 per month upon a purchase of property of the value of $3,500 would not be unconscionable, unreasonable, or disproportionate in amount, and if an issue had been made upon that point would very probably have been held to be a reasonable contract and not revocable as a penalty. That question cannot arise in this case, because the defendant is the only one who could complain of treating them as liquidated damages, and he makes no complaint, but has tendered a surrender of the property, and has likewise surrendered his claim for the return of any portion of the payments made. The contract gave to the vendor two important rights: First, upon default in the payment of any installment when due, to elect to have all remaining installments become immediately due and payable; second, to declare the contract void, from which it followed that he might institute foreclosure proceedings. Neither of these rights was denied to him. He availed himself of both rights. The second right pertained to a recovery of the possession of the property in the event the vendee did not yield up quiet and peaceful possession.
The first right permitted the vendor to make claim for the entire balance of the purchase money upon default in the payment of any installment. The right to make such claim was, however, subject to the condition that if the vendee should yield up quiet and peaceful possession the payments and improvements should be taken and considered as a fair rental for use and occupation and as liquidated and stipulated damages for the breach of the contract. The vendor had the undoubted right to institute foreclosure proceedings, but it was, of course, unnecessary in view of the tender of the vendee to yield up quiet and peaceful possession. The petition contained a prayer for personal judgment, but the plaintiff could, of course, recover only such damages as resulted from the breach of the contract itself, and the contract having provided that the installment payments made would be taken and considered as fair rental for the use and occupation, and as liquidated and stipulated damages for the breach of the contract, and the vendee having made no claim for the return of any part of the installments paid, and the answer having admitted the payment of the installments, there could be no recovery of a personal judgment. By the contract itself it was provided that the installments payable under the contract would be compensation for the breach, and they therefore became the measure of damages, and no other recovery will be permitted to the complaining party. By the fact of plaintiff having elected under that clause of the contract to declare all unpaid installments immediately due and payable, the defendant became entitled to tender a return of the property and thereby be exonerated from further liability thereunder.
The court erred in denying the demand of the defendant for a trial by jury. By the provisions of Section 11379, General Code, in all actions for the recovery of money, the defendant is entitled to trial by jury, unless a jury trial be waived. The court likewise erred in overruling the defendant's motion for judgment in his favor upon the pleadings. When the petition, the answer, and the reply are considered together, no issue of fact is presented. They present only the legal question whether a tender of quiet and peaceful possession of the property by the vendee to the vendor operated as a discharge from further liability.
Ordinarily, where a petition is filed for personal judgment and for foreclosure, the defendant is entitled to have the question of personal judgment submitted to the determination of a jury, unless expressly waived. The question of foreclosure of the equity of redemption raises an issue in chancery. The Court of Appeals did not therefore err in rendering final judgment in favor of the defendant.
Its judgment reversing the court of common pleas and rendering final judgment in favor of the defendant will therefore be affirmed.
Judgment affirmed.
KINKADE, ROBINSON, JONES, MATTHIAS, DAY and ALLEN, JJ., concur.