GUILFORD v. OIEN ET AL (1943)

Plaintiff brought this action in claim and delivery to recover possession of a piece of heavy earth–moving equipment known as a Le Tourneau carryall scraper, purchased by defendants from plaintiff's assignor, under a conditional sales contract. Defendants interposed a cross–complaint for damages based on allegations of an unlawful seizure. The trial court gave judgment for defendants on the cross complaint, and plaintiff appeals. Admittedly the defendants did not conform to the provisions of the conditional sales contract, and the determination of the appeal rests largely on the soundness of the trial court's conclusion that the sellers waived the provision of the contract wherein it was specifically agreed that time was of the essence thereof.

The defendants were engaged in mining operations in Calaveras county, and they purchased the scraper from Guerin Bros. in South San Francisco on September 8, 1941, under a conditional sales contract, for use by defendants in Calaveras county. The purchase price was $2,901.77, on which defendants made a down payment of $1,375, and by the terms of the contract they agreed to pay the balance in $275 installments on the 15th day of each succeeding month, commencing on October 15, 1941, the final payment of $151.77 to be made on March 15, 1942. The contract contained all of the usual provisions employed in a sale of that kind. Among other things it provided that title was retained in the seller until the full purchase price, including interest and any other sum which might be due under the contract, was paid; that should the seller employ an attorney to enforce any of the rights under the contract there should immediately become due and payable a reasonable attorney's fee; that the scraper would not be removed from the county wherein the contract was recorded, without the written consent of the seller. Section 10 of the agreement read as follows: “At the option of seller, buyer shall be deemed to be in default: (a) If buyer fails to do or perform any of the acts or things, or to make any of the payments required by this contract, or said promissory notes, at the times or in the manner herein or therein specified; * * * or, (d) if at any time seller shall deem the said property or seller's interest therein insecure. In the event of the happening of any of the above contingencies, seller may, at its option, without demand or notice exercise any of the following remedies: First: It may without notice elect to treat the entire remaining balance of the purchase price and interest, evidenced by said promissory notes due and payable immediately and sue therefor; or, * * * Third: It may take possession of said property wherever and whenever found, and with or without notice or demand, may elect to treat buyer in default, and in such event all of the rights, titles, and equities of buyer in said property shall immediately cease and determine, and seller shall be released from all obligations to transfer or deliver said property to the buyer, and all sums of money theretofore paid, and all sums then due and unpaid by the buyer to seller hereunder or under said promissory notes shall remain the property of seller and shall be considered compensation for the use, wear and tear and depreciation of said property, and buyer agrees forthwith to pay to seller all of said payments which are then due and unpaid; or, Fourth: It may avail itself of any of the remedies for the enforcement of a seller's rights under an agreement such as this, as provided by the laws of the State of California.” By section 12 of the agreement, time and each of the terms and conditions of the contract were expressly declared to be of the essence thereof, and the acceptance of any payment after it was due or the failure to pursue any of the remedies of the seller therein provided for upon default by the buyer in performance of any of his obligations, should not constitute a waiver of any of the provisions of the contract and should not prevent the seller from exercising any of the remedies herein provided on account of any past or future defaults either in making the payments or in the performance of the various obligations by the buyer. And it was further provided that in the event of assignment of the agreement by the seller, the buyer agreed to waive all defenses he might have under the agreement.

The defendants took possession of the scraper at the time of the execution of the contract, operated it for a while in Calaveras county wherein the contract was recorded, and then without obtaining permission from the seller so to do, moved the scraper to Amador county and then to San Joaquin county; but in spite of repeated demands, defendants paid no part of any of the monthly installments, and on February 16, 1942, Guerin Bros. assigned the contract to plaintiff. On February 17, 1942, plaintiff demanded possession of the scraper, but defendant Oien, with whom most of the dealings were had, refused to divulge where it was kept, and on February 20, 1942, plaintiff filed this action in claim and delivery for the possession of the scraper or its reasonable market value, plus damages for its unlawful detention, attorneys' fees and costs of suit; and on February 21, 1942, the sheriff seized the scraper.

