Stevenson vs. Maxwell

Stevenson vs. Maxwell. Where the vendee in a contract for the purchase and sale of real estate, takes possession of the property as owner without having paid-the purchase-money, he is hound to pay interest. The rule, it seems, is the same whether the land is or is not productive, so long as the possession of the vendee is undisturbed, and the vendor is not in default. And where the execution of the deed and the payment of the purchase-money are to he simultaneous acts, the mere omission of the vendor to give the conveyance before any demand thereof or offer to pay the purchase money, is not a default within the meaning of the rule. When, in a contract for the sale of lands, the purchase money is to be paid or secured and the conveyance executed on a particular day, and neither party performs or offers to perform on the day, neither can maintain an action at law upon the contract. lu such a case, however, either party may claim specific performance in equity, making the offer incumbent upon him in the bill; and the failure to make a tender before the commencement of the suit will only affect the question of costs. Per Gabdinee, J. The complainant and defendant were jointly interested in a lease of vacant and unimproved city property. They had also an equitable title to the reversion under a covenant of the lessor contained in the lease to convey the property in fee. The complainant agreed to sell to the defendant all his interest in the property, the conveyance to be given, and tire purchase money paid or secured, on a given day named in the contract. The day passed, nothing being done by either party towards the performance of the contract; but the defendant subsequently went on and improved the property by building stores, &c. and received large rents and profits; and in an account afterwards stated between the parties, the defendant was charged with the purchase money and interest, but not with any portion of the rents. Held, that the possession and improvements of the defendant must' be referred to the contract of sale and not to the lease, and that he was bound to pay interest on the purchase money. Stevenson v. Maxwell, 2 Sandf. Ch. 273, reversed. Appeal from the late court of chancery, where the bill was filed by John B. Stevenson against Maxwell, and the heirs, devisees, and legal representatives of Thomas Stevenson, deceased. The case, so far as necessary to be stated, was as follows : On the 14th of November, 1828, the complainant and Maxwell became the purchasers from one Bradshaw of a lease of a lot of land on Cedar-street, New-York. and of adjoining lands. The lease had been executed by the said Thomas Stevenson to Bradshaw, and contained a covenant to convey the property in fee at a stipulated price. The title of Mr. Stevenson had been transmitted to sundry persons under his will, among whom the complainant and Maxwell took interest for life. The purchase of the lease by the complainant and Maxwell was made under an agreement between them, the first, second, sixth and eighth clauses of which were as follows: 1. “ Hugh Maxwell is to advance the sum of seven thousand dollars to pay for the transfer of the lease now held by the said Bradshaw, and the said John B. Stevenson is to pay the said Maxwell, the amount of interest on the said sum of seven thousand dollars.” 2. “ The amount of rent to be received for the said premises, by the said Maxwell, is to be equally divided between him and the said Stevenson, after payment of the interest on the said sum of seven thousand dollars, the taxes and repairs, and whatever other charges are fairly to be made concerning the premises.” 6. “All advances to be made by the said Maxwell in the purchase of the said lease, or for, or by reason of any other payments which may be made by the said Maxwell, of or concerning the carrying into effect the object of this agreement, shall be allowed to the said Maxwell, with interest thereon, and the interest of the said Stevenson subjected to the payment of all such advances.” 8. “ The conveyance and assignment, and all other legal proceedings concerning the premises, shall be in the name of the said Maxwell, and the same to be held subject to all claims for or by reason of any advances or responsibilities the said Maxwell may make or enter into by reason of the premises.” In pursuance of the agreement, the lease was assigned by Bradshaw to Maxwell, who took possession of the premises in November, 1828, for the benefit of the complainant and himself. In 1829, Maxwell, in the behalf of himself and the complainant, offered to pay to the legal representatives of T. Stevenson the requisite sum for the purchase of the property in fee, pursuant to the terms of the lease, and requested a performance of the covenant therein contained to convey the title. On the 29th of January, 1830, the complainant agreed to sell to Maxwell his undivided half of the lot on Cedar-street at the rate of $500 per foot, amounting in all to $7708. It was at that time a vacant and unimproved lot. The complainant executed a written agreement for the sale, covenanting, in consideration of the price