Miller v. Snedeker

• Citation: 101 N.W.2d 213,257 Minn. 204
• Decision Date: 22 January 1960
• Docket Number: No. 37762,37762
• Parties: Clarence R. MILLER, Appellant, v. Herbert S. SNEDEKER et al., Respondents.
• Court: Supreme Court of Minnesota (US)

Page 213

101 N.W.2d 213

257 Minn. 204

Clarence R. MILLER, Appellant, v. Herbert S. SNEDEKER et al., Respondents.

No. 37762.

Supreme Court of Minnesota.

Jan. 22, 1960.

Syllabus by the Court

1. On appeal from a judgment, where no motion was made for a new trial, the only issues before the supreme court are whether the evidence sustains the trial court's findings and whether those findings support the conclusions of law and the judgment.

2. Where time is of the essence and where the contract requires the vendee, after receiving an abstract, to point out any defects therein within a certain time and he fails to do this and it is for this reason that the vendor fails to correct the abstract, the vendee is held to have waived the objections he has thereto.

3. Notice of rescission for default is a prerequisite to an action to recover payments, but it need not be in express terms or couched in any particular language.

4. The general rule that a party to a contract cannot breach it and thereby secure for himself some right or advantage to the detriment of the other party thereto applies to contracts for the sale of real estate.

5. Where a vendee enters upon the performance of his contract to purchase, and, after paying part of the consideration, makes inexcusable default, he cannot maintain an action to recover the money so paid.

6. A vendee, who defaults in the payments due under such a contract and announces his inability to perform the same, is not entitled, unless the contract so provides, to a return of a payment made when the contract was entered into, nor has the court, in the absence of a statute to that effect, authority in equity to require a return of the money by the vendor as a condition to a cancellation of the contract.

7. Rescission is a question of fact; and, where the vendee undertakes to show the mutual rescission of a contract for the purchase of land, the burden is upon him to establish this fact.

8. The rule is well established that only a material breach of a contract or a substantial failure in its performance justifies a party thereto in rescinding.

9. The provisions of M.S.A. § 559.21 do not prevent the purchaser's abandonment of the contract and do not provide the exclusive remedy of the vendor for a breach of the contract terms. Section 559.21 is cumulative and does not exclude the vendor's right of action against a defaulting vendee for specific performance or for a judicial termination of the contract.

10. The right to rescind on the grounds of failure of performance belongs to the party who is himself without fault. Even though he has sufficient grounds for rescission, if he has done some act which justifies the other party in refusing or delaying performance, or has failed to perform his own part of the contract, the right to rescind does not exist.

Van Valkenburg, Blaisdell & Moss, Minneapolis, for appellant.

E. T. Chesnut, Minneapolis, for respondents.

NELSON, Justice.

This appeal involves an action for recovery of earnest money paid upon an agreement for the purchaser of real property which contract plaintiff claims was terminated by rescission. This appeal is by plaintiff from a judgment for defendants.

The real property involved is located in the city of Minneapolis at 307 West Minnehaha Parkway and consists roughly of one-half of Lot 3 and a small triangular portion of Lot 18 in Auditor's Subdivision No. 118. The residence thereon faces the Parkway and there is a garage located at the rear of the lot. Since there is no alley in the block and the dwelling extends to some 4 feet from either side line, access to the garage is obtainable only by virtue of a driveway easement extending across that portion of Lot 3 not included in the premises.

The purchase agreement was entered into between defendants, Herbert S. Snedeker and Laura C. Snedeker, his wife, as vendors, and the plaintiff, Clarence R. Miller, as purchaser. The premises sold included an easement for the above-mentioned driveway.

The earnest money payments totaling $1,000 were made as required, although one was late. The stated consideration in the purchase agreement was $19,500, earnest money payments of $500 each to be paid within 2 weeks and the balance of $18,500 on or before 60 days from an after July 12, 1956. A provision of the contract important on this appeal is the following:

'* * * The buyer shall be allowed 10 days after receipt thereof for examination of said title and the making of any objections thereto, said objections to be made in writing or deemed to be waived. If any objections are so made the seller shall be allowed 30 days to make such title marketable.'

