Palmer v. Fox

Brief Fact Summary. Grace H. Palmer (Plaintiff) sued Fox (Defendant) to recover the unpaid balance due on a contract for the sale of land.

Synopsis of Rule of Law. Covenants to make improvements are dependent if the contract does not show that the covenants are independent and the time stipulated for the performance was concurrent.

Facts. Louis G. Palmer & Company and Defendant entered into a contract for the sale of a certain lot. The purchase price was $1,650.00 of which $247.50 was to be paid at the execution thereof and the balance to be paid in monthly installments of $16.50 each and the entire amount to be paid in five years. The defendant made the initial payment and also made monthly payments. The Louis G. Palmer & Company assigned its interest to Plaintiff and she commenced an action to recover the balance of the purchase price due in the amount of $709.02 plus interest. The covenant in the contract stated that the vendor agrees at its own expense to furnish cement sidewalks except one and furnish water mains and sewers. The covenant further provides that if the water and sewer are put in by the city, the assessment against the property shall be paid by the vendor. The contract also provided that upon receiving payment of principal and interest in full the vendor would execute and deliver to the vendee
a warranty deed of the premises, subject to certain covenants and restrictions. Defendant claimed that the vendor and its assignees (Plaintiff) failed to perform covenants in the contract to make stated improvements in the subdivision and in failing to gravel the streets. Defendant also claimed that the Plaintiff could not recover because of the failure to tender a deed to the premises before commencement of the action. Plaintiff contends that the covenant by Defendant to pay is independent of Plaintiff’s covenant to furnish improvements. Whether the covenants are independent or dependent is irrelevant, in that Plaintiff’s failure to gravel the streets is not a material breach. The trial court found for the Plaintiff in the amount of $709.02 and $146.89 interest. Defendant appeals.

Issue. Whether the covenant of a vendor to make improvements is a dependent covenant?

Held. Yes. Judgment reversed without a new trial with costs to Defendant.
Covenants are construed to be dependent or independent according to the intention of the parties and the good sense of the case. Courts ought not to construe covenants as independent unless it clearly appears that it was the intention of the parties at the time the contract was executed. Here, it appears that it was the intention of the parties that such improvements were to be made within a five-year period and this conclusion clearly appears from the language of the contract and extraneous fact.
Covenants to make improvement are dependent if the contract does not show that the covenants are independent; the time stipulated for the performance was concurrent; and the lots were purchased for a home. In the instant case, the contract on its face does not show that the covenants are independent. It was the intention of the parties that the covenants were to be performed concurrently. But here, the Defendant did not purchase the lot for a home, it was purchased for investment purposes. However, that factor is not conclusive; the Defendant purchased the property with the intention that there be improvements made on the land. Therefore, the Defendant’s covenant to pay the balance of the purchase price and to surrender the contract was dependent upon the vendor’s covenant to make the specified improvements and to deliver a deed to a lot.
However, the Plaintiff substantially breached the dependent covenant and cannot maintain this action. The Plaintiff’s noncompliance with the requirement that Plaintiff gravel the streets amounts to a substantial and material breach of the covenant to improve.

Discussion. There is a presumption that mutual promises in a contract are dependent and are to be regarded when possible. Other courts, contrary to the holding of this case, have held that the doctrine of constructive dependency of promises should be rested on their fairness and not on the intention of the parties.