Opinion ID: 1252071
Heading Depth: 1
Heading Rank: 5

Heading: Tender of Benefits

Text: Appellants assert that Ludvik's failure to prove a prior tender or offer to restore benefits precludes rescission of the assignment. Such tender will not be required, however, where the decree of the court can impose those duties of restitution as justice requires. Fryer v. Campbell, supra, 43 P.2d at 996; Woods v. City of Hobbs, 75 N.M. 588, 408 P.2d 508, 510-511 (1965); Melms v. Mitchell, supra, 512 P.2d at 1342. In Fryer v. Campbell, supra, 43 P.2d at 996, in discussing the necessity of an offer by the injured party to restore benefits prior to an action for rescission in equity, we said: Restitution is a condition of relief, not of instituting the suit. We hold that proof of a prior tender was not essential to appellee's defense of rescission based upon misrepresentation.
The Meyers contend that the trial court erred in denying two proposed jury instructions concerning the rights of third parties to enforce contracts made for their benefit. The first proffered instruction provided: A party may enforce a contract expressly made for his benefit even though he was not a party to the transaction. Although this instruction represents an accurate statement of the law, Lawrence v. Fox, 20 N.Y. 268 (1859), it was properly refused by the trial court. No question was ever raised as to the status of the Meyers as third-party beneficiaries or their right to enforce the pertinent provisions of the assignment between Horseshoe and Ludvik, should that assignment be proven valid. Since these matters were not in issue, the proposed instruction would have added to the confusion in this case without assisting the jury in resolving the essential question  the right of Ludvik to rescind the assignment of the contract for the deed to the ranch. The second proposed instruction provided as follows: In this action the Plaintiffs, Fred and Blanche Meyer, claim that they were third-party beneficiaries of the contract entered into between James A. Ludvik and Horseshoe Creek Limited. Once the rights of a third-party beneficiary vest, the original parties to the contract cannot rescind the contract based upon the happening of an event or an occurrence which occurs after the rights of the third-party beneficiary have vested. The rights of a third-party beneficiary vest when: a. A contract was made that benefited the third-party. b. The third-parties acquire knowledge of the contract for their benefit. c. They assent thereto. Assent is implied if the third party had knowledge of the contract and failed to raise any objection thereto. If you find that Defendant Ludvik can rescind based upon fraud, Fred and Blanche Meyer have no rights under the contract. This instruction, by its terms, concerns the right of the original parties to mutually rescind their agreement, once the rights of the third-party beneficiary have vested. Accordingly, this instruction has no relevance to the instant case and was properly denied by the trial court. The concept of vesting does not preclude the assignee of mortgaged premises, who agrees to assume the mortgage, from asserting against the mortgagee/third-party beneficiary grounds for rescission or any other defense that he could have raised against the mortgagor/assignor. Proctor Trust Co. v. Neihart, 130 Kan. 698, 288 P. 574 (1930). That which was said in Bank of Alameda County v. Hering, 134 Cal. App. 570, 25 P.2d 1004, 1005 (1933) is pertinent here:    It is conceded that respondent [the mortgagee] was not a party to the alleged fraud, but it was alleged that appellant's [the grantee's] grantor made certain fraudulent representations in 1924 at the time appellant [the grantee] purchased the property.    An agreement of assumption is treated as a contract made for the benefit of a third person [citations], and such a contract may be enforced by the third person at any time before it is rescinded. Civ. Code, § 1559. In order to defeat respondent's [the mortgagee's] rights under the agreement of assumption, it was necessary for appellant [the grantee] to allege and prove a rescission of said agreement. Hence, the second instruction proposed by the Meyers did not address the issues raised by the present case and was properly excluded by the trial court.
The jury verdict awarded restitution to appellee in the sum of $128,523.25. This figure reflects the actual expenditures made by Ludvik under the terms of the assignment: January 19, 1979 $ 750.00 Cash at signing January 19, 1979 $ 42,014.32 Payment August 1, 1979 $ 42,173.12 Payment December 24, 1979 $ 41,857.68 Payment September 21, 1979 $ 1,728.13 1978 taxes Total: $128,523.25 Horseshoe contends that the jury verdict is in error for failing to account for the benefits received by Ludvik during his possession of the ranch. Specifically, Horseshoe asserts that the jury failed to consider the fair rental value of the ranch property, including the $22,000 Ludvik received from Jackson as compensation for the time that he was out of possession, and certain profits owed to Fred M. Meyer from the sale of cattle, which profits were included in the purchase price of the assignment. The jury was instructed that a finding that Ludvik was entitled to rescind the assignment would necessitate restoring both parties to their former positions: JURY INSTRUCTION NO. 9 A party rescinding a contract is entitled to restitution and is entitled to receive back the money he has paid on the contract. If you determine James Ludvik rescinded the contract with Horseshoe Creek Limited he is entitled to recover the money paid on the contract between the time he entered into the contract and the time it was rescinded. Horseshoe Creek is entitled to receive any benefits that James Ludvik received during the time he possessed the ranch prior to rescission. We have recognized that the purpose of an action in rescission is to place the parties in their former positions, but have held that a court    may grant rescission whenever by the exercise of its powers it can do what is practically just between the parties. Fryer v. Campbell, supra, 43 P.2d at 996. See also, Dreiling v. Home State Life Insurance Company, 213 Kan. 137, 515 P.2d 757, 766-767 (1973); State ex rel. Burk v. Oklahoma City, Okl., 522 P.2d 612, 620-621 (1974). The jury had before it evidence that Ludvik had purchased Centlivre's rights under the contract for deed and had incurred litigation expenses in excess of $139,000, in order to protect his interest in the ranch property. As a result of these expenditures Ludvik, at the time of trial, had paid or was obligated to pay $43,669.27 more than he had agreed to pay under the assignment of the the contract from Horseshoe. A reasonable conclusion is that the jury considered the benefits received by Ludvik while he was in possession of the property, but determined that the value of such benefits was offset by the unanticipated, additional expenses that Ludvik had incurred in protecting his interest in the ranch. We are mindful that the parties cannot be restored to the positions that they held prior to the execution of the assignment. Horseshoe, by allowing various liens to be levied on the ranch, defaulted on the original contract for deed from Centlivre, thereby permitting Ludvik, in Centlivre's position, to declare a forfeiture. Nevertheless, we conclude that the verdict and judgment in this case are supported by the record and represent an adjustment of the equities between the parties to the extent that is practically just. In view of our affirmance of the verdict, we will not address the appellants' contention that the jury's failure to follow instructions with respect to restoration casts doubt on other aspects of the verdict. The issue of the reimbursement to Fred M. Meyer of profits earned as a result of the sale of cattle is not properly before this court, since Fred M. Meyer is not a party to this action. Affirmed.