*1 judgment is affirmed. Judges All the concur. BIRKLAND, ux., Respondent Appellants
HALVORSON et v. (171 77) N.W.2d (File 8, 1969) Opinion No. 10590. filed October Rehearing 12, 1969 denied November *2 Aberdeen, appellants. Myers, Morris and for Rice, Aberdeen, respondent. George for defendant and J HANSON, Judge. litigation
This stems from the sale of the "Lone Pine Trailer 22, July plaintiffs, in Aberdeen on 1964 to Elvin and Bev- Court" Halvorson, defendant, erly by Joseph O. Birkland. One June action, designated plaintiffs commenced an as Civ. 67- 1967 seeking rights sale; a declaration under contract for of judgment payments a for made under in the the contract amount $12,300; $5,440 damages alleged for and for of the breach contract. On 1967 commenced a second action June designated 67-215, they as in which a Civ. seek rescission general contract. Defendant answered both actions with a denial, asking plea estoppel, of waiver and and a counterclaim Upon stipulation for strict foreclosure of the for contract sale. of counsel the two actions were consolidated for trial. The is- damages jury sue of was submitted to a which returned a ver- findings plaintiffs. $1.00 dict of in favor of The court then entered denying plaintiffs' of fact and conclusions of law to rescind granting estoppel prayer because defendant's strict for single judgment foreclosure contract deed. A was en- judgment. appeal tered. Plaintiffs from the appeal A further denying from the order unnecessary. motion for a new trial was Madsen, Highway State Commission v. 119 N.W.2d judgment. appeal as such order is reviewable on from the sought recovery payments Plaintiffs rescission and made (1) grounds, under the contract of sale on alternate Mistake viz.: by misrepresentations (2) by induced made defendant fail- resulting ure of consideration from defendant's or failure refusal showing according to tender an abstract merchantable title the contract. summary, appears operated
In it Birkland "Lone Pine Trailer Court" on Lots to 17 in 41 of Roche's Block Aberdeen, City East Addition to Side South Dakota. Block (otherwise 41 is bounded on the east Greenwood Street re- Street) ferred to as the south Fifth Avenue sixty-six Both Southwest. streets are feet The northern wide. *3 adjoining tier of lots in Block 56 Block 41 on the south was owned by platted wife defendant's and the area as Fifth South- Avenue by east between Block 41 and Block 56 was used defendant operation of his trailer court. Also the west half of Green- large wood Street was used and a cement incinerator block by utilized the tenants of the court trailer was situated thereon. July In 1964 defendant decided to sell court and the trailer Draeger, listed it sale with C. A. in Aberdeen. realtor Through acquaintance property a mutual learned They on was the market and contacted defendant. met on two negotiations prior July to occasions 1964 and in the course of inspection an was made of the boundaries and court facilities. dispute by representations is There as to the defendant made during negotiations ownership as to of the west half of Green- According plaintiff and wood Fifth Southeast. to Street Avenue Halvorson, him informed both streets had been va- by cated and were owned him. Plaintiff further testified he con- making expansion templated trailer court more use of an of the purchased and not the trailer street areas he would have except representation ownership court for the of defendant. Defendant, hand, on testified told Halvorson the other he much streets would have but that wasn't of a be vacated problem. agreed parties which were incor- on the terms of sale
porated Money prepared Sale Mr. in an Earnest Contract of Draeger July Defendant which was executed 1964. fur- property description nished the realtor with a of the to be in- Court, serted in the contract follows: "The Lone Pine as located Aberdeen, on and all Block 41 Addition to South Roaches portion Dakota less Lots that of 5th 1-2-3-18-19 & 20 Plus running avenue 41 which has on the south side of said Block plus portion been vacated that Street run- ning vacated, on the east side of Block 41 which has been conveyed prop- west half with of said street vacated is to be (1) $36,000 erty." provided price The contract further the sale $1,000 down, $5,000 paid was to be as follows: as soon as sellers $30,000 furnished a contract of deed and the balance to be commencing paid per $225 at September the rate of month (2) completed by the transaction was to be given pur- 1964 when would to the be Draeger Money chasers. Mr. testified that when the Earnest Con- July tract was executed in his office on 1964 the defendant him, Halvorson, presence told plaintiff in the that Greenwood Street had been vacated. signing Money
