Dvorak v. Kuhn

• Decision Date: 18 February 1970
• Docket Number: No. 8571,8571
• Citation: 175 N.W.2d 697
• Parties: John J. DVORAK, Plaintiff and Respondent, v. Arnold KUHN, Defendant and Appellant. Civ.
• Court: North Dakota Supreme Court

Page 697

175 N.W.2d 697

John J. DVORAK, Plaintiff and Respondent, v. Arnold KUHN, Defendant and Appellant.

Civ. No. 8571.

Supreme Court of North Dakota.

Feb. 18, 1970.

Rehearing Denied March 10, 1970.

Syllabus by the Court

1. Where rescission of a contract to sell real estate is sought on the ground of mistake, and the record discloses a mistake of fact on the part of the seller consisting in his belief in the existence of a thing material to the contract which does not, in fact, exist, rescission may be decreed on the ground of such mistake. Sec. 9--03--13(2), N.D.C.C.

2. Generally, rescission of a contract on ground of mistake should not be decreed against a party whose conduct did not contribute to or induce the mistake and who will obtain no unconscionable advantage therefrom. Where, however, all parties at an auction sale knew, and impliedly agreed, that the starting bid for real estate when offered as a unit was to be an amount equal to the average per-acre bid received for such land when previously offered in separate parcels, a mistake in computing such per-acre average and selling the land at a figure substantially under the amount already bid for it when offered in separate parcels, would give to the buyer, under such circumstances, an unconscionable advantage where the difference between the price already bid and the bid of the buyer for the unit amounted to $3,200.

3. Rescission of a contract, whether the object of a suit in equity or an action at law, is governed by equitable principles.

4. The written memorandum in the sale of real estate required under the statute of frauds must contain substantially all of the provisions of the agreement.

5. The statute of frauds has no application where there has been full and complete performance of the agreement by one of the contracting parties and acceptance of such performance by the other, and any part remaining to be performed is not required to be put in writing under the statute.

6. A valid escrow may be made by oral agreement and its existence, in part at least, may be shown by circumstances and conduct indicating the intention of the parties.

7. Libel is a false and unprivileged publication by writing, printing, picture, effigy, or other representation to the eye, which exposes a person to hatred, contempt, ridicule, or obloquy, or which causes him to be shunned or avoided, or which has a tendency to injure him in his business or occupation.

8. Where one charged with libel makes a complete retraction and apology before the commencement of the suit for libel, and where the allegedly libelous matter is not libelous per se, and where the party who claims to have been libeled fails to introduce any evidence of damages or injury caused by the alleged libel, judgment of the trial court dismissing the counterclaim for libel will be affirmed

9. For reasons stated in the opinion, the judgment of the district court granting rescission is set aside on condition that defendant exercise the option granted herein to purchase the land; that portion of the judgment decreeing the transaction void under the statute of frauds is reversed; judgment dismissing defendant's counterclaim is affirmed; and the case is remanded with instructions to enter judgment in conformity with this opinion.

Freed, Dynes & Malloy, Dickinson, for plaintiff and respondent.

Greenwood, Swanson, Murtha & Moench, Dickinson, for defendant and appellant.

STRUTZ, Judge.

This action grew out of the sale of certain real estate at public auction. The plaintiff, at the time the alleged cause of action arose, was a single man, having been divorced. He owned certain tracts of land totaling 680 acres, with buildings on some of the property. After he had decided to sell his farming interests, he next determined that he would sell at public auction. In carrying out such decision, he engaged a licensed auctioneer to conduct the sale and secured the services of the Liberty National Bank of Dickinson, North Dakota, to clerk the sale.

The auction was held on October 7, 1968. A large crowd was in attendance. When the land was about to be sold the auctioneer announced that it would first be offered in five separate parcels, with the understanding that the high bid on each separate parcel would not be accepted immediately as the final bid. Instead, after high bids had been received on all five tracts, the average per-acre bid would be computed and the entire tract then would be offered as one unit at a figure per acre slightly in excess of the average per-acre bid which had been received on the five parcels. It was to be understood that the bidding then would proceed from such figure. If no bids were received for the entire unit which would exceed the average per-acre bid received on the five separate tracts, the sale would be closed and the land would be struck off to the persons who had made the high bid on each of the five separate parcels. If, however, a bid in excess of the average per-acre price so bid on the separate tracts was received on the land as a unit, the land would be struck off to the highest bidder for the entire tract.