above stated to be paid or secured on the first day of May then next, to execute a full and perfect conveyance of all his right and interest in and to the moiety of the lot, and that when' the legal title thereto was obtained he would do any act necessary to convey his interest therein on payment of the stipulated price No conveyance or transfer of his interest was executed by the complainant to Maxwell on the said 1st of May, 1830, nor until after the decree in this cause: nor did Maxwell make any tender of the price or of security, nor request a conveyance. No active measures were taken to obtain the title from the persons in whom it was vested under the will of T. Stevenson until this suit was instituted in 1836. That object was accomplished under a decree made in the cause on the 27th of March, 1840. Maxwell erected expensive and valuable stores on the lot in 1830 and 1831, and his nett income from the lot since their completion was $700 a year over and above all charges, the interest on the cost of the lot and of the improvements. He also made all the improvements for the joint benefit of himself and the complainant upon other parts of the land embraced in the lease to Bradshaw. In March and April, 1831, a correspondence took place between the complainant and Maxwell in relation to the sale of the complainant’s interest in this lot, which is more particularly referred to in the opinion of the court. The difficulty between the parties, according to the testimony of Mr. Ferris, was settled as follows : Maxwell agreed to charge the complainant interest at the rate of 6 per cent for advances made on their joint account, in relation to the property and improvements, and to charge nothing for his services. Maxwell to retain the lot sold, or claimed to be sold, under the agreement of the 29th of January, 1830. In August, 1833, an account was made out by one Golf, an accountant, who was employed by the complainant, and stated the account from materials furnished by Maxwell, who paid him for his services. Copies of this account were furnished to the complainant and Maxwell, neither of whom, so far as it appears, made any objection to the same down to the time of the filing of the bill. The bill charges the statement of the account, and that in it Maxwell was charged with the purchase money of this lot according to the agreement, being $7706,34, and with the interest thereon, being $1620,83—which includes interest from the date of the agreement of sale between the complainant and Maxwell—and the complainant charged with one half of all the disbursements of Maxwell for the purchase of said lease, (Bradshaw’s,) with payment of the assessments and of the disbursements before mentioned, and all other disbursements and expenses in relation to the said premises, and with interest at the .rate of 6 per cent, &c. The answer of Maxwell states, “ that although it may be true that the said account referred to is correct, so far as it goes, and as to the items therein contained and he (the defendant) believes that it is so, he denies that it contains a true or correct statement of all the pecuniary transactions between him and the complainant; and in support of this denial says that there was a private account between them not forming a part of the account stated in August, 1833, on-which the complainant was indebted to him in the sum of SI028,48—according to schedule B, annexed to the answer. The bill asked for an account, and for a specific performance. The suit seems to have been an amicable one to the time of taking the account before the master. The assistant vice chancellor of the first circuit, on the 27th of March, 1840, made a decree in the cause, whereby he directed, among other things, that it be referred to a master to take an account between the complainant and Maxwell touching their respective - receipts and disbursements for or on account of any of the demised premises, and the improvements and buildings thereon; and that in taking such account the master charge the said Maxwell with the purchase money of the lot on Cedar-street., according to the agreement between him and the complainant, and allow said Maxwell interest at the rate of six per cent on his advances, but no commissions; and that the master make all proper allowances or charges between the complainant and said Maxwell, including their private accounts not relating to the premises, and ascertain the amount to be paid by them respectively. The master, in taking the account, allowed Maxwell six per cent for advances made by him, and charged him with interest at the rate of seven per cent upon moneys received by him and charges against him. This was the subject of the second exception of Maxwell to the master’s report. The master also allowed the complainant interest at the rate of seven per cent on the contract price of the lot on Cedar-street. This was the subject of the third exception ; Maxwell insisting that no interest should he allowed. Both exceptions were allowed by the assistant vice chancellor, (See 2 Sandf. Ch. Rep. 273,) and his decision was affirmed by the chancellor on appeal. The complainant