Hartley v. Williams

• Decision Date: 13 January 1956
• Docket Number: No. 7410,7410
• Parties: Carol Mae HARTLEY, Respondent, v. E. Lane WILLIAMS, Appellant.
• Court: Missouri Court of Appeals

Page 129

287 S.W.2d 129

Carol Mae HARTLEY, Respondent, v. E. Lane WILLIAMS, Appellant.

No. 7410.

Springfield Court of Appeals, Missouri.

Jan. 13, 1956.

J. D. Gustin, Wayne T. Walker, James H. Holt, Springfield, for appellant.

James H. Keet, Homer D. Wampler, Jr., Springfield, for respondent.

McDOWELL, Presiding Judge.

This is an action in equity to rescind a written contract made between plaintiff and defendant for the purchase of a house and lot in Springfield, Missouri, and for restitution.

The cause was tried in Division II of the Circuit Court of Greene County and judgment rendered for plaintiff, decreeing the rescission of the contract and that defendant pay the plaintiff the sum of $976.99. Defendant appealed.

The amended petition alleges that on July 1, 1950, a written contract was entered into between defendant and plaintiff whereby defendant agreed to sell plaintiff a house and lot in Springfield, Missouri (described), for $4,500; the purchase price to be paid, $500 cash on signing of contract, and the balance in monthly instalments, $40 each, first instalment payable August 1, 1950, with 6% interest payable semi-annually, January 1st and July 1st, of each year.

It alleges that sufficient payments were made to reduce the balance due to $2,997.74 and that plaintiff requested defendant to furnish an abstract showing good merchantable title free and clear from all liens and encumbrances except taxes due and payable in 1951, and requested that defendant execute and deliver to plaintiff a warranty deed to said property and stated that plaintiff would execute her note for the unpaid balance, bearing interest at 6% per annum, payable semi-annually.

The petition pleads that plaintiff paid a total of $2,680 on the purchase price of the property, $341.08 in repairs, taxes and insurance, making a total payment of $3,021.08 and that she received rents totaling $1,380.

It pleads compliance by plaintiff with the terms of the contract and defendant's failure to comply; that plaintiff is now and long has been ready and willing to comply with the contract but defendant failed to furnish an abstract showing good merchantable title.

It pleads that when plaintiff learned of the defective title she immediately rescinded the contract, offered to return the property to defendant with all rents collected thereon and offered to do complete equity; that defendant refused tender of the property and now intends to enforce the terms of the contract, and plaintiff has no adequate remedy at law.

The contract is annexed to the petition at plaintiff's exhibit (A) and made a part thereof.

The prayer is for rescission and for restitution.

The answer admits the making of the contract as alleged; admits that plaintiff made payments as provided in the contract until May 12, 1954, and that the amounts alleged in the petition as paid are correct; that the payment reduced the balance due on the property to slightly less than $3,000, but, since May 12, 1954, no payments have been made.

It alleges that defendant delivered to plaintiff an abstract of title which was examined by her attorney and, since that time, has been fully advised as to the condition of title; that she entered into possession of the property and has remained in possession and appropriated all income therefrom, paid taxes, insurance, made changes and alterations, paid monthly payments without protest, demand or objection; that she without excuse quit making payments but still exercises rights of ownership.

It denies tender of property to the defendant as alleged. It denies that defendant failed to deliver a good and sufficient warranty deed conveying merchantable title with abstract but pleads that on June 10, 1954, defendant tendered to plaintiff a warranty deed with abstract of title, which plaintiff refused to accept and execute her note for the balance of the purchase price; that defendant has complied with all the conditions of the contract but plaintiff has failed to comply and has forfeited all her rights under said contract in the property.

It pleads that after the taking of possession, exercising of ownership, making repairs, paying taxes without protest or objection with knowledge of the conditions of the title, plaintiff cannot now in good conscience and equity claim the right to rescind.

Briefly stated the evidence is that the contract annexed to plaintiff's petition was executed as alleged. Under the terms of the contract plaintiff agreed to pay defendant $4,500 for a house and lot in Springfield; $500 cash upon the execution thereof, and balance, $4,000 in monthly instalments of $40 each, the first payment to be made August 1, 1950, and $40 each month thereafter; 6% interest to be paid semi-annually, on the first of January and August of each year. The contract provided that upon plaintiff's demand defendant would convey to plaintiff by good and sufficient warranty deed the property when indebtedness was reduced to $3,000 or less and plaintiff would execute her promissory note for balance of purchase price, bearing 6% interest, payable semi-annually. Defendant was obligated to furnish plaintiff an abstract showing good merchantable title in him.

