When one party to a special contract not under seal refuses to
perform his side of the contract or disables himself from
performing it by his own act, the other party has thereupon a right
to elect to rescind it, and may, on doing so, immediately sue on a
quantum meruit for anything he had done under it
previously to the rescission.
This doctrine was supported by the Supreme Court of the
Territory of Washington in this case, and is now sustained by this
Court notwithstanding the decision of the Supreme Court of the
State of Washington in
Distler v. Dabney, 23 N.W. 335,
construing the code of that state adversely to it.
Stutsman County v. Wallace, 142 U.
S. 293, explained and distinguished from this case.
Judgments of territorial Courts in mere matters of procedure are
not subject
Page 148 U. S. 346
to reversal because of decisions made in subsequent cases by the
courts of the state, after its admission, while the former cases
were pending on appeal in this Court.
Defects in the pleadings in this case, if any, not having been
questions below, cannot operate here to invalidate the trial
there.
A title derived from a land grant railroad company which has not
received a patent, by reason of failure to pay the costs of
surveying, is not a title which a party who has contracted for a
deed of the land and has paid the purchase price therefor, is
obliged to accept.
When a contract is entered into to convey and to purchase a
tract of land, and title fails as to part of it, the purchaser may
rescind the contract as to all.
When part of a contract of purchase of land is that the
purchaser shall assume and pay a mortgage thereon, if the title to
a part of it fails, he may rescind the contract without paying the
mortgage.
When a contract to convey land permits the purchaser to enter
and occupy, and he does so and makes the payments prescribed by the
contract, and the seller fails to convey by the agreed title, the
seller cannot, in an action by the purchaser to recover back the
purchase money, set up as an offset a claim for the rent of the
land during the buyer's occupancy.
It appears from the record in this case that on October 20, 1882
at Walla Walla, in Washington Territory, Levi Ankeny, the plaintiff
in error, entered into a contract with Van Buren Clark, the
defendant in error, by which Ankeny agreed to sell and convey to
Clark two quarter sections of land in Walla Walla County, in
consideration of 12,000 bushels of wheat, to be delivered in three
annual installments of 4,000 bushels each, and of the assumption by
Clark of a mortgage of $3,000 on the land. This contract was
evidenced by three written instruments as follows:
1. A bond from Ankeny to Clark in the penal sum of $10,000,
conditioned to convey the land to Clark upon his paying the
consideration according to agreement.
2. A "wheat note" from Clark to Ankeny, which reads as
follows:
"Walla Walla, W.T., Oct. 20, 1882"
"For value received I promise to pay to Levi Ankeny, or order,
twelve thousand (12,000) bushels of good, merchantable wheat, said
wheat to be delivered to the owner of this note at any railroad
station in Walla Walla County, Washington Ty.,
Page 148 U. S. 347
and payments to be made as follows: on or before Oct. 15th,
1883, four thousand (4,000) bushels; on or before Oct. 15th, 1884,
four thousand (4,000) bushels, and on or before Oct. 15th, 1885,
four thousand (4,000) bushels, the owner of this note to furnish
sacks for said wheat."
3. A chattel mortgage from Clark to Ankeny to secure the payment
of the wheat note.
Under this agreement, Clark entered into possession of the land,
and continued in possession of it until the fall of 1886.
In performance of this contract, Clark, in December, 1883,
delivered to Ankeny 4,167 bushels of wheat, and in September, 1885,
he delivered 8,600 bushels, making 767 bushels more than the
contract called for. Ankeny accepted this wheat in fulfillment of
the contract.
After the delivery of the wheat to Ankeny, Clark demanded a deed
for the land. This Ankeny neglected to give, putting Clark off from
time to time upon one pretext or another, until Clark, becoming
impatient, finally insisted either upon a deed to the land or
payment for his wheat. Clark was then referred by Ankeny to the
latter's attorneys, who informed him that he could have a warranty
deed to the quarter on the even section and a quitclaim deed to the
quarter on the odd section, or the "railroad land," as it was
called, and they further informed him that if the Northern Pacific
Railroad Company should not get title to the odd section, and he
should be obliged to procure title from the government, Ankeny
would pay the necessary expenses of obtaining title in that way.
This does not seem to have satisfied Clark, and on November 16,
1886, he served upon Ankeny the following notice:
"Walla Walla, W. T., Nov. 16, 1886"
"Levi Ankeny, Esq., Walla Walla, W.T."
