Case Name: ANDERSON, Respondent, v. SECURITY LAND COMPANY et al, Appellants
Court: South Dakota Supreme Court
Jurisdiction: South Dakota
Decision Date: 1929-04-13
Citations: 55 S.D. 40
Docket Number: File No. 5837
Parties: ANDERSON, Respondent, v. SECURITY LAND COMPANY et al, Appellants.
Judges: SHERWOOD', P. J., and POLLEY, J, concur.
Reporter: South Dakota Reports
Volume: 55
Pages: 40–53

Head Matter:
ANDERSON, Respondent, v. SECURITY LAND COMPANY et al, Appellants.
(224 N. W. 937.)
(File No. 5837.
Opinion filed April 13, 1929.)
Teigen & Davis, of Sioux Falls, for Appellant.
Kraivse & Krause, of Dell Rapids, for Respondent.

Opinion:
BROWN, J.
At the times material to this action Security Land Company was a corporation 'with headquarters at Sioux Falls, defendant Engebretson its president, defendant Lindgren its vice president, and one George Thompson, its secretary.
Defendants were interested in land in Dickey county, N. D., and in the fall of 19x9 and spring of 1920 Lindgren triedi to interest plaintiff in the purchase of some land there. In June, 1920, Engebretson and Lindgren took a party, of which plaintiff was one, to look at land in Dickey county, and as a result plaintiff made a contract to buy the N. 27 — 132—62, containing 320 acres. Shortly after plaintiff's return to- his home on his farm in Minnehaha- county, Lindgren came out to the farm with a contract written up for the purchase by plaintiff of the W. 35 — 132—63 and stated to him that they were unable to get title for the N. 27, but that he and Eingebretson had just bought the W. 3-5; that they had paid $75 an acre for it and would- let him have it for just the price they paid for it, seeing they were unable to deliver the N. 27. Plaintiff says he hadl never seen the W. % 35, but, relying on defendant's • representation that they had paid $75 an acre for it, he ¡believed it would be worth that, and thereupon signed the contract which Lindgren had brought out, by the terms of which plaintiff agreed to- buy from Security Land Company the W. % 35, containing 320 acres, for $24,000, $1,000 to be paid in cash, another $1,000 August 15th, $4,400 on March 1, 1921, and $17,-600 March x, 1926; a note secured by mortgage to be given for the last payment. This contract was signed in the name of the Security Land Company by Lindgren as vice president. Anderson testified that he asked Lindgren why it should not also-be signed by Engebretson, and that Lindgren replied that that made no -difference; he and Engebretson owned the land in partnership and Security Land Company was the name they did business in. The $1,000 cash payment was made, and on August 15th Engebretson and Lindgren came o-ut to plaintiff's farm to get the second payment of $1,000. Plaintiff and his wife both testified that at that time plaintiff told them that he had received letters from the lawyers examining the title, to the effect that the title to the land was not in their name, but they said it was and they would give a clear title to it, that they would have the title made good before the March 1st payment of $4,400 came due, and as a result of this conversation plaintiff- paid- the second $1,000.
Various objections were made to the title by attorneys for plaintiff, and plaintiff got information that defendants had not paid as much as $75 an acre for the land, so the $4,400 payment was never made, and in -December, 1921, Security Land Company commenced an action against Anderson in the district court of Dickey county, N. D-.j to foreclose his interest in the land, in which action judgment by -default was entered on March 22, 1922, adjudging that the contract of plaintiff for the purchase of the land "is in all things foreclosed, cancelled and determined, and all right, title and interest of the defendant, Edwin A. Anderson, in and to the said premises be and is hereby foreclosed and cut off and the title to said premises is hereby q-uieted in the plaintiff as against the defendant and- his assigns and they and each of them are hereby enjoined from setting up any claim to said- property or any part thereof." On November 17, 1921, plaintiff gave defendants written notice o-f rescission of the contract on the ground of false representations made to him as to the price they had paid for the land, and because defendants had no title to convey, and demanded the return of the $2,oqo paid by him, which notice being disregarded by defendants, the present action was commenced to recover the $2,000 paid, on the ground that plaintiff had been induced to enter into the contract by the fraudulent representations of defendants that they were letting him have the land at the same price they had just paid for it, and on the further ground that defendants never had title to the land and could not convey it. Prom judgment on a verdict in favor of plaintiffs and an order denying a new trial, defendants Engebretson and Lindgren appeal.
Defendants' assignment of error on the refusal of the court, at the commencement of the trial, to require plaintiff to elect whether he would proceed on the cause of action based on rescission on the ground of fraud, or on the cause of action based on the failure of 'defendants to perform the terms of the contract, cannot be sustained. There is no inconsistency in plaintiff's action on the ground of fraud, and also on the ground of failure to furnish title. His right of rescission may be sustained on either ground, and he was at liberty to proceed upon either or both, and the court rightly refused to require an election.
