the sale as an absolute wrongful rescission, and the seller must restore any instalments received. It may be inferred from the decisions that if the seller does give proper notice the buyer could not recover instalments.25

Where as generally happens the buyer is given possession of the land the case might well be, and indeed should be, distinguished from an ordinary executory contract to buy and sell. Even in the case of personal property where there is no right to specific performance, much authority recognizes that the buyer in possession under a conditional sale is the beneficial owner, and the seller in substance a mortgagee.26 If this is true of personal property, it is still more clearly true of real property. The relation of a vendor and purchaser of realty even under a wholly executory contract has been likened to the relation of mortgagor and mortgagee. This seems inaccurate, but where the purchaser is given immediate possession and beneficial enjoyment of the land, the analogy seems a sound one. If so, the situation should be dealt with in the same way as a mortgage situation is dealt with. Where time is not stated expressly or impliedly to be of the essence this analogy is followed, though strict foreclosure with forfeiture of any payments made is sometimes allowed. The Supreme Court of the United States has said: "In case of a default in the payments there are several remedies open to the vendor. He may sue on the contract and recover judgment for the purchase money, and take out execution against the property of the defendant, and, among other property, the land sold, or he may bring ejectment, and recover back the possession; but in that case the purchaser, by going into a court of equity within a reasonable time and offering payment of the purchase money, together with costs, is entitled to a performance of the contract, or the vendor may go, in the first instance, into a court of equity, as in the present case, and call on the purchaser to come forward and pay the money due or be forever thereafter foreclosed from setting up any claim against the estate." 28

"Fanchez v. Goodman, 29 Barb. 315; Levy v. Loeb, 89 N. Y. 386, 390. See also the early New York decisions, supra, n. 21.

26 See supra, §§ 734 et seq., infra, § 965. 27 See infra, §§ 928 et seq.

28 Hansbrough v. Peck, 5 Wall. 497, 18 L. Ed. 520, quoted with approval

"But generally in this country the decree is not for a strict foreclosure but for a foreclosure by sale of the property.' 11 29 Where the transaction is in its essence a mortgage, agreements for forfeiture and provisions that time is of the essence should be given no more weight than similar provisions in a mortgage. Such a principle is not, however, always recognized. Not only is a defaulting purchaser in such a case generally denied the right to recover what he has paid, but he has also not infrequently been denied the right to pay with interest what is due and enforce the contract specifically. In a few instances

extreme forfeitures have been permitted where the contract made time of the essence.30 In a majority of cases, however, equitable relief has been given a purchaser in possession against provisions making time essential, the situation being rightly treated as substantially the same as that of mortgagor and mortgagee, and the provision for forfeiture as ineffectual as in a mortgage.31 But in a recent decision of the British Privy Council, 32 it was held that though a provision for forfeiture could not be enforced, specific performance must be denied. This reverses the ordinary rule of equity in regard to mortgages. As most American courts would deny the buyer the right to recover any portion of the instalments he had paid, there is the more reason why they should give the alternative right which the English court denied. In considering the right to recover instalments which have been paid, the certainty with which actual damage can be measured should be taken into account. If this is difficult there is the greater reason for not interfering with the forfeiture upon which the parties have

Heckard v. Sayre, 34 Ill. 142 (specific enforcement was denied because the last instalment was tendered less than a week after it was due. Cf. Ebert v. Arends, 190 Ill. 221, 233, 60 N. E. 211); Iowa Railroad Land Co. v. Mickel, 41 Ia. 402 (the buyer was denied specific enforcement of the contract because the second instalment was paid two days late, and the amount paid was three dollars too small); Brown v. Ulrick, 48 Neb. 409, 67 N. W. 168 (specific enforcement was denied a buyer who was eight months late in making proper tender though he had paid $1,100 and had greatly improved the land); Steele . McCarthy, 1 Saskatchewan, 317. In Fox v. Grange, 261 Ill. 116, 103 N. E. 576, the court though giving the vendee specific performance on the ground of waiver stated without qualification the vendor's right of forfeiture in the absence of waiver.

"Cheney v. Libby, 134 U. S. 68, 33 L. Ed. 818, 10 Sup. Ct. 498; Butler v.

Colson, 99 Ark. 340, 138 S. W. 467,
468; Steele v. Branch, 40 Cal. 3, 11;
Shouse v. Doane, 39 Fla. 95, 21 So.
807; Haas v. Coburn, 22 Ida. 47, 124
Pac. 476; O'Fallon v. Kennerly, 45
Mo. 124; Ewins v. Gordon, 49 N. H.
444, 460; Hall v. Delaplaine, 5 Wis.
206, 216, 68 Am. Dec. 57; Edgerton
v. Peckham, 11 Paige, 352. In Hans-
brough v. Peck, 5 Wall. 497, 18 L. Ed.
520, and Nelson v. Hanson, 45 Minn.
543, 48 N. W. 410, time was stated
to be of the essence of the contracts
in suit, and the language of the court
seems to indicate that the purchaser
would have been given their ghts of a
mortgagee. In Minnesota and North
Dakota and perhaps other States a
vendor may not cancel the contract
for the vendee's default except after
written notice giving the vendee thirty
days to make good the default. See
Kryger v. Wilson, 242 U. S. 171, 37
S. Ct. 34, 61 L. Ed. 229.

