Hamilton v. McGill, 49510

• Decision Date: 07 December 1977
• Docket Number: No. 49510,49510
• Citation: 352 So.2d 825
• Parties: Harvey D. HAMILTON and M. L. Farris v. Donald R. McGILL.
• Court: Mississippi Supreme Court

Page 825

352 So.2d 825

Harvey D. HAMILTON and M. L. Farris v. Donald R. McGILL.

No. 49510.

Supreme Court of Mississippi.

Dec. 7, 1977.

Troutt & Moore, Nat G. Troutt, Senatobia, Billy J. Gilmore, Lexington, for appellants.

Barrett, Barrett & Barrett, Pat M. Barrett, Jr., Lexington, for appellee.

Before PATTERSON, SMITH and LEE, JJ.

PATTERSON, Chief Justice, for the Court:

This is an appeal from the Chancery Court of Holmes County. There the vendee was denied a rescission of a land and timber contract but was granted an abatement in the purchase price with interest. The vendors appeal from the abatement in price and the vendee cross-appeals from the denial of the rescission.

On September 27, 1974, Donald R. McGill, hereinafter McGill, a resident of Texas, purchased 982.74 acres of land in Holmes County for $296,100 from Harvey D. Hamilton and M. L. Farris. This acreage was known as the Sontheimer Place and consisted of approximately 267 acres of open bottomland, 43 acres of open hill land, and 672 acres of timbered land. A payment of $59,000 was made at the time of purchase and a note and deed of trust were executed by McGill for the remainder. By separate instrument, though part of the transaction, McGill executed a timber deed to Hamilton and Farris in consideration of their transferring certain farm equipment and cattle to him.

Thereafter, McGill operated the Sontheimer Place as a cattle farm and improved it by remodeling the residence thereon as well as hiring a manager for its operation and improvement. Following heavy rains on March 12, 1975, Harland's Creek, which traverses the tract, overflowed, covering the bottomland from hill to hill to a depth of five feet in places. By the next day the flood receded and in its wake left three drowned calves, fence damage and deposits of silt and other debris over the bottomland, causing the grass to be temporarily unfit for cattle consumption.

In his suit for rescission filed a few days later, McGill alleged that Hamilton had represented that the Sontheimer Place did not flood and was not subject to flooding, thereby defrauding him, and that Farris, who was present, remained silent and therefore became equally guilty. He prayed for a rescission of the deed, a refund of the down payment, a refund of the monies expended for improvements, a lien on the land, sale of the land for the satisfaction of any decree for damages, and general relief. The complainant, in his pleadings, offered the return of cattle and equipment but did not offer to return the land or its possession. Hamilton and Farris denied these allegations, demurred and filed a cross bill seeking damages for interference with the sale of timber. McGill denied the allegations of the cross bill and after several amendments the cause came on for trial.

The demurrer was overruled and the cause was heard on the rescission issue. There was a conflict in the testimony concerning the representations of Hamilton to McGill about flooding of the lowlands prior to the sale, all of which occurred in the presence of witnesses. McGill testified that Hamilton, when asked, assured him the property did not flood, overflow, or have any flooding problems. According to McGill, Hamilton stated that he had been raised on the place and knew the bottom never overflowed. There was testimony that Farris was present when the alleged misrepresentations were made, but remained silent. McGill testified he would not have purchased the Sontheimer Place for cattle farming had he known it was subject to overflow and that Hamilton never represented to him that it flooded or "flashflooded." The appellants established on cross-examination, however, that McGill purchased the Johnson Place, also traversed by Harland's Creek, which lay immediately north of the Sontheimer land five days after the flood. This purchase was explained by McGill as the consummation of an agreement made prior to the flood.

In presenting their version of the events preceding the purchase, Hamilton testified that he advised McGill the Sontheimer Place was subject to flash flood and both he and Farris testified that on Tuesday, September 24, 1975, a few days prior to the purchase, while they were present on the land proposed to be purchased, that Hamilton advised McGill the creek did get out on the bottomland, and that he, the witness, would not have the place if it did not overflow. Both vendors admitted they knew the bottomlands of the Sontheimer Place had flooded in February or March 1973 while they owned it and Hamilton further admitted that he knew the creek overflowed when he purchased it. There was testimony that the Johnson Place, purchased after the flood, was also subject to overflow from the creek.

