Ugland v. Farmers & Merchants' State Bank

Fisk, J. (after stating the facts as above). The chief question in dispute in this litigation is as to who, as between plaintiff, Hgland, and defendant Hanson, is equitably entitled to the land in controversy. Both claim from a common source, while the defendant bank claims to hold the title merely in trust for its codefendant. The crucial question is whether, prior to the time plaintiff purchased the assignment of the contract from Noble, the latter had, by a valid contract, parted with his interest in such land to defendant Hanson, and this, in turn, depends upon the correctness of the contention on Hanson’s part that he had so far consummated and executed the prior verbal agreement with Noble as to vest in him the latter’s interest. It is not disputed that some time prior to plaintiff’s purchase oral negotiations were had between Noble and Hanson, towards the purchase by the latter of the former’s interest, and that such negotiations finally culminated in an oral agreement, whereby Noble agreed to sell and Hanson agreed to purchase the land for a consideration of $3,000, to be paid in a designated manner, and that $1 of such sum was in fact paid, with the intention, as stated by Hanson, of binding the bargain. These parties, however, do not agree in their testimony as to the details of such agreement, Noble testifying to an understanding that he was merely to assign to Hanson his contract with the security company, and to receive from him the difference between $3,000, [544] and the amount still remaining due to such company on said contract; while Hanson denies this and swears positively to an understanding that he was to pay Noble $3,000 cash for a warranty deed of the premises, free of encumbrances. There was no agreement that Hanson should have possession of the land prior to the consummation of the deal, but -some time later Hanson’s servant moved into the house without permission from Noble, and thereafter permission to remain was given on condition that, if the deal fell through, the use of the buildings should be treated as an offset to certain needed repairs to be made by Hanson to such buildings. Such preliminary verbal agreement was never consummated. Whether the failure to consummate the same was Noble’s or Hanson’s fault is in dispute; but, as we view it, such fact is not controlling, for nothing was done by Hanson under this agreement up to the time plaintiff’s rights attached, except to pay the $1 aforesaid. It is true he had acquired permission, as above stated, for his servant to remain in' the house on the land conditionally, but it is entirely clear that such facts are wholly insufficient to take the contract without the statute of frauds. Noble had the undoubted right to .treat such contract at an end, as he did, and to dispose of his equity to plaintiff. His testimony to the effect that he several times demanded of Hanson that he fulfil his agreement, and that he gave him ample opportunity to do so, is, we think, true. It was certainly to his interest to deal with Hanson on a $3,000 basis, if possible, rather than to deal with plaintiff on a $2,800 basis. His principal object in selling was to raise money with which to effect a redemption of other lands from forced sale, and he waited on Hanson as long as he could, and finally notified him that the deal was off and tendered back the $1 payment. We think this effectually terminated any right which Hanson may have had under the verbal agreement. Hanson is not entitled, under this record, to any legal or equitable consideration. The small amount of seeding which he did on this land in the spring of 1909 was done after he was notified that the deal was declared off, and after being informed of plaintiff’s purchase; and not only this, but the same was done against the positive protest of plaintiff. Appellant’s counsel charges plaintiff with bad faith in purchasing with knowledge of Hanson’s contract. This is not justified by the record which discloses by uncontroverted testimony that he was informed, be [545] fore purchasing, that Hanson’s deal had fallen through. Had he any reason to believe that this was untrue, is it likely that he would have parted with his money as he did, knowing that he was merely buying a lawsuit ? The testimony shows that Noble solicited plaintiff to make the purchase, instead of plaintiff soliciting him to sell, as appellant’s counsel would have us believe. The evidence discloses that plaintiff acted in making such purchase in the utmost good faith, and with no intention of infringing upon the rights of anyone. His testimony and that of his witnesses is both reasonable and probable, and we deem his cause of action meritorious. Much of appellant’s argument is predicated upon the erroneous assumption that the verbal negotiations between Noble and Hanson amounted to an executed contract. Such contention is so manifestly untenable that we pass it without further comment. But appellant contends that