After the Earnest Contract retained Thurow, Aberdeen, attorney Elmer an at law in to examine prepare testifying abstract a Contract For Deed. In for de- fendant, objection plaintiffs' over attorney- that it violated the *4 privilege rule, parol client and the evidence Mr. Thurow stated parties orally he examined the abstract and advised the in his property based, office that title to the was defective as it was part, upon in tax quieted by deeds and title would have to be apparently by defendant. He was then retained defendant purpose. Mr. Thurow also testified the matter of the streets being discussed, not vacated was but he was informed this mat- by ter would be taken care of someone else. The Contract For prepared by signed Deed by Mr. Thurow parties was the on substantially 1964. It contained provisions the same Money as the Earnest Contract. It property described sold (4 17) inclusive, as "Lots four to seventeen to Forty-one in Block (41), Aberdeen, of Roaches East side Addition to County, in Brown
332 Dakota, adjoin- portion
South and that of vacated 5th Avenue ing South, portion Block 41 on the and that of the West half of adjoining vacated Street said Block 41 on the East". obligated convey The contract also prop- defendant seller to erty by Warranty Deed and to furnish an Abstract of Title show- ing property merchantable title to said and if title was not now merchantable, perfect the seller had six months to title. payments required
Plaintiffs made the of them and went in- August They to of the trailer court on 1964. learned April They the streets had not been vacated in 1965. immediate- ly contacted defendant who informed them that Mr. Ivan Hunt- singer, Aberdeen, get attorney another in would the streets City vacated. On 1965 the Commissioners of Aberdeen June vacating passed Southeast, a Resolution Fifth Avenue but re- fused to vacate Greenwood Street. February plaintiffs present
In retained their counsel and on payments his advice refused to make further under April they writing contract. On notified defendant days perfect he had ten to title and to furnish an abstract show- ing legal appropriate proceedings merchantable title or would be commenced. These actions were then started in and were June tried in December 1967. appears City
It further that Commissioners of Aberdeen passed vacating a Resolution July Greenwood Street on 1967. during An abstract of title was tendered progress defendant of the trial. Such abstract was day certified to on the 15th days December 1967. This was four after the trial commenced. Apart considering from and without plain the merits of tiffs' claimed alleged rescind for mistake induced misrepresentations appear it would that were upon entitled to a decree of rescission their alternate ground. unequivocally The Contract required For Deed defend showing ant to furnish an abstract merchantable title to all August sold to 1964 or within six months *5 failed, refused, neglected, thereafter. He either or was unable right comply. payments under the contract was de- His to to compliance. pendent upon It material and essential his was a agreement. provision on Re- As stated in Vol. Black Cancellation, p. of 1103 "When a vendor scission and § given land, convey time or on who has bound himself to at a give good conditions, stipulated performance a is unable to so, upon property when called to do either because title to the acquire title or because he has failed to he never held the expected acquire un- he has been title which he to or because claims, purchaser clear title from or hostile able to clouds pay- to make will be entitled to abandon the contract and refuse or, price, partial payment, he will ment of the if he has made a has to rescind the contract and recover back what he be entitled (2) (4). given." and See also SDCL 53-11-2 subsections Furthermore, partial was an obvious failure of there agreed put plaintiffs to sell and consideration in that defendant possession 5th Half of Avenue Southwest West August beyond his Greenwood Street on 1964. This was rights, authority. conveyable possessory He had no or abutting owner, except as an in Greenwood Street or 5th Ave actually City nue. Until those streets were vacated nothing acquired Aberdeen of value from defendant so as their was far use concerned. complete plain
The rescission in this case was when gave rescission, pay tiffs notice of their refused to make further ments, everything and offered tender back of value received under the contract. rescinding party
As a condition to rescission
"the
party everything
contract must
restore
to the other
of value
which he has
received
from him under
the contract".
