Stewart v. Mann

165 P. 590 | Or. | 1917

Lead Opinion

Mr. Justice Burnett

delivered the opinion of the court.

1-3. The bankruptcy of the company did not impair the obligations of the contract with the plaintiff, nor lessen his privileges under the same. It did not foreclose his interest in the land. He was not compelled thereby to take title on less favorable terms than those for which he stipulated. In buying at the sale and taking the conveyance from the trustee with the condition inserted therein, as above quoted, Mann placed himself precisely in the situation of the company at the outset of the transaction between it and the plaintiff. The defendant contends that Reimers did not assign to the company his contract for the purchase of Mann’s undivided half of the land. That, however, cannot avail Mann in the present juncture, for he took the deed mentioned with the condition stated, and this binds him to perform the covenants of the company. If he had desired to avoid this result it was his business to foreclose his contract with Reimers whereby he might have rid his own half of the land of the obligations of the agreement between himself and Reimers. With them would have fallen plaintiff’s interest in the Mann half for that interest depended upon and was derived from the Reimer’s contract. Mann avoided this course, however, and bought in the whole tract on the terms already described, which estops him from shirking the obligations of the company under its covenant with the plaintiff: Cummings v. Jackson, 55 N. J. Eq. 805 (38 Atl. 763); Hill v. Minor, 79 Ind. 48; Crawford v. Edwards, 33 Mich. 354; Miller v. Thompson, 34 Mich. 10; Goos v. Goos, 57 Neb. 294 (77 N. W. 687); Hadley v. Clark, 8 Idaho, 497 (69 Pac. 319); Selby v. Sanford, 7 Kan. App. 781 (54 Pac. 17); Mississippi Valley Trust Co. v. Hofius, 20 Wash. 274 (55 Pac. 54). The result is that the situation is equivalent to that existing between the company and the plaintiff at the outset. The plaintiff was not in default in his payment. He preferred a claim for damages for the neglect of the company and of Mann to cultivate the orchard as required by the contract. This was not a breach of the stipulation on the part of the plaintiff. It is not necessary to determine whether the demand was well or ill founded. However, it seems to have provoked the defendant Mann to repudiate the obligations originally resting upon his predecessors in title, something he had no right to do, having assumed them as already shown. His conduct constitutes what Stewart is entitled to consider a breach of the contract on the part of Mann. In the language of Mr. Justice Vann, in Elterman v. Hyman, 192 N. Y. 113 (84 N. E. 937, 127 Am. St. Rep. 862, 871, 15 Ann. Cas. 819), as applied to Stewart:

“He accepts ‘the situation which the wrongdoing of the other party has brought about,’ and tries to get out of the land what he paid on it under the contract. * * The vendee does not rescind when without fault he goes into a court of equity and insists on a right springing from the contract and payment thereon pursuant to its terms. He does not repudiate the contract, but stands on it and affirms it as the foundation of the right he seeks, to enforce, as fully as if he sought entire specific performance. He does not abandon his equitable ownership by trying to assert it in the only way that it can be asserted. The contract has been performed by him, wholly it may be, or in part, as in the case before us, and as, owing to the fault of the vendor, he cannot have the full performance to which he is entitled, he asks for partial performance by the enforcement of the trust created by the contract and payment as provided thereby. He does not sue for money had and received, but to enforce a lien on land into which the money went. Nor does he rescind the contract, which is the source of his lien, by seeking to enforce it to the only extent now possible, owing to the breach by the vendor, but he demands that equity should give him the interest in the land that he acquired by the contract and payment. The denial of that right would be an encouragement to wrongdoing, and to hold that an attempt to foreclose the equitable lien is a rescission of the contract would deny the right in all cases, including those in which the vendee is in possession and has made improvements.”

4. The doctrine of the cases is to the effect that a vendee acquires an estate in land under an executory contract for the purchase of the same in proportion as he pays the purchase price and is not in default in the performance of his covenant. The vendor holds the legal title to that extent in trust for the vendee. When the seller repudiates or fails to perform the contract the vendee has the right to get out of the land what he put into it, by foreclosing his equitable lien upon the premises. His right to do so is well recognized by the authorities: Gerstell v. Shirk, 210 Fed. 223 (127 C. C. A. 41); Howard v. Linnhaven Orchard Co., 228 Fed. 523; Brede v. Rosedale Terrace Co., 158 App. Div. 438 (143 N. Y. Supp. 583); Stockwell v. Melbern (Tex. Civ.), 185 S. W. 399; Tyler v. Cate, 29 Or. 515 (45 Pac. 800); Feldblum v. Laurelton Land Co., 151 App. Div. 24 (135 N. Y. Supp. 349); Ihrke v. Continental Life Ins. & Invest. Co., 91 Wash. 342 (157 Pac. 866). This latter case is one almost precisely like the instant contention in every particular. The subject is treated in a very exhaustive opinion written by Mr. Justice Fullerton, of the Washington Supreme Court, and is well worth reading in connection with the matter involved.

