Property

Brief

Union Bond & Trust Co. v. Blue Creek Redwood Co.

Procedural History:

• Trial Court ruled for the Defendant.
• Appealed.
• Preliminary decree allowing plaintiff to complete the contract within a specified time by paying the entire purchase price together with the defendant’s damages resulting from the delay in performance.

Facts:

• May of 1946, the assignors of the parties litigant entered into a timber purchase contract.
• Vendee agreed to purchase certain timber lands for $750,000 to be paid out of the proceeds of timber cut.
• Assignees continued under the contract and all went reasonably well until $585,000 had been paid by vendees.
• Certain defaults then occurred and plaintiff, assignee of the vendee, filed this action for a judgment declaring the contract to be in full force and effect and requiring specific performance of the vendor.

Issue:

• Is forfeiture valid in the above stated circumstances?

Holding:

• No. reversed with instructions.

Reasoning:

• Early California cases applied a strict rule of forfeiture against vendees defaulting under contracts declaring time to be of the essence.
• California Courts soon modified their strict rule of forfeiture by holding it inapplicable when the vendor had waived or was estopped to assert the time provision of the contract, or had allowed the entire price to become due without declaring forfeiture.
• In the present case, the plaintiff has made substantial payments under the contract and has made substantial improvements to the property.
• The court felt it would better serve the parties involved to allow the contract to stand with new instructions on how to compensate the vendor and how the vendee will enter back into the contract to pay the remaining balance and damages that were accrued by the defendant.