Palmer v. Fox - 274 Mich. 252, 264 N.W. 361 (1936)

Rule:

Stipulations in a contract are to be construed to be dependent or independent according to the intention of the parties and the good sense of the case. Technical words should give way to such intention. Courts will not and ought not to construe covenants and agreements as independent, and still enforce performance by the other party, unless there is no other mode of construing the instrument, and unless it clearly appears to have been the deliberate intention of the parties at the time the instrument was executed. In brief, the courts will construe covenants to be dependent, unless a contrary intention clearly appears. A party should not be forced to pay out his money, unless he can get that for which he stipulated. Where the acts or covenants of the parties are concurrent, and to be done or performed at the same time, the covenants are dependent, and neither party can maintain an action against the other, without averring and proving performance on his part.

Facts:

Plaintiff Louis G. Palmer & Company sold a subdivision lot to defendant Orrin P. Fox for a price to be paid over a period of five years. The purchase agreement required the plaintiff to make certain improvements in the subdivision. The improvements were not completed. The defendant failed to make the required payments and the plaintiff filed suit to recover the balance of the purchase price. The trial court found in favor of the plaintiff and the defendant appealed. On appeal, the defendant contended that the failure to make the improvements was a material breach of the covenant to make improvements, which barred the vendor's recovery.

Issue:

Under the circumstances, could the plaintiff vendor recover the balance of the purchase price, notwithstanding plaintiff vendor’s failure to make the improvements stipulated in the purchase agreement?

Answer:

No.

Conclusion:

The court reversed the judgment of the trial court. The court found that the defendant's covenant to pay and the plaintiff's covenant to make improvements were concurrent and dependent upon each other. According to the court, where covenants were dependent, one party should not be compelled to pay out his money in strict performance of his own covenants, when the other party cannot or will not perform on his part material acts which were to be concurrently done and which were not merely subordinate or incidental but go to the entire consideration which supported the promise of the other party to pay. Otherwise, the purchaser, although compelled to pay the purchase price, would not receive what he stipulated to purchase. In this case, the court held that the plaintiff was guilty of a substantial breach of a dependent covenant and thus, could not maintain the action.