5. When Mann sought to rescind the contract he should have put the plaintiff in statu quo; he did this only in part, by merely returning what the plaintiff had paid directly to him. Stewart had a right to accept the situation thus thrust upon him and, by foreclosing his vendee’s lien, compel the defendant Mann, so far as his rights in the premises were involved, to make complete restoration to the plaintiff, so as to place him where he was in the beginning; in other words, to complete the process of rescission by repayment of the full sum the plaintiff had already invested in the land. The result is that the decree of the Circuit Court is reversed and one here entered in accordance with the prayer of the complaint, except that no interest can be allowed prior to the date of this decree: Sargent v. American Bank & Trust Co., 80 Or. 16 (154 Pac. 759, 156 Pac. 431). Reversed. Decree Rendered.

Mr. Chief Justice McBride, Mr. Justice Moore and Mr. Justice Bean concur.

Denied July 10, 1917.

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Rehearing

On Petition for Rehearing.

(165 Pac. 1169.)

Mr. Leroy Lomax, for the petition.

Mr. George Arthur Brown, contra.

Department 2. Mr. Justice Burnett delivered the opinion of the court.

6. The defendant’s petition for rehearing would be very persuasive if it were founded upon a correct premise. It charges in substance that the plaintiff sought to compel the admission from the defendant that both he and his predecessor-in interest had violated the terms of the contract under which the plaintiff was to purchase the property in that they had not cultivated the orchard on the premises in the manner prescribed. This, however, is not the ground upon which the defendant placed his return of the money and his abjuration of the contract.

It will be remembered that Stewart protested at the time he made the last payment and claimed that the defendant and the company had failed to comply with the stipulations of the contract for the cultivation and establishment of the orchard and that there should be an abatement, of the purchase price to cover the default. As showing the position which the defendant took it is only necessary to quote his letter dated July 14, 1914, addressed to the plaintiff, saying:

“Inclosed herewith I hand you check $79.15 which you sent me July 2nd. I also enclose a certified check for the sum of one hundred and sixty dollars and sixty cents, being the amount of the payments made by you to me heretofore on your contract with Chehalem Mountain Orchard Company on account of tracts fifty-four and part of tract fifty-three, as provided in your contract.

“You are certainly very much mistaken in your conclusion in this matter. When I purchased the land from the trustees in bankruptcy, I by no means assumed the payment of the debts of the bankrupt, and you have no right to believe or think so, from anything I have ever said or done. I gave you to understand that I was willing to assume your contract as a separate individual contract and deal between ourselves ; that is, I was willing to deed you the land making you a good title upon the payment to me of the balance due under your contract. I could sell the land for more money than is due under your contract, or think I could do so, hut I was willing to let you have the land for the amount yet due under your contract but I certainly did not assume the debt of the bankrupt. You can readily see that one would he very foolish to do such a thing, and you have no right to expect such a thing from me.

“You say in your letter that you intend to institute suit against me to recover money which you paid the Chehalem Mountain Orchards Company under your contract. You should have presented any claim you had against the company to the referee in bankruptcy, as no one assumed those liabilities, and you never heard of any one assuming the liabilities of a bankrupt in purchasing the assets of .one who has gone into bankruptcy. Because of your misunderstanding of the matter I am returning the money to you and I certainly wonld not let you have the land for the amount yet due under your contract with the bankrupt, and in addition to that make good any amounts you had lost on the bankrupt.

“Yours respectfully,

“(Signed) S. M.Mann.”'

It will be recalled that the land was sold by the trustee in bankruptcy subject to the contract and that the defendant accepted a deed containing the condition to the effect that he himself expressly agreed to assume as part of the purchase price the encumbrances upon the property, including the contract in question. His letter above quoted constitutes a repudiation of his covenant. He did not justify his course at that time by the assertion that he and his predecessor had complied with the contract, but proceeded on the basis of there being no liability whatever on his part. Whatever his reason may be he committed a breach of the contract in his renunciation of it. He cannot at this time mend his hold- and take up the question of whether or not the orchard was cultivated as agreed upon. Having denied any liability in any event he must abide by Ms position tbns assumed. Tbe deed be bad taken made bim liable and when be disavowed that liability tbe plaintiff was entitled to consider it as a breach and to proceed in foreclosure of bis vendee’s lien upon tbe premises. Tbe petition for rehearing is denied. Behearing Denied.

Mr. Chief Justice McBride, Mr. Justice Moore and Mr. Justice Bean concur.