Summary
In Whiting v. Derr (121 App. Div. 239) the rule is stated: "It is well settled in principle and by authority that where there has been a total failure of consideration, or where a contract has been abandoned, or has been rescinded, an action will lie for money had and received to recover back any money paid by either of the contracting parties to the other in furtherance of the contract."
Summary of this case from Drake v. White Sewing Machine Co.Opinion
July 23, 1907.
Clarence P. Moser [ David Bennett King with him on the brief], for the appellant.
Conrad Saxe Keyes, for the respondent.
I think that the complaint may be sustained as for money advanced upon a contract upon a disaffirmance or rescission thereof. (See Weaver v. Bentley, 1 Caines, 47; 2 Pars. Cont. [8th ed.] 794.) In Koerner v. Henn ( 8 App. Div. 604) the court, per BRADLEY, J., say: "It is, however, a general rule that an executory agreement, which is entire, may, upon a substantial breach by one of the parties, be rescinded for that reason by the other when it can be done in toto and the parties put in statu quo. ( Weaver v. Bentley, 1 Caines, 47; Meade v. St. Louis M. Life Ins. Co., 51 How. Pr. 1; Giles v. Edwards, 7 Durn. E. 181; Hunt v. Silk, 5 East, 448.)" In Fulton v. Metropolitan Life Ins. Co. ( 4 Misc. Rep. 76) the General Term of the New York Common Pleas, per BISCHOFF, J., say: "It is well settled in principle and by authority that where there has been a total failure of consideration, or where a contract has been abandoned, or has been rescinded, an action will lie for money had and received to recover back any money paid by either of the contracting parties to the other in furtherance of the contract. (2 Whart. Cont. § 742; Raymond v. Bearnard, 12 Johns. 274; Chesapeake Ohio Canal Co. v. Knapp, 9 Pet. 541, 566; 9 Lawy. ed. 222, 231; Lindsley v. Ferguson, 49 N.Y. 625; 3 Am. Eng. Ency. of Law, 889.)"
The allegation that the defendant failed to complete and to deliver the boat cannot admit the implication that he constructed the boat until it was launched or was fit for launching. Hence it was not incumbent upon the plaintiff to allege compliance with the condition under the contract that a third payment must be made when the boat was launched. The title to the boat or its materials was primarily in the defendant ( Andrews v. Durant, 11 N.Y. 35), and was vested in the plaintiff perforce of the special provision of the contract. But the plaintiff could not in the same breath disaffirm the contract and assert such title. The defendant was not entitled to receive or to recoup the money, if any, which he had expended for his labor and materials. ( Havens v. Patterson, 43 N.Y. 218, 223.) The restoration to statu quo "does not mean that things should be replaced in every sense as they were, as this is impossible, but that the injured party should restore whatever he has received that he can restore and surrender any advantages he may have received." (1 Whart. Cont. § 285.)
I advise affirmance of the interlocutory judgment, with costs, with leave to the defendant to plead over on payment of costs.
HIRSCHBERG, P.J., and MILLER, J., concurred; GAYNOR, J., read for reversal.
The plaintiff and the defendant made a written contract by which the latter agreed to build a boat for the former for $1,455, and have it completed and ready for delivery on July 1st following, and the plaintiff agreed to pay therefor in four equal installments, viz., $363.75 on the signing of the contract, the same amount when the boat was in frame, the same amount when it was launched, and the balance when it was ready for delivery. The complaint, after alleging the contract, alleges that the plaintiff paid the first and second installments. It then alleges that the defendant failed to complete the boat by the time agreed upon; that thereafter the plaintiff notified the defendant that unless the boat was completed by July 25th he would rescind the contract and require the amounts paid by him to be returned; that the defendant failed to complete by that time, whereupon the plaintiff rescinded and demanded back the said amounts; and the prayer is for judgment therefor.
The defendant agreed to have the boat completed by July 1st, but only on performance by the plaintiff of the condition precedent that he should pay three successive installments at certain stages of the work before completion. There is no allegation in the complaint of performance of such condition precedent. The allegation is only of the payment of the first and second installments. If there were an allegation that the work was not done up to the stage for the payment of the third installment, that would be an excuse for its non-payment, but there is no such allegation. The plaintiff had no right to rescind if he was himself in default, i.e., unless he had performed the condition precedent to his right to have the boat completed. There being no allegation that he had so performed, no cause of action is alleged in the complaint.
The judgment should be reversed and the demurrer sustained.
Interlocutory judgment affirmed, with costs.