Raasch v. Goulet, No. 5522.

• Court: United States State Supreme Court of North Dakota
• Writing for the Court: McKENNA
• Citation: 57 N.D. 674,223 N.W. 808
• Parties: RAASCH v. GOULET.
• Docket Number: No. 5522.
• Decision Date: 28 February 1929

57 N.D. 674
223 N.W. 808

RAASCH
v.
GOULET.

No. 5522.

Supreme Court of North Dakota.

Feb. 28, 1929.

[223 N.W. 808]

Syllabus by the Court.

“The mutual rights and obligations of the parties to a written contract for the purchase and sale of real estate may be waived and the contract annulled and extinguished by parol.” Mahon v. Leech, 11 N. D. 181, 90 N. W. 807.

Such mutual rights and obligations may be terminated by abandonment on the part of the vendee acquiesced in by the vendor, even though no statutory notice of cancellation is given.

A court of equity will not extend the extraordinary relief afforded by specific performance to a vendee who has been grossly negligent of his rights, or has abandoned his contract, where the vendor, induced by his action, has entered into obligations inconsistent with the performance of the contract.

A court of equity, in the matter of specifically enforcing a contract to convey real estate, will insist on a showing of the utmost good faith on the part of the purchaser, and require that he make it appear that he has been ready, willing, able, and even eager throughout to have the

[223 N.W. 809]

contract enforced, and will refuse relief if, on account of his negligence or unwillingness at any time to perform his part, the performance has been delayed, especially if such delay renders performance inequitable and unjust as to the seller.

In an action for specific performance, the plaintiff may have relief by way of damages, to the extent of the amount paid upon the purchase price, if, on account of any fault or wrong on the part of the defendant, or any change of condition not due to the plaintiff's fault, equitable relief by way of decree for specific performance cannot be effectually afforded.

If a vendee is not entitled to a decree of specific performance because of a want of equity in himself, he may not recover damages for the same reason.

One who has been induced by fraudulent representations to become the purchaser of property has, upon the discovery of the fraud, three remedies open to him, either of which he may elect:

(1) He may rescind the contract absolutely and sue in an action at law to recover the consideration parted with upon the fraudulent contract; or

(2) He may bring an action in equity to rescind the contract, and in that action have full relief, or, lastly

(3) He may retain what he has received and bring an action at law to recover the damages sustained.

A purchase who has been induced to enter into the contract by fraud, has, upon its discovery, an election of remedies. He may either affirm the contract and sue for damages, or disaffirm it and be reinstated in the position in which he was before it was consummated. These remedies, however, are not concurrent, but wholly inconsistent, and ordinarily the adoption of one remedy excludes the other.

A purchaser, induced by fraud to enter into a contract for the purchase and exchange of real estate, has a right, upon the discovery of the fraud, to rescind the contract.

Generally speaking, rescission abrogates the contract, not partially, but completely, and, after a binding election to rescind, a purchaser cannot insist upon his rights under the contract.

Appeal from District Court, Barnes County; A. T. Cole, Judge.

Action by Casper F. Raasch against George O. Goulet. Judgment for defendant, and plaintiff appeals. Affirmed.

Lemke & Weaver, of Fargo, for appellant.

Combs, Ritchie & Hanchett, of Valley City, for respondent.

McKENNA, District Judge.

Two different phases of this controversy have previously been before this court for adjudication. See Raasch v. Goulet, 49 N. D. 936, 194 N. W. 380, and Raasch v. Goulet, 52 N. D. 707, 204 N. W. 338. Following are the principal facts:

On October 15, 1915, the plaintiff, Casper F. Raasch, of Ashland, Neb., was the owner of a tract of land known as the Christian ranch, comprising 814 acres, situate in Saunders and Cass counties, Neb., and incumbered for $28,500. On this date he entered into a preliminary agreement with the Lund Land Company, a corporation, of Valley City, N. D., by which Raasch agreed to sell and convey to the Lund Land Company these 814 acres at the agreed price of $145 per acre, or a total consideration of $118,030, which sum, less the incumbrance of $28,500, made a net cost to the land company of $89,530. The Lund Land Company agreed that, if after examination of the plaintiff's Nebraska ranch it decided to accept the property, it would convey to Raasch 2,580 acres of land in Barnes county, N. D., at the agreed price of $65 per acre, or a total consideration of $167,700, which amount, less Raasch's equity in the Nebraska land of $89,530 and the sum of $70 allowed Raasch for expenses, left a balance due and owing from Raasch on the property thus to be exchanged of $78,100, which he agreed to pay by turning in one-half of the crops raised on the Barnes county land each year; this sum to draw interest at 6 per cent. from March 1, 1916.

