Dooley v. Stillson

• Decision Date: 26 February 1925
• Docket Number: No. 5907.,5907.
• Citation: 128 A. 217
• Parties: DOOLEY et al. v. STILLSON.
• Court: Rhode Island Supreme Court

128 A. 217

DOOLEY et al.

v. STILLSON.

No. 5907.

Supreme Court of Rhode Island.

Feb. 26, 1925.

Exceptions from Superior Court, Providence and Bristol Counties; George W. Greene, Judge.

Assumpsit by James E. Dooley and others, receivers, against Ira E. Stillson. Verdict was directed for defendant, and plaintiffs bring exceptions. Exceptions sustained, and case remitted for new trial.

Edward M. Sullivan, John J. Sullivan, and Daniel A. Colton, all of Providence, for plaintiffs.

Frederick A. Jones, of Providence, for defendant,

BARROWS, J. Action of assumpsit. Plea general issue under which defendant sought to recoup damages to an amount equivalent to plaintiffs' partial payment on account. The case is before this court on exceptions to direction of a verdict for defendant by the superior court.

Plaintiffs are receivers of a dissolved copartnership, which had entered into a written agreement with defendant to purchase for $15,000 a farm, household supplies, crops, stock, farming implements, tools, wagons and harnesses on September 9, 1919. Pursuant to its terms, $6,000 was then paid on account, and the balance was to be paid in $2,000 cash and a mortgage for $7,000, on January 2, 1920, when plaintiffs were to receive a deed. The contract contained no provision in case of breach by vendees that the $6,000 should be forfeited or considered as liquidated damages to the vendor. Time was not declared to be of the essence of the contract, nor was there any clause giving the vendor the right to repossess himself of the real and personal property or to resell. Possession pursuant to the contract, with unlimited right of use and consumption of the personal property and disposal of the crops, was delivered to vendees at or about the time of the original agreement. Defendant ceased thereafter to exercise any control over the personal property, the farm or management of operations thereon, and thereafter vendees dealt with the entire property, real and personal, as if it were their own.

The declaration alleges that the contract was broken by the buyer's inability to secure the $2,000, and avers that the seller after the buyer's breach declared the contract null and void, and retained the money paid on account of the purchase price. This suit is for recovery of that payment.

On the farm when sold were 45 tons of hay, 500 bushels of corn, 3 horses, 3 cows, 8 pigs, and 50 hens; 350 bushels of potatoes were dug by vendees, and ripening fruit on the trees consisted of 600 bushels of apples and 25 bushels of pears.

The vendees did not make their payment on January 2d. and, on January 23d, vendor, by his attorney, served notice upon vendees that unless the contract was completed on January 29, he would repossess himself of the property, and "take such further steps as may seem necessary to protect my rights." Vendor did not repossess himself at that time however. One of the vendees, a Mr. Barba, continued in possession until late in May, 1920. On May 18th an auction sale by vendor of both the real and personal property then remaining was attempted, but not completed as to the real estate owing to failure to receive a bid of more than $7,500, for which amount the vendor was unwilling to permit the farm to be sold. The greater portion of the personal property transferred by the contract had been sold prior to this auction and the balance then remaining brought $943. Barba still lived on the farm. On May 25th defendant gave Barba notice to quit in the form usual from landlord to tenant in this state. Barba quit within a few days thereafter. Defendant took possession of the real estate. He thereafter advertised it for sale in his own name and put up a "For Sale" sign on the premises without consulting vendees. Vendor held the premises until September 8, 1920, at which time he conveyed the real estate at private sale to one Peckham for $9,000, giving the usual warranty deed. The testimony was that this was a fair price for the farm.

The trial court directed a verdict for defendant, holding that vendor had not rescinded the contract by repossession and resale; that for a rescission there must be actual or implied intention and assent on both sides; that after a buyer's breach the seller, both in cases of sales of real estate and personal property, could resell; that the difference between the original contract price and the resale price was an element of vendor's damages, and that the evidence here disclosed damages to defendant in excess of the $6,000 for which plaintiffs sued.

