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ment of the consideration "as provided in said agreement." The consideration was $214,560. The Atchison company went into possession on or before May 21, 1887. The agreement became effective and the purchase price of tract second became due if a release of the mortgages and a proper deed were tendered on May 21, 1887. The deed, however, was not tendered and the consideration was not paid until June 17, 1887, or later. Interest at six per cent on the purchase price for this time amounts to more than $1000, yet no interest was asked or paid. Such was the interpretation which the parties, appellee as well as appellant, put upon the contract at that time. As to tract first, the appellee parted with the possession before it was entitled to the purchase money. The vendor was to make certain improvements, procure a release of certain mortgages and tender a warranty deed before it was entitled to the purchase money.
This being the agreement, when the appellee refused to execute a deed except with a clause of defeasance, which was not in accordance with the agreement but violative of its terms and of the duty of appellee to appellant, it was an unreasonable default and refusal of the appellee to carry out its contract. The appellee refusing to comply with its contract, and by reason thereof the purchase money not being due, the appellant filed this bill for specific performance. By its answer the appellee placed a construction on the contract not authorized, and which was not in accordance therewith. At the hearing that construction was first abandoned and a deed tendered which was in accordance therewith, but appellee for the first time insisted that interest should be allowed on the purchase price from about the time appellant took possession. This was by the trial court held to be equitable, and the decree in that regard was affirmed by the Appellate Court, on the principle that where there is a sale of land at a specified price, to be paid for at a subsequent date, and delivery
of possession to the vendee, the vendor is entitled to interest on the purchase money, on the principle that the value of the possession is, in its rents and profits, equal to the interest, even though the contract of sale is silent as to interest. This presents the first legal question raised by the assignments of error.
The appellee, being desirous of the advantages and benefits of the lease, by which appellant was to pay $100,000 per annum for 999 years, contracted to sell the land, pay off the mortgages, make certain improvements and tender a warranty deed, upon which the purchase money was to be paid by appellant. But these acts to be performed by appellee were, under the terms of the contract, to be distinctly performed with appellant in possession, and by its contract no provision was made for interest. The necessary construction of the language used in the contract, taken in connection with the circumstances attending the transaction, convinces this court that the benefits to be derived by appellee from its rights under its lease to appellant, and the consideration to be paid thereunder, were to be regarded as equivalent to a release of a claim of interest, inasmuch as the extension of time for making repairs, completing improvements, releasing mortgages and executing deed was in the interest and for the benefit of appellee, whilst during all that time it may be reasonably considered that appellant would not have undertaken to pay so high an amount under the lease unless it had its own switch yards, freight buildings and grounds, so that the lease. would be of value to it. These were mutual advantages. The appellee was to receive the consideration per month under its lease, and, to induce appellant to pay that, was willing to deliver immediate possession of the lands sold, and receive the purchase money when it was able to comply with its contract in building its viaduct, the alignment of its tracks, the release of mortgages and the execution and tender of a warranty deed.
Such being the circumstances attendant on this transaction, and the contract being silent with reference to the question of interest, it is clear to this court that at the time of entering into this agreement the intention of the parties was expressed in the agreement itself, clearly and explicitly, and that intention was, as derived from the lease and agreement, that no interest was to be paid on the purchase money. Where a contract is in writing, courts of equity, like courts of law, must construe the contract according to the intention of the parties as expressed by its terms, and where there is doubt or ambiguity as to the intention of the parties, courts may take into consideration the surrounding facts and circumstances. But neither courts of equity nor of law are authorized to make contracts for the parties.
Such being the contract and its interpretation, we must determine whether, where a bill for specific performance is filed, equity will require interest on the purchase money to be paid by the vendee in possession, regardless of the fact that the vendor may be in fault in failing to comply with the terms of the contract in tendering a deed, and by otherwise failing to comply with its provisions and covenants.
A person cannot, as a matter of right, call upon a court of equity to enforce the specific performance of a contract for the sale of land. It is always within the sound discretion of the chancellor whether he will exercise the power, taking into consideration the contract and surrounding circumstances. In his exercise of that sound discretion he is governed by the rules and principles of equity jurisprudence. Where a contract of sale and purchase of land is entered into and a written agreement partly made, in equity the title is treated as being where the parties have placed it by the terms of their agreement, and for that purpose the vendor is held to be a trustee of the legal title for the benefit of the vendee, and the vendee is trustee of the purchase money for the
benefit of the vendor. This equitable construction of such contracts arises from the principle that equity considers that which is agreed to be done as actually performed. As a result of this principle, where there is an agreement in writing for the purchase and sale of lands, and the vendee enters into possession, there are many authorities holding that the purchaser entering into possession must pay interest on the purchase money from the time such possession commenced. It is held inequitable that the vendee shall have the rents and profits and retain the purchase money without the vendor being entitled to interest. Fry on Specific Performance (sec. 1418) states the rule thus: "It follows from the principles already stated and discussed in this chapter, that generally, in the absence of stipulation, a purchaser of the estate which is the subject matter of the contract must pay interest on the unpaid purchase money from the time when his possession under the contract commenced until completion." And again (sec. 1419): "The rule that the purchaser in possession shall pay interest on the unpaid part of the purchase money will be applied even in cases where the delay arises from the neglect of the vendor, and the purchaser makes no actual profit out of the land. "The act of taking possession,' said GRANT, M. R., 'is an implied agreement to pay interest, for so absurd an agreement as that a purchaser is to receive the rents and profits to which he has no legal title, and the vendor is not to have interest, as he had no legal title to the money, can never be applied."" And this is again stated as follows (sec. 1425): "So strongly does the court hold to this principle, that a purchaser in possession shall pay interest on the unpaid purchase money, that it will look at any contract which appears to prevent the application of this rule by the light of this general principle of justice, and, it seems, refuse execution of it where it grossly violates this principle, for a court of equity interposes only according to conscience."
It must be conceded the authorities go to the full extent of sustaining the statements made in the text of this able writer on this subject. But there are exceptions to the general rule, and one exception is well stated by Sir WILLIAM GRANT, Master of the Rolls, who, in applying the rule and allowing interest, said in Powell v. Martyr, 8 Ves. 146: "The rule is perfectly clear and reasonable, that if a purchaser is let into possession and the reception of the rents and profits, he shall pay interest for his purchase money. On the other hand, it must be admitted that a case may be in which he shall not pay interest notwithstanding he has the rents and profits, but it must be a strong case and clearly made out." It is important, therefore, to determine whether this case comes within the exceptions to the general rule. In determining this question it is necessary to make a further reference to the authorities.
In Minard v. Beans, 64 Pa. St. 411, the contract was made March 9, 1868, to convey property October 1, 1868, for $25,000, payable $1000 cash, $5000 April 1, 1868, $4000 October 1, 1868, the balance to be secured by mortgage and payable in five installments, "with interest on all money remaining unpaid." Possession was taken April 1, 1868. The first three payments were made as agreed, and the deed was delivered October 1, 1868. The vendor sued for interest on the $19,000 from April 1 to October, 1868, when the deed and mortgage were delivered. The trial court allowed interest. On appeal the Supreme Court, by THOMPSON, C. J., said: "A plain reading of its (the agreement's) terms in regard to the payment of the purchase money seems to be all that is needed to show that the claim of the plaintiff for interest is unsupported. * * * There was no contract to pay interest on any money falling due on the first of October, 1868. Interest, as a general, I may say universal, rule, is never demandable until money is due. 'It is,' say the books, compensation allowed to the creditor for delay of pay