On the said 15th day of October, 1915, a supplemental agreement was entered into between C. F. Raasch and the Lund Land Company, by which the Lund Land Company agreed to dispose of 1 1/2 sections of the Barnes county land for a sum equal to the amount paid for same by Raasch, and it agreed to sell the land on or before one year from date and to make full and complete settlement for same on or before March 1, 1917,

[223 N.W. 810]

and covenanted that, if it failed to dispose of the land within the time mentioned, the company would itself purchase the land at said price, and would pay Raasch for his equity in said land in cash and assume all indebtedness against said lands.

The same evening a contract of employment was entered into, under which Raasch was employed by the Lund Land Company at a salary of $1,500 a year, as an agent of the company, commencing April 1, 1916. The employment contract provided that Raasch should move his family to Valley City and work from the office of the Lund Land Company in search of land buyers, etc.

On the date of these contracts, the Lund Land Company was not the owner of the Barnes county land, and had no interest in the same whatever, and did not even have it listed for sale, but it was at that time the sole property of the defendant, George O. Goulet, and he had not in any manner authorized the Lund Land Company to act for him in negotiating a sale or trade for these lands.

On February 16, 1916, the defendant, George O. Goulet, of Oriska, in Barnes county, N. D., entered into a contract with the Lund Land Company, agreeing to convey 3,220.41 acres of land in Barnes county, which included the 2,580 acres the Lund Land Company had agreed to exchange with Casper F. Raasch on the 15th day of October, 1915. The consideration for the transfer was $120,765, upon the following terms: $2,000 in cash at the time of the contract; $1,000 on February 24, 1916; $5,000 March 10, 1916; $12,765 on April 1, 1916; and the balance of $100,000.00, at 6 per cent. interest. to be paid by delivery of one-half of the crops each year. Such contract provided that same might be canceled upon 30 days' notice in case of failure to make the payments covenanted, and that no assignment of the contract or the premises should be valid without the written consent of the vendor.

On March 1, 1916, Casper F. Raasch moved to Valley City, N. D., and entered the employ of the Lund Land Company as a salesman and solicitor at a salary of $1,500 a year. On March 30, 1916, Raasch and his wife executed a conveyance of their Nebraska land to one Warner, an employee of the Lund Land Company. This was done, as represented by the company to Raasch, merely as a convenience in procuring a loan. Warner, with the consent of Raasch, mortgaged the Nebraska land to one John F. Webber, of Ottumwa, Iowa, to secure a loan of $35,000. It was explained to Raasch that out of the money so to be obtained the $28,500 mortgage on his Nebraska land would be paid off and the remainder would be paid to Goulet on the North Dakota land. Webber, however, only advanced $5,000 upon this mortgage, and no additional sum was ever advanced by him.

On March 31, 1916, Raasch and the Lund Land Company made a new contract covering the transaction of exchange of lands between them, and embodying the same terms contained in the preliminary agreement of October 15, 1915, Raasch's only explanation for making this new agreement is that the company asked him to, and he simply signed the new contract.

On this same date, March 31, 1916, the Lund Land Company secured from George O. Goulet an agreement extending the time for the payment of the sum of $12,675, which was due April 1, 1916, to the 15th of April, 1916. The Lund Land Company at this time had paid Goulet, in addition to the $2,000 cash payment on February 16, 1916, the further sums of $1,500 on March 14, 1916, and $4,500 on March 31, 1916.

Some time in April, 1916, Casper F. Raasch and George O. Goulet met in the office of the Lund Land Company at Valley City, N. D., and Raasch was introduced to Goulet as the new owner of the farm which Goulet had agreed to convey to the Lund Land Company. At that time Goulet took Raasch out to the farm, showed him around the place, told him that a certain scale did not go with the farm, tried to sell him a tractor, and at that time Raasch purchased from Goulet some $2,000 worth of seed for seeding the land in 1916, and paid for the same.

The lands were leased in 1916 to some four tenants. The leases were all made by the Lund Land Company, with the knowledge and consent of Raasch, and under an agreement with the company Raasch procured tenants on the Nebraska farm in the year 1916.

On May 18, 1916, a further extension agreement was entered into between Goulet and the Lund Land Company, whereby, the Lund Land Company having paid the additional sum on the contract of $3,003.63, and having further covenanted and agreed to pay the sum of $2,500 as a consideration for the extension, it was...