Schaff v. Kennelly

• Decision Date: 04 December 1953
• Docket Number: No. 7403,7403
• Citation: 61 N.W.2d 538
• Parties: SCHAFF v. KENNELLY et al.
• Court: North Dakota Supreme Court

Page 538

61 N.W.2d 538

SCHAFF v. KENNELLY et al.

No. 7403.

Supreme Court of North Dakota.

Dec. 4, 1953.

Syllabus by the Court.

1. Section 28-1510 NDRC 1943, as amended by Chapter 204 SLND 1951, requires a motion for judgment notwithstanding the verdict to be made within ten days after reception of the verdict. Where a notice of motion and motion for a judgment notwithstanding the verdict are served upon the adverse party or his counsel within ten days after the reception of the verdict and the notice fixes a time for hearing more than ten days after the reception of the verdict, the motion is made in time and the court does not lose jurisdiction because it is set for hearing and heard after the ten-day period has lapsed.

2. Where a notice of motion and motion for a judgment notwithstanding the verdict are served within ten days after the rendition of the verdict, the motion will be considered to have been made in time, although the notice and motion are not filed in the office of the clerk of the district court until more than ten days from the rendition of the verdict, and the failure to so file does not render the order of the court made thereon subject to jurisdictional attack.

3. A party to a contract may rescind it only for the reasons or upon the grounds set forth in Section 9-0902 NDRC 1943.

4. A failure or even a partial failure of consideration imports a breach of contract but every breach of contract does not import a failure of consideration.

5. A breach of contract, in order to warrant rescission upon the ground of failure of consideration, must be a substantial breach.

6. In an action to recover money paid for the purchase of real estate upon the ground that the plaintiff was fraudulently induced to enter into the contract of purchase, and the evidence of fraud is conflicting, the question of whether or not the inducement was fraudulent is for the jury.

7. One who has been induced to enter into a contract for the purchase of real estate by fraudulent representations of the vendor may elect to affirm the contract and bring an action against the vendor for damages, or he may elect to rescind the contract for fraud and restore to the vendor everything of value which the vendee has received under the contract, or offer to restore the same, upon condition that the vendor do likewise, unless the latter is unable or positively refuses so to do.

8. A party who elects to rescind a contract for the sale and purchase of real estate on the ground that he was fraudulently induced to enter into it has a choice of procedures. He may bring an action in equity setting forth his election to rescind and ask the court to declare a termination of the contract and grant other relief, or he may bring an action at law based upon a rescission that has already been accomplished in the manner prescribed by Section 9-0904 NDRC 1943.

9. In order to effect a unilateral rescission as a condition precedent to an action for the recovery of money only, the rescinding party must give the other party prompt notice of his election to rescind and must restore or offer to restore everything of value that he has received under the contract, unless there are applicable exceptions such as the inability or positive refusal of the party against whom rescission has been effected to make a restoration.

10. Rescission, once accomplished, completely abrogates the contract from the beginning.

11. An obligation is not extinguished by an offer of partial performance.

12. Insufficiency in a notice of rescission and offer of restoration will be waived by an absolute refusal to entertain the proposal on the part of the party against whom rescission is sought.

13. A contract for the sale of real estate which contains a provision that in case of default by the purchaser he agrees upon demand by the vendor to surrender possession does not afford an exclusive remedy. The vendor may waive the provisions of the contract in this respect and pursue the remedy of foreclosure by action.

14. No power of attorney is required to foreclose a land contract, nor is it necessary that a notice before foreclosure be given prior to the institution of such an action. The notice required by Section 32-1920 NDRC 1943 must be given only in proceedings to foreclose mortgages on real estate.

15. A deficiency judgment may not be rendered in an action to foreclose a land contract. Such judgment can only be obtained in a separate action brought under the conditions and in the manner prescribed by Chapter 217 SLND 1951 J. K. Murray, Bismarck, for plaintiff-appellant.

Kelsch & Scanlon, Mandan, for defendants-respondents.

MORRIS, Chief Justice.

