Clark v. Belt

Decision Date16 March 1915
Docket Number4014.
Citation223 F. 573
PartiesCLARK v. BELT.
CourtU.S. Court of Appeals — Eighth Circuit

Sterling & Clark, of Redfield, S.D., for plaintiff in error.

Tinley Mitchell & Pryor, of Council Bluffs, Iowa, and W. F. Bruell of Redfield, S.D., for defendant in error.

Before SANBORN and HOOK, Circuit Judges, and POPE, District Judge.

POPE District Judge.

Belt owned property in the city of Essex, Iowa. Clark had a farm in Spink county, S.D. They exchanged. By the terms of their agreement the South Dakota farm was to be taken at $32,000 subject to a mortgage of $16,800, thus leaving the net equity $15,200. The Iowa town property was placed at $18,500, with a mortgage of $4,000, making the net equity $14,500. To cover the difference of $700 in the two equities, resulting from the valuations thus placed, Belt was to pay Clark $700 in cash. The contract gave Belt one-third of all crops raised on the farm, evidently for the current year, 1908, but Belt was to assume a contract outstanding for 150 acres of breaking at the rate of $2.75. While there is some ambiguity in the contract as to the date when the papers were finally to be delivered, it seems reasonably clear that November 1, 1908 was the final date for such delivery. The contract was made by an agent of Clark on his behalf, and was subject to his approval of the trade, as it was subject also to an inspection of the South Dakota land by Belt. Clark subsequently approved the trade, but upon the further condition that Belt was to let Clark have $800 on or before July 2, 1908, and thus in advance of the exchange of deeds. This amount, it will be noted, was $100 more than the cash payment which Belt ultimately was to make to Clark, but the difference was to be protected by a lien given by Clark to Belt on part of the town property received on the exchange. This proposition was agreed to by Belt after an inspection by him of the South Dakota property, and the sum of $800 was, pursuant to such agreement, paid to Clark by Belt in July, 1908. On October 31, 1908, Belt tendered Clark the necessary papers covering the town property, and also the sum of $700 as stipulated, and demanded a deed to the South Dakota property in return. Clark had, however, previous to this, transferred the property to another, and refused to make the deed in return. Following the refusal of Clark to make title, Belt filed this suit for damages for the breach of the contract. The damages claimed were in three items:

(a) The $800 advanced in July, 1908, and for which, with interest, a return is demanded.
(b) A number of items representing the value of one-third of the crops raised in 1908 on the South Dakota property, and aggregating $1,517.53.
(c) The difference at the date of the breach between the value of the South Dakota property and the Iowa property. Upon this point the allegation of the complaint is that the South Dakota property was, at the date of the breach, worth $25,184, with an incumbrance of $16,800, leaving an equity, which would have come to the plaintiff had the trade gone through, of $8,384. The actual value of the Iowa property at the date of the breach is alleged to have been $8,500, allowing against which an incumbrance of $4,000, there was left $4,500 as the equity which would have gone to the defendant, or a difference of $3,884 in favor of plaintiff had the trade been consummated.

These three items aggregate $6,201.33, for which judgment was asked, with interest from November 1, 1908. The answer sets up various allegations of fraud by Belt in pointing out the town property, and which, it is claimed, relieved Clark from a compliance with his contract. There is in the answer a tender back of the $800 paid in July, 1908. Upon the trial, which by stipulation was to the court, there were findings against the defendant on the issue as to fraud, and a finding that plaintiff should recover. The court in assessing the damage allowed the $800 advanced, and also the value of one-third of the crops grown on the land in the season of 1908, which value was fixed at $1,207.06. The court declined to allow anything for the alleged loss to plaintiff as contained in allegation (c) above set forth. There is a finding by the court, however, that on or about September 1, 1908, the South Dakota equity was worth $8,384, and the Iowa equity amounted to $3,800, thus leaving a balance of $4,584 in favor of the South Dakota property had the trade been effected.

