Loud v. Pomona Land Water Company
The Pomona Land & Water Company, defendant in error, a corporation duly organized under the laws of the state of California, brought this action of covenant against Henry M. Loud, a citizen of the state of Michigan, to recover various sums of money due upon agreements under seal, embodied in 20 contracts and 9 applications for the sale and purchase, at different prices, of separate and distinct parcels of land lying and being in the state of California, together with designated shares of stock in certain irrigation companies.

The 20 contracts declared on in counts 1 to 40, inclusive, are substantially the same in form, the difference between them being in the dates, description of land, purchase price, time of payment, and the number of shares of stock in the irrigation companies. The applications declared on in counts 41 to 49, inclusive, while relating to different parcels of land, and varying in dates, purchase price, time of payment, etc., are also substantially alike.

These several contracts and applications need not be separately noticed or considered. One class is represented and illustrated in the contract set out in the first count of the declaration, while the other is set out according to its legal effect in the forty-first count of the declaration. The contract declared on in the first count is as follows:

'This agreement, made the eighth day of April, 1887, between      Pomona Land and Water Company, a corporation duly organized      under the laws of the state of California, and having its      office and principal place of business in the town of Pomona,      county of Los Angeles, state of California, party of the      first part, and H. M. Loud, of Oscoda, Michigan, party of the      second part, witnesseth that in pursuance of a resolution of      its board of directors adopted October 25, A. D. 1883, and in      consideration of twenty-five hundred and thirty-nine dollars,      paid by the party of the second part, the party of the first      part does covenant and agree that, after the making of the      payments and full performance of the covenants hereinafter expressed to be made and performed by the party      of the second part, the party of the first part will, in      consideration thereof, convey by deed of grant, bargain, and      sale, to the party of the second part, his heirs or assigns,      the following described real property, situated in the county      of Los Angeles, state of California, to wit: Lot seventeen      (17) of the northeast Pomona tract, according to the map of      said tract duly recorded in Book 5, page 461, of      Miscellaneous Records of Los Angeles County, California,      estimated to contain forty and .62 acres of land, together      with 406.2 shares of stock of the Del Monte Irrigation      Company, representing four and .062 inches of water under      four-inch pressure, measured from center of aperture, said      stock to be delivered by the party of the first part, and      accepted by said party of the second part, subject to the      by-laws of the said Del Monte Irrigation Company, when      payment in full is made for the above-described land.

'The party of the first part reserves the exclusive right of      way for laying pipes and aqueducts for conveyance of water;      also the right to enter upon said lands and make necessary      excavations for laying pipes and aqueducts, and to inspect,      repair, repiace, and control the same.

'And for and in consideration of the foregoing agreement, and      as the purchase price of the above-described premises, the      party of the second part do covenant and agree to pay to the      party of the first part, its successors or assigns, the sum      of ten thousand one hundred and fifty-five dollars, United      States gold coin, to be paid in the following manner: $2,539      on or before delivery of this contract; $3,808 on or before      April 8, 1888; $3,808 on or before April 8, 1889; ___ on or      before ___, 188_; and interest upon said respective sums from      April 8, 1887, until paid, at the rate of eight per cent. per      annum, payable annually; and if not so paid, at option of      said company, to be added to principal, and bear like      interest.

'And the party of the second part, in consideration that the party of the first part does hereby agree that the party      of the second part may at once enter upon, occupy, and enjoy      the above-described premises, does further covenant and agree      to pay and discharge all taxes, assessments, and water rates      that may be levied or assessed during the pendency of this      agreement on the said described premises; and, in default of      the party of the second part doing so, the party of the first      part may pay the same, and, before the final payment of      purchase money, the party of the second part hereby expressly      agrees to refund all amounts so paid, with interest from the      date of such payment at the rate of one per cent. per month.