The defendants filed an answer and cross–complaint, admitting the default on the contract and admitting that they had refused to deliver the scraper to plaintiff, but alleging adverse business conditions and financial inability to meet the payments as the reason for their default, and alleging a tender of the balance of the purchase price after the scraper had been seized by the sheriff. It was also alleged that financial arrangements had been made to enable them to pay the balance due prior to February 14, 1942, and that they had communicated with Guerin Bros., stating they were in a position to pay the full balance due and requesting a statement of the amount due, which Guerin Bros. promised to furnish, but failed to do so; also that when plaintiff demanded possession of the scraper defendants informed him they were in a position to make immediate payment of the balance due and requested that plaintiff advise them as to the amount due, but that plaintiff stated he intended to get possession of the scraper and would not accept payment of the balance. No specific allegation of waiver was made.

The action was tried by the court without a jury, and findings were entered in favor of defendants, substantially in accord with the allegations of the cross–complaint, and further finding that Guerin Bros. had waived the provision of the contract that time is of the essence thereof. Judgment was entered pursuant to the findings (1) awarding defendants possession of the scraper, defendants to be charged with $1,580 as the balance due on the conditional sales contract; (2) in case return of the scraper could not be made, $1,420, representing the difference between the reasonable value of the scraper and the balance due under the conditional sales contract; (3) damages for the unlawful taking and withholding of said scraper at the rate of $25 a day, amounting at the date of the judgment to $3,950, which it will be noted is approximately $1,050 more than the purchase price of the scraper. In other words, the net result of the judgment as rendered is that defendants, after having had the use of the scraper for more than five months, now receive it entirely paid for, plus $2,370 damages. One of the grounds urged for reversal is, therefore, that the amount of damages awarded is wholly unreasonable, particularly in view of the uncontradicted evidence showing that certain repairs had been made necessary due to the hard usage given the scraper by defendants. There would seem to be much merit in the point; but it is our conclusion that plaintiff is entitled to a reversal on the other major ground urged, that the trial court's conclusion that there had been a waiver of the provision that time is of the essence of the contract is not supported by the evidence. Consequently it is unnecessary to inquire into the merits of the question of damages.

With regard to the question of waiver, the record shows the following facts: Shortly after the purchase of the scraper defendants took it to Jenny Lind in Calaveras county where gold mining operations were being carried on by defendants. It was used in connection with other mining equipment, in hauling gravel to a hopper and washing the gravel down. It was subjected to very hard usage, being used some 20 hours a day seven days a week. The mining venture proved unsuccessful, and after December 24, 1941, defendants moved the scraper to Amador county, and about February 1, 1942, to Stockton in San Joaquin county, to the Le Tourneau shop there, and afterwards it was rented out to work on a railroad yard. The first installment under the contract fell due October 15, 1941, but no payment was made because the mining operations were proving unsuccessful. Shortly before the second installment fell due, and on November 13, 1941, Guerin Bros., the seller, wrote to Oien and the defendant Stickney calling attention to the default in payment and requesting a check for the two installments by return mail. Oien admitted receiving the letter, but did not reply. On December 26, 1941, Guerin Bros. again wrote Oien demanding “a check in the amount of $825.00 by return mail or otherwise we will have to take some action to collect same.” On December 30, 1941, a telegram was sent Oien which he received, stating that “if we do not receive payment of $825.00 by the 2nd it will become necessary to take legal action.” On January 6, 1942, Guerin Bros. wrote Oien in part as follows: “We have written and wired without any response and therefore, if a check in the amount of $1,100.00 plus interest of $30.54 is not in our possession by January 10th you can then expect our truck to be up there by January 12th to take possession of the carryall.” On January 8, 1942, Guerin Bros. attorney in San Francisco wrote Oien and Stickney, stating the amount claimed to be due, plus interest and attorneys' fees; that unless a check was received covering this amount before January 15th he would “take such legal action” as may be available under the contract, and suggesting that a check be sent at once in the amount of $945.78. On January 13, 1942, Guerin Bros. received a letter signed “G. T. Oien” (the signature was denied by Oien but he admitted he wrote to Guerin Bros. about that time) promising that he would “shortly begin to make payments” on the contract. Guerin Bros.' attorney wrote again on January 22, 1942, to Oien and Stickney, and Oien testified he thought he received it but was not sure. It was in reply to Oien's letter of January 13, 1942, to Guerin Bros., and again stated the amount due, as follows: “There are now four payments due, according to the terms of your notes, each in the amount of $275.00, plus interest $30.56, and plus attorney fee of $100.00, a total of $1230.56.” The letter then went on: “Unless payment of this amount is received within the next five days, I have been instructed by Guerin Bros. to take such action as may be necessary. You are also requested to inform me the present location of the carryall.” Thus it will be noted that as late as January 22, 1942, Oien had a statement of the amount due under the contract. On Thursday, February 12, 1942, E. H. Guerin went to Stockton and saw Oien. It is apparently the discussion had at this time which formed the basis of the court's finding of waiver. Two versions of the discussion were given, one by Oien and one by Guerin. Oien testified that he met Guerin at the Le Tourneau shop in Stockton; that Guerin asked him what he was going to do about the carryall; that he told Guerin how much difficulty he had had in mining, and he was sorry the thing had happened the way it did, but he wanted to make a settlement with him, and he asked Guerin for a bill; that Guerin said he did not have a bill with him, and Oien asked him to send one as soon as he could; that Guerin said he would send him one Monday, and Oien said as soon as it arrived he would make a settlement, that he had made financial arrangements enabling him to pay it off; that Guerin did not ask for the scraper, but inquired where it was, and Oien told him it was there, right outside the shop. Later Oien testified that “when Mr. Guerin demanded the carryall I went out and got it and took it into Thompson–Morton and locked it up.” Thompson–Morton was the company that was lending Oien the money to pay the balance due.

