Opinion
No. 32168
Decided February 21, 1951.
Land contract — Construction — Prepared by vendor's agent on printed form — Purchase price paid in monthly installments — No provision for interest — Obligation to pay interest not created, when — Interest mentioned in printed form — Typed portion prevails over printed portion — Obligation not created by taking possession — Or by Section 8305, General Code, when — Whether interest obligation created, a matter of construction.
1. Where after extended negotiations a land contract is drawn by the vendor's agent, who uses therefor a printed form and types therein a recital of the purchase price and a provision that such purchase price is to be paid at a specified amount per month, but does not mention interest therein, the mere appearance of the word "interest" in subsequent printed paragraphs of the agreement does not create an obligation of the purchaser to pay interest.
2. The typed portion of a land contract will prevail over the printed portion thereof, if the two are inconsistent.
3. The fact that the purchaser immediately takes possession of the premises sold under a land contract does not in and of itself create liability for interest from date of the instrument on the portion of the purchase price stipulated to be paid in future monthly installments.
4. When a land contract drawn by the vendor's agent fails to provide for payment of interest, Section 8305, General Code, which stipulates a rate of six per cent interest under certain circumstances, does not create an obligation to pay interest from date of the instrument on deferred installments of the purchase price named in such contract.
5. A land contract, which contains no provision for interest, is not analogous to an instrument which provides for usurious interest and it derives no benefit from Section 8306, General Code.
6. Whether a land contract provides for payment of interest is a matter of construction, which is to be effected by following well established rules for construing contracts.
APPEAL from the Court of Appeals for Trumbull county.
The appellee was plaintiff in an action in the Common Pleas Court of Trumbull County to collect $530.31 allegedly due on a land contract. The defendants, who were the purchasers, tendered the sum of $10 as the balance due on the purchase price, and prayed for specific performance. The amount thus put in issue represents the interest on the sum named in the contract as the purchase price. The trial court held for the defendants and ordered specific performance upon payment of $10.
The Court of Appeals, with one member of the court dissenting, reversed the judgment of the trial court and rendered judgment in accordance with the prayer of the petition.
The case was admitted to this court upon the allowance of a motion to certify.
On April 17, 1939, O'Neill sold a city lot in Niles, Ohio, to the defendants and the sale was evidenced by written agreement. The sale was effected by one Harvey C. Kistler who was an experienced dealer in real estate and who represented O'Neill, the vendor, in the transaction. Kistler drew up the agreement using a printed form entitled "Land Contract — With Dower Clause — No. 39A," printed by a recognized publisher of legal forms. On the first page of the agreement appears the usual recitation as to the parties and a description of the premises being sold. In the upper fourth of the second page appears the following (typing indicated by italics):
"And the said party of the second part doth hereby agree to pay to the said party of the first part,
his heirs, executors, administrators or assigns, for the land aforesaid, the sum of ($1600.00) Sixteen hundred and 00/100 _____ Dollars, ( $1600.00), being the value of said premises, payable as follows: Seventy-five _____ Dollars, ( $75.00 cash), cash in hand, the receipt whereof is hereby acknowledged, and the balance of Fifteen hundred twenty-five and 00/100 ___ DOLLARS in monthly payments of $15.00 each and as much more as the party of the second part wishes to pay. Payments payable at Kistler-Campbell Agency, 405 Niles Bank Bldg., Niles, Ohio."
The entire remainder of the second page is blank and a red line is drawn through it, which line starts from the period following the typed word "pay." The last sentence above quoted is typed over said red line, which indicates that it was typed somewhat later than the other provisions.
On the third page of the agreement appear five printed paragraphs of terms and provisions with spaces left for insertion of appropriate pronouns. Then follow the witness clause and signatures. The first and fourth of the above-mentioned printed paragraphs are relied upon by the plaintiff. They read as follows:
"It is expressly agreed by and between the parties to this agreement, that if any one of said installments, or the interest accrued thereon, shall not be paid when due, then all of said installments remaining unpaid shall at once become due and payable, at the option of the first party.
"* * *
"Now if the party of the second part, his heirs, executors, administrators or assigns, shall well and truly pay the full purchase money aforesaid, with interest, taxes, assessments and insurance, at the time and in the manner above stipulated, then, on the full receipt thereof, and not otherwise the said party of the first part, his heirs, executors, administrators or assigns, shall well and truly make and deliver, or cause to be made and delivered, to said party of the second part, on surrender of his duplicate contract, a good and sufficient warranty deed * * *."
At the trial, Kistler and O'Neill testified that, before the agreement was drawn, the parties discussed providing for interest at six to seven per cent. The defendants testified that interest was not discussed. The record is clear that the parties negotiated at least one week before the agreement was executed.
The defendants made regular monthly payments of $15 under this agreement, said payments being made at the office of Kistler. The payments were entered on defendants' original executed copy of the agreement, which copy is an exhibit in this case and is attached to the bill of exceptions.
The last page of the printed form of agreement is ruled into columns with appropriate headings for posting payments. The columns are headed, respectively, "Date of Payment," "Principal," "Interest," "Interest Paid To" and "Received By (Signature)." Each payment of $15 was entered in the column headed "Principal." Nothing was at any time entered in the column headed "Interest" or in the column headed "Interest Paid To." The payments were not totaled at any time and no part thereof was allocated to interest. The defendants were not supplied with a book in which to enter payments made under the contract and their only record of such payments is that appearing on the back of the agreement as above indicated. The evidence satisfactorily establishes that the plaintiff made no claim that the defendants were liable for interest until late in 1947, some eight years after the agreement had been executed. The question was then raised when the defendants tendered the plaintiff $10 as the balance remaining due of the $1,600 referred to in the agreement as the purchase price. O'Neill refused the tender and demanded interest from the date of the agreement which was computed to be $520.31. The method of computing the interest is not in dispute.
