Opinion
No. 35254.
February 1, 1943. Suggestion of Error Overruled May 10, 1943.
1. USURY.
Under contract for sale of land requiring purchaser to pay 10 percent per annum interest on unpaid balance of the purchase price, purchaser was not required to pay the interest since it was "usury."
2. EQUITY.
The general doctrine that no relief will be afforded against "mistakes of law" applies only to mistakes of the general law and not to the mistakes of persons as to their own private legal rights.
3. SPECIFIC PERFORMANCE.
A purchaser who was not in default as to demanded interest payment, because it was usurious, or as to unfinished condition of house built on land purchased, when he agreed to surrender contract of sale and to become vendors' tenant was entitled to specific performance of contract of sale on ground that purchaser surrendered his valuable equity under a "mistake of law" as to his private rights.
4. SPECIFIC PERFORMANCE.
A purchaser was not precluded from obtaining specific performance of contract of sale on ground that he had not paid entire purchase price when due where he paid full amount when bill was filed and payment was accepted by vendors.
5. SPECIFIC PERFORMANCE.
Equity will grant specific performance of contract to sell land even where there has been default in matter of time, if not to do so would result in great injury to purchaser.
6. SPECIFIC PERFORMANCE.
The alleged defaults charged against purchaser with respect to items of insurance and taxes did not deprive purchaser of right of specific performance of contract for sale of land, but equity required such items to be charged against purchaser before obtaining specific performance.
7. SPECIFIC PERFORMANCE.
If purchaser who was entitled to specific performance of contract for sale of land should not pay vendors the balance found to be due within time allowed, sale of land would be ordered to be made by commissioner of court out of proceeds of which vendors should be first paid (Code 1930, sec. 456).
APPEAL from chancery court of Grenada county, HON. L.A. SMITH, SR., Chancellor.
Stone Stone, of Coffeeville, for appellant.
There is not a single element of rescission or abandonment in the matters developed by the proof in this case. As a general rule the right to rescind must be exercised in toto. The contract must stand in all its provisions or fall altogether. A party cannot repudiate a contract or compromise so far as its terms are unfavorable to him and claim the benefit of the residue.
12 Am. Jur., Secs. 439, 440, 444.
See also McArthur v. Fillingame, 184 Miss. 869, 186 So. 828; Klein v. Buck and Markham, 73 Miss. 133, 18 So. 891.
A written contract may be changed or modified by a subsequent oral agreement, provided however that the new oral agreement is supported by an additional consideration.
Pritchard v. Hall, 175 Miss. 588, 167 So. 629; Edrington v. Stephens, 148 Miss. 583, 114 So. 387.
With regard to the few dollars that have never been paid by Jim Baker for taxes and insurance, his right under his plea for general relief to be allowed to pay this in the same bill where he calls rightfully for his deed, we refer to the case of Milam v. Paxton, 160 Miss. 562, 134 So. 171, which is conclusive on the right of Jim Baker to do so.
Cowles Horton, of Grenada, for appellees.
The court will be bound to note, we are sure, that appellant makes no claim whatever to a performance of his contract. That contract was clear, certain and specific. Appellant had no right whatever to any conveyance without performing the contract according to its terms. Every provision of that contract was perfectly valid and binding except the one with regard to interest; that provision was entirely waived by the appellees and at no time have they ever claimed or demanded any interest. Appellant, however, did remain bound by all of the other provisions and when the learned court below held that he had not performed his binding obligations it did so after full consideration of the testimony of both sides. Appellees showed that appellant had not performed his contract; appellant made no effort to prove performance but bases his claim entirely on the argument that every provision of the contract favorable to the appellees was of "secondary importance" and appellant's violation thereof immaterial. When the learned chancellor declined to accept this view we respectfully submit that he was not only justified in so doing by the facts but by every law applicable to contracts of this character.
Learned counsel also argues that there was no consideration for appellant's changing his relation from a prospective purchaser to a simple tenant of the property. Just as the chancellor held, appellant did, in fact, receive by an acceptance of his own proposition that such a change be made several months' free rent and absolute release from his contract. From and after the time that appellees consented to this change of situations, appellant had no further obligations to the appellees under that contract. This and the free months' rent was clearly, as the chancellor held, sufficient in law to support appellant's conduct.