SDCL
Therefore,
53-11-5.
the decree
rescission
in this case should
require plaintiffs
pay
to account
for the reasonable
value
use, occupation
their
of the trailer court since
against
pay
1964 as an offset
their
to recover
respect
made under
contract.
In this
ments
see Larson v.
Thomas,
Damages
N.W.
the breach of contract is an not issue and in the ac- counting damages plaintiffs on rescission cannot claim such as an offset.
Reversed.
BIEGELMEIER, J., ROBERTS, J., P. concur.
RENTTO, J., dissents.
HOMEYER, J., in concurs dissent.
RENTTO, Judge (dissenting). judgment appealed plaintiffs recovery from awarded being $1.00, jury the amount of the verdict on their cause of damages arising action for from defendant's breach the con- granted request for tract sale. It also defendant's for strict fore- contract, allowing plaintiffs period closure of ten $29,106.81, days pay in which to the sum of in de- possession was entitled fault of which defendant to immediate premises. No mention was made therein of of the a denial of plaintiffs' request for a rescission. litigation finding only rescission feature of this
On the one: made the court is this alleged plaintiffs
"That discovered defect in the real described in the abstract of title title to the '9', April in evidence as Exhibit in received deed, remaining did not elect to rescind the contract collecting possession property, rents period April until elected from that when to rescind the contract."
Concerning phase of the case it concluded: rescission of the
"That are not entitled to a executed on or about contract for deed timely upon discovery of their reason failure to rescind alleged of the fraud as to Street and Fifth asserting estopped Avenue and are from such having rescind, property, been in the collecting same, profits period the rents and from for a years." of two and one-half
The court found further that at the time of trial the defendant willing ready, had merchantable title to the and was obligations perform and able to his under the contract. 1967, 53-11, party may
Pursuant
unilaterally
to SDCL
Ch.
by notifying
party
rescind a contract
the other
of his election
offering
everything
to do so and
to restore
of value that he has
bring
may
rights
received. He
thereafter
an action to enforce
arising therefrom. This is a law action and is often referred to
as an action on a rescission. It is not to be confused with an
provided
1967,
action for a rescission
for in SDCL
Ch. 21-12.
Sweeney
Co.,
1,
1107;
v. United Underwriters'
25 S.D.
124 N.W.
Co.,
47;
Purcell v. International Harvester
37 S.D.
159 N.W.
Sabbagh
Co.,
v. Professional & Business Men's Life Ins.
79 S.D.
513;
116 N.W.2d
Main v. Professional & Business Men's
Co.,
Life Ins.
proceeding
80 S.D.
the trial record. There are indications that it was treated as an
regarded
action on a rescission and also that it was
as an ac-
for
tion
a rescission. It
majority
seems to
opinion
me that the
is,
views it as an action on a rescission. If it
then in order to
it,
plaintiffs
prove
maintain
they
must
unilaterally
that
re-
prior
serving
scinded
contract
to its commencement
'the
offering
required
Hegge Hegge,
notice and
to restore.
v.
44 S.D.
555,
336
As to matter of notice the court found that it was not timely and for that reason held that were not entitled reversing majority to a rescission of the contract. The in finding action of trial court has to hold that the court's is 15-6-52(a). clearly erroneous. SDCL In this I am un- able to concur. rescission, equitable
If the action is an one the find- ing holding justify deny- of untimeliness could the trial court's ing general rescission. The rule seems to be that circumstances bringing delay may incident to a in a suit for rescission render grant inequitable it relief. 12 Cancellation of Instru- C.J.S. 51; Am.Jur.2d, Instruments, ments Cancellation 44. This § § holding, ample support especially record furnishes for so in view fact that defendant perform his counterclaim offered to willing ready, perform. and at the time of trial was and able to Hershey, 21-50-2. SDCL 1967 See Moter v. *8 Bellamy, and Walsh
N.W.
v.
Accordingly, I dissent.
HOMEYER, J., concurs in this dissent.