Court Opinion

ID: 3240340
Source: CourtListenerOpinion
Date Created: 2016-07-05 16:13:51.205099+00
Date Added: 2024-06-11T07:40:34.099165
License: Public Domain

It is clear that there is no foundation in the evidence for any recovery, under any count of the complaint, against the defendant Osborn. He merely sold to plaintiff his contract for the purchase of the land from the defendant Nunn, and he was guilty of no deceit, either actively or passively, with respect to the incumbrances complained of; nor was he guilty of any breach of warranty or of contractual obligation. So far as he was concerned, the rule of caveat emptor must be applied to plaintiff.
The evidence shows without dispute that the deed made by Nunn to plaintiff, and placed as an escrow with the Huntsville Bank, to be delivered upon plaintiff's compliance with the conditions of the contract of sale, was never delivered and never became operative as an executed conveyance, and therefore no action could lie for the breach of any of its covenants.
Plaintiff's right of action against Nunn, if any, must be grounded on one of two propositions: (1) Deceit in not disclosing the existence of the outstanding incumbrances; or (2) breach of the executory contract of sale in not removing the incumbrances, or in not being able, ready, and willing to do so whenever plaintiff, being himself able, ready, and willing, offered performance on his part, on or before January 5, 1920.
It is the settled law of this state that the vendor of personal property owes to the vendee the duty of disclosing to him any fact, unknown and not apparent to him, which would impair the vendor's title; and the failure to make such disclosure is an actionable deceit. Corry v. Sylvia Y Cia,192 Ala. 550, 68 So. 891, Ann. Cas. 1917E, 1052. The same principle is here invoked as to a sale of land, where there were outstanding incumbrances, apparent upon the mortgage records, which were accessible to the vendee's inspection had he chosen to wait and examine them.
It is perhaps impossible to deduce from our decisions on this subject a rule which is entirely harmonious with all that has been written. See Younge v. Harris' Adm'r, 2 Ala. 108; Steele v. Kinkle, 3 Ala. 352; Cullum v. Branch Bank, 4 Ala. 21, 37 Am. Dec. 725; Van Arsdale v. Howard, 5 Ala. 596; *Page 140 
Morgan v. Patrick, 7 Ala. 185; Bryant's Ex'r v. Boothe, 30 Ala. 311,315, 68 Am. Dec. 117; Jordan v. Pickett, 78 Ala. 331, 338; Meeks v. Garner, 93 Ala. 20, 8 So. 378, 11 L.R.A. 196; Hawkins v. Merritt, 109 Ala. 261; 19 So. 589; Rarden v. Badham, 142 Ala. 500, 38 So. 1029; Corry v. Sylvia Y Cia,192 Ala. 550, 68 So. 891, Ann. Cas. 1917E, 1052; Consumers' C.  F. Co. v. Yarbrough, 194 Ala. 482, 69 So. 897.
But on principle, and in substantial harmony with our best-considered cases, we are constrained to hold that, where the contract for the sale of land is executory on both sides — the purchaser having parted with nothing of value — the agreement to convey at a future time is consistent with an intention to procure a release of outstanding incumbrances, or to cure existing defects of title, and the existence of such incumbrances or defects, though not disclosed to the purchaser, is not a fraud upon him and will not support an action for deceit, nor justify a rescission of the contract. In such a case the vendor may honestly intend to remove the incumbrances or cure the defects in due season to convey a good title to the purchaser when the latter, by his own seasonable offer to perform, entitles himself to demand it. Blanks v. Walker,54 Ala. 117; Pate v. McConnell, 106 Ala. 449, 453, 18 So. 98; Cullum v. Branch Bank, 4 Ala. 21, 35, 37 Am. Dec. 725. In Cullum v. Branch Bank, supra, the Court said:
"Indeed, by offering to sell an estate, the vendor virtually represents it as not incumbered by himself, or, if incumbered, he will free it before the sale is executed."
This, we think, is the extent of his obligation and liability.
But where, at the time the contract of sale is made, the purchaser, relying upon the vendor's implied representation that the title is, as to his own acts, good and unincumbered, pays all or any part of the consideration, he may maintain an action for deceit, founded upon the vendor's failure to disclose the existence of defects or incumbrances created by himself, as it was his duty to do. Morgan v. Patrick, 7 Ala. 185; Younge v. Harris' Adm'r, 2 Ala. 108, 110.
The breach of the duty of the vendor to disclose was not offset and avoided by the failure of the purchaser to wait and examine the records before making the cash payment required. As said in Younge v. Harris' Adm'r, supra:
"It is true, that an examination of the land office [mortgage records here] would have disclosed the true state of the title; but as there was no fact or circumstance disclosed, which was calculated to induce a doubt of the title of the vendor, or put the plaintiff on inquiry, such extreme diligence cannot be exacted."
That case was a bill in equity for rescission because of fraud and deceit by nondisclosure.
In Camp v. Camp, 2 Ala. 632, 636 (36 Am. Dec. 423) it was said:
"But the law is not so destitute of morality, as not to require each of the contracting parties to disclose to the other all material facts, of which he has knowledge, and of which he knows the other to be ignorant, unless they are open to common observation; and not to forbid any intentional concealment, or suppression of the material facts necessary to be known, and to which the other has not equal access, or means of ascertaining." (Italics ours.)
Manifestly, the record of such an incumbrance, though accessible to a purchaser, is not one of those facts so open to common observation as to place the parties in an equal position of knowledge and responsibility.