This case should be affirmed on, at least, two propositions: (1) That if the learned chancellor had accepted the testimony of the appellant and not that of appellees the decree would still be correct, for appellant has never put himself in position to demand a deed. (2) That it is just as clear as can be that the learned chancellor is not manifestly in error in his findings of fact, upon which findings appellant frankly concedes that the case must be affirmed.
On November 14, 1932, appellant and appellees entered into a written agreement by which the small lot described in the contract was to be purchased by appellant from appellees, and the latter were to convey the same to appellant upon the payment of the purchase price thereof, to wit, $500. It was therein further agreed that appellant was to have a period of five years within which to pay the purchase price, but at the end of each year within that period appellant was to pay ten percent per annum interest on any part of the purchase price then unpaid.
It was further stipulated that appellant "agrees to commence at once and construct and build on said lot or parcel of land a dwelling house and keep the same insured against fire with loss payable in favor of first parties as their interest appears, and it is agreed and understood that in the event the second party makes default in any of said interest installments or taxes or insurance premiums, at the option of said first parties this contract is to terminate and become null and void." All that was said in the contract about the dwelling house is contained in the above quotation, from which it is seen that there is nothing therein which specifies the kind, size or approximate cost of the dwelling to be erected, and default in respect to the dwelling house is not included in the items for which appellants would have the right, at their option, to terminate the engagement.
Soon after the date of the contract, appellant began the construction of a four or five room dwelling house with porches, and in May, 1933, he had so far progressed with the work that he was able to move into the house with his family. But in bringing the work to this point he had exhausted his limited resources, and was thereafter able to proceed only as he could secure sufficient employment to permit him to do more, and this in the depth of the depression which then involved the entire state, as well as the nation at large. The result was that sometime about the spring of 1934, the house was still incomplete to the extent that about $125 in material was necessary to finish the building and about $70 to install sewage equipment, plus about $25 in labor, not including appellant's labor which, it is admitted, was bestowed in installing these further materials. And appellant had not been able to pay the ten percent interest on the principal of the purchase price due, according to the letter of the contract, on November 14, 1933.
This being the situation, in the spring of 1934 appellees began to insist that appellant must at once finish the house, and according to appellees' main and most dependable witness, John G. Hardy, appellees "would tell Jim all along that he had broken his contract. . . . We all met over there and saw Jim and discussed the condition of the house and told him that we would have to foreclose this contract, that we could not let it go on, the time had passed on it and the house was going to ruin." We need not quote further, but there is additional testimony to be gathered from the whole record to the same effect, and to the effect that appellees were insisting that there had been a default not only in not finishing the house earlier, but also in the supposed interest payable on the 14th of the previous November.
As a matter of fact, Jim was not in default as to the demanded interest payment because, being usury, as appellees now concede, Jim was under no obligation to pay it then, or at any other time, and he was in no coercible default in respect to the unfinished condition of the house, as we have already pointed out. But Jim is a negro and appellees are white people of some wealth and position, and the record further shows that Jim was not disposed to have any controversy with appellees, but, on the contrary, that at that time he trusted them. And appellees say that in the helpless situation in which they assumed to encompass Jim, he agreed that if appellees would furnish the material necessary to complete the house, Jim would surrender his contract and become thence their tenant of the property.
According to Jim's testimony, which appellees do not dispute, he had expended on the house and outhouses in materials and labor more than $1,600, and this under circumstances of extreme hardship, evincing a will and earnestness on his part which for one of his color was of more than ordinary merit. And, as already mentioned, and according to all the testimony, including that in behalf of appellees, all that it took and all that was expended by appellees in order to finish the house, including sewerage and sanitary equipment, was the said sum of approximately $220.
If, then, Jim did surrender this valuable equity, in which he had put so much, for the poor privilege of becoming a tenant in his own house, as the chancellor held that he did, it is inescapable from this record that he did so under a mistake of law as to his private rights and interests.