appealed to this court. W. Silliman, for appellant. Wm. C. Noyes, for respondent. [MAJORITY — Gardiner, J.] Gardiner, J. delivered the opinion of the court, in which he first considered the second exception, and stated as the conclusion that the exception was not well taken, and should not have been allowed by the court below. [This part of the opinion is omitted, as embracing nothing of general interest.] In regard to the third exception he proceeded as follows. As to the third exception. The master had charged interest upon the purchase money agreed to be paid by the defendant for the lot on the north side of Cedar-street, from the 6th day of May, 1830. In this the court below have decided that he erred. This is the more important question in the case. The agreement for the sale of this parcel was made on the 29th of January, 1830. According to which the complainant “in consideration of $500 per foot, to be paid, or secured, on the first day of May thereafter, covenanted to execute a full and proper conveyance of all his right and interest in the moiety of said lot, and then, when the legal title was obtained, he would do any legal act to convey his interest in said lot upon payment of the money aforesaid.” It is objected that the complainant is not entitled to interest. 1st, Because the defendant did not take possession under the agreement; and 2d. Because the complainant was in default in not tendering a conveyance. 1st. As to possession. At the date of the above contract, the parties were jointly interested in this property, under the lease executed by the owner in fee, the father of the complainant, to Bradshaw, and assigned by the latter to Maxwell, for his own benefit, and that of the complainant. Maxwell therefore had-the legal title to the possession of all the premises embraced in the lease, including the parcel- in question. He erected valúa ble stores on the lot contracted to him, in 1830, and the year following; and other valuable improvements, in building and otherwise, were made upon the residue of the property by his direction. And the question is whether the possession and control of this parcel of the premises are to be referred to the lease, or to the contract, in exclusion of the complainant, and as sole owner. If the defendant claimed to hold under the lease, then by the 2d article of the agreement of Nov. 28, 1828, the rent of all the premises including the lot in question, was to be equally divided between Maxwell and the complainant, “ after deducting all charges fairly made by the former concerning the premises.” The defendant should therefore have charged the advances made by him for the improvements, and credited the rent. He did neither one nor the other; on the contrary, in the account stated in 1833, by the concurrence of both parties, no credit even for ground rent is given to the complainant, for this lot, and Maxwell is charged with the purchase money and interest thereon, from the date of the agreement. There can be no question that Maxwell made the improvements on the parcel of the land for himself exclusively, without recognizing the right of the complainant to be consulted as to expenditures, or to an account of the profits. The contrary has never been claimed or pretended by him at any time. There cannot be a more decisive, or unequivocal act of possession, than the erection of buildings upon the lot contracted to him, for his own benefit, and the receipt of the whole rents and profits to the exclusion of his co-proprietor. The evidence leaves no doubt upon my mind that the defendant was in possession under the agreement. The rents and profits exceeded the interest upon the purchase money, after deducting all charges ; and he is bound upon every principle of equity and justice to pay interest, unless the complainant has forfeited his claim to it by his misconduct. His alleged misconduct consists, in not tendering a conveyance of his equitable right to the defendant. This does not amount to a default. The purchase money was to be paid or secured on the first of May, and it was as much the duty of the defendant to pay at the time stipulated, as of the vendor to convey. Neither could sue at law, without a tender of a deed by the one party, or of the purchase money or security by the other. Either party might, however, go into equity for a specific performance, and make the offer incumbent upon him in the bill; and the failure to make a tender, before the commencement of the suit, would only affect the question of costs. (12 Vesey, 25.) The most that can be said is, that the complainant did not put the defendant in default. Not that he was in default himself. This is not sufficient to excuse the payment of interest. Sugden says it must be a strong case, clearly made out, in which a purchaser shall not pay interest where he has received the rents and profits. (3 Sugden on Vendors, 101, ch. 16 ; 8 Vesey, jr. 1489.) Here the defendant had the benefit of the purchase money. His situation is the same as if he had received a conveyance and given security according to the contract, when he must have paid interest. He was compelled to borrow to make