Guerin's version of the discussion was as follows: He testified that he met Oien at the Le Tourneau shop and told Oien that he wanted either the scraper or the money; that he told Oien he thought he had already given him ample opportunity to pay; that Oien told him he was not in a position to pay at that time, and made some mention about sending a bill; that Guerin told him he had the same contract as Guerin had and Oien could figure simple interest as well as he could; and Oien said that about on Tuesday he was going to get in touch with his partners and see if he could raise some money.

At any rate, no bill was received by Oien, but on Monday, February 16th, C. B. Rohn, the president of the California Tractor & Equipment Corporation in Stockton, called on Oien at the Thompson–Morton place of business with a written authorization signed by Guerin to pick up the carryall. Oien testified that Rohn asked him where the scraper was and he refused to tell him, and refused to give him the scraper; that he told Rohn that he was going to pay for the scraper as soon as Guerin sent him a bill; that Rohn asked to take the scraper and hold it for three days, but Oien refused to let him have it, stating it might as well remain in his possession until it was paid for because as soon as he got a bill it would be paid for; that the authorization Rohn presented did not state the amount due and demand payment thereof, but only demanded that the carryall be turned over to Rohn.

Oien further testified that the next day, February 17th, he met Guilford, the plaintiff, at Thompson–Morton's, and Guilford demanded the scraper, but Oien refused to give it to him; that Guilford said he had purchased the contract and wanted delivery of the scraper; that Oien told him he had already made arrangements with Guerin to pay it off, and all he wanted was a statement; that he wanted the scraper himself; that he offered to pay Guilford the balance due, that he had a check in his pocket for $1580, but did not show it to Guilford; that Guilford said he did not care anything about the financial end of it, that he wanted the scraper; that he told Guilford he would call him up that night or see him the next day; that the next morning, the 18th, a check for $1,580 was delivered to Oien's attorney by Thompson–Morton and efforts were made to locate Guilford at his hotel in Stockton, but he had checked out; that he phoned Guilford's home that night and the next, but could not locate him. Much of the foregoing testimony so given by Oien was contradicted by Rohn and Guilford. On Saturday the 21st the scraper was seized by the sheriff. On February 24th, the next business day, Oien's attorney tendered to one of plaintiff's attorneys a cashier's check for $1,580, representing the unpaid installments and interest on the contract, but not including attorneys' fees or costs. The tender was refused.

In support of the judgment defendants contend that the evidence establishes a waiver of the provision of the contract that time is of the essence thereof; and that tender of full compensation was made; that therefore they were entitled to be relieved of their default under the provisions of section 3275 of the Civil Code. That section reads: “Whenever, by the terms of an obligation, a party thereto incurs a forfeiture, or a loss in the nature of a forfeiture, by reason of his failure to comply with its provisions, he may be relieved therefrom, upon making full compensation to the other party, except in case of a grossly negligent, willful, or fraudulent breach of duty.” However, it is our opinion that resolving all conflicts in favor of the defendants the record does not show any legal basis for the conclusion the Guerin Bros. waived the provision of the contract to the effect that time is of the essence thereof, or that a tender of full compensation was made.

