Court Opinion

ID: 3880472
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:12:06.555643+00
Date Added: 2024-06-11T13:36:41.065532
License: Public Domain

In my opinion the order of the Court below sustaining the defendant's demurrer to the complaint should be reversed for the reasons following:
The complaint alleges, in substance, that on March 30, 1920, Auld contracted in writing to sell Searles two certain parcels of land containing in the aggregate 77.8 acres for $6,000, upon the following terms: $50 cash; $250 on May 25; $500 in certain stock at $125 per share on November 1st; $450 cash on December 28, 1920; at the latter date, upon compliance with the foregoing terms, Auld was to execute and deliver to Searles a deed covering the property and take from him his bond and mortgage for the remainder of the purchase price, $4,750, payable $2,000 on January 1, 1922, and $2,750 on January 1, 1923, with interest on the deferred payments from January 1, 1921, at 7 per cent., Searles to be allowed credit upon payments made prior to December 28, 1920, at 7 per cent. — that the deed was to convey the property with full covenants of warranty, dower renounced and free from incumbrances: that Searles paid an attorney $60 to examine the title, who reported that Auld did not have title to the property; that Searles made the cash payment of $50 and also the $250 payment due May 25, 1920; that, instead of the stock deliverable on November 1st, Auld agreed to take Searles' *Page 434 
note for $500, which was executed and delivered to Auld on November 1st (the maturity date not being stated in the record); that on December 28th, when the $450 payment was due and the papers referred to were to be executed, Searles tendered to Auld the $450 in cash and the $500 of stock deliverable on November 1st under the original agreement, and demanded a deed of the land and a return of the note, which by agreement had been substituted for the stock; that Auld informed Searles that he could not comply with his contract to convey the land; that the payments in cash of $300 and the note for $500 were obtained by Auld from him through the false representation that he could and would deliver to him a good title to the land, knowing at the time that he could not do so; that the damages sustained were $360 (including the attorney's fee of $60) actual damages, and $2,000 punitive damages. The prayer for judgment was for $360 actual damages, the surrender of the $500 note, and $2,000 punitive damages.
The parties had a perfect right to change the terms of the contract, and when they agreed that, instead of the stock deliverable November 1st, Auld would take the note of Searles for $500, and that agreement was consummated, they made a valid amendment to the original contract, and it became as if that provision had formed a part of it. So, when Searles went to Auld on December 28, 1920, to demand his deed, it was his duty to tender not only the $450 cash due on that day, but the amount of his $500 note. He had no right, in the absence of an agreement restoring the terms of the original contract, to tender the stock and demand his note. The stipulations of the parties were concurrent, and, before either could sue the other for a breach, he must put himself in the attitude to demand performance by doing what he had agreed to do. 27 R.C.L., 456; 39 Cyc., 1551. *Page 435 
It is not alleged in the complaint that Auld did not have title to the land at the time of the alleged tender. The statement that he informed Searles "that he could not comply with his contract" was in reply to an insufficient tender by Searles and doubtless expressed an unwillingness rather than an inability. But, even if he did not have title, that fact did not excuse Searles from putting himself rectus incurio by making a proper tender.
But there is a more serious and difficult matter involved. It is thus alleged in paragraph 9 of the complaint:
"That said sum of $300 and the note for $500 was [were] obtained from the plaintiff through the false representation that the defendant could and would deliver the plaintiff a good and sufficient title to said premises above described, well knowing at the time that he could not execute such title."
It is further alleged in paragraph 10:
"That the defendant herein falsely and fraudulently obtained the money as above set forth."
"Misrepresentation or fraud as to the title of the vendor to the property contracted for is material, and, if not a misrepresentation of law, avoids the contract induced thereby and entitles the purchaser to rescind." 39 Cyc., 1264.
This general statement is subject to the qualification:
"If the title is defective, or if he [vendor] has no title at the time of entering into the contract, but such defects are cured at the time fixed for performance, * * * a rescission will not be permitted." 39 Cyc., 1410.
And this qualification is itself thus qualified:
"The rule that a contract of sale will not be rescinded for want of or a defect in title, if the vendor tenders a good title at the time fixed for performance by the contract of sale, is very generally held not to apply when the vendor has been guilty of fraud." *Page 436 
The purchaser may therefore rescind the sale if the vendor has made a misrepresentation as to his title at the time of the contract and fails to make the defect good at the time of performance, or when such misrepresentation had been fraudulently made, regardless of his ability to make the defect good at the time of performance.
The latter alternative not being fully covered by the allegations of the complaint, it was not error to sustain the demurrer. The allegations of fraud relate only to promises, and not to representations of fact.
The complaint attempts to state facts entitling the plaintiff to the remedy of rescission of the contract on account of the fraudulent misrepresentation as to title and the remedy for a breach of the contract. These remedies are apparently inconsistent. The first repudiates the contract, and the other recognizes its validity. It may be (as to which no opinion is expressed) that the plaintiff may be required to elect. 39 Cyc., 2000.
The result of this appeal which leaves the defendant in possession of $300 of the plaintiff's money and his note for $500 without anything to show for it in the plaintiff's hands does not commend itself to my idea of justice, if they were obtained by a fraudulent misrepresentation.
I think, therefore, that if the judgment should be affirmed, the case should be remanded, with leave to the plaintiff to file an amendment or supplemental complaint as he may be advised, the supplemental complaint setting up the fact of a valid tender if such be accomplished, and with leave to the defendant to answer as he may be advised, and to move that the plaintiff be required to elect which remedy he shall pursue; this Court not being concluded by the ruling upon this last motion.
MR. JUSTICE FRASER concurs. *Page 437