improvements; the money was therefore of importance to him. In addition to which he received all the rents and profits. A weaker case for exemption from the payment of interest, can scarcely be imagined. In Flodyer v. Cocker, (12 Vesey, 27) which strongly resembles the present in its main features, it was held that “ the vendee, by taking possession under a contract of sale, proceeds upon the supposition that the contract will be executed, and therefore agrees from that day he will treat it as executed. The act of taking possession is an implied agreement to pay interest.” The fact that the lot was unimproved when sold, does not vary the equity of the case. It was vacant when purchased by these parties, but we cannot suppose that after paying §6000 for opening a street, they intended it should remain so. They designed to improve it. ' The contract deprived the complainant of the right to do this on his own account or in conjunction with the defendant, and transferred that privilege to the latter exclusively. And the parties have agreed that the complainant’s interest, to which this right of improvement was incident, was worth $7000 and upwards. The defendant has treated the contract as executed and exercised that privilege, and for aught I can perceive should pay interest. Upon general prim ciples, I am inclined to think that whenever a vendee takes possession of premises, as owner, under a contract of sale of this description, he is bound to pay interest, whether the land is 01 is not productive, so long as his possession is undisturbed, and the vendor is not in default; and that the omission to execute a conveyance before demand and an offer to pay the purchase money by the vendee, is not a default within the rule. It was urged that the complainant had repudiated the agreement, and some weight seems to have been given to the suggestion by the vice chancellor and chancellor. There was a misunderstanding between the parties in 1831, as appears by their correspondence. But we have no means of judging of the merits of that controversy. The, complainant insisted that the writing oí the 29th of July, 1830, was a consent merely to unite with the defendant in a sale to a third person,' and did not give the right to the defendant to become the purchaser. The latter in his reply says nothing directly upon the subject of that agreement, but claims that the Bradshaw lease had been purchased by him, and as assignee, he demands a conveyance of the complainant, as one of the heirs of the elder Stevenson; but with a view to ascertain the amount to be paid to him for that conveyance, he proposes to adjust the claim of the complainant under the agreement of the 29th of January. So far as we can judge from the correspondence, both parties insisted upon grounds from which they subsequently receded. But as early as 1833, through the interference of friends, the whole matter was adjusted. The agreement was to stand confirmed by the complainant, and in consideration thereof, Maxwell was to waive all claim for commissions and services in making improvements, and receive interest at the rate of 6 per cent on his advances made on joint account of the parties. An account was shortly afterwards made out by an accountant who was employed by the complainant, and furnished with the materials from which it was compiled by Maxwell, and paid bj him for his services; a copy of which was left with each of the parties, and acquiesced into the time of taking the account before the master. In that account, Maxwell was charged with the purchase money of this lot; and interest from the time of .he purchase. This account is referred to in the bill, and admitted by the answer of the defendant according to his belief to be correct so far as it goes, but that it does not embrace a private account, in his favor, against the complainant, and was therefore not a settlement of all the pecuniary transactions between the paities. The items for the purchase money and interest are distinctly admitted in the answer as constituting a part of the account. No objection is there made, nor any of the matters, now alleged, as constituting an equitable ground of an exemption from the payment of interest; no pretence that the defendant has not always had possession under the contract, or that it was repudiated by the complainant, or that a demand was ever made of a conveyance, or that one could not have been obtained whenever required, upon payment of the purchase money, or by furnishing the security mentioned in the contract. In the absence of all allegations of this sort, and when a man of the defendant’s professional standing has sworn to his belief that a charge for interest was correct, courts and their officers are fully authorized in assuming it to be so. The conclusion, to my mind, is inevitable, that the defendant is either mistaken in his answer or wrong in his exception. I think the master right in his report, and that the decrees of the chancellor and vice chancellor should be reversed, so far as relates to the 2d and 3d exceptions, with costs in the courts below, but without costs upon this appeal. Ordered accordingly.