Johnson v. Herbst

• Court: Minnesota Supreme Court
• Citation: Johnson v. Herbst, 140 Minn. 147, 167 N.W. 356 (Minn. 1918)
• Decision Date: 26 April 1918
• Docket Number: No. 20850.,20850.
• Parties: JOHNSON v. HERBST et al.

140 Minn. 147

167 N.W. 356

JOHNSON

v.HERBST et al.

No. 20850.

Supreme Court of Minnesota.

April 26, 1918.

Appeal from District Court, Waseca County; Arthur B. Childress, Judge.

Action by James A. Johnson against Paul Herbst and others. Judgment for defendants, and, from an order denying a new trial, plaintiff appeals. Order reversed.

Syllabus by the Court

Where the vendor contracts to convey a clear title at a stipulated date on receiving payment from the vendee, and time is of the essence of the contract, and the vendee is ready and offers to pay on receiving a clear title, but the land is subject to liens which the vendor is unable to have discharged at the time fixed for performance, the vendee may rescind the contract and recover back the earnest money paid.

The rule that where an incumbrance is presently payable, the vendor is not required to discharge it out of his own funds, but may do so out of the purchase price simultaneously with the payment of the price and delivery of the deed, does not apply where time is of the essence of the contract, unless the vendor is able to cause the liens to be satisfied at the time fixed for performance. Henry A. Morgan, of Albert Lea, for appellant.

John J. Spillane and Moonan & Moonan, all of Waseca, for respondents.

TAYLOR, C.

Defendants own a farm in Waseca county which they listed for sale with one Halvorson, cashier of the State Bank of Hartland. Halvorson negotiated a sale of the farm to plaintiff, a resident of Iowa, and pursuant thereto plaintiff and defendants entered into a contract, dated November 12, 1913, whereby defendants agreed to convey the farm to plaintiff by warranty deed for the sum of $11,950. The contract acknowledged the payment by plaintiff of the sum of $1,000 upon the purchase price and provided that he should pay $3,950 on March 1, 1914, and that on the same date, March 1, 1914, he should execute a mortgage for the balance of $7,000, payable March 1, 1924, and bearing annual interest at the rate or five per cent. The contract also provided that defendants should convey the land by warranty deed containing the usual covenants ‘when payment of $3,950.00 is made March 1, 1914.’ The contract also provided that defendants should furnish an abstract showing ‘a good and merchantable title’ in time for plaintiff to examine it before making final settlement. The contract also provided that all payments should be made at the State Bank of Hartland, and that the failure of plaintiff to make such payments, or any of them, ‘punctually and upon the strict terms and times above limited and likewise to perform and complete all and each of his agreements and stipulations aforesaid strictly and literally without any failure or default,’ should authorize defendants to terminate the contract without any right in plaintiff to compensation for moneys paid or improvements made by him.

Defendants delayed furnishing the abstract but after several requests mailed it to plaintiff on February 13, 1914. The abstract disclosed that defendant, Paul Herbst, had acquired title to the farm through a deed from Mary Herbst and John Herbst, her husband, which deed provided that at the death of the grantors the grantee should pay to six different persons certain designated sums, amounting in the aggregate to the sum of $1,500, with interest thereon after the death of the grantors at the rate of six per centum per annum. The deed made these sums liens upon the land until fully paid. The abstract also disclosed other incumbrances but they were removed and require no further mention. On February 23, 1914, plaintiff returned the abstract with the opinion of his attorney, and requested a compliance with the suggestions of the opinion. This opinion, among other things, called for a discharge and release of the liens. On Thursday, February 26, 1914. Halvorson wrote plaintiff acknowledging the return of the abstract with the opinion, and stating that defendants intended to pay the liens out of the money to be paid by plaintiff on March 1st, and suggesting that plaintiff send a draft for the money to the State Bank of Hartland, of which Halvorson was cashier, to be used for that purpose. Plaintiff made no reply to this letter, but on the following day, Friday, February 27, 1914, went from Iowa to the farm to look at some personal property. While plaintiff was at the farm defendant referred to the liens but plaintiff replied that the settlement was to be made at the bank which was the place to talk them over, and they arranged to meet at the bank on the following day, Saturday, as the first day...