plaintiff is not in a position to invoke the statute of frauds as against defendants, being himself a stranger to the Hanson contract. If such contention is sound, it would logically follow that a vendor in an executory contract, voidable under the statute, would have his hands tied so effectually that he could not transfer the premises to another until he had first procured a judicial decree adjudging the contract at an end. This is not the law. Noble had the undoubted right to do as he did, repudiate such alleged contract by selling to plaintiff. By such sale Noble elected to treat his former voidable contract with Hanson as void. The fact that Noble, both prior to the sale to plaintiff and by such sale, repudiated the former contract unquestionably, may be shown by plaintiff. The authorities cited to the contrary by appellant’s counsel do not support such contention. We cite below a few of the many cases announcing what we deem the correct rule. Messmore v. Cunningham, 78 Mich. 623, 44 N. W. 145; Hansen v. Berthelsen, 19 Neb. 433, 27 N. W. 423; Shelton v. Thompson, 96 Mo. App. 327, 70 S. W. 256; First Nat. Bank v. Blair State Bank, 80 Neb. 400, 127 Am. St. Rep. 752, 114 N. W. 409; Sanborn v. Murphy, 86 Tex. 437, 25 S. W. 613. We quote from Hansen v. Berthelsen, supra, as follows: “It is contended on behalf of the plaintiff that the statute of frauds is personal, .and that no one can plead it but Miss Berthelsen. This is true to [546] the extent that, as between Miss Berthelsen and the plaintiff, no one can plead the statute for her, and the defense is personal. When, however, she conveys to another, and thereby denies by her act the existence of a valid contract between herself and her grantor for the re-conveyance of the land, the grantee from her may set the statute up as a complete defense to the verbal contract, unless it has been so far performed as to take it out of the statute. In other words, the defense is available to parties and privies. Rickards v. Cunningham, 10 Neb, 420, 6 N. W. 475; Breckenridge v. Ormsby, 1 J. J. Marsh. 236, 19 Am. Dec. 84-86. The defense, therefore, is available to Love.” There is no merit in appellant’s contention that the statute of frauds was not properly raised by plaintiff. The complaint alleges that Hanson’s claims to such property are based on a certain oral agreement claimed to have been made with Noble. The answer alleges, by way of new matter, an executed agreement between Noble and Hanson, whereby the latter purchased the former’s interest in such land and was given possession. This is deemed denied by plaintiff, and it was incumbent on defendants to prove a valid contract as thus alleged, and it was unnecessary for plaintiff, in order to rely on the statute, to serve a reply raising such question. See Feeney v. Howard, 79 Cal. 525, 4 L.R.A. 826, 12 Am. St. Rep. 162, 21 Pac. 984, and cases therein cited. Also Jones v. Pettigrew, 25 S. D. 432, 127 N. W. 538; Traver v. Purdy, 30 Abb. N. C. 443, 25 N. Y. Supp. 452. Furthermore the action was tried throughout in the court below upon the assumption by both sides that the statute of frauds was in issue, and defendants sought to show that the Hanson contract had beer* so far executed as to take it without the operation of the statute. The sufficiency of the tender made by plaintiff to defendant bank of the sum of $2,615 on June 4, 1909, being the balance then due from plaintiff on the purchase price, is next challenged by appellants, but under the evidence we entertain no doubt as to its sufficiency. The fact that a cashier’s check was tendered, instead of currency, is not fatal; for the tender of currency was waived by not objecting to the form of the tender on this ground. Section 5260, Revised Codes 1905, expressly thus provides in the following language: “All objections to the mode of an offer of performance, which the creditor has an opportunity to state at the time to the person making the offer, and [547] which could be then obviated by him, are waived by the creditor, if not then stated.” But it is argued that such tender was'not kept good because the notice of the deposit of said sum in the Security Bank of Knox failed to state that such bank was a bank of good repute. Such contention is wholly devoid of merit. The statute, § 5259, Eevised Codes, does not require that the notice shall state such fact. If the fact exists the tender is good, and the obligation discharged, provided the notice is otherwise sufficient. It was unnecessary for plaintiff to prove that this bank was of good repute, for the presumption, in the absence of a different showing, is that it was. There having been a due offer of payment of the amount due, and this sum having been immediately deposited in a bank of deposit in this 'state of good repute, and due notice thereof given to defendant bank,, it follows that under § 5259, supra, the obligation was discharged. Our conclusions, as above stated, lead to an affirmance of the judgment, and it is accordingly affirmed.