Case Name: Woodman, Appellant, vs. Blue Grass Land Company, Respondent
Court: Wisconsin Supreme Court
Jurisdiction: Wisconsin
Decision Date: 1905-10-03
Citations: 125 Wis. 489
Docket Number: 
Parties: Woodman, Appellant, vs. Blue Grass Land Company, Respondent.
Judges: 
Reporter: Wisconsin Reports
Volume: 125
Pages: 489–498

Head Matter:
Woodman, Appellant, vs. Blue Grass Land Company, Respondent.
April 8
October 3, 1905.
'Vendor and purchaser: Contracts: Breach: Rescission: Recovery of earnest money: Election: Corporations: Recording articles: Failure to index: Equity: Specific performance: Marketable title.
1. Where one party to an executory contract, before the time appointed for performance, repudiates it by deliberately declaring he will not perform, the other party may treat the contract as terminated and recover the damages sustained by the other’s breach, unless it be a contract of which specific performance is desired and could properly be decreed.
2. In such case the effect of the termination is to stop the performance at the point then reached, subject to the payment of damages, but not to undo what has already been done thereunder.
3. Where earnest money was voluntarily paid at the inception of a land contract as part payment thereon and was rightfully in the vendor’s possession, and tlie vendee repudiated tile contract while there was still ample time for the vendor to perform, the vendee does not thereby reinvest himself with the title to the earnest money.
4. Where a purchaser of land wrote frequent and emphatic letters-to the vendor stating that he considered the contract rescinded or annulled, demanding return of the earnest money, and threatening immediate suit if it was not returned, such acts amount to clear, unequivocal, and absolute refusal to perform the contract on his part.
5. In such case, under the evidence, stated in the opinion, the vendor is held to have never treated the vendee’s repudiation as a breach, but to have Kept the contract alive, and he must therefore show ability to perform on his part in order to defeat the vendee’s claim for recovery of the earnest money.
6. Where it appears from the evidence that the articles of a corporation were duly made and filed and actually recorded as required' by law, but had not been indexed, the mere failure of the register of deeds to properly index the record does not invalidate-the corporation or suspend its legal powers.
7. Action for specific performance of a land contract pan be maintained notwithstanding the existence of liens presently payable, since the court can, by its decree, make provision for their payment and discharge out of the purchase money then due.
S. A lien on realty, which may be paid out of the purchase money simultaneously with the delivery of the deed, does not make an otherwise perfect title unmarketable.
Appeal from a judgment of tbe circuit court for St. Croix county: E. W. Helms, Circuit Judge.
Affirmed.
Tbis is an action to recover earnest money paid by tbe plaintiff to tbe defendant upon an executory contract for the conveyance of land on tbe ground of failure of performance by tbe defendant. Tbe defense was, in substance, that the plaintiff, repudiated tbe contract before tbe expiration of the-time within which it might be performed and thus forfeited any claim to tbe return of tbe earnest money. Trial by jury was waived and tbe case tried by tbe court. Tbe evidence showed that on June 30, 1902’, tbe plaintiff and defendant, a corporation, entered into a written contract called an earnest-money contract. Tbis contract acknowledged receipt by tbe defendant from tbe plaintiff of $1,000 as part paymént for 9,000 acres of land at $3.50 per acre, then sold and agreed to be conveyed by the defendant to the plaintiff, in Oneida county, Wisconsin, on certain conditions, among which were that one third of the consideration in addition to said $1,000 was to be paid upon delivery of a properly executed -contract for the conveyance of the lands according to a draft of such contract attached, and the balance of the consideration in five equal annual instalments; that within twenty days an abstract was to be furnished by the defendant; that the plaintiff was to have till August 30, 1902, to examine the title, and that, if defects should be found in the title rendering the same unmarketable, defendant should have a reasonable time after written notice thereof to cure such defects, but if the title to any portion of the land was not marketable, and could not be made so within the time limited, then such portion (not exceeding 500 acres) was to be excepted from the operation of the contract; and if the title to at least 8,500 acres was made marketable within the limit of time, and the plaintiff refused to accept the same or to perform his part of the contract, then the earnest money was to be forfeited to the defendant as liquidated damages. It further appears that after some delay (which delay was waived by the plaintiff) an abstract was furnished by the defendant to the plaintiff August 2, 1902; that on the 12th day of the same month the plaintiff sent a letter to the defendant, stating a number of defects in the title to various parcels of the land, including unpaid taxes, outstanding tax certificates, an uncanceled mortgage of $8,000 on a part of the land, and an alleged easement of flowage; that on August 23, 1902, the plaintiff sent a letter to defendant stating that the lands were incumbered and that the contract was thereby rescinded and that plaintiff would not carry it out, and demanding a return of the earnest money as well as the payment of $300 damages; that after-wards, on the same day, plaintiff and defendant, by a memo randum in writing upon said contract, agreed that tbe time should