Barkis V. Scott

Defendants have appealed from a judgment quieting plaintiff's title to a parcel of real property. In 1941, plaintiff and defendants executed a contract whereby defendants agreed to purchase plaintiff's house and lot in Oakland. Seven hundred dollars was paid down and the balance of $5,450 with 6 per cent interest was to be paid at the rate of $42.50 per month. The contract provided that payments were to be made on the fifteenth day of each month and that "If Default should be made in the payment of any of the said sums of principal, interest or installments at maturity thereof, all moneys theretofore paid in the premises by said parties of the second part shall, at the option of said party of the first part, become absolutely forfeited to and be retained by said party of the first part, as and for liquidated and agreed damages for breach of this agreement; and this agreement shall then become and be absolutely void and of no effect. . . . It Being Expressly Agreed that time is the essence of this contract. . . ." Defendants went into possession and made 57 monthly payments up to and including the payment due May 15, 1946. They also made permanent improvements on the property of the value of $3,114.47. The checks sent to plaintiff for the June and August payments were returned by the bank marked "Refer to Maker." The July check was honored. On August 26, 1946, plaintiff notified defendants that he had elected to declare a forfeiture of their interest under the contract for the defaults in the June and August payments. Plaintiff was not aware that the June check had been dishonored when he accepted the July payment, and defendants were not aware that either check had been dishonored until they received plaintiff's