Loff v. Gibbert

• Citation: 39 N.D. 181,166 N.W. 810
• Parties: LOFF v. GIBBERT et al.
• Decision Date: 21 February 1918
• Court: United States State Supreme Court of North Dakota

39 N.D. 181

166 N.W. 810

LOFF

v.GIBBERT et al.

Supreme Court of North Dakota.

Feb. 21, 1918.

Syllabus by the Court.

One who seeks rescission in equity must restore or tender to the adverse party, as a precedent to the right to rescind, the consideration received under the contract sought to be rescinded.

A party who brings an equitable action for rescission does not become divested of his interest in the property offered to be returned by making the offer to return it. The offer to return becomes effective only if accepted by the adverse party or when a rescission is adjudged by the court. In event a rescission is not adjudged, the parties stand in the same position as though rescission had not been sought, and the property offered to be returned remains the property of the party who seeks rescission.

To constitute an equitable estoppel there must exist a false representation or concealment of facts made with knowledge actual or constructive, and the party to whom it was made must have been without knowledge or means of knowledge of the real facts.

Where the truth is known to both parties, or where they both have actual means of knowledge, there can be no equitable estoppel short of one arising from actual contract.

Appeal from District Court, Cass County; Pollock, Judge.

Action for injunction by John H. Loff against Mike Gibbert and Frank Budack, as Sheriff of Richland County, N. D. Judgment for plaintiff, and defendants appeal. Affirmed.Pollock & Pollock, of Fargo, and George S. Grimes, of Minneapolis, Minn., for appellant. Engerud, Holt & Frame, of Fargo, for respondent.

CHRISTIANSON, J.

In December, 1913, the plaintiff, Loff, entered into an agreement with the Francis Merchandise Brokerage Company, whereby he agreed to exchange a section of Minnesota land for a stock of merchandise and give $5,000 to boot. In performance of the contract, the plaintiff conveyed the land to the company and paid to it $2,500 in cash and received shipments of goods purporting to be the merchandise described in the contract. The plaintiff, who is a merchant at Abercrombie, sold some of the goods received in the first shipment, but on receipt of the remainder of the goods he discovered that the representations of the Francis Merchandise Brokerage Company as to the value and quality of the goods were false and fraudulent. Upon discovering the fraud he segregated the goods which he had received and kept the goods so segregated ready for redelivery to the company. At the same time he commenced an action in the United States District Court in Minnesota, wherein he offered to restore to the brokerage company the goods still in his possession and to pay the value of the goods sold. And in such action Loff asked that the contract be rescinded and set aside, that the defendants therein be required to reconvey the land, and that the brokerage company be ordered and required to accept, take, and remove the goods and pay to the plaintiff the difference between the $2,500 paid by the plaintiff to the brokerage company and the sums received by him from the sale of part of the goods.

The defendant Gibbert had obtained a verdict against the brokerage company for $1,708.53 in the district court of February 9, 1914, plaintiff's attorney, Judge Engerud, had a conversation with Grimes, Gibbert's attorney, with respect to the Francis Brokerage Company. In that conversation the transaction between Loff and the brokerage company was fully discussed, and Judge Engerud informed Grimes that Loff intended to bring an action in the United States District Court to obtain a rescission of the contract and a reconveyance of the land which Loff had conveyed to the brokerage company. The action for rescission was commenced February 10, 1914. Thereafter on February 17, 1914, Grimes wrote Engerud as follows:

“In reference to your suit against Francis Merchandise Brokerage Company I understand that your client has rescinded the contract and brought an action in the federal court at Fergus Falls to recover his land and has tendered back to the brokerage company the invoice of the merchandise shipped to him. Kindly advise me whether this is so and if it will in any way prejudice your client's interest for me to levy an attachment upon these goods as the property of the Francis Merchandise Brokerage Company. If your client still has any claim upon the goods, of course I do not want to dip in or have any contest of any kind with him, but if he has rescinded the contract and does not claim any title to the goods, I would like to put an attachment upon them in favor of the claim in hand.”

Judge Engerud replied to this letter on February 18, 1914, as follows:

“In reply to yours of the 17th inst. will say that we have brought suit to rescind the contract with the Francis Merchandise Brokerage Company, the suit being now pending in the United States District Court at Fergus Falls. The goods which we received are in the hands of our client John Loff at Abercrombie, N. D., being held by him for the defendant, we, of course claiming and asserting that the goods belong to the defendant and that we are ready to turn them over to the corporation. I would think, therefore, that it would be entirely proper for you to attach them as the goods of the Francis Merchandise Brokerage Company. There is certainly no objection to that course so far as our client is concerned. The goods are worth about $2,000.”

The defendant Gibbert thereafter instituted an action in the district court of Cass county, and a warrant of attachment was issued therein, under which the sheriff of Richland county levied upon the stock of merchandise in Loff's possession at Abercrombie. The sheriff did not remove the goods, but left them in Loff's possession, taking his receipt therefor. Gibbert obtained judgment against the brokerage company by default. He thereupon caused an execution to be issued, and by virtue thereof the defendant sheriff on or about April 20, 1914, removed the goods from Loff's possession for the purpose of selling them at an execution sale; the sale being advertised to be held on May 7, 1914.

At the time the sheriff removed the goods he, at the request of Gibbert's attorney, presented to Loff, and requested that he execute, a certain instrument disclaiming “any right, title, or interest in or to” the merchandise. This disclaimer bears date March 2, 1914, and was prepared by Gibbert's attorney. Loff refused to sign the paper.

Shortly after the removal of the goods the plaintiff, Loff, served upon the sheriff a notice of claim and demand, claiming ownership of the property. In his claim, the facts with respect to Loff's ownership and one pending action for rescission are fully set forth. On the same date Judge Engerud wrote defendant's attorney as follows:

“April 22, 1914.

George Grimes, Esq., Minneapolis, Minn.-Dear Mr. Grimes: Mr. Loff informs me that the sheriff of Richland county was at Abercrombie and took away the goods which he had previously attached against Francis Mdse. Brokerage Co. I was somewhat surprised at this. I have caused to be served on the sheriff the demand and notice, a copy of which I inclose. As you will readily see the title to these goods depends on the outcome of the rescission suit which we now have pending in the federal court in Minneapolis. If that suit is decided in our favor, which I feel fairly confident it will, then of course the goods belong to ...