32 Steedman v. Drinkle, [1916] A. C.
275.

agreed. "The application of this principle becomes more manifest in cases where a public interest or policy supervenes, as where, for non-compliance by stockholders in corporations engaged in undertakings of a public nature with the terms of payment of instalments due on account of their shares, by which a forfeiture of the stock and of all previous payments thereon has been incurred and declared, the courts refuse to grant relief." 33 If the seller reclaims the property, there is no doubt that he thereby destroys his right to sue on the contract for unpaid instalments.34

§ 792. Civil Law.

The penal obligation was known to the Roman Law and originally it seems recovery of the full penalty was permissible.35 Later it was recognized that the amount named as penalty was not conclusive. If it were inadequate more might be obtained and if it were excessive the amount might be reduced. 36 Penal

33 Clark v. Barnard, 108 U. S. 436, 456, 27 L. Ed. 780; citing Sparks v. Proprietors of Liverpool Water Works, 13 Ves. 428; Prendergast v. Turton, 1 You. & Col. Ch. 98; Naylor v. South Devon Railway Co., 1 De G. & Sm. 32; Sudlow v. The Dutch Rhenish Ry. Co., 21 Beav. 43.

34 In Waite v. Stanley, 88 Vt. 407, 92 Atl. 633, the court said:-"Under the contract, the promise of the vendor to convey the property constituted the consideration for the vendee's promise to pay the purchase money (Ferry v. Stephens, 66 N. Y. 321), and since by the decree in the equity case all interest of the vendee was foreclosed, by reason of which the contract was ended, and the absolute title to the property reinstated in the vendor, there was no longer any consideration for the vendee's promise to pay the purchase price. 'A court of Chancery regards the transfer of real property in a contract of sale and the payment of the price as correlative obligations. The one is the consideration of the

other; and the one failing leaves the other without a cause.' Redfeld v. Woodfolk, 22 How. 318, 16 L. Ed. 370; Washington v. Ogden, 66 U. S. (1 Black) 450, 17 L. Ed. 203. Thus the matter stood at the time of the trial of this action at law in the court below, and, the item in dispute being then without consideration, the defendant was not liable therefor. See Sawyer v. McIntyre, 18 Vt. 27; Arbuckle v. Hawks, 20 Vt. 538; Graff's Executrix v. Kelly's Executors, 43 Pa. 453, 82 Am. Dec. 580; Day v. Lowrie, 5 Watts (Pa.), 412; Moore v. Smith, 24 Ill. 512."

35 Justinian's Inst. 3, 15, 7 (Moyle's 5th ed.).

36 Hunter's Roman Law, 3d ed. 652, citing from Dig. 44, 4, 4. "Cornelius compromised a claim against Mævius for 60 aurei, but Mævius inconsiderately agreed to a penalty of 100 aurei if he did not keep the terms of the compromise. Cornelius could not recover more than was really due-namely, 60 aurei; and if he demanded more, could

stipulations in a contract of sale, however, were rigidly enforced.37

In modern European Codes the subject is not dealt with on uniform principles. The French Code provides "When the contract stipulates that the party who fails to perform his obligation shall pay a certain sum as damages, neither a greater nor a less sum can be granted the other party;" 38 and the extensive copying of the French Code has established the same provision in other countries.39 The French law prior to the enactment of the Code permitted the penalty when excessive to be reduced by the court. 40 Even under the Code the penalty may be modified if the obligor has performed in part; 41 and in any event, the court is given a limited power to permit delayed performance of the obligation, thereby saving the penalty.42 The German Civil Code has a more complete protection against excessive penalties. It provides "If a forfeited penalty is disproportionately high, it may on motion of the debtor be reduced by a judgment to a proper amount. In judging as to the adequacy, every rightful interest of the creditor, not only the property interest,-is to be considered. After payment of the penalty a reduction is excluded." 43 So in the Swiss Federal Code of Obligations, the judge is given power to reduce penalties which he regards as excessive.44

§ 793. A condition may involve a penalty or forfeiture.

A condition may be as penal in its effects as a promise to pay a penalty. Not only is this true in conveyances, 45 but in contracts. For instance, if a building contract provided that the builder should build a house and finish it by October 1st,

Thus a

be defeated on the ground of bad
faith (exceptio doli mali).
penalty might be reduced."

"Hunter's Roman Law, 652.
"Civil Code, Art. 1152.

*See, e. g., Civil Code of Italy, Art. 1214; Civil Code of Spain, Art. 1154.

1 Evans' Pothier on Obligations (2d Am. Ed.), p. 162, and this principle is preserved in the Code of Louisiana, § 2127.

41 Civil Code of France, Art. 1231.

42 Civil Code of France, Art. 1244, and see Fuzier-Herman et Darras, Code Civil, annoté vol. 3, p. 90, 17.

43 German Civil Code, § 343.

44 Art. 163 (Art. 182 of Code of 1881).

45 See Sanitary District v. Chicago &c Trust Co., 278 Ill. 529, 116 N. E. 161.