Case Name: KALLISON v. POLAND
Court: Texas Courts of Civil Appeals
Jurisdiction: Texas
Decision Date: 1914-05-27
Citations: 167 S.W. 1104
Docket Number: No. 5293
Parties: KALLISON v. POLAND.
Judges: 
Reporter: South Western Reporter
Volume: 167
Pages: 1104–1107

Head Matter:
KALLISON v. POLAND.
(No. 5293.)
(Court of Civil Appeals of Texas. San Antonio.
May 27, 1914.
Rehearing Denied June 22, 1914.)
1. Vendor and Purchaser (§ 108 )—Reme-dies oe Purchaser—-Fraud.
When a purchaser discovers fraud in connection' with the sale of land, he has the election, either to ask for a rescission of the contract and the repayment of the money, or to sue for damages suffered by reason of the fraud.
•[Ed. Note.—For other cases, see Vendor and Purchaser, Dec. Dig. § 108. ]
2. Fraud (§ 27 )—Representations — Contract for Sale oe Land.
Fraudulent misrepresentations by the vendor that there was upon the land a well containing 10 to 12 feet of water are such as to justify a recovery .by the vendee of the damages arising therefrom.
[Ed. Note.—For other cases, see Fraud, Cent. Dig. § 8; Dec. Dig. § 27. ]
3. Vendor and Purchaser (§ 93 )—Rescis-sion by Vendor — Nonpayment oe Purchase Price—Defenses.
Where a purchaser had instituted suit to recover damages for misrepresentations affecting the value of the land, and had asked that the damages be applied on the lien notes, his failure to pay a note which became due pending the action does not entitle the vendor to rescind the contract; the jury having found the existence of the fraud.
[Ed. Note.—For other cases, see Vendor and Purchaser, Cent. Dig. §§ 153, 154; Dec. Dig. § 93. ]
Appeal from District Court, Bexar County; W. F. Ezell, Judge.
Action by I. W. Poland against Natban Kallison for damages arising from false representations in tbe sale of a tract of land. From a judgment awarding damages to tbe plaintiff, but allowing tbe defendant to rescind tbe sale, both parties appeal.
Reversed, and judgment rendered for tbe plaintiff.
Templeton, Brooks, Napier & Ogden and S. C. Eldridge, all of San Antonio, for appellant. Hertzberg, Barrett & Kerebeville, of San Antonio, for appellee.
For other oases see same topic and section NUMBER in Deo. Dig. & Am. Dig, Key-No. Series & Rep’r Indexes

Opinion:
FLY, C. J.
This is a suit for damages alleged to bave arisen from false representations made by appellant to appellee in regard to a well on a certain tract of land afterward sold by appellant to appellee. It was alleged that appellant represented that tbe tract of land bad on it a good well that always bad 10 to 12 feet of water in it, and that tbe water therein was amply sufficient to water 75 bead of cattle; that, acting on said representations, appellee paid appellant $800 in cash, and executed to bim two promissory notes, one for $700, due on June 10, 1913, tbe other for $4,600, due on October 10, 1917, each bearing 10 per cent, interest; that when appellee moved on said land, with bis family, be found tbe well practically dry and of no use or benefit. Appellee further alleged that be had paid $61 an acre for tbe land, and that its real value was only $35, and be prayed for judgment for an excess of $26 an acre, amounting in tbe aggregate to $2,600. Tbe cause was tried on a second amended petition and a third amended answer; neither of them indicating when the original petition and original answer were filed. Appellant denied tbe allegations of tbe petition, and alleged that tbe $700 note became due on June 10, 1913; that he demanded payment of tbe same, which was refused; that it was provided in the notes, if tbe first note was not paid at maturity, or tbe interest not paid on either of them, appellant should bave the right to declare them both due and payable; that appellant, upon default in payment of- tbe first note, declared tbe other note due and placed them in tbe hands of an attorney; that, after giving appellee reasonable time in which to pay said notes, appellant elected to rescind said sale and tendered back tbe notes to ap-pellee; that appellee failed and refused to pay said notes; and appellant prayed for a judgment for tbe title and possession of tbe land, and for tbe cancellation of tbe notes.