be extended to October 1, 1902; that on September 2, 1902, the plaintiff wrote a letter stating that he was informed that serious damage had been done to the land by forest fires, and that he considered the contract rescinded and demanded the return of the $1,000 earnest money; that on the 19th of the same month he wrote again, demanding the return of the earnest money and threatening suit in case it was not paid; that on the 22d of the same month he sent a formal notice to the defendant stating that by reason of the failure of title, and incumbrances upon the lands, and deficiencies therein ■occurring since June 30, 1902, he declared the' agreement annulled and demanded the return of the $1,000 earnest money; that on the 20th of September the defendant wrote to the plaintiff stating that it expected to carry out the contract and would not return the earnest money, but would perform the •contract on its pai4 on or before October 1st; that on September 25th the defendant wrote again, stating that it intended to carry out the contract and refusing to return the earnest money; that on September 29th the plaintiff wrote to the defendant again, stating that the contract was rescinded and renewing his demand for the return of the earnest money; that on October 14th the defendant’s attorney ■called on the plaintiff at his office in Minneapolis, having in his possession a satisfaction of the $8,000 mortgage above referred to and also a contract such as was contemplated by the earnest-money contract, and announced to the plaintiff that he had such instruments in his possession and ashed plaintiff what he proposed to do about the contract, and plaintiff replied that he refused to carry it out; that after service ■of the written notice of defects in the title the defendant undertook to remove the objections to said title, and continued to make efforts to carry out tbe contract on its part up to the time when it received the notice from the plaintiff of Sep tember 2d, at wbicb time it ceased its efforts, believing that tbe plaintiff would not perform tbe contract; that most of tbe defects claimed by tbe plaintiff in tbe title either did not exist or werp in fact cured by tbe defendant after tbe notice of sucb defects was given, but that tbe $8,000 mortgage was undischarged, and that there were outstanding tax certificates on twenty-seven forties of tbe lands, issued upon the tax sale of 1896, tbe aggregate amount.of such certificates not exceeding tbe sum of $200. Upon these facts tbe trial court concluded that plaintiff was not entitled to recover said earnest money, and judgment for tbe defendant was rendered, from which tbe plaintiff appeals.
For tbe appellant there was a brief by John W. Bashford and B. M. Bashford, attorneys, and R. M: Woodman, pro se, and Francis B. Hart, of counsel, and reply briefs signed by Francis B. Hart and P. M. Woodman, and oral argument by Mr. Woodman.
Harold Ha'i'ris and John Barnes, for tbe respondent.

Opinion:
Tbe following opinion was filed May 2, 1905:
WiNsnow, J.
While there were a "number of questions raised by tbe appellant in this case and ably argued by him in person both in bis brief and upon bis oral argument, it appears very conclusively to us that a single well-established legal principle adopted by this court establishes tbe correctness of tbe judgment. That principle is that,when one party to an executory contract, before tbe time appointed for performance, repudiates it by deliberately- declaring that be will not perform, tbe other party may treat tbe contract as terminated and recover tbe damages sustained by tbe other's breach. Merrick v. N. W. Nat. L. Ins. Co. 124 Wis. 221, 102 N. W. 593. The injured party is not required to perform on bis part, unless, indeed, it be a contract of wbicb specific performance is desired and could properly be decreed; but be may cease bis own efforts to perform and demand damages for tbe other's breach. In this state and in many jurisdictions that action may be maintained at once, but in some j u-risdictions it cannot be maintained until the day of performance has been passed. That question, however, is of no importance here. Merrick v. N. W. Nat. L. Ins. Co., supra; Davis v. Bronson, 2 N. Dak. 300, 50 N. W. 836; Gibbons v. Bente, 51 Minn. 499, 53 N. W. 756; Shaw v. Republic L. Ins. Co. 69 N. Y. 286; Leake, Contracts (4th ed.) 615-617; 9 Cyc. 637, 638, 698, 699. The principle is that, unless the contract be one of which a court of equity will decree specific performance, either party may terminate it pending its performance, subject only to the payment of the damages which the other party sustains thereby. The effect of such termination is to stop the performance at the point then reached, subject to the payment of damages, but not to undo what has •already been done thereunder. In other words, the act of termination or repudiation stops the progress of events just where it finds them, but has no retroactive effect, and cannot, in reason, have any such effect. Applying that principle to the present case, it is very plain that the plaintiff cannot recover. The earnest money was voluntarily paid by the plaintiff at the inception of the contract as a part payment thereon and was rightfully in defendant's possession. The plaintiff repudiated the contract while there was still ample time for the defendant to perform. By that act he did not and could not affect the character of the acts which had already been performed in carrying out the. contract, and manifestly could not reinvest himself with the title to the earnest money. This is so plain that further discussion is unnecessary.
Francis B. Hart, for the motion.
Harold Harris and John Barnes, contra.
By the Oourt. — Judgment affirmed.
The appellant moved for a rehearing.