Taft v. Kessel

By the Court, Paine, J. This action was brought by the plaintiff as vendor, to bar the defendant’s equities under a land contract. The defendant set up that be bad been damaged by the fraudulent representations of the plaintiff, as to the boundaries of the land, made at the time of the sale. But the finding of the court was adverse to the defense, and there is no sufficient exception to enable us to review any question of fact. The finding embraces a series of distinct propositions, some of fact and some of law, and there is only a general exception to the whole finding. That this is insufficient, is too well settled to need a reference to autboiities. But the defendant also averred in his answer, that the plaintiff bad no title to the land contracted to be sold, but that he bad falsely and fraudulently represented to the defendant that be bad title, and by this deceit induced him to make the contract, and be asked to recover the amount be bad paid, with interest. ' On the trial be offered -to prove these allegations, and all evidence on the point was excluded on the objection of the plaintiff, to which exception was taken. [277] It has been a .matter of some doubt with us, as to what effect this ruling should have upon the judgment. We think the contract obviously required the plaintiff to give the defendant a good title, except that the covenant against encumbrances was to be limited to those “ made or suffered by through or under ” the vendor. It expressly recited that the plaintiff was the “ owner,” and had agreed to convey to the defendant “by a good and sufficient deed,” &c. This shows clearly that the parties did not contemplate a mere quit claim, but were bargaining for the conveyance of a complete title, exceptas modified by the limitation of the covenant against incumbrances, to those made or suffered by or under the grantor. Now if the grantor had actually given a deed with a covenant of seizin, and the defendant had given back a-mortgage to secure the unpaid purchase money, and this action had been brought to foreclose the mortgage, it seems to be settled that the defendant being in possession, and no paramount title having been asserted against him, would be compelled to pay the balance due on the mortgage, deducting only nominal damages on his showing a failure of title, and thereby a breach of the covenant of seizin. Rawle on Covenants for Title, p. 100 et. seq.; Morrison vs. Underwood, 20 N. H., 371; Hill et. al., vs. Butler, 6 Ohio St., 217. The ground of this rule is, that as the purchaser has the undisturbed possession, which may ripen into a perfect title, it cannot be assumed with any certainty that he has suffered, or ever will suffer any actual damage by the breach of the covenant of seizin. And although he might be entitled to nominal damages, yet the erroneous disallowance of them by the court below is not a sufficient reason for reversing the judgment, where the disallowance did not affect the question of costs. See cases last cited. Eegarding this as well settled in cases where a deed has been given and a mortgage taken back, I have had some difficulty in perceiving any substantial distinction, so far as respects th e question under consideration, between such a case and one [278] like the present, where the vendor gives a bond for a deed, retaining the title as security. If the failure of title in the vendor is no good reason why the purchaser in possession should not pay the unpaid purchase money or have his rights under the deed cut off by a foreclosure sale, it is not readily obvious to my mind why the saíne failure of the title should relieve a purchaser in possession under a contract, from either paying the purchase money or being barred of his rights under the contract. And there probably is no reason for any distinction between the two cases, where the vendee elects not to rescind the contract, but to retain the possession acquired under it and take his chances of being ousted by an adverse title. But the vendee, in such case, may rescind and recover the purchase money paid. For it is well settled that a purchaser under an executory contract calling for a good title:, will not be required to complete the purchase if the title fails. And the real question here seems to be, whether, in a case like this, a purchaser is in a position to exercise this right, without having restored, or offered to' restore the possession? As a general rule, a party rescinding a contract must restore what' he acquired under it. He must-place the other party in statu quo. And this seems to be a condition precedent to the right to maintain an action founded bn such rescisión. Moyer vs. Shoemaker, 5 Barb., 322; Randlett vs. Herren, 20 N. H., 107; Hurst vs. Means, 2 Swan, 598. There are some English cases which have held that where possession has been delivered under. a contract -for the sale of real estate, it is impossible to place the vendor in statu quo, and therefore the vendee cannot rescind and sue for the 'consideration, as for money had and received, but must sue on the contract for damages. Hunt vs. Siek, 5 East, 449; Blackburn vs. Smith, 2 Excheq., 783. If this doctrine should be established, I should then be of the opinion that in analogy to the rule where a deed has been -given and a mortgage taken back, the vendee in possession could only recover nominal damages. But the right of rescinding [279] seems to have been generally allowed in this country on a failure of title in the vendor, notwithstanding the vendee may have taken possession. And assuming this right to exist, I have come to the conclusion that in a case like this, it should not in a court of equity, be held an indispensible condition to its exercise, that the vendee should have previously restored the possession. There are cases where courts of equity have held that a party claiming a right founded on a rescisión of a contract, must have restored, or at least offered to restore what he acquired, as the rule is at law. Ship vs. Wheeless, 33 Mississippi, 652. But there are others where it is held, that whenever the contract has been obtained by the fraudulent representations of the vendor as to his title, or where it is necessary for the protection and indemnity of the vendee, he may insist on a resci-sión and recovery of the amount paid, without first restoring possession. Garner and others, vs. Leverett, 32 Ala., 413; Coffee and others, vs. Newsome, 2 Kelly, 460. I approve the reasoning of these cases, and think it applicable to the present. We have held in this state, that the purchaser who has advanced any portion of the purchase money, has an equitable lien on the land as security, where the contract is rescinded on default of the vendor. Wickman vs. Robinson, 14 Wis., 493. This being so, the retaining possession may be necessary in some cases for the protection of the purchaser; and it would be unreasonable in such cases to compel him to abandon it as a condition of his right to rescind. There seems no objection to a rule allowing a purchaser thus brought into court as a defendant, to claim a recision and a recovery of the purchase money paid, without a previous surrender of the possession, leaving that matter to be disposed of by the judgment, which can be so framed as to adjust the rights of both parties upon equitable terms. Griffith vs. Depew, and others, 3 Marshall, 177; Williams vs. Rogers, 2 Dana, 374. It may, perhaps, be doubtful whether the appellant really [280] desires a total rescisión of the contract upon the condition of abandoning the possession. But if the facts averred in his amended answer are true, he is entitled to such rescisión and to recover the money paid. It was therefore erroneous to reject the evidence offered to show a failure of title. The judgment is reversed, with costs, and a new trial ordered.