"Dear Sir: I have performed my part of the contract in the
purchase of the land described in your bond to me. I have learned
that you have no title to one hundred and sixty acres of it. You
have refused to give me anything more than a quitclaim deed to this
part of the land. I cannot accept
Page 148 U. S. 348
such a deed. It was not what the contract called for. Unless
within five days from this date you convey a perfect title to me to
the whole of the land described in the bond by a good and
sufficient conveyance, I will at the end of that time abandon this
land and surrender the possession to you, and look to you for such
compensation as the law allows me on account of violation of the
contract."
"Resp'y,"
"V. B. Clark"
Ankeny seems to have paid no attention to this notice, and
Clark, several days thereafter, taking a witness with him, went to
Ankeny's bank and formally surrendered possession of the land to
Ankeny. Clark then abandoned possession of the land, and has not
occupied it since.
Subsequently to all this, and on the 19th day of March, 1887,
Clark brought this action in the district court of the first
district to recover from Ankeny the value of 12,767 bushels of
wheat delivered under the contract. The case was tried before a
jury, who, upon the direction of the court, brought in a verdict
for the plaintiff, and judgment was given upon the verdict.
The defendant took the case in error to the Supreme Court of the
Territory of Washington, which affirmed the judgment of the
district court. The case is now before this Court on error to the
Supreme Court of the Territory of Washington.
Page 148 U. S. 351
MR. JUSTICE SHIRAS, after stating the facts in the foregoing
language, delivered the opinion of the Court.
Numerous errors have been assigned to the rulings of the court
below. The first has to do with a question of pleading. The
plaintiff declares in assumpsit for the value of a certain amount
of wheat by the plaintiff sold and delivered to the defendant. To
this the defendant answered, setting up the execution of a
so-called "wheat note" and a chattel mortgage to secure it and
alleging that "all the wheat delivered to defendant by plaintiff
was delivered and received as payment on said note, and not
otherwise." In this answer no mention was made of any contract for
the sale of land. The plaintiff, by way of replication, made a full
statement of the contract for the sale of the land, alleging
performance on his part and default on the part of the defendant.
He averred that after he (the plaintiff) had so performed said
contract by the delivery of the wheat to the defendant, he duly
demanded that defendant should convey the land to the plaintiff, as
by his bond he had undertaken to do; that the defendant neglected
and refused so to do, and still neglected and refused to grant and
convey said land to the plaintiff by any good and sufficient deed,
and that said defendant had no title to one parcel of the land
described in the bond, and that, since the making of the contract,
defendant was not the owner or seised in fee or
Page 148 U. S. 352
at all of said land. He further alleged that the wheat mentioned
in his complaint or declaration, except an excess thereof over the
requirements of said bond, was the purchase price of the land, and
that, by reason of defendant's neglect and refusal and inability to
perform the said contract, the defendant became and was indebted to
plaintiff for the reasonable value of said wheat, and that such
demand constituted the cause of action in the complaint
pleaded.
In disposing of the contention of the plaintiff in error that
the pleadings disclose a departure by the plaintiff below from the
cause of action set forth in his complaint, and a resort to a new
and different cause of action in his replication, we are of course
entitled to regard the allegations of fact contained in the
complaint and replication as true.
It would therefore appear that there was a contract whereby the
defendant below was to grant and convey unto the plaintiff certain
tracts of land by a good and sufficient deed of conveyance, in
consideration whereof the plaintiff was to deliver to the defendant
1,200 bushels of wheat; that the plaintiff performed his part of
the contract by delivering the said wheat which was received by the
defendant; that the plaintiff thereupon demanded of the defendant a
conveyance of the land; that defendant neglected and refused to
grant and convey said tracts of land by any good or sufficient
deed, and that, as to one of the tracts, the defendant had no title
to convey.
Upon such a state of facts, it seems plain that the plaintiff
had a right to treat the contract as at an end and to bring an
action to recover the value of the wheat he had delivered to the
defendant and such other damages as he might have suffered by
reason of that failure of the latter to perform his part of the
contract and,
a fortiori, that he might waive any demand
for consequential damages and confine his claim to a demand for the
value of the wheat. In the latter event, he might well assert his
claim by a count alleging the delivery and receipt of the wheat, a
consequent duty on the defendant to pay its value, and a demand for
the same.