'And the party of the second part further agrees that during      the pendency of this agreement he will not commit or suffer      any strip or waste of said premises, or of any improvements      now existing or hereafter to be placed thereon; and, if any      default shall be made in any of the above payments for the      space of sixty days after same shall become due, then it      shall be lawful for the party of the first part, its      successors or assigns, at their option, to rescind this      agreement to convey, to re-enter upon, and to repossess said      premises and all improvements existing thereon, removing the      party of the second part and all claiming under him      therefrom; and it is agreed that in such case that all      payments theretofore made shall be retained by the party of      the first part as compensation and liquidated damages for the      previous use, enjoyment, and occupation of the premises by      the party of the second part; and it is hereby expressly      covenanted and agreed between the parties hereto that this      instrument is not and shall not be construed as a conveyance,      equitable or otherwise, and that, until the delivery of said      final deed of conveyance or tender of all payments precedent      thereto, the party of the second part, his heirs or assigns,      shall have no title, equitable or otherwise, to said      premises.

'It is further expressly agreed that time is of the essence      of this contract.

'In witness whereof, the party of the first part has caused      its corporate name and seal to be subscribed and affixed by its president and secretary thereunto duly authorized; and      the party of the second part has hereunto set his hand and      seal, this third day of May, 1887. Executed in duplicate.

'Pomona Land and Water Company,

'By H. A. Palmer, President.

'[Seal of the Company.]

'By F. L. Plmer, Secretary.

'H. M. Loud. [L. S.]

'Sealed and delivered in the presence of B. F. Nichols.'

The applications are in the following form:

'Application for Purchase. Pomona, Cal., April 15th, 1887. Received from H. M. Loud seventy-five dollars deposit on application for purchase of northeast quarter (N. E. 1/4) of lot twenty-two (22), containing ten (10) acres of land, according to map of the San Antonio tract, duly recorded in Book 3, p. 7, of Map Records of San Bernardino County, with usual water rights pertaining to said tract, at the price of fifteen hundred dollars, and on the following terms: Seventy-five dollars cash deposit as above. First payment, $300.00, within sixty days from date; second payment, $562.50, on or before April 15th, 1888; third payment, $562.50, on or before April 15th, 1889; second and third payments to bear interest from date at the rate of eight per cent. per annum, interest to be payable annually. In consideration of the premises, I, H. M. Loud, hereby agree to purchase said property and pay for the same at the price and on the terms above set out; and in consideration that the Pomona Land and Water Company has withdrawn from the market the above-described land for sixty days, so that the said H. M. Loud may purchase the same at the above agreed on price, in case the said H. M. Loud fails or refuses to make said first payment, as above, within the time above mentioned, then the deposit herein made shall be retained by the Pomona Land and Water Company as the estimated damages suffered and the liquidated damages received by said company on account of the withdrawal of the land from the market as aforesaid. Time is hereby declared to be of the essence of the fulfillment of the obligation of the said H. M. Loud to purchase the above land under the terms and conditions above expressed. No title, legal or equitable, nor any right to the possession of the above-described land, shall inure to said H. M. Loud until the Pomona Land and Water Company shall have delivered an executed contract to him for the same. H. M. Loud. [Seal.] Thomas & Easton. [Seal.] F. MacPherson, Ag't.'

Indorsed: 'Pomona, June 20th, 1887. Rec'd $300.00, being balance of first payment on the within application. Pomona Land and Water Company. F. L. Palmer, Treas.'

The ninth application for the purchase of lot 11 of the northeast section of the Pomona tract differed from the rest in the fact that only part of the first payment was made.

The declaration, after alleging the refusal and failure of the defendant below to pay the respective sums due under the several contracts, averred that the plaintiff had been at all times, and was still, ready and willing, upon the making of the payments in said contracts expressed to be made and performed by the said Henry M. Loud, to convey, by deed of grant, bargain, and sale, to the said Loud, his heirs or assigns, the property described in said contracts, together with the shares of stock of the respective irrigation companies referred to in the contracts. There was no averment in the declaration of any tender of a conveyance or conveyances of the lands or of the stock in the irrigation companies, nor of any tender of any conveyance or contracts referred to in the applications.