The case of Rarden v. Badham, 142 Ala. 500, 38 So. 1029, was a bill in equity for the rescission of a contract for the purchase of land, on the ground that the vendor did not have a complete title at the time of the sale. The defect was that Badham, the vendor, had not paid all the purchase money to his own vendor, and had not received a deed of conveyance — facts not disclosed to the purchaser. Badham showed in his answer, however, that he was able to pay the purchase money installments as they fell due, and offered to execute a sufficient bond to protect the purchaser. Pursuant to the decree of the trial court he did execute the bond; and, finding no fraud in the transaction, and holding that the purchaser should have investigated, and should be presumed to know, the state of the title in general, the decree denying relief was affirmed. That case, therefore, does not come within the principle of the instant case, and is not in conflict with what we have written.
It is not necessary to review the rulings of the trial court in sustaining demurrers to counts 5, 6, and 12 of the complaint, since those counts were for deceit by concealing the existence of mortgages on the land, and under counts 7 and 8, to which the demurrers were overruled, plaintiff had full advantage of that aspect of his case.
Under counts 7 and 8 it was, under all the evidence, a question for the jury to determine whether plaintiff was in fact deceived and defrauded by the defendant Nunn's nondisclosure of the existence of the outstanding mortgages. If they found that he was, they could award damages only for such injuries as were suffered by him before he was informed of the mortgages — and, under the evidence, the only recoverable damage would have been for the loss of $2,000, paid to Osborn as part of the purchase money.
So far as Nunn's liability for deceit is concerned, it is of no importance that Drake paid the $2,000 to Osborn instead of to Nunn. The legal effect of the joint transactions shown between Nunn and Osborn and *Page 141 
Drake was the return to Osborn of his advance payment, and the payment of the same amount by Drake to Nunn. At any rate, the payment by Drake was knowingly induced by Nunn's conduct amounting in law to deceit.
If the contract of sale had been fully executed, instead of being abandoned, it may be conceded that the proper measure of damages would have been the difference in the value of the land with and without the incumbrances, or the necessary cost of their removal, if removed. See Tillis v. Smith Lbr. Co.,188 Ala. 122, 65 So. 1015. But that rule is not applicable here. We think the trial court was in error in not submitting to the jury the question of the defendant Nunn's liability for deceit.
The complaint exhibits no count declaring upon a breach of Nunn's executory contract to convey the land. But, where the evidence establishes a breach by the vendor, or mutual inability to perform at the time when performance was due, and the contract is abandoned, the purchaser may recover from the vendor any payment of money that he has made under the contract. 29 Am.  Eng. Ency. Law (2d Ed.) 727 (2); Maddera v. Smith, 3 Stew. 119; Waters v. Spencer, 22 Ala. 460; Flinn v. Barber, 64 Ala. 193. And such a recovery may be had under the common counts, as those cases show.
Ordinarily, the purchaser can put the vendor in default only by tendering full performance on his own part, and demanding performance by the vendor; but —
"when it is apparent that tender and demand will be unavailing, as where the vendor * * * puts himself in a position in which performance is impossible, offers a defective title, or is unable to perform, a formal tender and offer of payment and demand of deed by the purchaser is not necessary to entitle him to recover back what he has paid under the executory contract, as the law does not require idle ceremony." 29 Am.  Eng. Ency. Law, 726.
On the other hand, mere defect of title in the vendor and a present inability to give such a title as he covenants to do in a bond for title, does not, in all cases, dispense with the necessity of payment of the entire purchase money and the demand by the vendee of a conveyance, in order to entitle the latter to maintain an action to recover back the purchase money already paid; and where, in such an action, there is no proof of tender of payment of the purchase money and of demand for the conveyance, and it is shown that, notwithstanding an infirmity of title in the vendor, if the purchase money had been paid, the vendee could and would have obtained a title conforming to the covenant, the plaintiff cannot maintain the action. Pate v. McConnell, 106 Ala. 449, 18 So. 98.
Notwithstanding Nunn's testimony that he was able, ready, and willing to convey to plaintiff a good and unincumbered title on or before the last day appointed for performance, and specifically that he had obtained a release of the Chickamauga Trust Company's mortgage, and had arranged for a loan of sufficient money to procure a release of the Schiffman mortgage, if the jury believed the testimony of Drake, they might properly have found, on the whole evidence, that Nunn was not able or ready to convey the title free of incumbrances at the appointed time; and that Drake was able, ready, and willing to perform on his part; and, further, that a formal tender of performance by Drake at the bank, where alone he was authorized and required to make his tender, would have been unavailing, since the depositary bank held no release of either mortgage, and had no instructions with respect thereto, and could have done nothing more than deliver the deed to Drake, and receive his money, or money and mortgage, as provided by the contract.
It is to be observed that the release which Nunn claimed to have had of the Chickamauga Company mortgage, secured from an agent of that company, does not appear to have been given by any proper authority, and in any case was worthless, in view of the fact that the mortgage had been transferred by that company to another foreign corporation, and a release could be given only by the transferee.
If Drake's testimony be taken as true, we think it was Nunn's duty to secure and place the releases with the bank with instructions to deliver them with the deed when properly demanded, or else to be there with them himself for that purpose. If he failed to do so, and Drake, after reasonable efforts, failed to find him in town, the jury might well have found that Nunn was in default, and have excused Drake's omission to make a formal tender of performance at the bank. The law on this subject is stated in Brady v. Green, 159 Ala. 482,48 So. 807.
On this phase of the case, therefore, we think that the general affirmative charge for the defendant Nunn was improperly given, and that the question of default in performance of the contract, whether by Nunn or Drake, should have been submitted to the jury.
For the error in instruction, and for the reasons stated, the judgment will be reversed and the cause remanded.
Reversed and remanded.
ANDERSON, C. J., and McCLELLAN and THOMAS, JJ., concur.
                              On Rehearing.