286 UNIV. OF CALIFORNIA 11 CALIFORNIA LAW REVIEW VENDOR AND PURCHASER: TIME OF THE ESSENCE: WAiver of THE EFFECT OF CONDUCT-In California the principle that where, in an installment contract for the sale of land, time is made of the essence, and the vendee defaults, the vendor is entitled to retain the payments made to him under the contract, is definitely established by the case of Glock v. Howard and Wilson Colony Company,' which is followed in subsequent decisions. Our courts choose rather to enforce such stipulations strictly, protecting business interests by uniformly enforcing certain rules concerning contracts,and by refusing to make over the contract for the parties, than to adhere to the view that time cannot be made strictly of the essence in equity. The California view is supported by at least one authoritative text writer, and it has even been held in this state that the provision making time expressly of the essence is unnecessary and wholly immaterial in reaching this result." But where we find a strict enforcement of forfeiture the courts are prone to apply the doctrines of "waiver" loosely, and so the rule in the above case was later modified by Boone v. Templeman." The rule there laid down was "that where the entire course of business between the parties has amounted to a waiver of the condition, a forfeiture cannot be declared without notice and demand; and further, that allowing the total purchase price to become due makes the tender of a deed a condition precedent to declaring the vendee in default." 9910 This view is taken in many later cases11 and so, in view 1 (1898) 123 Cal. 1, 55 Pac. 713, 69 Am. St. Rep. 17, 43 L. R. A. 199. 2 Odd Fellows' Savings Bank v. Brander (1899) 124 Cal. 255, 56 Pac. 1109; Oursler v. Thatcher (1908) 152 Cal. 739, 93 Pac. 1007; Skookum Oil Co. v. Thomas (1912) 162 Cal. 539, 123 Pac. 363; Smith v. Post (1914) 167 Cal. 69, 138 Pac. 705; Cross v. Mayo (1914) 167 Cal. 594, 140 Pac. 283; Schwerin Estate Realty Co. v. Slye (1916) 173 Cal. 170, 159 Pac. 420; Heden v. Point Reyes Land Co. (1921) 185 Cal. 121, 196 Pac. 44; Tomboy Gold and Copper Co. v. Marks (1921) 185 Cal. 336, 197 Pac. 94; Fresno Irrig. Farms Co. v. Canupis (1918) 39 Cal. App. 184, 178 Pac. 300, 37 Cal. App. Dec. 22; 8 California Law Review, 62. 3 Brown v. Ulrick (1896) 48 Neb. 409, 67 N. W. 168; 29 Harvard Law Review, 791. 4 Vernon v. Stephens (1722) 2 Peere Wms. 66, 1 Ames Equity Cases. 338. 5 Pomeroy's Equity Jurisprudence 864. 6 Nance v. Avenall (1915) 147 Pac. 583, 584, 26 Cal. App. Dec. 551; 2 Williston on Contracts, p. 1513. 7 "The expression 'waiving a forfeiture' is incorrect. Election is the applicable doctrine; and the act is unilateral." Ewart, Waiver in Insurance Cases, 18 Harvard Law Review, 366. 8 "Strict doctrines as to forfeitures inevitably produce loose doctrines as to 'waiver' where, before time for performance, vendor signifies his intention not to insist on timely or exact perfomance and purchaser, in reliance thereon, acts accordingly; the principle of Equitable Estoppel is quite sufficient to preclude insistence upon the condition to purchaser's injury." 33 Harvard Law Review, 952. (1910) 158 Cal. 290, 110 Pac. 947, 139 Am. St. Rep. 126. 108 California Law Review, 62. 11 Stevinson v. Joy (1912) 164 Cal. 279, 285, 128 Pac. 751; 1 California Law Review, 300; Myers v. Williams (1916) 173 Cal. 301, 159 Pac. 982; Butte Creek Consol. D. Co. v. Olney (1916) 173 Cal. 697, 708, 161 Pac. 260; Her of this modification, the vendor is held to have waived his right to enforce the forfeiture strictly by accepting installments after maturity.12 And the courts have also presumed a waiver from the general conduct of a vendor when such conduct shows an intention not to rely upon the condition precedent.13 The effect of these decisions has been that, although provisions making time of the essence are enforced strictly in this state, yet the practical result has been much the same as in those jurisdictions which take the view that the real effect of such a stipulation is that it is merely evidence which may, or may not, show that time was so important that delay by the plaintiff should bar him from equitable relief. In the case of Brown v. Chowchilla Land Co.14 the parties entered into contracts for the purchase and sale of certain real estate, which provided for monthly installments to be paid on the interest and purchase price, and expressly provided that time should be of the essence of the contract. The thing which distinguishes this case from the ordinary one is that the parties further agreed that "the waiver by the seller of any breach of any covenant or agreement herein contained on the part of the purchaser shall not be deemed or held to be a waiver of any subsequent or other breach of said covenant or agreement, nor a waiver of any other covenant or agreement herein contained." By this clause the parties actually contracted