Opinion ID: 2193381
Heading Depth: 1
Heading Rank: 1

Heading: recission

Text: The right to rescind a contract is governed by statute. [4] A party is entitled to rescind only if he uses reasonable diligence to rescind promptly and to restore to the other party everything of value which was received under the contract. [5] This court has held that compliance with these rules is a condition precedent to the maintenance of an action to rescind. Volk v. Volk, 121 N.W.2d 701, 706 (N.D.1963). The rule pertaining to prompt rescission, however, does not operate where legal excuse or justification for delay is shown. Lanz v. Naddy, 82 N.W.2d 809 (N.D.1957). Robertson contends that Kenner failed to comply with the statutory requirement of prompt rescission. The determination of prompt rescission does not depend alone upon the lapse of time, but also upon the circumstances of each particular case. Lanz v. Naddy, supra . The contractual relationship between Kenner and Robertson extended over a considerable period of time. The contracted-for buildings which could have been built in six days were completed almost one year after the execution of the contract. Upon noticing the white rust on the steel panels, Kenner telephoned Robertson informing the latter that he would not accept buildings in that condition. Kenner's refusal to accept such defective buildings was sufficiently prompt to satisfy the statutory requirements. [6] Whether or not notice of rescission is timely is a question of fact. Gimbel v. Kuntz, 286 N.W.2d 501 (N.D.1979). Under these circumstances, the court's findings on this issue are not clearly erroneous. Rule 52(a), NDRCivP. An additional statutory requirement is that the party seeking to rescind must offer to restore everything of value which he has received under the contract. The defective buildings were the only things of value Kenner received under his contract. Kenner's refusal to complete payment on the contract and his refusal to accept the buildings in such a defective condition constituted a sufficient offer to restore everything of value which he had received under the contract. See Schaff v. Kennelly, 61 N.W.2d 538 (N.D.1953). Because the remedy of rescission is not held in high esteem by the courts, there must be a substantial breach of contract before there can be a basis for rescission in equity. See Schaff v. Kennelly, supra . Thus, if a builder has substantially performed the contract, then ordinarily the remedy of rescission should not be granted. The contractor has substantially performed if the owner obtains, on the whole, what is bargained for in the contract. The question of substantial performance in this case is thus determined by the effect of white rust on the new buildings. The trial court prepared an extensive 20-page memorandum opinion in lieu of findings of fact and conclusions of law. Insofar as findings are included therein and are supported by substantial evidence, they are not clearly erroneous. The court found that Kenner's purpose in acquiring a galvanized steel building was its freedom from maintenance over an extended period. The court further found that the white rust destroyed the maintenance-free characteristic, and therefrom appropriately concluded that there was not substantial performance. Robertson has pointed out no specific finding that we should consider to be clearly erroneous. When only a general attack is made against a decision by a trial court, this court can only give a general review. See Sorenson v. Olson, 235 N.W.2d 892 (N.D. 1975), Syllabus 1. This court has held that where defects pervade the whole building, there can be no recovery on the basis of substantial performance. Braseth v. State Bank of Edinburg, 12 N.D. 486, 98 N.W. 79 (1904). The question of substantial performance is one of fact for the trier of fact. Dittmer v. Nokleberg, 219 N.W.2d 201, 207 (N.D.1974). Robertson further contends that rescission was improperly granted because the parties could not be restored to the status quo before the contract. Under the particular facts of this case, this argument is without merit. These buildings are not permanently affixed to the land and thus may be removed by Robertson. The fact that the costs of hauling the buildings on and off the property, as well as the costs of erection, are substantial and are borne by Robertson, does not deprive Kenner of the right to rescission. The buildings became corroded with white rust as a direct result of Robertson's, or its agents', negligent storage of the materials. Care must be exercised in storing galvanized steel panels. Care is desirable indoors and is absolutely necessary when the panels are stored outdoors. In stacking the panels, wood dividers must be used to insure proper drainage and to prevent the panels from touching one another. Failure to use the wood dividers allows water to become trapped between the panels, resulting in the formation of white rust. The incidental costs of effectuating rescission of this contract are thus properly borne by Robertson. Robertson specifically contends that there was not competent evidence to prove lack of substantial performance in that Kenner's expert witness, Stanley Saugstead, testified to matters beyond the scope of his expertise and knowledge. Saugstead, a professional farm appraiser, testified as to the value of the buildings in their defective condition. This testimony was correctly ruled inadmissible by the trial court in light of Karlinski v. P. R. & H. Lumber & Construction Co., 68 N.D. 522, 281 N.W. 898 (1938). Saugstead, however, further testified as to the extent of the white rust problem. Robertson contends that this testimony should have been inadmissible to prove lack of substantial performance. Such a contention is without merit. In the trial of a nonjury case, only when all the evidence in support of a finding is incompetent do we reverse on that ground. See Schuh v. Allery, 210 N.W.2d 96, 100 (N.D.1973), and the many cases which have followed. Kenner did not have the burden of proving lack of substantial performance; but rather, it was Robertson who properly had the burden of proving substantial performance of this contract. See Marchand v. Perrin, 19 N.D. 794, 124 N.W. 1112 (N.D. 1910). Whether or not a contract has been substantially performed is a question of fact. Dittmer v. Nokleberg, supra . The trial court's finding that Robertson had failed to substantially perform the contract was not clearly erroneous. Rule 52(a), NDRCivP.