Opinion
Decided December 30, 1929.
Real property — Contract of purchase and sale — Action for earnest money and cross-petition for specific performance — Unenforceable judgments and unsatisfied mortgage — Not incumbrances justifying refusal to perform, when — Time of essence of contract in law, but not equity — Time of tender sufficient, when — Specific performance granted if title good when decree rendered.
1. Judgments unenforceable against property were not "incumbrances" which would justify purchaser in refusing performance on question of title as affected by such judgments.
2. Where sufficient of purchase money was to be allotted to discharge mortgage on property, purchaser could not refuse
performance because of mortgage.
3. Time could be made of essence of realty sale contract by express agreement or by circumstances or by length of time which would make it inequitable to compel specific performance.
4. In courts of law, time is considered of essence of all contracts, though under equitable rule, this is not so.
5. Where vendor was to make tender within 60 days from June 2, tender on August 13 held sufficient.
6. If vendors are able to present good title at time of decree, specific performance may be decreed.
ERROR: Court of Appeals for Hamilton county.
Messrs. Strother, Greenberg Schubert and Miss Vera A. Woeste, for plaintiff in error.
Mr. Julius R. Samuels, for defendants in error.
This suit grows out of a written contract for the purchase and sale of real estate. The contract is as follows:
"Cincinnati, Ohio, June 2, 1928.
"In consideration of one dollar ($1.00) receipt of which we hereby acknowledge we agree to sell our property, 721 East McMillan, situated in the suburb of Walnut Hills, City of Cincinnati, Hamilton County, Ohio, on the south side of East McMillan St., being 25 feet more or less on East McMillan St. by 102 feet more or less in depth running through to an alley in the rear, with all buildings and improvements thereon to Sol Schaengold, his heirs, or assigns at the price of Twenty Thousand Dollars ($20,000.00), net to us, title to be free, clear, and unincumbered, with full release of dower.
"This option is extended to Sol Schaengold, his heirs or assigns, and is to be good and binding to noon, July 1, 1928. It is agreed that purchaser is to have 60 days from date of purchase to take title.
"Excepting taxes due and payable December, 1928, and thereafter, to be paid by Sol Schaengold.
"Will Dick.
"Rose Dick.
"Witness:
"Joseph Greenberg.
"June 2, 1928.
"I hereby exercise my option to purchase the above property and give herewith my check for $1000.00 as deposit, said deposit to be applied on purchase price.
"Sol Schaengold."
The plaintiff below, Sol Schaengold, plaintiff in error here, brought an action to recover from Will Dick and Rose Dick the $1,000 deposited on the purchase price under the contract. Defendants below, defendants in error here, resisted the claim, and, by way of cross-petition, sought specific performance of the contract. The trial court dismissed the plaintiff's petition, and entered a decree on the cross-petition, granting specific performance. From that decree, error is prosecuted to this court.
The plaintiff's grounds for refusal to perform the contract rest on the following claims: That there was no tender of title to the property, clear, free, and unincumbered, made within the time limit of the contract; that there were unsatisfied judgments, some of which were had through the foreclosure of mechanic's liens, appearing on the records of the county; and that there was an uncanceled mortgage of $11,000 held by the Eagle Savings Loan Association.
The record discloses that on August 1, 1928, the defendants tendered to the plaintiff, in the office of the plaintiff's counsel, a deed to the property, together with the calculated balance due on the mortgage to the Savings Loan Association, and demanded payment of the balance of the purchase price. Plaintiff refused to proceed, and demanded the $1,000 deposit, for the reason that the title to the property was not clear. There is some dispute in the evidence as to just what was said, but the trial court could well conclude from the evidence that such tender was made.
It appears that there were some actions in the court of common pleas in the foreclosure of mechanic's liens, and for personal judgments, but the record discloses that the mechanic's liens had been canceled of record more than a year prior to the making of the contract in question. It also discloses that these judgments had been paid, but that no formal entry of satisfaction had been placed on the record. Ten days later the defendants placed of record satisfaction of the judgments, which had long since been paid. Three days after the entering of the satisfaction of the judgments, defendants again tendered a deed, with the calculated balance due the Savings Loan Association, but performance was refused by the plaintiff.
Disposing of the judgments, it is sufficient to say that the judgments, not being enforceable against the property, were but clouds on the title at the time of the tender of August 1, 1928, and could not be considered as an incumbrance thereon, and would therefore not affect the marketability of the title. It was therefore not an incumbrance which would justify the plaintiff in refusing performance on the question of the title as affected by these judgments.
Neither would the mortgage excuse performance when it was presented that sufficient of the purchase money was to be allotted to the discharge of the mortgage held by the Savings Loan Association. The evidence is sufficient to show that this mortgage was to be taken care of in the closing of the transaction.
It is argued by counsel for plaintiff in error that time is of the essence of this contract, and that no clear, free, and unincumbered title being presented within the sixty days provided in the contract, any tender subsequent thereto was of no avail.
If the tender of August 1 could be questioned, this would not relieve the plaintiff from performance, since, under the law, time could only be made of the essence of the contract by the express agreement of the parties, or by circumstance, or by length of time which would make it inequitable to compel specific performance.
There is no provision in this contract expressly making time of the essence thereof, nor do we find in the record any circumstances which would change the situation. In courts of law time is always considered as of the essence of all contracts, but in equity this is not so, and under the equitable rule time is not of the essence of this contract. Therefore the tender of August 13 would be sufficient, if the tender of August 1 could be questioned.
It has been decided, and is the law, that a mortgage, to be taken care of out of the purchase money, is not an obstacle to specific performance of a contract. It has also been held that, if the parties are able to present a good title at the time of the decree, specific performance will be decreed. It has been held that, where there are liens to be discharged, same may be provided for in the decree. The extent to which courts will be authorized to give the relief of specific performance is shown in the case of Richards v. Doyle, 36 Ohio St. 37, 38 Am. Rep., 550. The case here, warranting a decree of specific performance, is much stronger than the case of Richards v. Doyle. We therefore hold that the defendants, on their cross-petition, are entitled to a decree of specific performance under the facts in the case, which was properly granted. However, the decree provides:
"It is further ordered, adjudged and decreed that the plaintiff shall within fifteen days from date hereof pay to the defendants the balance of the purchase price of said property due under the contract entered into between plaintiff and defendants to wit: Nineteen Thousand Dollars ($19,000.00) together with interest at the rate of six per cent. per annum from the 2nd day of August 1928 until paid, less a deduction for the amount due The Eagle Savings Loan Association on the mortgage held by it on the property aforesaid, which latter amount due The Eagle Savings Loan Association shall be paid to it by said plaintiff, in extinguishment of said mortgage."
It will be noted in this paragraph the court gives a decree for interest on the balance of the purchase money from the date of the tender, from the 2d day of August, 1928, until paid. This part of the decree would give to the defendants interest on the unpaid balance and at the same time possession of the property for the period and any income derived therefrom. We know of no rule of law or any decisions which go this far. It would seem inequitable for the defendants to have the property, and at the same time receive interest on the full value thereof, as interest on money.
The only relief asked by the defendants in the cross-petition is specific performance of the contract, and that is all they are entitled to. In other words, upon the delivery of the deed, they are entitled to have the balance of the purchase price, less the amount required to discharge the mortgage of the Savings Loan Association.
The decree may therefore be modified, eliminating the question of interest, and, as so modified, will be affirmed.
Judgment modified and affirmed as modified.
CUSHING, P.J., and ROSS, J., concur.