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1 Robbins.

Cranwell v. Clinton Realty Co.

vendee, unless he shows that he tendered to the vendee a proper deed and demanded payment, which was refused. Flandrau v. Albanesius, 63 N. J. Eq. (18 Dick.) 800 (Court of Errors and Appeals, 1902); Leaird v. Smith, 44 N. Y. 622.

There is no evidence in this case that the realty company ever tendered a deed to the vendee.

The real question that I find necessary to determine in this case is whether the defendant, the realty company, by reason of the arrangement alleged to have been made on November 6th, 1903, or by reason of the notice given to Cranwell, dated November 11th, 1903, acquired the right to rescind or terminate the original contract on account of default by Cranwell.

As I have stated before, I do not find that at the conversation between Wright, Butts and Cranwell, held on November 6th, any agreement was arrived at by which the company could terminate the contract at once, if Cranwell did not pay the taxes and interest.

The subject under discussion at that interview was the length of extension that the company would give Cranwell. He wanted many months, and they would not accede to his desire.

They finally agreed that if he would pay the taxes and interest they would extend the time until the 1st day of February, 1904. The circumstances concerning the sending of the check, in pursuance of this arrangement, have been heretofore detailed. With respect to the notice dated November 11th, 1903, it should first be observed that they do not therein demand that he pay the balance due upon the purchase price or suffer a loss of his contract, but demand that he shall pay the taxes and interest within the week or they will cancel the contract.

Whatever effect in equity might be given to a notice from the vendor to the vendee that he must settle within a specified time or lose his right under the contract, in the case at bar there are mitigating circumstances in favor of the vendee.

It will be recalled that the testimony shows that a check for the interest was sent on November 10th, and that the notice was dated November 11th. On the last-mentioned day, and before that notice was received by Cranwell, Cranwell's son met Luxton

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and was informed by him that such a notice was on the way, and when the younger Cranwell told Luxton that they had sent the check, Luxton replied that then they need not pay any attention to the notice.

For the purpose of avoiding responsibility for the conduct of Luxton as binding on the company, they sought to show that Mr. Luxton's connection with the company and his right to represent it ceased at a period prior to the latest negotiations with Cranwell.

While there is no clear exposition given by the witnesses for the defendant, the realty company, of its internal arrangements, I think it sufficiently appears that the following was the situation: Wright, who was president, Butts, who was secretary and treasurer, and Luxton, who was general manager, were in a close corporation dealing in real estate. Butts had evidently advanced some $6,000 to the enterprise, and it was the understanding that he was to receive this sum back before the others obtained any dividend, or, as they expressed it, "had any interest."

As among themselves, Luxton, as general manager, at first seems to have had undisputed power to bind the corporation in every legitimate way. They intimate, rather than prove, that later he was shorn of some of his powers, and under very suggestive and leading questions put to Mr. Wright by counsel for the company, they sought to prove that they brought notice of this home to Cranwell.

But I think they failed to prove that Cranwell was ever properly informed that Luxton could no longer speak for the com

pany.

Long after the time they claim that Luxton had ceased to have the right to bind the company, we find, from the testimony, that his apparent relationship toward it remained as before. We find, for instance, that he is constantly sent by the others to Cranwell; we find him selling property as before; the testimony shows that he was present, with the others, when the communication of November 11th was determined upon and was written and sent, and the very contract to Kleinke, which

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1 Robbins.

Cranwell v. Clinton Realty Co.

was drawn upon the day that the realty company claims it rescinded the contract with Cranwell, was written by Luxton.

Luxton himself testified that he has now the same interest that he always had.

Under these circumstances, I find that Cranwell, who had had all his dealings with Luxton, was justified in continuing to believe that Luxton was vested with the same power that he had always theretofore had to bind the company.

Whether or not a vendor may, so to speak, make time of the essence of a contract by giving a notice requiring the vendee to make settlement within a time specified therein seems to be debatable. Hubbell v. Von Schoening, 49 N. Y. 327.

But even conceding that such a notice might be effectual, the vendor could only claim default after he had shown full performance upon his part and that he tendered a proper deed to the vendee, Hubbell v. Von Schoening, supra.