There is no bill of exceptions in the case, so that the only question is as to the sufficiency of the facts found to support the judgment. R.S. 700. In the absence of the evidence, of course, the findings of fact must be deemed to have been properly supported at the trial.

The point is made against the judgment below that the arrangement was void for lack of mutuality in that the acceptance of the South Dakota property by plaintiff was left dependent upon his being satisfied with it upon inspecting it, and particularly because the contract provided that 'if found (by Belt) to be otherwise than as represented or as understood by said second party (Belt) this agreement to be null and void. ' It is urged that a contract leaving it to the understanding of one of the parties as to what was represented was without binding effect upon him, and bound the one without binding the other, and was thus lacking in mutuality. The trade, however, was not closed upon that basis. It appears from the record that plaintiff did inspect the South Dakota land, and was satisfied therewith, and that defendant thereupon made a proposition by which the trade was closed upon the further consideration that $800 should be paid down in July, instead of awaiting the exchange of papers. While the original transaction was more or less one of negotiation on each side, there was created by the later transaction a condition binding upon all concerned, and a final situation characterized by mutuality.

It is also said that the contract is too indefinite for enforcement; that it fails, for example, to state in what year the crops referred to in the contract were to be raised; that it does not prescribe the date for the delivery of the deeds; that it is not sufficiently definite as to when the breaking of the 150 acres was to be done, or as to the incumbrance on the Essex property. The trial court, with all the surrounding circumstances before it, seems to have had no difficulty in ascertaining that the year for which crops mentioned in the contract were to be raised was the current year, to wit, 1908; that the date by which exchange of deeds was, at all events, to be effected, was November 1, 1908, and that as to the other matters upon which uncertainty is contended for, there was no difficulty in ascertaining the intent of the parties. We entertain no doubt of the correctness of the court's findings upon these points. Indeed, in the absence of the testimony, we are in no position to question them.

It is urged that there should have been no judgment in favor of plaintiff for the $800 advanced for the reason that this amount was tendered before suit. There is no proof, however, of a tender, and no finding of such, and it is not pretended that the tender included interest, so that there was no obligation on plaintiff to have accepted this in satisfaction of his claim.

The chief contention, however, upon the record is one of more substance, and goes to the amount of damages as found by the court. As we have seen, the damages allowed was the $800 item, with interest from July, 1908, and also $1,207.06, the value of one-third of the crops grown upon the South Dakota farm in the summer of 1908. The first item was, in view of what we have said, clearly a proper allowance. But, what as to the second? This involves a consideration of questions not entirely free from difficulty. The primary question in determining this is whether this was a South Dakota or an Iowa contract. If a South Dakota contract, the matter of damages was controlled by the following statute of that state:

'The detriment caused by the breach of an agreement to convey an estate in real property, is deemed to be the price paid, and the expenses properly incurred in examining the title and preparing the necessary papers, with interest thereon; but adding thereto, in case of bad faith, the difference between the price agreed to be paid, and the value of the estate agreed to be conveyed, at the time of the breach, and the expenses properly incurred in preparing to enter upon the land.' This statute is cited and applied in Dal v. Fischer, 20 S.D. 426, 107 N.W. 534. If it be a South Dakota contract, then the whole matter is governed by the statute above quoted, for in the presence of a state statute regulating the measure of damages, the duty of the federal courts ends with the enforcement of such statute. Under this statute, the only amount recoverable, unless there was bad faith, is the price paid, to wit, $800, with interest. In the presence of bad faith, which, however, is not here in terms found, there would be added the difference between the price agreed to be paid to wit, the Iowa property and $700, and the value of the estate agreed to be conveyed, to wit, the South Dakota property and one-third of the crop. Since the judgment of the court does not conform to either of these measures of damage, it is clearly erroneous if tested by the South Dakota statute. But is this a contract of that state? To determine this, we must, of course, go to the findings, and while these are lacking in fullness, it seems reasonably clear that it is an Iowa contract.

The test of the place of a contract is as to the place at which the last act was done by either of the parties essential to a meeting of minds. Until this...

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