Tbe cause was submitted to a jury on special issues, to which they answered that appellant bad made tbe false representations as to tbe well; that appellee believed them to be true, and would not bave purchased tbe land if such representations bad, not been made; that they were material; that tbe fair market value of tbe land at time of tbe sale was $40 an acre; and that tbe rental value of tbe land from July 23, 1913, to date of judgment was $100. In addition to tbe answers of the jury, the court recites in tbe judgment tbe finding, upon uncontroverted evidence, that on October 10, 1912, appellant conveyed a certain tract of 100 acres of land, therein described, to appellee; that appellee paid thereon $800 in cash, and at tbe same time executed two promissory notes, one for $700, due on June 10, 1913, and tbe other for $4,600, due on October 10, 1917, reserving in the deed and each note a vendor's lien to secure payment of the notes, 'and giving tbe option to the bolder to mature both notes upon default of payment of the first note or any installment of interest; that appellee defaulted in tbe payment of tbe $700 note, and appellant elected to rescind the sale. Upon tbe answers of the jury and tbe findings of tbe court, tbe court rendered judgment for appellee for $2,000, and for appellant for tbe land and a cancellation of tbe two notes.
Under the answers of tbe jury tbe damages amounted to $21 án acre, amounting in tbe aggregate to $2,100, and it is evident that tbe sum found by tbe jury was reduced by tbe sum of $100 found as rent due by ap-pellee. Tbe jury found tbe allegations of fraud to be true, and yet the judgment granted a rescission of the contract, not giving tbe fraudulent representations any force or effect on the question of rescission. From tbe judgment of tbe court, both parties appealed, and tbe ease is. before this court on assignments o& error by appellant and cross-assignments by appellee; the contention of appellant being that judgment should have been rendered in his favor for tbe land, and in favor of appellee for $800, amount of cash paid on tbe land, less tbe $100 rent for tbe period after an election to rescind was made, and tbe contention of appellee is that appellee should have bad judgment for $2,-100, to be applied on the two notes, and that tbe balance on .the $4,600 be declared to become due on October 10, 1917.
When appellee discovered tbe fraud of appellant in connection with the land, be had the election between two remedies, namely: To ask for a rescission of tbe contract of sale, for tbe repayment of the purchase money be bad' paid, and a cancellation of his notes, or to retain tbe land and sue for tbe damages that be bad suffered by reason of tbe misrepresentations of appellant. Bigelow on Fraud, p. 184; Grabenheimer v. Blum, 63 Tex. 369; Du Bois v. Rooney, 82 Tex. 173, 17 S. W. 528.
There can be no doubt that if appellant, as found by tbe jury, made fraudulent representations to appellee as to tbe condition of tbe well, that appellee could sue for and recover tbe damages arising from such fraud. Pendarvis v. Gray, 41 Tex. 326.
That proposition is not one about which there can be any controversy, and, without complication with the cross-action £or forfeiture instituted by appellant, the matter would be plain and simple. Putting aside that action for rescission of the land contract, appellee had the right to recover the damages and have-such damages placed as a credit on the purchase money yet unpaid.
If appellant had instituted suit on the notes, and appellee had answered, setting up the facts upon which he based this suit for damages, it is clear that he could, upon proof of the same, have offset his damages against the amount of the notes. If that be true in a court of law, would it not be true in a court of equity into which a vendor enters to rescind the contract of sale? In that court, where justice presides, and conscience is the standard, no one can come with unclean hands and invoke aid of its decrees. In that court rescissions are not favored, and no forfeiture will be permitted, if it appears that the default upon which the rescission or forfeiture is asked was brought about through any act of the plaintiff. The mere failure to pay the purchase money justifies a rescission; but it must appear that such default was not caused or induced by the act of the party seeking the rescission. Warvelle on Vendors, c. 30, § 6, p. 822; Scarborough v. Arrant, 25 Tex. 129; Thomas v. Beaton, 25 Tex. Supp. 318; Buckingham v. Thompson (Civ. App.) 135 S. W. 656; Wallace v. McLaughlin, 57 Ill. 53.
In this case the evidence showed fraudulent misrepresentations upon the part of appellant which induced the sale, and that the default in the payment of the $700 note was caused directly by such misrepresentations. It was by reason of the fraudulent actions and representations that the' note was not paid, because appellee not only had the right to have the- damages he had suffered credited on the purchase money notes, but that they should have been used to liquidate the debt that became due while the suit was pending. It would be inequitable and unjust to permit a rescission under such circumstances. Moore v. Giesecke, 76 Tex. 543, 13 S. W. 290.