away the effect of the waiver of any breach upon subsequent breaches, irrespective of whether notice that the vendor again wished to assert his right to enforce the forfeiture had been given or not. In the instant case the plaintiff became in arrears in his payments, but after a lapse of nearly three years he made an overdue payment which was accepted by the vendor. In the suit for specific performance, instituted after the vendor later refused to convey, the court denied relief and enforced the forfeiture, holding that where a contract for the sale of real estate includes a provision similar to the above, an acceptance of overdue payments does not constitute a waiver of the right to declare the contract forfeited for subsequent overdue payments, and that a notice of the revival of the right of forfeiture is not required. In view of the above decision most installment contracts in the future will undoubtedly contain such a covenant, thereby assuring a strict enforcement of the provision making time of the essence. The result is that, instead of the more liberal view, we now find ourselves back to a rule of strict enforcement of forfeiture under such mosa Beach Land and Water Co. v. Law Credit Co. (1917) 175 Cal. 493, 495, 166 Pac. 22; 8 California Law Review, 62; Karl v. Andrews (1919) 29 Cal. App. Dec. 462, 42 Cal. App. 513, 183 Pac. 838; Lemle v. Barry (1919) 181 Cal. 1, 183 Pac. 150; 181 Cal. 5, 183 Pac. 148; Newell v. E. B. & A. L. Stone Co. (1919) 181 Cal. 388, 184 Pac. 659, 9 A. L. R. 993; Hoppin v. Munsey (1921) 185 Cal. 678, 688, 198 Pac. 398; Kerr v. Reed (1921) 187 Cal. 409, 202 Pac. 142. 12 Boone v. Templeman, supra, n. 9. 13 Karl v. Andrews, supra, n. 11. 14 (Sept. 26, 1922) 39 Cal. App. Dec. 133, 210 Pac. 424. 288 11 CALIFORNIA LAW REVIEW contracts, unalleviated by the doctrines of waiver. Harsh though this rule may seem, it follows as a logical and inevitable conclusion as long as our major premise remains the view typified by Glock v. Howard and such cases. Relief from this strict doctrine lies in changing the major premise. The question which such a situation presents is merely whether or not parties can contract that their conduct will have a different effect than that which it would naturally have had if there had been no stipulation. In relieving against forfeitures the courts have really refused to give legal effect to the intention of the parties as expressed by their agreement, and this constitutes an exception to the rule that persons of full capaciy to contract are bound by their agreements.15 This is the situation where the courts refuse to enforce the waiver by a mortgagor of his equity of redemption.16 But the mortgage case is distinguishable from an agreement to waive the effect of the parties' conduct when it might otherwise amount to a waiver of the provision making time of the essence. In the former case equity will interfere because of the duress of circumstances, for, as a California court has said, "debtors, under the force of pressing necessities, will submit to almost any exactions for loans of a trifling amount, compared with the value of the property." Now, the contract here, by which the parties chose to waive the effect which their conduct would normally have had under the law in California, does not seem to be a contract which is inherently harsh or unjust in its own nature, nor one which would warrant interference, on the basis of public policy, with the freedom of contract of the parties. From the standpoint of justice to a vendee who has defaulted the result reached in this case may seem to be too harsh, but the fault lies, not in the decision of the court in the instant case, but rather in the fact that we have kept to the rule of strict forfeiture in this state, seeking to get around it by waiver, instead of adopting a more equitable rule. It is the application of such strict formulae as this that prompts commentary on the law of today such as is contained in the following lines of Mr. H. G. Wells: "Existing law seems to him. (the writer) to be based upon a confused foundation of conventions, arbitrary assumptions, and working fictions about human relationship, and to be a very impracticable and antiquated system indeed ́; he is persuaded that a time will come when the whole theory and practice of law will be recast in the light of a well developed science of social psychology in accordance with a scientific conception of human society as one developing organization and in definite relationship to a system of moral and intellectual education. He contemplates the law and lawyers of today with a temperamental lack of appreciation."18 W. V. C. 15 20 Michigan Law Review, 646. 10 2 Story's Equity Jurisprudence, 399; Vernon v. Bethell (1762) 2 Eden 110, 113; Pierce v. Robinson, Adm'r (1859) 13 Cal. 125, 126. 17 Pierce v. Robinson, Adm'r, supra, n. 16. 18 H. G. Wells, The Outline of History, p. 537. |