The record contains no plea on the part of the defendant below, but there was served upon the plaintiff's attorney a copy of the plea of the general issue, with notice of special matters of defense, which the parties have treated as a pleading by the defendant. The special matters of defense set out in the notice were in effect as follows: That, if the contracts were made, they were obtained by fraud, and were therefore void; that the use and value of the lands depends upon their proper irrigation by artificial means; that, to induce defendant below to make the purchase of the lands, the plaintiff represented that it had a good, clear title in fee to the lands; that it controlled and possessed water and water rights, by means of shares of stock in the Del Monte, the Palomares Irrigation Companies, and the Irrigation Company of Pomona, to furnish ample and sufficient water to fully and sufficiently irrigate said lands, so that each parcel of land should have water to irrigate the same; that the plaintiff below, knowing that defendant's only purpose in making the contracts was to resell the lands at a profit, represented that it had not and would not place any other lands upon the market for sale; that defendant relied upon these representations and statements, which proved to be fales; that the plaintiff was insolvent and irresponsible; that it did not have a good title to the lands, but that they were heavily incumbered with mortgages, and therefore the defendant could not convey a good title to them; that the plaintiff land company did not possess or control sufficient water or water rights to fully and sufficiently irrigate the lands, and water sufficient to irrigate said lands was not represented by means of the stock in the irrigation companies named, and could not be furnished by said stock; that the supply of water furnished thereby was not and could not be continuous; that the irrigation companies had not sufficient supplies of water to furnish such water, or to furnish it continuously or in the quantities called for by the contracts; that the irrigation companies were not responsible for furnishing such supply which was not brought on or supplied to said lands; that, notwithstanding the agreement of the plaintiff below that it would not put other lands on the market, it at once, after the making of the contracts, placed large quantities of land on the market, and became such a strong competitor that the defendant was prevented from making a sale of said lands; that to some of the lands no water was brought, and to none was it brought in sufficient quantities to irrigate them; that he was a stranger in California; that he hesitated to enter into the contracts because he was unfamiliar with the laws of the state and of the business methods in common use by the plaintiff, and did not know the risk or the extent of the liabilities he would incur; but that plaintiff induced him to make such contracts, representing that they were upon the common printed forms it had adopted, and that defendant would not be liable under the laws of the state beyond the amount he should pay upon the contracts, and the loss of the land in case of failure to make payments; that plaintiff only dealt in that manner in its land sales, and in no event would it hold, or seek to hold, the defendant to any personal liability beyond the amount paid; that defendant relied upon these representations in entering into the contracts; and that this suit was in violation of such representations and a fraud upon defendant.

As a further special defense, the defendant set up 'that the plaintiff did not on the day when the last installment of the purchase price was made payable by the terms of said alleged contracts, respectively, nor at any time, convey or tender a conveyance of the land or stock described in said contracts, respectively, or in either or any of them, to this defendant.'

Upon the trial of the cause the circuit court directed a verdict for the plaintiff for the various sums due and unpaid under the contracts, amounting, with interest, to $79,819.30. On motion for a new trial, heard before the circuit justice (Mr. Justice Brewer) and the district judge who tried the case (Judge Brown), it was ordered that judgment be entered on the verdict, but that execution should be stayed 'until thirty days after the plaintiff had deposited with the clerk of the court, for the benefit of the vendee, all the deeds to the lands and certificates of stock, so that defendant may have an apportunity of examining the same, to see if the titles are perfect and the transfers of stock are made in accordance with the laws of the state of California.'

In compliance with this order, the plaintiff below deposited deeds for the land and certificates for the stock in the irrigation companies in accordance with the tems of the several contracts, but the defendant declined to accept the benefits of the order or to receive the deeds and stock so deposited, and prosecuted the present writ of error to reverse the judgment of the court below.

Benton Hanchett and George F. Edmunds, for plaintiff in error.

[Argument of Counsel from pages 572-574 intentionally omitted]

Henry M. Duffield and Don. M. Dickinson, for defendant in error.

Mr. Justice JACKSON delivered the opinion of the court. 

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