Oien's testimony was to the effect that on February 12, 1942, when Guerin called on Oien, he told Oien he would send a statement of the balance due the following Monday, and that although the scraper was then in plain sight, within a hundred feet of Guerin, he made no move to repossess it. But in order to constitute a waiver “there must be an existing right, benefit or advantage; a knowledge, actual or constructive, of its existence; and an actual intention to relinquish it or such conduct as warrants an inference of the relinquishment. It has been held that there must be a meeting of minds and an intentional forbearance to enforce a right. Waiver is a voluntary act and implies an abandonment of a right which can be enforced, or of a privilege which can be exercised––an election to dispense with something of value or to forego some advantage which one might, at his option, have demanded or insisted upon. * * * In no case will a waiver be presumed or implied contrary to the intention of the party whose rights would be injuriously affected thereby, unless by his conduct the opposite party has been misled, to his prejudice, into the honest belief that such waiver was intended or consented to.” 25 Cal.Jur. p. 926, (Italics added); Lincoln Holding Corp. v. Union Indemnity Co., 129 Cal.App. 399, 18 P.2d 744. Applying the foregoing legal doctrine to the situation here presented, it seems quite clear that Guerin's acts and conduct cannot be construed as a waiver. Certainly the mere fact that he said he would send a statement of the amount due on Monday cannot be considered as a voluntary relinquishment of any right, when he did not send such statement, but instead sent Rohn with a written authorization to repossess the scraper. Nor can the fact that Guerin failed to repossess the scraper that day be considered as an expression of intent not to repossess the scraper, because as he testified the scraper was a large piece of equipment weighing several tons, and he had no facilities at that time to take it away. Nor in view of Rohn's arrival on Monday with an authorization to repossess the scraper, can it be said that Oien was misled to his prejudice into the honest belief that a waiver was intended. Furthermore, the contract provided: “Time, and each of the terms and conditions hereof, is expressly declared to be of the essence of this agreement. The acceptance of any payment after the same is due or the failure in any one or more instances to pursue any of the remedies of the seller or his assignee herein provided for upon default by the buyer in performance of any of his obligations, shall not constitute a waiver of this, or any other provisions of this contract and shall not prevent the seller or his assignee from exercising any of the remedies herein provided on account of any past or future defaults either in the making of the payments herein provided or in the performance of the various obligations hereof by the buyer.” And as held in Fageol T. & C. Co. v. Pacific Indemnity Co., 18 Cal.2d 748, 756, 117 P.2d 669, 674: “The contract provides that time is the essence of every part thereof; that neither acceptance of any overdue payment nor the waiver of any breach of any term or condition shall ‘operate as a waiver of any other prior or subsequent breach’; and that upon default repossession may be gained without previous demand of performance. Having so provided, the parties were bound by such covenants to the same extent as they were bound by any other article of their agreement. By such provisions they neither violated a statute nor contravened public policy. Where a contract expressly provides that acceptance of installment payments after they become due shall not operate as a waiver of its forfeiture provision, the acceptance of past due payments does not waive strict performance as to any other payments or conditions stipulated in the contract. Pacific Finance, etc., Co. v. Pierce, 48 Cal.App. 600, 191 P. 1115; Lundberg v. Switzer, 146 Wash. 416, 263 P. 178, 59 A.L.R. 131. It having been established that Thomas was in default as to the payment due January 10 and that such default was never waived, plaintiff's repossession of the truck was its absolute right.”