Defendants contend that the written contract was with Security Land Company, which is a corporation, and that the defendants Engebretson and Lindgren cannot be made personally liable. Both plaintiff and his wife testified that when the contract was made Lindgren represented that the land was owned by him and Engebretson; that Security Land 'Company was only a name that they did' business in; that when the August payment was due both Engebretson and Lindgren came out and stated that the land was in their name, that they had bought it, and they would give a clear title to it by the time that the March, 1921, payment was due, and, referring to the stamped- signature of Security Land Company on the contract, said that was "the way' they signed their contracts; that they were in company, Engebretson and Lindgren." "Wlhen persons hold themselves out as partners- in a particular business and thereby induce others to deal with them in that capacity, it is no diefense to actions brought against them by such others, that there is no partnership between them." 30 Cyc. 390. There is evidence that when getting the money from, plaintiff both Engebretson and Lindgren represented that they held the land in partnership and were selling to him in that capacity, and that they used the name Security Land Company as the way in which they signed their contracts. It is true that Engebretson and Lindgren denied this, but that only raised an issue for the jury, which has determined it in favor of plaintiff. A plaintiff may establish liability against defendants as partners "by evidience of representations, conduct and circumstances which are naturally calculated to beget the belief that defendants were partners." 30 Cyc. 416.
The record indicates that Engebretson and Lindgren were the active managers of the business carried on in the name of Security Land Company; Thompson was secretary, but does not appear to have done much of the business. It does not appear what the capital stock of the corporation was, nor whether any one other than these three had any stock in it. In Swartz v. Burr, 43 Cal. App. 442, 185, P. 411, the court says: "The law is not scrupulously particular in discriminating between the contracts of one who owns practically all the stock of a corporation and controls its affairs, as to whether he executes a contract relating to the corporate business in his individual or in the corporate capacity." And holds that parol evidence is admissible to' show a contract in the individual names of officers of the corporation is, in fact, the contract of the corporation. See, also, to the same effect, Fountain v. West Lumber Co., 161 N. C. 35, 76 S. E. 533. A party cánnot conduct his business by making contracts in an assumed name or in the name of another, and then avoid the obligations by invoking the parol evidence rule to exclude proof of his true relations to the transaction. Moyers v. Fogarty, 140 Iowa 701, 119 N. W. 159.
The representation that they had just bought the. land and paid $75 an acre for it, and since they were unable to deliver the N. 27 as they had agreed they would let plaintiff have the W. 35 for just what they paid for it, was a material representation, and, if untrue, plaintiff had1 .a right, on discovering its falsity, to rescind1 the contract and recover the money he had paid under it. 26 C. J. 1266.
In Beare v. Wright, 14 N. D. 26, 103 N. W. 632, 69 L. R. A. 409, 8 Ann. Cas. 1057, it is said that in the absence of special circumstances showing a fiduciary relation between the parties or other circumstances giving rise to an implied agreement that the price paid by the vendor should be the price paid by the plaintiff, a mere false statement as to the price paid by the vendor is not actionable deceit. But in the case at bar the special circumstances referred to by the North Dakota court exist. Here there was not merely an implied agreement but an express agreement that the price paid by the vendor should be the price to the plaintiff.
The contract was entered into in June, 1920, and contained a clause that if title to the premises is not good and cannot be made good within one year from the date when the first deferred payment shall become due, the $2,000 which had been paid should be refunded, but "if the title to said premises is then good in the name of the grantor and abstract is submitted showing same, and said purchaser then refuses to accept the same, said $2,000 shall be retained by Security Land Company as liquidated damages."
The first deferred payment was due August 15, 1920. Neither on August 15, 1921, nor at any time since, has title to the premises been good in the name of the grantor, either Security Land1 Company, 'Engebretson, or Lindgren. If defendants had no title to the land, and they had none not even at the time of the trial, they cannot retain the money paid. "A vendor is not entitled to forfeit the contract for default in the payment of-the purchase money unless at the time of the default he is able to1 make a conveyance in accordance with the terms of the contract." 39 Cyc. 1375. Defendants could not at any time have enforced specific performance of the contract because none of them1 at any time have had any title to the land'. The contract was to convey or cause to be conveyed to plaintiff by warranty deed the land described, and this required them to tender or be able to tender a deed executed by themselves and containing their own covenants. They could not perform their part of the contract by offering the deed of A. A. Moore or of any other third party. Gaar v. Lockridge, 9 Ind. 92; Miner v. Hilton, 15 App. Div. 55, 44 N. Y. S. 155; Weitzel v. Leyson, 23 S. D. 367, 121 N. W. 868. Plaintiff had a right to rescind on the ground that defendants could not, either at the end' of the year from the time of the first deferred payment, or at any other time, give him such a conveyance as was called for by the contract. And since defendants were unable to perform, tender of performance by the purchaser was not necessary in order to enable him to rescind. 39 C'yc. 1422.
The judgment of the North Dakota court is not res judicata as to anything involved in this case. Plaintiff in that case made no claim that it had performed, or could perform, the contract on its part, and that judgment did not determine anything whatever as to the rights of the parties except that the contract was canceled and terminated and all rights of defendant Anderson in and to the land cut off. Neither the complaint nor the judgment had anything whatever to say about the $2,000 Anderson had paid, or whether he was entitled' to- have it refunded. Defendant in that action was a nonresident, service was by publication, and he made no appearance. No judgment in personam could be given against him, and no such judgment was attempted to1 be given. His right to recover payments he had made was neither involved nor adjudicated in that action. Heilig v. Parlin, 134 Cal. 99, 66 P. 186.
Judgment and order affirmed.
SHERWOOD', P. J., and POLLEY, J, concur.