Magdalena Estate v. Louis J. Myrick

Summary

A landmark case establishing that in installment sale contracts, where the vendor elects to cancel the contract due to buyer's default, the vendor cannot retain payments made without an express contractual provision for forfeiture. The Supreme Court applied Article 1124 of the Civil Code, holding that remedies of demanding performance or resolution are alternative, not cumulative. Once the vendor chose cancellation, it must restore the buyer to the original situation by returning payments with interest. The decision reinforced the principle that contract interpretation should be based on clear, unambiguous terms rather than subsequent explanations, and established important precedent on restitution in cancelled contracts.