Under the ordinary system of pleadings, an action of
Page 148 U. S. 353
assumpsit would lie to recover back purchase money paid upon a
contract of sale which had been rescinded.
Smith expresses the doctrine in his note to
Cutter v.
Powell, 2 Leading Cases 30, 7th American edition, thus:
"It is an invariably true proposition that whenever one of the
parties to a special contract not under seal has in an unqualified
manner refused to perform his side of the contract or has disabled
himself from performing it by his own act, the other party has
thereupon a right to elect to rescind it, and may, on doing so,
immediately sue on a
quantum meruit for anything he had
done under it previously to the rescission."
The learned author sustains his proposition by citing
Withers v. Reynolds, 2 B. & Ad. 882;
Planche v.
Colburn, 8 Bing. 14;
Palmer v. Temple, 9 Ad. &
El. 508.
Well considered American cases are to the same effect.
Eames
v. Savage, 14 Mass. 425;
McCrelish v. Churchman, 4
Rawle 26;
Baston v. Clifford, 68 Ill. 64;
Stahelin v.
Sowle, 87 Mich. 134.
It is, however, contended that under the Code of Washington, a
different rule prevails, and the case of
Distler v.
Dabney, 28 P. 335, decided by the Supreme Court of that state,
is cited. That decision was made after the trial of the present
case, and while the appeal from the Supreme Court of the Territory
of Washington was pending in this Court; but it is claimed that,
under the doctrine of
Stutsman County v. Wallace,
142 U. S. 293,
when, pending an appeal from a territorial court to the Supreme
Court of the United States upon a question of local law, the
territory is admitted as a state, and the Supreme Court of the new
state reaches an opposite conclusion upon the same question, the
latter decision will be followed by the Supreme Court of the United
States.
It does indeed appear that in the case of
Distler v.
Dabney, the Supreme Court of the State of Washington has
construed the Code of that state as meaning that the plaintiff's
complaint must contain his real cause of action, and that he cannot
be permitted to meet matter set up in the answer by resorting in
his replication to a new cause of action inconsistent
Page 148 U. S. 354
with the statement made in the complaint. The facts of that case
were not dissimilar to those of the case in hand, and it must be
conceded that if we are bound to adopt the construction put by the
supreme court of the state on the code of the state as applicable
to the code of the territory, notwithstanding an opposite view of
the supreme court of the territory, it would lead to a reversal of
the judgment in this case unless, indeed, the objection was waived
by the subsequent conduct of the defendant.
It would seem to be altogether unreasonable that the judgments
of territorial courts in mere matters of procedure should be
subject to reversal because of decisions made by the courts of the
state in subsequent cases while the former cases were pending on
appeal in this Court. Nor do we understand the case of
Stutsman
County v. Wallace to so hold. In that case, there were
involved a substantive right to an estate and a construction of the
tax laws of the state and territory, and it was pointed out in the
reasoning of this Court that our mandate must be issued to the
supreme court of the state, which, in its turn, directs the state
court succeeding to the district court of the territory to proceed
in conformity to our judgment, and it would seem to irresistibly
follow that in the enforcement of a law common to the territory and
to the state, this Court must, in pursuance of the well settled
rule, adopt the construction put upon the local statute by the
highest court of the state.
The distinction between that and the present case is obvious.
The question before the territorial courts in the particular we are
now considering involved no substantive right, but a mere matter of
orderly procedure in the trial court, and we are satisfied with the
ruling of the supreme court of the territory that the district
court did not err in regarding the facts set up in the replication
as properly pleaded to the matters alleged in the answer, and as
not, in substance, a departure from the complaint.
The course of the district court at the trial was approved by
the supreme court of the territory, and surely cannot now be
impugned because, in a later and different case, arising in
Page 148 U. S. 355
the courts of the new state, the supreme court of the state
declares the methods to be followed by the courts of the state.
Even if, as a matter of technics, the replication was a departure
from the complaint, it is not easy to see how the defendant could
have availed himself of such a defect in a court of error. His
proper course, if he wished to invoke the rigor of the law, was to
raise the question either by a demurrer or by a motion; but his
conduct in agreeing to a change of venue, after the pleadings had
been perfected, in entering into a stipulation as to the principal
facts of the case, and in going to trial upon the issue as made up,
ought to preclude him from opening the pleadings at the trial.
