Summary
In Clark v. Kirsner, 196 Md. 52, 55-56, 74 A.2d 830, Kirsner sold property to Clark under an agreement of sale. An action was brought to rescind the contract and have a declaratory judgment for the amount owing by Kirsner to Clark.
Summary of this case from Sommers v. DukesOpinion
[No. 205, October Term, 1949.]
Decided July 19, 1950.
Vendor and Purchaser — Vendor's Inability To Give Title At Time of Contract, Immaterial, If Able To Give At Time of Deed — Applied In Suit To Have Contract Declared Void — Rescission of Contract — By Purchaser, By Notice and Suing To Recover Payments In Action for Money Had and Received — In Equity, May Be Had for Innocent Misrepresentations but They Must Be Material — Misrepresentation or Mistake, As Ground For Relief or Defense, At Law or In Equity, Must Be Material.
If a vendor of realty is able to give good title at the time for conveyance under the contract, it is immaterial, at least in the absence of bad faith, that he may not have been able to do so at the time the contract was made. p. 55
If a purchaser of realty has a right to rescind the contract, he may do so by notice and sue to recover payments made by him in an action for money had and received. Such an action is equally remedial with a bill in equity. pp. 55-56
In equity, rescission of a contract may be had for innocent misrepresentations. p. 56
At law or in equity, a misrepresentation or mistake, to constitute a ground for relief or a defense, must be material. p. 56
In the suit at bar, by the purchasers of leasehold realty against the vendor, to have the agreement of sale declared void and unenforceable because, at the time thereof, the vendor did not have title and represented the ground rent to be less than it was and to declare that vendor owed the plaintiffs for the amounts paid by them under the agreement, it was held that the agreement was not void for those reasons and the plaintiffs were not entitled to the relief prayed because the vendor, prior to the time for conveyance, had secured title and had the ground rent reduced to the amount represented by him; that there was no evidence of any intentional misrepresentation by him but the evidence showed a mistaken belief as to the title and amount of the ground rent; and that, assuming, without deciding, the plaintiffs had, in this proceeding, the same rights to rescission for innocent misrepresentations or mistake as they would have in equity, the misrepresentations as to title and amount of ground rent were immaterial. pp. 53-56
Decided July 19, 1950.
Appeal from the Court of Common Pleas of Baltimore City (NILES, J.).
Suit by Otto H. Clark and Lacy M. Clark against Milton F. Kirsner and the Linden Holding Company for a declaratory judgment that an agreement of sale of realty between plaintiff-purchasers and Kirsner, vendor, was void and unenforceable and that he was indebted to them for amounts paid by them under the agreement. From a declaratory judgment for the defendants, plaintiffs appealed.
Affirmed.
The cause was argued before MARBURY, C.J., and DELAPLAINE, COLLINS, GRASON, HENDERSON and MARKELL, JJ.
Hyman A. Pressman, for appellants.
Joseph Loeffler with whom were Harry E. Goertz and Bernard J. Medairy on the brief, for appellees.
This is an appeal from a declaratory judgment in favor of defendants in a suit for a declaratory judgment that an agreement of sale dated January 16, 1947 between defendant Kirsner and plaintiffs is null and void and unenforceable and that defendant Kirsner is indebted to plaintiffs in the sum of $2,060 plus interest.
By an agreement of sale dated January 16, 1947 defendant Kirsner sold to plaintiffs the property 2029 North Payson Street subject to an annual ground rent of $75 for the price of $5500, of which $600 had been paid and the balance was to be paid, $60 monthly on the eighteenth of each month commencing February 18, 1947, these monthly payments to be applied to payment of taxes, ground rent and insurance and all other proper charges against the property, as well as interest on the balance of the purchase price, and the balance, if any, to be applied to the principal of the purchase money. "Upon payment of $1100 including the deposit ($600)" a deed for the property was to be executed which should convey the property by a good and merchantable title. Plaintiffs agreed to execute a mortgage or mortgages for the balance due to a building association and defendant Kirsner, the monthly payments not to exceed $60. Before the execution of the contract defendant Kirsner stated to plaintiffs that he was the owner of the property and that the ground rent was $75. In fact, the property was then owned by the corporate defendant, Linden Holding Company, and the ground rent was $78. Defendant Kirsner and his mother own all the stock of the corporate defendant. He thinks he owns one-third, his mother two-thirds. He says he had power, not written power, to act on behalf of the corporation. He buys and sells real property, for himself or himself and his mother, in his own name or in the name of the corporation. As Judge Niles says, "there is no evidence of any intentional misrepresentation by him. * * * the situation was just as he said; it was a mistaken belief as to who had the title and how much the ground rent was".