In rebuttal, McGill presented evidence, corroborated by telephone bills, etc., that he was in Houston, Texas, on Tuesday, September 24, 1975, and was not present in Holmes County, Mississippi, on that date. Faced with this evidence the defendants moved for a recess to secure witnesses on this new issue. The motion was overruled, however, and the case was taken under advisement upon adjournment of the court.

Later, the appellants moved to reopen the case so that testimony might be presented on the issue brought out on rebuttal. This motion was sustained and in addition, the court advised the litigants that testimony relating to an abatement of purchase price in the event the court denied rescission would be heard. When the hearing concluded, the case was again taken under advisement and thereafter, a decree was entered denying rescission but awarding an abatement of $53,400 on the purchase price, plus interest of $4,395.48. The court was of the opinion from the evidence that $53,400 was the difference in the value of the Sontheimer Place as represented to McGill at the time of purchase, September 27, 1974, and its actual value at that time. The court permitted this sum to be offset against McGill's note to Hamilton and Farris, and finally, the cross bill of the appellants was dismissed.

The trial court found that Hamilton and Farris had deceived McGill by their misrepresentations and silence that the bottomlands of the Sontheimer Place did not flood. It, however, denied rescission on several grounds, one being that the Sontheimer Place was suitable for cattle operations despite periodic flooding. It found that McGill had not offered to restore possession of the land nor to account for profits or pay fair rental for its use and had failed to plead or prove the present owner of the promissory note and deed of trust, and, more importantly, that McGill's actions subsequent to the flooding so complicated the task of adjusting equities as to make rescission impractical.

The last premise was based upon the finding that McGill had continued to make capital improvements, plant crops, fertilize, and use farm equipment and sell cattle, originally purchased from the defendants, without tender to the defendants or maintenance of proper records. Thus, the court concluded that he was not in position to restore the defendants to status quo, or an approximation thereof, for rescission and that an abatement of the purchase price would be more equitable under the circumstances.

Although there are numerous assignments of error, the appellants argue only three. They are:

1. The court should have sustained the general demurrer and the motion to exclude appellee's evidence.

2. The court erred in permitting the appellee on reopening the case to introduce evidence on the issue of abating the purchase price.

3. The court was manifestly wrong in finding that appellants committed fraud and in entering a money decree.

McGill's assignment of error on cross-appeal is that the court erred in denying rescission.

The appellants first argue the opinion of the trial court implicitly acknowledges the general demurrer should have been sustained because the court found that McGill could not restore the defendants to status quo due to his activities on the Sontheimer Place after its purchase nor in his pleadings did he offer to restore the land to the defendants. From this it is urged that essentials to rescission, restoration or offer thereof, are lacking and it necessarily follows that McGill did not state a cause of action.

This contention is a projection of Griffith, Mississippi Chancery Practice, section 208, footnote 62a (2d Ed. 1950), which states in part:

. . . Before a party may rescind a contract of mutual and dependent covenants he must do or offer to do all required of him by it, and so show by his bill and proof. . . .

The argument requires a review of the cases supporting the statement. Hines v. Baine, S. & M. Ch. 530 (Miss.1842), was a suit for specific performance of a contract to purchase "lots" in the city of Grenada. Its basis was "mutual and dependent covenants" where neither party had performed the requisite obligations of the agreement. The Court held there was nothing to indicate either an offer to convey title or a demand for payment or any notice of the intention of the vendor to abandon or rescind the contract, stating:

. . . Although a contract may be rescinded by one party by acts in pais, yet, where such is his intention, he must give notice of it, and must put the other party in default by offering to comply fully with his part of the contract. . . . and before Bryant could absolve himself from the contract, he was bound to have tendered a deed, or at least offered to convey upon the purchase-money being paid. . . . (S. & M. at 537)

The present case is distinguishable in that it does not involve "mutual and dependent covenants" to be performed, but rather is a consummated transaction where McGill had paid $59,000 for the land, had executed a note and deed of trust for the balance of the purchase price, had executed a timber deed and had paid approximately $15,000 to retire a note of the appellants as part of the consideration for the personalty...