These views also dispose of the further objection that the
plaintiff did not, in his replication, plead a rescission of the
contract. But the reply did allege facts that gave a right to
rescind, and the plaintiff's evidence, if true, sustained those
allegations. Such a defect, if it were one, would, if demurred to,
have been curable by amendment, and cannot operate in a court of
error to invalidate the trial below.
Assuming the sufficiency of the pleadings, we are brought to
consider the second question in the case, and that is whether, upon
the evidence, the plaintiff was entitled to a verdict and judgment.
The trial court having thought fit to peremptorily direct the jury
to find a verdict for the plaintiff in a stated amount, the
defendant is obviously entitled to the benefit of every fact and
presumption which might have justly controlled the jury in his
favor, or, in other terms, the plaintiff must be able to sustain
his judgment as the proper conclusion of the law upon the
uncontradicted or admitted facts of the case.
There were three principal matters of contention in the trial
court:
1st. Did Ankeny have a good title to the northeast quarter of
section 19, being part and parcel of the lands which he agreed to
sell to Clark?
2d. Did Ankeny make an efficient tender of a good and sufficient
deed of conveyance?
3d. Supposing that Ankeny failed in one or both of these
particulars, was Clark disabled from availing himself of such
Page 148 U. S. 356
failure by having himself failed to pay the mortgage for $3,000
upon the land contracted for, and which he had agreed to pay as
part of the purchase money, and did he waive tender of a deed?
We shall briefly consider these subjects in their order. And
first, as to Ankeny's title to the northeast quarter of section 19.
It was conceded in the stipulation filed that the main line of the
Northern Pacific Railroad Company was completed in the year 1880,
on the route and line shown by certain maps of definite location
attached to the stipulation, and that after examination and report
by commissioners, as provided in the act of Congress, the road was
accepted by the President of the United States; that on May 30,
1881, the Northern Pacific Railroad Company executed and delivered
to one Peter Huff a warranty deed for said northeast quarter of
section 19, and that on December 13, 1881, the said Peter Huff,
together with his wife, executed and delivered to Ankeny a warranty
deed for the said northeast quarter of section 19. Upon this state
of facts it was contended by the plaintiff, Clark, that there was
nothing to show that the Northern Pacific Railroad Company had paid
into the Treasury of the United States the cost of surveying,
selecting, and conveying the same, as prescribed by the Act of July
15, 1870, nor to show that any patent had been granted to the
railroad company, and that hence, within the cases of
Railway Company v.
Prescott, 16 Wall. 603,
Railway
Company v. McShane, 22 Wall. 444, and
Northern
Pacific Railroad v. Traill County, 115 U.
S. 600, the Northern Pacific did not have and hold the
legal title to the tract in question, and therefore that the
conveyance by the railroad company to Huff and that by Huff to
Ankeny did not operate to vest a good legal title in the
latter.
On the part of the defendant, Ankeny, it was claimed that by
force of the original grant to the Northern Pacific Railroad
Company and the filing of its map of definite location, and by
reason of the construction and completion of its road and the
acceptance thereof by the President of the United States, there was
vested in the railroad company a good legal
Page 148 U. S. 357
title, and that it was not necessary to show affirmatively the
payment of the cost of the survey nor to show that a patent had
been granted to the railroad company, and to sustain this position,
he cited the case of
Deseret Salt Co. v. Tarpey,
142 U. S. 241.
Whether the reasoning and language of the cases so cited by the
respective parties can be satisfactorily reconciled we do not feel
called upon to determine, because we think that, at any rate, there
is doctrine common to the cases that warranted the plaintiff in
refusing to accept the defendant's deed.
The opinions in the earlier cases, in treating of the effect
attributable to the nonpayment by the railroad companies of the
cost of surveying, selecting, and conveying the lands, as
prescribed by the Act of July 15, 1870, 16 Stat. 305, c. 292, speak
of the title's remaining in the United States until such payment
shall be made, and the court below seized on this language as
establishing in the present case a want of legal title in the
Northern Pacific Railroad Company, and consequently in its grantee,
and hence held that the plaintiff was justified in rejecting the
defendant's title.
In the case of
Deseret Salt Co. v. Tarpey, the Court,
per MR. JUSTICE FIELD, regarded the failure or omission to pay the
survey charges as operative to
"preserve to the government such control over the property
granted as to enable it to enforce the payment of these costs, and
for that purpose to withhold its patents from the parties entitled
to them until such payment,"
and thus to give the government a lien for said costs.