On September 24, 1951, the plaintiff, as purchaser, and the defendants, as sellers, entered into a written contract for deed involving the sale of the following property:

'Lots One (1), Two (2) and Three (3) in Block Forty (40), in the Original Town, now City, of Mandan, North Dakota, including all buildings thereon except one frame playhouse, which the parties of the first part reserve and shall have the privilege of removing from the premises within a reasonable time; Included also is the kitchen equipment contained in said house on said lots, consisting of steel cabinets, electric stove, gas refrigerator, electric dishwasher, garbage disposal, breakfastnook furniture, and exhaust fan; and laundry equipment consisting of automatic washer, dryer and gas range; also all carpets on floors and all window shades and drapes now in the house.'

The total purchase price was $35,000, $10,000 of which was paid at the time the contract was executed. The balance of the purchase price was to be paid as follows: $5,000 on January 30, 1952; $8,000 on January 30, 1953; $6,000 on January 30, 1954; and $6,000 on January 30, 1955. Interest was provided for at four per cent per annum, payable annually. The purchaser agreed to keep the buildings on the premises insured for not less than $25,000. The sellers agreed to give possession of the house on October 1, and the garage on October 10, 1951. The plaintiff actually took possession on September 28.

On or shortly after February 14, 1952, plaintiff served on the defendants by mail the following notice of rescission:

'Take Notice that the undersigned, Paul Schauf, does hereby rescind that certain contract for deed made between you and he on the 24th day of September, 1951 wherein and whereby you promised and agreed to sell him the following described real property situated in the City of Mandan, North Dakota, to-wit: Lots Two and Three (2 & 3), in Block Forty (40), in the Original Town, now City, of Mandan, North Dakota including certain buildings designated in said contract for deed, for the purchase price of Thirty-Five Thousand Dollars ($35,000.00).

'This rescission is based upon the following grounds, among others:

'1.) That you fraudulently misrepresented to the undersigned the condition of the dwelling house situated on said lots, among other things in this: that you guaranteed, warranted and represented that said dwelling house and all of its fixtures and appurtenances were in good condition and that there were no hidden defects in said property; that in truth and in fact said dwelling house had been gutted by fire and the evidences of such fire have been covered up by repairs, which gutting by such fire greatly depreciated the value of said property.

'2.) That the sewer system was defective; that it did not and does not yet carry the waste water off and away from the said house; that said sewer was all blocked up and it is so defective that it can not be efficiently repaired without installing a whole new sewage system.

'3.) That after the sale of said dwelling house aforementioned and without the knowledge or consent of the undersigned, you took and carried away fixtures and appurtenances of said dwelling house and in place of the fixtures and appurtenances so removed, replaced some of them with cheap and defective ones; that such constitutes a breach of your contract.

'4.) That the undersigned hereby tenders and offers to execute and deliver to you the deed to such premises, re-transferring same to you on the condition that you contemporaneously therewith return to the undersigned the purchase price so paid to you, to-wit: Ten Thousand Dollars ($10,000.00) or more; that upon your failure to acquiesce in this rescission and restore the purchase price so paid, the undersigned will deem it and take it as a fact that you refuse to acquiesce in this rescission.'

On May 6, 1952, the plaintiff served on the defendants the summons and complaint in this action, setting forth the contract and fact that notice of rescission and restitution had been given. The grounds for rescission as contained in the notice were also alleged. The plaintiff then concluded:

'That by reason of the aforesaid facts, the defendants and each of them are now indebted to the plaintiff in the sum of $10,350.00, together with interest thereon at the rate of 4% from date of payment of same to the defendants and to the insurance company for premiums; that the reasonable rental value of said property was and is the sum of $100.00 a month and that this plaintiff does hereby offer to allow the defendants credit on the aforementioned sum, the sum of $100.00 a month from the time the plaintiff took possession of same, to-wit: the 24th day of September, 1951, leaving a balance due the plaintiff from the defendants of $9,550.00, together with interest at the rate of 4% per cent per annum from the date of the contract.'

The plaintiff then prays for a money judgment in the above amount. Under date of November 3, 1952, the plaintiff amended his complaint by amplifying the allegations of fraud. He realleged the portion of his former complaint above quoted and ended it with the same prayer for judgment.

To the plaintiff's amended complaint the defendants filed an amended answer and cross-complaint. They deny generally...