Mr. Walter F. MacQueen and Mr. James R. MacQueen, for appellee.
Mr. Ralph R. Miller and Mr. Ralph R. Thombs, for appellants.
The plaintiff claims the right to collect interest computed at 6 per cent per annum on current unpaid balances and argues four propositions, viz.:
(1) The written agreement, on its face, provides for the payment of interest; (2) the law assumes the obligation to pay interest on the deferred installments of the purchase price of land when possession is taken by the purchaser; (3) under Section 8305, General Code, the "legal rate" of 6 per cent interest applies when no rate is specified; and (4) when no rate of interest is specified the instrument is similar to a note which provides for usurious interest, which usurious interest is stricken down and, in its place, collection of 6 per cent is authorized by Section 8306, General Code.
The meaning of this instrument should be determined by following the usual and well established rules of construction. The purpose of construction is primarily to determine the intent of the parties. State, ex rel. Maher, Pros. Atty., v. Baker, 88 Ohio St. 165, 172, 102 N.E. 732.
In the paragraph which states the agreement as to price and manner of payment thereof this instrument is silent as to interest. It clearly states that the price is $1,600, payable $75 cash and the balance of $1,525 in monthly payments of $15 each. If the parties intended that interest should be paid, this was the place in the instrument to so stipulate. The court cannot rewrite the agreement and insert provisions which the parties must be presumed to have purposely omitted.
The appearance of the word "interest" in the two printed paragraphs later in the instrument does not create an obligation on the part of the purchaser to pay interest. In one such printed paragraph the language is, "* * * if any one of said installments, or the interest accrued thereon, shall not be paid when due * * *." No "interest thereon" could accrue for none was specified, except such as the law might cause to attach to past due installments. There was none past due. All installments were paid regularly. In the other printed paragraph the language is, "Now if the party * * * shall * * * pay the full purchase money aforesaid, with interest, taxes * * * at the time and in the manner above stipulated, then * * *." No time or manner of payment of interest was "above stipulated." The printed provisions of the agreement cannot be relied upon if in conflict with the typed provisions which were inserted at the time the contract was executed. Farmers National Bank v. Delaware Ins. Co., 83 Ohio St. 309, 94 N.E. 834.
No obligation to pay interest appears on the face of this instrument.
Authorities without number can be cited to support the rule that doubtful language in a contract is to be interpreted most strongly against the party who used it or the party who prepared the contract. See Farmers National Bank v. Delaware Ins. Co., supra. Also, see statement of the rule in 12 American Jurisprudence, 795, Section 252, and 1 Restatement of the Law of Contracts, 328, Section 236.
The plaintiff, O'Neill, through his agent, Kistler, drew this instrument after several days of negotiation. Kistler was an experienced dealer in real estate. He used a printed form of agreement and typed in what the parties had agreed upon as to price and terms of payment. In that paragraph, he did not mention interest. If, as plaintiff claims, interest was discussed in the negotiations, failure to mention it in the written agreement is of even greater significance under the well recognized rule that all negotiations and prior conversations are merged in the final written instrument. 17 Ohio Jurisprudence, 513, Section 417, and cases cited therein; 12 American Jurisprudence, 755.
Furthermore, the conduct of the plaintiff and his agent, Kistler, over the period of nearly eight years following execution of the instrument is significant. During all that time monthly payments were received by Kistler and were entered on defendants' copy of the agreement as payments on "Principal." No part of the payments was entered as "Interest," and no claim of right to interest was asserted until the total amount paid by defendants substantially equalled the purchase price named in the instrument. The conduct of the plaintiff tends to support the defendants' position. State, ex rel. Burgess Niple, v. Linzell, Dir., 153 Ohio St. 545, 93 N.E.2d 9; 12 American Jurisprudence, 787, Section 249.
The plaintiff has cited respectable authorities holding that, as a general rule, a purchaser of real estate who takes possession, under contract, is liable to the vendor for interest on that portion of the purchase price, payment of which is deferred. None of the authorities so cited involves facts similar to those of the instant case. In most instances the instruments indicated intent to charge interest. In none of them was the purchaser supported, in his defense, by conduct of the vendor as in the instant case.
The argument of plaintiff that he is entitled to 6 per cent interest under Section 8305, General Code, since no rate of interest is specified, is without merit. The 6 per cent rate specified in that section applies only "when money becomes due and payable." In the instant case the payments became due and payable monthly and were promptly paid. Hence, no interest can be claimed under this section of the General Code.
Plaintiff devoted considerable time to arguing an analogy between the treatment of usurious interest provisions and what he claims should be accorded this instrument where no rate of interest is specified. He undertakes to bring to his aid Section 8306, General Code. He argues that the striking down of usurious interest creates a situation exactly analogous to one where no interest is specified, and that the legal rate of 6 per cent, which the law substitutes for the usurious rate, should likewise be applied where no rate is specified. For many reasons that argument is unsound. It is sufficient to point out that in usurious transactions the parties clearly evidence their intent to charge interest, whereas in the instant case the intent seems equally clear not to charge interest at any rate.
It does not appear that the exact question now before this court has been previously decided in Ohio, but the case of Crosby v. Glick, 22 Ohio App. 466, 153 N.E. 300, involved facts very similar to those involved herein and we consider the decision reached in that case as being in harmony with our conclusions herein.
We agree with the conclusion reached by the trial court and find that the Court of Appeals erred in reversing the trial court's judgment.
The judgment of the Court of Appeals is reversed, and the judgment of the Common Pleas Court is affirmed.
Judgment reversed.
WEYGANDT, C.J., ZIMMERMAN, STEWART, TAFT, MATTHIAS and HART, JJ., concur.