1. Did the lower court err in holding as a matter of law that the contract was not rescinded? Rescission is not merely a termination of contractual obligation. It is abrogation or undoing of it from the beginning. It seeks to create a situation the same as if no contract ever had existed. It differs from a breach of contract by abandonment or repudiation by one party, so recognized by the other. For rescission there must be mutuality, expressed or implied. Mere recognition that the contract has been broken is not rescission. The mutuality essential to rescission may be found to exist if, after breach of contract or abandonment by one party, the other by word or act declares the contract rescinded. Black on Rescission and Cancellation, §§ 1, 6.

An implied rescission is as effective as an express one. 39 Cyc. 1356. An attempted restoration of the status quo is an essential part of rescission. No express declaration of rescission existed in the present case. If rescission is found it must be implied from circumstances. The acts of vendor to which vendees made no objection, viz., giving the notice to quit, taking possession and offering the property for sale followed by actual sale, are urged as conclusive evidence of rescission. Plaintiffs claimed (a) that if the contract were not rescinded, vendees still had the right to demand specific performance, that vendor's resale had rendered performance impossible, and therefore the contract had been rescinded; (b) that without rescission the vendor could make no conveyance of vendees equitable title, except through the intervention of a court of equity; and (c) that the warranty deed definitely concluded a chain of circumstances whereby the vendor was precluded from performance of his part of the contract, and showed a definite intention to rescind. Neither contention is sound.

(a) Vendees' own conduct would bar him from securing specific performance.

(b) It is true that the language in some of the cases refers to vendor as holding the legal title as security for the payment of the

purchase money, and on default suggests equitable foreclosure as at times the only safe procedure (Hansbrough v. Peck, 5 Wall. 497, 18 L. Ed. 520), but the same court later said in Jennison v. Leonard, 21 Wall. 302, 22 L. Ed. 539, that the nature of such transactions had become established; that the vendor retains the legal title for the equitable benefit of vendee to the extent of the amount paid on the purchase price; that the vendees' equitable interest, may be terminated by voluntary relinquishment, or surrender of possession to vendor by vendee, and thereafter vendor may resell the property and convey a complete title.

(c) Black on Rescission and Cancellation, § 579, declares there is a presumption of rescission in sales of personal property, when the seller reclaims or retakes possession after delivery because the vendee has not paid for it; that this presumption prevails unless there is evidence of intent to retake it for sale on the buyer's account. But "the mere fact that the purchaser of land under an executory contract makes default in his payments, and either abandons possession or permits the vendor to resume possession, but without any agreement between them, does not operate as a rescission of the contract of sale." Hart v. Stickney, 41 Wis. 630, 22 Am. Rep. 728; Morris v. Derr, 55 Kan. 569. 40 P. 908; Seymour v. Warren, 114 App. Div. 813, 100 N. Y. S. 267; Batson v. Johnson, 162 Ala. 411, 50 So. 348, 136 Am. St. Rep. 50. Evidence of intent to rescind may be found from all the circumstances in a case. A resale of land often has been held to be a rescission, as has likewise bringing ejectment proceedings and the giving notice to quit followed by quitting. 39 Cyc. 1388. In Pierce v. Staub, 78 Conn. 459, 62 A. 760, 3 L. R. A. (N. S.) 785, 112 Am. St. Rep. 163, a case tried without a jury, rescission was found on a state of facts some of which were like the present ones.

Most of the cases where rescission has been found were tried in equity, or, if at law, to the court without a jury, and it cannot be known whether the question was treated as one of fact or law. As rescission, however, depends both upon the acts of the parties and the intention with which those acts are done, in a partly performed contract involving the sale of both real and personal property, and especially where much of the latter is intended to be and has been consumed, we think the jury should determine whether there has been rescission. Black, § 675. Intention is a question of fact. Swift v. Rounds, 19 R. I. 527, 35 A. 45, 33 L. R. A. 561, 61 Am. St. Rep. 791. The contract here was entire. Waite v. Stanley, 88 Vt. 407, 92 A. 633, L. R. A. 1916C, 886. Rescission, if at all, was in toto, 39 Cyc. 1354. While in cases where the evidence is clear and unambiguous it is the duty of the court to decide whether or not a rescission has taken place as a matter of law, we are not satisfied that such duty existed in the present case. In spite of presumptions there are circumstances indicating that the contract was never rescinded by the defendant. Neither notice to quit nor resale with warranty deed, alone or in combination, definitely established vendor's intent to cancel the contract ab initio. Both acts were consistent with vendor's adhesion to the original contract, and an effort to realize on his security for its performance. Rounds v. Baxter, 4...