"Whatever be the nature of the plaintiff's demand and of the relief which he seeks, if his elaim grows out of, or depends upon, or is inseparably connected with, his own prior fraud, a court of equity will, in general, deny him any relief, and will leave him to whatever remedies and defenses at law he may have." Pomeroy, Eq. § 401.
The rule stated by Story, in his Equity Jurisprudence, vol. 1, § 779, and approved by the Supreme Court in Roberts v. Lovejoy, 60 Tex. 253, is the one to govern in cases like this, and is as follows:
"The general rule in all such cases is that the purchaser, if he chooses, is entitled to have the contract specifically performed, as far as the vendor can perform it, and to have an abatement out of the purchase money or compensation for any deficiency in the title, quantity, quality, description or other matters touching the estate."
That rule is one supported by justice and reason. As said by Waterman, in his work on Specific Performance:
"The purchaser will be entitled to compensation at any time before the conveyance and the payment of the whole purchase money as to a matter which has previously arisen either before or after the contract."
In the case of Austin v. Ewell, 25 Tex. Supp. 403, cited and approved in the Roberts-Lovejoy Case, herein cited, the court said:
"The case here presented is one in which the vendor is the party who first places himself in the wrong. When it was ascertained that the house, which was supposed to be on the land conveyed, was not in fact on the land, it was the duty of the vendor to have allowed the proper deduction from the purchase money which remained to be paid. His refusal to do this placed him in the wrong. The original contract of sale by Ewell to Austin and Weatherby ought to have been enforced; the proper deduction being made from the purchase money on account of the house in which Ewell lived at the time of the sale."
That was a suit to recover the land by the vendor. In the present suit appellant had represented that a certain well was permanent with water at a fixed depth of 10 or 12 feet, which representation was not true, and appellant should have allowed a proper deduction from the purchase price to cover the lack of the well. He did not do so and thereby placed himself in the wrong, caused the default in payment of the note, and cannot ask a rescission of the contract of sale. Watson v. Baker, 71 Tex. 739, 9 S. W. 867; Hazzard v. Morrison (Civ. App.) 130 S. W. 244.
The law did not require appellee to pay the note that became due during the penden-cy of his suit, and it was not a default on his part to refuse such payment. Appellant could not take advantage of a state of circumstances created by his own fraudulent conduct to rescind the contract and retake the land. Appellee had the right to a specific performance of the contract with a deduction from the purchase price agreed to be paid for the land. It would be unconscionable to permit appellant to escape the result of his fraudulent representations by rescinding the sale and retaking the land. As said by this court in Buckingham v. Thompson, herein cited:
"If it should be determined that plaintiff was guilty of false representations concerning the land inducing the contract, we think plaintiff would have had no right to retake possession by summary process."
The jury have found that the fraud of appellant induced the contract, and appellant cannot be permitted to rescind the contract and retake the property:
Appellee had the right to have the contract specifically performed, and to recover a rebate on the purchase money that would reduce the purchase price to the proper value, and this equitable relief did not depend upon the manner and form in which the suit for specific performance and the cross-action for rescission were instituted. Whether the ven-dee is entitled to equitable relief is a proper subject of inquiry in every case. Moore v. Giesecke, herein cited.
In order to rescind the contract and recover the land, there must be a default upon the part of the vendee, and it is permissible in such a suit for the vendee to show that he was not at fault, but that the vendor is in fault on account of failure to comply with the terms of the contract of sale. Kauffman v. Brown, 83 Tex. 41, 18 S. W. 425; McCord v. Hames, 38 Tex. Civ. App. 239, 85 S. W. 504.
If appellee had failed to make out a case of fraudulent representations on the part of appellant, then the right to a rescission might have accrued to appellant; but, when fraud was found by the jury which induced the execution of the contract of sale, appellant failed to show equities entitling him to a rescission and retaking of the land, and appellee should, under the verdict of the jury, have recovered the amount of the excess in value of the land, and such sum should have been applied as a payment first on the $700 note and then the balance on the $4,600 note as of date of the-contract of sale, the balance of said note to become due according to the face and tenor thereof.
The judgment is reversed, and judgment here rendered that appellant take nothing by his suit, and in favor of appellee as herein indicated, together with all costs in this behalf expended.