Plaintiffs paid $60 a month to defendant Kirsner for twenty-four months and into court for two months. The purchase price has not been reduced by $1,100. Judge Niles says, "The contract is somewhat ambiguous about the payment of $1100, specifically as to whether the payment of that $1100 is meant to be in reduction of principal. I cannot believe that any other interpretation of the contract was meant or intended by the parties." Nor can we; nor have defendants urged any other interpretation. Plaintiffs never tendered payment of $1,100 (or the unpaid portion thereof) or demanded conveyance of the property.
Through receipt of a tax bill in the name of the corporate defendant and subsequent examination of the land records by their attorney, plaintiffs learned in January, 1949 that the property stood in the name of the corporate defendant and that the ground rent was $78. They immediately attempted to repudiate the agreement of January 16, 1947 and demanded that defendant Kirsner refund to them all money paid by them. Defendant Kirsner refused to make such refund. Plaintiffs entered suit for a declaratory judgment on January 18, 1949. Pursuant to an order of court they paid into court the two sums of $60 payable on February 18, 1949 and March 18, 1949 respectively. On April 16, 1949 they moved out of the property. On April 19, 1949 defendant Kirsner had recorded a deed of the property from the corporate defendant to him, dated April 18, 1949, and an agreement, dated April 16, 1949, with the owner of the ground rent, reducing the ground rent from $78 to $75.
So far as the terms of the contract are concerned, it is not disputed that if a vendor is able to give good title at the time for conveyance under the contract, it is immaterial, at least in the absence of bad faith, that he may not have been able to do so at the time the contract was made. Maryland Construction Co. v. Kuper, 90 Md. 629, 45 A.2d 197; Friedman v. McLane, 193 Md. 565, 69 A.2d 253. Nevertheless plaintiffs contend that they were entitled to rescind because of innocent misrepresentations as to ownership of the property and the amount of the ground rent, and that the right to rescind could not be defeated, after it was exercised, by defendant Kirsner making his misrepresentations good.
We shall assume, without deciding, that plaintiffs have in this proceeding the same rights, if any, as they would have in equity. If they had a right to rescind they might exercise this right by notice and sue to recover payments made in an action for money had and received. Such an action "is commonly said to be equally remedial with a bill in equity." Poe on Pleading, § 117.
In equity, unlike an action of deceit, rescission may be had for innocent misrepresentations. Euzent v. Barrash, 180 Md. 451, 454-455, 25 A.2d 462; Donnelly v. Baltimore Trust Co., 102 Md. 1, 32, 61 A. 301; Cahill v. Applegarth, 98 Md. 493, 503-504, 56 A. 794. Likewise, unilateral mistake may be a defense to specific performance. Somerville v. Coppage, 101 Md. 519, 61 A. 318. But either at law or in equity a misrepresentation ( Pomeroy, Equity Jurisprudence, 5th Ed., §§ 898, 898a; Williston on Contracts, Revised Edition, § 1490) or mistake ( Williston, supra, § 1544), to constitute a ground for relief or a defense, must be material. Even in an action of deceit, based on actual fraud, a misrepresentation as to ownership of property sold ordinarily is not material. Cahill v. Applegarth, supra, 98 Md. 505, 56 A. 794; Boulden v. Stilwell, 100 Md. 543, 556, 60 A. 609, 1 L.R.A., N.S., 258. In proceedings for rescission materiality of innocent misrepresentations is more essential than in case of fraudulent misrepresentations. Restatement, Contracts, § 476, comment b; Williston, supra, § 1490.
It is unbelievable that plaintiffs in making the agreement of purchase were influenced by belief that defendant Kirsner, and not his corporation, was owner of the property. The evidence indicates that they were not influenced by any such representation and did not care who held the legal title. They did not have any examination made of the land records for two years.
The difference between a $75 ground rent and a $78 ground rent is obviously compensable by an abatement from the purchase price. Purchasers have been compelled by specific performance to take land, deficient in quantity to a much greater degree, upon a proper abatement from the price. Foley v. Crow, 37 Md. 51; Reigart v. Fisher, 149 Md. 336, 131 A. 568.
Decree affirmed, with costs.