We therefore conclude that Ankeny, the defendant below, if he
held only a title derived from the Northern Pacific Railroad
Company, and if that company had not paid the costs of surveying,
and had not received a patent, did not hold such a title as it was
obligatory on the plaintiff to accept, and that the plaintiff below
had a right to refuse the tender of defendant's deed, declare the
contract off, and maintain his action for the recovery of the
purchase money.
But it is contended that the record does not disclose that the
costs of survey and conveyance had not been paid, and that it may
be presumed that they had been paid, and even
Page 148 U. S. 358
that the lands had been actually patented to the railroad
company, in which event the question whether the costs of survey
had been paid would be immaterial.
Turning to the pleadings and to the stipulation as to the facts,
we find that the defendant did not aver in his answer, nor was it
admitted in the stipulation, that the railroad company had complied
with the necessary conditions as to payment of costs of survey, nor
was it alleged or admitted that a patent had been issued to the
railroad company for the lands in question. The plaintiff having
alleged want of title in the defendant, and the latter having met
that allegation only by the admission in the stipulation that the
railroad company had filed its map of definite location, and had
constructed its road to the satisfaction of the President, we think
that the court below was warranted in holding that the defendant's
title was imperfect, and that there was no question of fact to
submit to the jury.
If we are right in the conclusion that the defendant's title to
the land in dispute was imperfect, and subject to be defeated by
the United States in asserting their right to be paid the costs of
survey, it is not necessary to consider whether the defendant made
a proper tender of a deed of conveyance, or whether the deed was in
the form called for by the contract, or whether the plaintiff
waived a tender of the deed.
If the questions of tender and of waiver actually confronted us,
it might be difficult to show that they ought not to have been
submitted to the jury. But if the defendant had no title which he
could insist on the plaintiff's accepting, then those questions
have no legal significance.
An argument is made that as the failure of title was only as to
part of the land, the plaintiff could not elect to rescind as to
all. But the contract was an entire one. The purchase money was not
apportioned among the several tracts. The plaintiff's right to
refuse to accept was therefore clear.
Duke of St. Alban's v.
Shore, 1 H.Bl. 270.
Again, it is contended that the plaintiff was in no position to
rescind, because he had not himself fully complied with his part of
the contract, in that he had not paid the mortgage of
Page 148 U. S. 359
$3,000 that was on the land, and the payment of which he had
assumed. If, however, the defendant had no sufficient title to the
land, that would relieve the plaintiff from the duty of paying the
encumbrance. It cannot be plausibly maintained that before a vendee
can decline to accept an imperfect title, he must pay off a
mortgage whose payment was to constitute part of the purchase
money.
Another assignment of error is to the refusal of the court to
charge the plaintiff and credit the defendant with the rent of the
land during the period while the plaintiff was in possession. But
the plaintiff was not in possession as a tenant, or under any
agreement that he should pay rent. Nor does the law, under the
circumstances of the case, raise any obligation to pay rent.
Bardsley's Appeal, 10 A. 39, 40, is directly in point:
"It may be conceded, if one occupy the land of another by the
consent of the latter, without any agreement, that assumpsit for
use and occupation will lie. Such, however, is not this case. Here,
the possession was taken and maintained under an express contract
by which the appellant, in consideration of $8,000 to be paid
therefor, agreed to convey to the vendee a certain house free and
clear of all encumbrances, and title to be perfect. At the date of
the agreement, the vendee paid $500, and was at all times ready to
pay the residue of the purchase money on a deed being delivered to
him according to the agreement. The vendor was not able to execute
a deed according to his contract. These facts show the vendee was
not in possession under such circumstances as to create the
relation of landlord and tenant. There was neither an express nor
an implied contract to pay rent, and no action could be maintained
to recover for the use and occupation of the premises."
The authorities are uniform on this subject, and we content
ourselves with a reference to a few cases:
Patterson v.
Stewart, 6 W. & S. 527;
Williams v. Rogers, 2
Dana (Ky.) 374;
Gillet v. Maynard, 5 Johns. 86;
Guthrie v. Pugsley, 12 Johns. 126;
Cook v.
Doggett, 2 Allen 439.
None of the errors assigned having been sustained, the judgment
of the court below is
Affirmed.