In 2 Pomeroy Eq. Jur. (4th Ed.), Sec. 842, it is said: "The doctrine is settled that, in general, a mistake of law, pure and simple, is not adequate ground for relief. . . . If the mistake of law is not pure and simple but is induced or accompanied by other special features giving rise to an independent equity on behalf of the mistaken party, such as inequitable conduct of the other party, there can be no doubt that a court of equity will interpose its aid." And the author points out that there are courts which hold that the general doctrine that no relief will be afforded against mistakes of law applies only to mistakes of the general law, and not to mistakes of persons as to their own private legal rights and interests. This court, as disclosed in Railway Co. v. Jones, 73 Miss. 110, 121, 19 So. 105, and Hoy v. Hoy, 93 Miss. 732, 751, 48 So. 903, 25 L.R.A. (N.S.) 182, 136 Am. St. Rep. 548, 17 Ann. Cas. 1137, is aligned with those holding as last above stated. See also Williston on Contracts (Rev. Ed.), Sec. 1584 et seq., wherein among other considerations it is mentioned that relief may be granted where the mistake has been induced by the opposite party, or where there has been no substantial change of position by the other party and considerable hardship would be imposed upon the one mistaken.
The case at bar comes within the foregoing principles. The supposed second agreement, if made, was ineffective to displace the original contract, and appellant having paid the entire principal sum, together with within a few dollars of the sums advanced by appellees in and after the spring of 1934, is entitled to the relief of specific performance which by his bill he has prayed.
On the point made by appellees that appellant did not perform his contract by paying the entire $500 when due, a sufficient reply is that he had paid the amount when the bill was filed. The written contract, as originally made, striking therefrom the illegal portions, remained in full force as we have already said, and the payments received must be credited to the contract in force, not upon a spurious or pretended contract sought to be set up instead, and the payments received having been sufficient to pay the contract amount and within a few dollars of the advancements, it is not available now to interpose the defense that these payments were not made on time. The acceptance thereof has foreclosed that issue. The rule in such cases is that even when there has been default in matter of time, equity will still grant relief if not to do so would result in great injury to the purchaser. 58 C.J., p. 1074, Sec. 328. As said in Packard v. Booth, 62 Wn. 333, 335, 113 P. 774: "Ordinarily, where a great injury will result to a party to a contract if the other party is allowed to repudiate it, it will be specifically enforced, notwithstanding some breach of its conditions may have been made by the party seeking to have it enforced, and this, particularly, if the breach is a violation of some condition relating to the payment of the purchase price; the governing principle being to give aid to that party having the greater equities."
Here, as already stated, appellees were out of pocket only the sum of $220, for which, being put into the house, they were amply secured under the law. And for this, if they were allowed to prevail, they would get in return a house and outhouses which cost appellant approximately $1,600 plus approximately $700 paid them in cash by appellant, or a total of approximately $2,300 — for an outlay of only $220. Nothing is necessary beyond these stark figures to disclose who has the greater equities here.
The decree should have been for appellant, and we would so order except for the details now to be mentioned. Appellant should be charged (1) with the principal sum of $500 plus interest from but not before November 17, 1937, at the rate of six percent per annum. (2) With the $220, or whatever the exact sum is found to be, for the advances for material and labor made on the house by appellees with like interest from the dates payments therefor were made by appellees. (3) With the small insurance premiums on the house paid by appellees, and (4) with the taxes if there be any fair or proper method by which the amount of the taxes can be ascertained. The chancellor was correct in his holding that the alleged defaults charged against appellant in respect to the items of insurance and taxes were not such as to deprive him of the right to a specific performance, but equity requires them to be charged against appellant nevertheless. Against the foregoing four items appellant is to be credited with every payment he made to appellees, including the $20 for what is called in the record the "Tin," the debits and credits to be calculated upon the statutory partial payments plan. So accounting, if it be found that appellees have been fully paid, they shall be directed to execute to appellant forthwith a warranty deed. If a balance be found due by appellant, he will be ordered to pay to appellees within a short period of time the balance so found, for which he will be entitled to a deed. In default of the payment within the time allowed, a sale of the property will be ordered to be made by a commissioner of the court and that out of the proceeds the appellees shall be first paid. And a commissioner may be appointed to make the conveyance above mentioned, as provided by Sec. 456, Code 1930.
Reversed and remanded.