Bennett v. Farabough

• Decision Date: 12 June 1922
• Docket Number: 52
• Citation: Bennett v. Farabough, 241 S.W. 895, 154 Ark. 193 (Ark. 1922)
• Parties: BENNETT v. FARABOUGH
• Court: Arkansas Supreme Court

241 S.W. 895

154 Ark. 193

BENNETT v. FARABOUGH

No. 52

Supreme Court of Arkansas

June 12, 1922

Appeal from Drew Chancery Court; E. G. Hammock, Chancellor reversed.

Decree reversed and cause remanded.

Henry & Harris, for appellants.

1. Appellee has not met the requirements of law with reference to rescission on the ground of fraudulent misrepresentation as recognized by this court. 47 Ark. 165; 97 Id. 268.

Where the means of information is accessible to both parties so that, with prudence or vigilance, the purchaser might rely upon his own judgment, he will be presumed to have done so 112 Ark. 498.

The proof to establish fraudulent misrepresentations must be clear, satisfactory and convincing. 202 S.W. 720; 200 Id 139; 112 Ark. 498.

Misrepresentation must be of some fact that is material, the moving cause of the transaction. Black on Res. & Can. 169; Id. pp. 306-7; 77 A. 409; 94 Id. 12.

False and fraudulent misrepresentation may be waived by conduct. 90 A. 698; 102 Ark. 79; 98 Id. 328; 55 Id. 148.

2. The existence of incumbrances is no ground for rescission where the vendor's purpose was to use the purchase money to pay the incumbrances, and the mortgagees were willing to execute releases. Black, Res. & Can. 1043, and eases cited; 81 Neb. 754; 33 N.Y.S. 450.

Streett, Burnside & Streett, for appellee.

As found by the chancellor, the obligations to furnish the abstract showing a good, clear and merchantable title, and to place of record the satisfaction of all liens against the lands, were, by the terms of the contract and the intention of the parties, conditions precedent to the right to demand of plaintiff the payment of the balance of the purchase money or that it be placed in escrow. 6 R. C. L. 904; Bishop on Contracts, Enlarged Ed., 319; Id. 320; 134 Ark. 419; 121 Id. 487; 119 Id. 418.

The drainage tax covers a period of fourteen years. The assessment of benefits has the force and effect of a judgment. Appellants have not only not offered to discharge this lien, but specifically refuse to do so. 27 R. C. L. 542; 6 Id. 1021; 18 La. 510; 54 Pa.St. 203; 93 Ark. 447; 76 Ill. 493; 27 R. C. L. 517.

OPINION

WOOD, J.

On the 16th day of March, 1920, J. A. Bennett and W. S. Daniel (hereafter called appellants) entered into a written executory contract with G. M. Farabough (hereafter called appellee) by which appellants agreed to sell and the appellee agreed to buy one hundred and twenty acres of land in Drew County, Arkansas, for the consideration of $ 10,200. The contract provided that $ 1,000 of the above sum was to be paid in cash as earnest money. The balance was to be paid in "either of the following manners": $ 4,200 within thirty days from the date of the contract, and the balance by assuming existing incumbrances on the land in the sum of $ 5,000, or cash, at the option of the appellee. After setting forth the agreement for the sale and purchase and terms of payment thereon, the contract contains, among others, the following recitals: "* * * it being understood and agreed by the first party hereto that all liens and mortgages against said land shall be satisfied and placed of record before the balance of the $ 5,000 shall be paid over to the first party. It is further agreed and understood and the first party (Bennett and Daniel) hinds himself, his heirs and assigns, that, in the event of the payment of the sums above described in either of the manners set forth, then he shall execute his warranty deed conveying said lands in fee simple to the party of the second part (Farabough). It is further agreed and understood that the said party of the first part will submit to the second party an abstract to said lands showing a good, clear and merchantable title, and the second party shall have ten days in which to examine said abstract and to report his approval or to file his objections thereto. Then the first party shall have a reasonable length of time in which to meet any objections that said second party may find to said title.