I think that the rule formulated by the court or errors and appeals in the case of McTague v. Sea Isle City Building Association, 57 N. J. Law (28 Vr.) 428, applies to the case at bar. In that case the court said: "An executory contract that contains no stipulation for its rescission and that has not been induced by fraud, may, in general, be rescinded by one party only when the other expressly refuses to perform, or has rendered himself incapable of performing it, or has otherwise evinced his abandonment of it. Mere delay in the execution of a contract whose terms would be satisfied by performance within a reasonable time does not of itself entitle the other party to rescind."

I find that from the time of the interview on November 1st, 1903, to November 23d, 1903, the vendee showed his evident intention to take the property and pay for it, and showed clearly that he did not desire to abandon the contract, and that it was reasonable for him, in view of the conversations that he had had with the different officers of the company, to believe that they would wait for him to obtain the money that he had explained to them he expected to get, and that when he visited the president of the company, Mr. Wright, after he had heard rumors of the sale to another, and informed Mr. Wright (taking

Cranwell v. Clinton Realty Co.

67 Eg.

Mr. Wright's version) that he would take the deed, and pay the money due on the 1st of December, which was seven days from the date of the interview, it was reasonable for the realty company to wait for that period of time before canceling the contract, or to tender him a deed and demand performance.

It is admitted by counsel for Kleinke, and clearly appears by the testimony, that Kleinke had full knowledge at the time of taking the contract and deed of the agreement between the company and Cranwell, and there is, therefore, no difficulty with respect to the decree as to his rights.

"The rule is well established that a purchaser with notice of a prior equity, superior to the rights of his grantor, takes the place of the grantor, and is bound to do that which he was bound in equity to do. Such a purchaser can be compelled specifically to perform the agreement by conveying the land in the same manner and to the same extent as the grantor would have been compelled to do had he retained the legal title. Young v. Young, 45 N. J. Eq. (18 Stew.) 40, 41 (Chancellor McGill, 1889); Haughwout v. Murphy, 22 N. J. Eq. (7 C. Е. Gr.) 547 (Justice Depue, Court of Errors and Appeals, 1871)." Brinton v. Scull, 55 N. J. Eq. (10 Dick.) 747 (Vice-Chancellor Grey, 1897.)

"And to be a bona fide purchaser without notice, the defendant must not only have agreed to purchase without notice of the complainant's previous agreement, but he must also have actually paid the purchase-money and taken his deed without such notice." Dean v. Anderson, 34 N. J. Eq. (7 Stew.) 503 (Chancellor Bloomfield, about 1810); Brinton v. Scull, supra.

I will therefore advise a decree that the contract between the realty company and Cranwell be specifically performed, and that Kleinke be decreed to convey the title now vested in him.

I have determined to exercise the discretion vested in the court by the statute (P. L. of 1902 p. 538 § 84), by not allowing costs in this case.

My reasons for not allowing costs to the complainant are briefly these:

The complainant caused a long delay in the payment of the

1 Robbins.

Cranwell v. Clinton Realty Co.

purchase-money and undoubtedly often disappointed the expectations of the company with respect to the time it would receive the money, and finally, when a determined effort was made by the company to get in hand at once the interest and taxes, he did not see to it that they got the money, although, as I have found, he showed his intention to keep the contract alive by mailing the check which was not received.

The officers of the company undoubtedly believed that they were again to be disappointed with respect to receiving the money, and thought that they had a right to terminate the

contract.

Their testimony was frank and full, and was given without any equivocation or attempt to either color or conceal facts.

Their good faith is further shown by the fact that the sale to Kleinke was for exactly the same sum they would have received from Cranwell, so that it is clear that they did not seek to rescind the Cranwell contract because the property had appreciated in value.

Under such circumstances, therefore, it seems to me that it would be inequitable to require the defendants to do more than carry out the contract; they should not be visited with costs. A precedent in point in this respect is Sharp v. Trimmer, 24 N. J. Eq. (9 C. E. Gr.) 422 (at p. 426) (Vice-Chancellor Dodd, 1874).

I will advise a decree in accordance with these conclusions. The form of the decree will be settled upon notice.

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