After the land had been offered for sale in five separate parcels, and a high bid had been received on each parcel, the sale was temporarily halted while the clerk computed the average per-acre bid so received. This was computed by the clerk to have been.$72.84 per acre. The computation so made by the clerk was erroneous, however, because the actual per-acre bid received on the land when offered in separate parcels in reality had been $81.70.

After such erroneous computation had been made, the land was offered as an entire unit for an opening figure of $73 per acre, or slightly in excess of the per-acre bid as computed by the clerk. The high bid received for the land, when so offered as a unit, was $77 per acre. This was the bid made by the defendant, and the land was struck off to him at that price as having been the best and highest bid obtainable.

The plaintiff and his wife (whom he had remarried after the date of the auction sale) executed a warranty deed to the land conveying it to the defendant. This deed was mailed to the plaintiff's attorney. The deed was placed in the hands of the defendant's attorney for the purpose of examination, and thereafter, by agreement of the two attorneys of the parties, such deed was delivered to the Liberty National Bank together with an escrow agreement which had been signed by the attorneys. The record discloses that there was an unpaid mortgage owing by the plaintiff against the land, that there were some unpaid taxes due on the land, and that a judgment against the plaintiff, which was a lien on all the land, remained unpaid. The escrow agreement provided that the bank, as escrow agent, was to pay these items out of the purchase money which the defendant was to deliver to the bank; that upon payment of such purchase money, the bank would deliver the deed to the defendant. After the payment of the purchase money by the defendant to the bank, but before the bank had had an opportunity to pay all of the above-mentioned items and before the deed actually was delivered by the bank to the defendant, the plaintiff discovered the error which the clerk had made in computing the average per-acre bid on the land when it was offered in separate tracts. Upon making this discovery, the plaintiff served upon the defendant and upon the bank a written demand for return of his warranty deed, at the same time authorizing the bank to return to the defendant the purchase money which the defendant had paid to the bank.

The record discloses that the auctioneer did not execute a memorandum of sale, binding the parties to a contract of sale of the real estate, as he was authorized to do under Section 3--05--02, North Dakota Century Code.

On the above record, the trial court found in favor of the plaintiff, holding that the sale to the defendant was the result of a mistake in computation of the average per-acre price and that as a result of such mistake the auctioneer struck off the entire tract to the defendant as the highest bidder, whereas he was not, in fact, the highest bidder; that in reliance upon such mistake in computation the plaintiff made and executed the warranty deed, which deed was left with a purported escrow agreement at the Liberty National Bank for the purpose of payment of the mortgage, taxes, and judgment owed by the plaintiff, as seller; that immediately upon discovery of the mistake in computation of the average per-acre bid on such land and before the actual delivery of the deed by the bank to the defendant, the plaintiff acted to rescind and tendered back the purchase price; that because the plaintiff did not sign the escrow agreement, which had been signed by his attorney, there is no memorandum in writing which was binding upon the plaintiff, as seller of the real estate, as required by the statute of frauds; that the execution and delivery to the bank of the warranty deed by the plaintiff was insufficient to satisfy the provisions of the statute of frauds. The court also dismissed the defendant's counterclaim against the plaintiff for libel for stating that the defendant, with others at the sale, had unfairly and illegally agreed not to bid competitively.

From judgment entered in the district court for the plaintiff, setting aside the sale of the real property to the defendant, and from judgment dismissing defendant's counterclaim against the plaintiff for libel, the defendant has prosecuted his appeal to this court, demanding a trial de novo.

Numerous errors are urged by the defendant in support of his appeal. Since the trial court found that the auctioneer struck off the land to the defendant as highest bidder because of a mistake, and that the plaintiff, in reliance upon such mistake, made, executed, and delivered the warranty deed to the land, we first will consider the question of whether there was...