"It is further agreed and understood that, should the said first party be unable to establish a good, clear, merchantable title to said lands, then the earnest money herein acknowledged shall be returned to the said second party upon demand, it being also understood that, after a merchantable title has been established, should the second party fail to meet the payments according to the terms of this contract, then the earnest money shall be forfeited to the said first party at his option." The contract further provided that, when the deed had been delivered and accepted, the rents for said place during the year 1920 would be paid to the appellee.

On October 1, 1920, the appellee instituted this action in the chancery court of Drew County against the appellants, Bennett and Daniel, partners doing business under the firm name and style of Bennett-Daniel Company. In this complaint he set up the contract, alleged that he had performed the same and that appellants had failed to perform the contract in the following particulars: (a) They had not within a reasonable time furnished the appellee an abstract of title showing a "good, clear and merchantable title to said land." (b) They had failed and refused to satisfy and place of record all liens and mortgages against said land before the balance of the $ 5,000 purchase money under the terms of the contract was to be paid.

The appellee further alleged in his complaint that the appellants had falsely and fraudulently represented to the appellee that the lands were free from local assessments for drainage purposes; that appellee relied upon these representations and would not have entered into the contract if such representations had not been made. The appellee prayed that the contract be rescinded, and that he have a decree against the appellants in the sum of $ 5,200, the amount paid them, with interest thereon; that he have judgment for damages in the sum of $ 150, which he had expended in endeavoring to have appellants carry out their contract.

In their answer the appellants denied all the material allegations of the complaint, and, by way of cross-complaint, they admitted the execution of the contract alleged in the complaint, and averted that the contract was entered into with the appellee after he had been put in possession of all the facts concerning the location and desirability of the land, and after appellee knew that the land was subject to assessment for drainage improvements. They alleged that, after clearing up all the defects in the abstract of title to the lands, they had tendered to the appellee a deed which he refused to accept; that, after the payment by the appellee of the sums mentioned in his complaint, he notified the appellants that he preferred to pay the remainder due under the contract in cash rather than to assume the incumbrances mentioned; that it was understood between them that upon appellee's election to pay this amount the appellants might use the balance so paid in cash to them in paying off the incumbrances; that the appellants thereupon requested the appellee to deposit the balance of $ 5,000 due them in the Dermott Bank & Trust Co. or some other bank in the State, for the purpose of paying off these debts and having the incumbrances released; that the appellants agreed to deposit with the same bank a good and sufficient warranty deed conveying to the appellee the lands in question, together with such other money as would be necessary, in addition to the $ 5,000 balance due on purchase money, to satisfy the debts and remove the incumbrances; that the appellants had the holders of the incumbrances execute full releases of the incumbrances and notified the appellee that release deeds had been deposited with the Dermott Bank & Trust Company, and that appellants were ready to consummate the sale when the appellee should pay the balance of the purchase money; that appellee refused to do this and therefore failed and refused to comply with his contract. Appellants prayed that the appellee be required to specifically perform the contract on his part by paying into court the sum of $ 5,000, with interest, and that, upon his failure to do so, the title be declared vested in him; that appellants have judgment against appellee for the balance of the purchase money due them under the contract, and that the lands be sold to satisfy the same, or else that the appellee be required to accept title subject to the incumbrances.

The cause was heard upon the depositions of the witnesses, the contract and other documentary evidence, which was duly identified and introduced. The trial court found that the evidence presented in support of plaintiff's contention that he had been misled with reference to the drainage taxes is not sufficient to support such contention, and that his offer to take the land in the event that defendants cleared same of all outstanding liens and furnished abstract showing good, clear and merchantable title, often repeated, shows that he had waived this objection; that the evidence submitted in support of plaintiff's contention that he suffered damages in the sum of $ 175 is too uncertain and indefinite. The court found that the contract was executed as set up in the pleadings, and that the "plaintiff paid the $ 4,200 in accordance with his agreement, and elected to pay the $ 5,000 balance due on the lands in cash, and called upon defendants to satisfy all outstanding liens and furnish him with an abstract showing good, clear and merchant-able title. The defendants then demanded that plaintiff first pay over to some bank the said $ 5,000 as a condition precedent to clearing the title. This plaintiff refused to do, and, when the defendants made no further effort to satisfy the liens...