It showed that defendant furnished plaintiff with an abstract of title in 1951; that she had the same examined by an attorney and was advised that the record title was not a good merchantable title; that she advised defendant's attorney and defendant of the objections to the title and that defendant promised he would furnish a good title when the time came to make the deed. The evidence shows that plaintiff did not return to Springfield until June 10, 1954, at which time a conference was held with defendant's attorney, Mr. Gustin, in his office; that parties' attorneys were present and defendant stated he would still live up to his part of the contract; that he would give plaintiff a clean deed and title to the property as stipulated; that plaintiff's attorney advised defendant, in presence of his attorney, that the title was not good; that defendant stated the title was good and he would not spend one dime to have it perfected.

It was contended by defendant that in the conference plaintiff's attorney agreed that all exceptions to the title would be waived except the objection to the tax title, under which defendant claimed. The evidence is that plaintiff requested of defendant that he file an action to have the title corrected and offered to pay half of the cost, which defendant refused to do.

Under the pleadings it is defendant's contention that he has a good merchantable title and that the abstract which he furnished plaintiff shows such title.

The evidence shows that plaintiff refused to pay any further instalments; that she tendered the property back to defendant and demanded of defendant restitution of the amounts paid on the purchase price and for taxes, repairs, etc., as set out in the petition.

The abstract of title, offered in evidence, shows defendant claims through a tax title filed for record December 21, 1939, wherein the property was purchased at a tax sale, third offering, for $30.59.

Defendant states on page 2 of his brief: 'Two clauses of this contract figure most materially in this case--one, that when the credits on monthly payments of the consideration had reduced the balance of the principal to $3,000.00 or less, defendant would execute and deliver a deed and take the plaintiff's note for the remainder; the other, that defendant agrees 'to furnish abstract showing merchantable title' free and clear of liens and incumbrances. The case rode off in the court below on the construction of the phrase quoted above.'

In our opinion we will refer to appellant as defendant and to respondent as plaintiff, the position they occupied in the trial court.

Defendant's first allegation of error is that the petition fails to state a cause of action for rescission.

It is first urged that the petition does not plead plaintiff was defrauded. We find that the basis of plaintiff's action arises from a default in the performance of the contract by defendant. Therefore, we will not consider this objection. We agree with the statement made by defendant, in his brief on page 7, that: 'The most that can be said of this petition is that it charges a breach of contract for failure to furnish abstract showing 'good merchantable title'.'

The cause was tried upon this theory and the judgment of the trial court is based upon it.

We do not agree with defendant's contention that failure to furnish an abstract showing good merchantable title, as provided in the contract of sale, is not ground for rescission.

It has long been held in this state that where the contract is executory and the defendant fails to fulfill his part and that such radical non-performance of mutual dependent covenants going to the very root and life of the contract amounts to an abandonment thereof and releases the other party to further recognize its obligations, equitable remedy of rescission will be applied. Jones v. Peterson, 335 Mo. 242, 72 S.W.2d 76, 86; 6 R.C.L., p. 925, Sec. 310; 13 C.J. p. 614, Sec. 664; 17 C.J.S., Contracts, Sec. 425; Haydon v. St. Louis & S. F. R. Co., 117 Mo.App. 76, 93 S.W. 833.

In Jones v. Peterson, supra, 335 Mo. 242, 72 S.W.2d at page 86, the court comments on Haydon v. St. Louis & S. F. R. Co., 222 Mo. 126, 121 S.W. 15, cited by defendant, as follows:

'* * * it was held that the plaintiffs therein 'must stand or fall' on what the writer of the opinion, Judge Lamm, termed a 'sensible limitation' on that doctrine, and which he quoted from Am. & Eng. Ency. Law (2d Ed.) Vol. 24, p. 619, as follows: 'A bill for rescission cannot ordinarily be maintained where the ground of relief is merely a breach of contract for which the complainant can obtain adequate compensation in an action at law. Courts of equity sometimes, however, exercise jurisdiction to rescind contracts upon the ground of a breach...