As to the second point, in order to come within the provisions of section 3275 there must be a tender of full compensation (Deevy v. Lewis, 54 Cal.App.2d 24, 128 P.2d 577; Fickbohm v. Knaust, 103 Cal.App. 443, 284 P. 692); and here the evidence shows as a matter of law that there was never any sufficient tender of the amount due on the contract. Oien told Guerin that he wanted to make a “settlement”, but he admitted that he did not make any actual offer of money; there is the bare statement in his testimony that he offered to pay Rohn the balance due, but there is no showing made in what form his offer was, nor in what amount; when he offered, according to his testimony, to pay Guilford the amount due he had a check in his pocket for $1580 but did not even show it to Guilford. And when through his attorney he delivered a cashier's check to Guilford's attorney for $1,580, admittedly that amount included only the delinquent payments of principal and interest, and nothing was included for attorneys' fees or costs. The contract provided for attorneys' fees, and in the written demands made of Oien before suit was instituted, attorneys' fees were included in the amount demanded. Therefore, the suit having been commenced, the right to attorneys' fees had accrued and since the tender did not include attorneys' fees, the tender was invalid; after suit is commenced, a tender to be effectual must be sufficient to cover debt and costs accrued before making tender. Cassinella v. Allen, 168 Cal. 677, 144 P. 746; Equitable Life Assur. Soc. v. Boothe, 160 Or. 679, 86 P.2d 960; 26 R.C.L. p. 639; 62 C.J. 662.

In any event, it is our opinion that the decision rendered in the case of Deevy v. Lewis, supra, furnishes a complete answer to defendants' contention that they were entitled to be relieved of their default. In that case the buyer brought an action against the seller's assignee for conversion of certain farming equipment which had been sold to the plaintiff under a contract of conditional sale. The plaintiff had defaulted in the payments specified therein, and the assignee of the seller repossessed the equipment. Two tenders were made and refused after the filing of suit and repossession of the property, the first for $347, and the second, two days later, for $920.15. This second offer was refused by the seller's attorney upon the ground that it was made too late and after plaintiff's rights under the contract had been terminated and upon the further ground that the amount offered was insufficient as $1,020.15 was the amount which would have been required. Thereafter defendants sold said equipment and plaintiff filed suit. The contract was similar to the one involved in the present case; time was made of the essence thereof; the seller was given the right to repossess the equipment upon default of the purchaser, and further provided that “Any indulgences granted purchaser shall not constitute a waiver of any of seller's rights.” The jury was instructed and the trial court proceeded upon the theory that there had been a waiver by the seller of the portion of the contract making time of the essence by reason of the indulgences granted to the purchasers by the seller in accepting payments after the times specified in the contract, and judgment was entered in plaintiff's favor. The appellate court reversed the judgment, and held, relying on Fageol T. & C. Co. v. Pacific Indemnity Co., supra, that provisions in a conditional sales contract that time is of the essence of the contract, and that any indulgences granted the purchaser shall not constitute a waiver of any of seller's rights, are valid and give the seller the right to repossess the property regardless of prior indulgences granted the purchaser in accepting payments after the times specified in the contract. And it further held that where a contract contains such a provision, the purchaser may not rely on the provisions of section 3275 of the Civil Code, should he fail to tender “full compensation” as required by that section as prerequisite to relief from forfeiture. To quote from the opinion [54 Cal.App.2d 24, 128 P.2d 579]: “We are therefore of the opinion that the theory upon which the instructions were based and upon which the trial court proceeded did violence to the express terms of the contract of the parties, which terms were valid and gave to the seller the right to repossess the property regardless of prior indulgences. We further conclude that plaintiff may not rely upon the provisions of section 3275 of the Civil Code to sustain the judgment as the uncontradicted evidence shows that plaintiff failed to tender ‘full compensation’ as required by that section as a prerequisite to relief from forfeiture.”

Defendants rely on the case of Miller v. Modern Motor Co., 107 Cal.App. 38, 290 P. 122, but that case is not controlling here because the facts there were amply sufficient to support the finding that there had been a waiver of the provision making time of the essence of the contract, and the contract there evidently did not contain the provision contained in the present contract to the effect that acceptance of payment after it was due, or any failure of the seller to pursue any of the remedies provided for upon default of the purchaser shall not constitute a waiver of any of the provisions of the contract. See Deevy v. Lewis, supra, 54 Cal.App.2d at page 28 128 P.2d at page 578. Furthermore, in the Miller case [107 Cal.App. 38, 290 P. 124] the plaintiff tendered “a sum in excess” of the entire balance due on the contract.

For the reasons stated the judgment is reversed with directions to the trial court to enter judgment in plaintiff's favor for the possession of the scraper, and for such additional relief as may seem just.

KNIGHT, Justice.

PETERS, P. J., and WARD, J., concur.