Plaintiff made no written objections to the title within the designated 10 days after receiving the abstract of title but orally advised the defendants that his attorney had examined the title and found it 'okay.'

The contract further provides:

'* * * if the title to said property be found marketable, or be so made within said time, and said buyer shall default in any of the agreements and continue in default for a period of 10 days, then and in that case the seller may terminate this contract, and on such termination all the payments made upon this contract shall be retained by said seller and said agent, as their respective interests may appear, as liquidated damages, Time being of the essence hereof; * * *.' (Italics supplied.)

That the defendants were pressing the plaintiff to perform is clearly shown by defendants' witness Arthur L. Kreitter and by plaintiff's witness Mrs. Doreen Romain. That plaintiff could not raise the necessary money to enable him to perform is equally clear. Mrs. Romain appearing on behalf of the plaintiff testified that she was to lend plaintiff $5,000 to be used by him in the purchase of the premises but that her loan was contingent on their marriage. They had not married at the time of the trial, more than a year later.

There had been communications from plaintiff to defendants and their real estate agent, Arthur L. Kreitter, that plaintiff expected to raise the balance of the purchase price in part by placing a mortgage upon the premises and the remainder by the personal loan from Mrs. Romain. Plaintiff had also indicated that he owned another house from the sale of which he could realize a sufficient equity if necessary, but the record indicates no effort on his part to sell. As the time for closing approached, Kreitter, according to his testimony, had several conversations with the plaintiff in which plaintiff informed him that Mrs. Romain had withdrawn her offer of a loan because of tax considerations and that as a consequence plaintiff was unable to raise the balance of the money. Nevertheless, Kreitter continued efforts toward completion of the transaction. This included conversations with plaintiff after the 60-day period had expired and also the sending of the abstract to a mortgage company as late as September 27 to assist plaintiff in arranging a loan.

The record indicates that prior to October 15 plaintiff received a title opinion from the mortgage company. On that day plaintiff advised defendants by letter that the title to the premises was unmarketable by reason of four claimed defects which he enumerated as follows:

'No description is given of easement over the portion of lot entering into this premise.

'Old age assistance lien to be corrected.

'Mortgage over balance of lot affects the easement.

'Mortgage covers part of Lot 18 which is part of this transaction.'

Plaintiff did not furnish defendants with a title opinion substantiating his claimed defects of title. In fact, the record indicates that an attorney of his own choice had examined the title and written an opinion thereon September 19, 1956, which found the premises free and clear of any encumbrances of record; this was no doubt the opinion which the plaintiff had in mind when he advised the defendants that his attorney had examined the title and found it 'okay.'

Plaintiff closed his letter of October 15 by saying:

'In view of the above this title will have to be corrected by proper court action.'

The defendants replied on October 16 by a registered letter which read as follows:

'If you will refer to your copy of the Purchase Agreement dated July 12, 1956, you will note it states: 'The buyer shall be allowed 10 days after receipt thereof for examination of said title and the making of any objections thereto, said objections to be made in writing or deemed to be waived.'

'The records show the Abstract was brought to date as of August 13, 1956, and was turned over to you by David C. Bell Investment Co. within a day or so thereafter. It is our understanding that when it was returned by you the latter part of September to the David C. Bell Investment Co. that your attorney had passed the title as marketable.

'No objection was made to us at any time, in writing or otherwise as to this title, during the duration of the Purchase Agreement, nor the 10 days it continued in default.

'We, therefore, regard the Purchase Agreement as terminated as of September 22, 1956.'

Following receipt of this letter, plaintiff, on October 24, 1956, commenced this action claiming the right to rescind the contract on the basis of defendants' letter, without any notice to the defendants and without making any tender of any kind and notwithstanding he had failed to pay the balance of the purchase price as required on or before September 1i, 1956. Plaintiff also sought recovery of the earnest money paid in the sum of $1,000. Defendants denied plaintiff's claim and controverted the validity of plaintiff's title objections, alleging default on the part of the plaintiff in failing to tender or pay the balance of the purchase price due September 12, 1956; plaintiff's inability to complete performance of the contract; and that damages suffered by defendants exceeded the amount of the earnest money.

The trial court determined as a matter of law...