Docket No. 3, Calendar No. 44,174.
Decided February 28, 1949.
Appeal from Ingham; Salmon (Marvin J.), J. Submitted January 4, 1949. (Docket No. 3, Calendar No. 44,174.) Decided February 28, 1949.
Bill by Samuel K. Harris and wife against Paul H. Axline and wife to rescind a land contract. Cross bill by defendants against plaintiffs for specific performance of contract and abatement of purchase price. Decree for plaintiffs. Defendants appeal. Reversed.
Hubbard, McCullough Fox, for plaintiffs.
Hammond Schram, for defendants.
In 1928, Samuel K. Harris inherited from his grandmother a house and lot at the southeast corner of South Capitol avenue and Lenawee street, Lansing, Michigan. He believed that the lot had a frontage of 40 feet on South Capitol avenue and 60 feet on Lenawee street, as described in the abstract of title and the tax receipts. In 1945, he and his wife, plaintiffs herein, sold the property on land contract to Paul H. Axline and wife, defendants herein. The property was described in the land contract as:
"The north 40 feet of the west 60 feet of lot 12 of block 149 of the original plat of said city of Lansing (commonly known and described as 501 South Capitol avenue), subject to any and all restrictions of record and to driveway rights over the south 4 feet of said premises to be used with the north 4 feet of the premises adjoining on the south."
The defendants took possession under the contract and made extensive improvements to the property.
Land fronting on South Capitol avenue was very valuable as it was zoned for commercial use and near the business district of the city. Apparently all the parties were mistaken in the honest belief that the property had a 40-foot frontage. Prior to purchasing the property, Axline with Harris' agent paced off the frontage on South Capitol avenue so as to confirm the representation and belief that it was 40 feet. Some time later, upon a survey being made, it was discovered that the city of Lansing owns approximately 6 feet of the property, inside of the sidewalk along the Lenawee street side, and, therefore, the plaintiffs owned and could convey only the northerly 34 feet of the property described in the contract. Defendants offered to pay and made a tender of the balance due on the contract demanding a warranty deed for a lot of the size called for in the contract.
Plaintiffs filed a bill for reformation of the contract so that the description would conform with the actual size of the premises. They asked specific performance of the contract as reformed, or in lieu thereof, that they might return to the defendants all moneys received from the defendants under the terms of the contract and that the contract be cancelled and held for naught. They also asked for general equity relief.
Defendants, on the other hand, in addition to denying many of the allegations in plaintiffs' bill, filed a cross bill in which they asked that plaintiffs, as cross-defendants, be decreed to accept the balance due on the contract, without interest from the date the tender of payment was made for the premises as described in the contract, and specific performance of the contract as written, or in lieu thereof that the court fix and determine the damages sustained by the cross-plaintiffs for the loss of 6 feet of land and deduct that amount from the balance due on the contract. They also asked for general equity relief. The trial judge rendered a decree rescinding the contract but on the condition that plaintiffs pay defendants for all reasonable improvements made less a fair rental value of the property from and after March 21, 1945, or in lieu thereof, that defendants accept an alteration of the contract and its reformation and amendment so as to embrace only the north 34 instead of the north 40 feet.
As this is an equity case it is heard de novo by this Court. To entitle plaintiffs to reformation of the contract, they must show by clear and convincing proof that by a mutual mistake the provisions of the contract, as written, do not express the true agreement of the parties. There has been no such showing here. Both parties were mistaken as to the actual size of the lot described in the contract and the fact that the plaintiffs were unable to convey good title to the whole 40 feet. There is no evidence of fraud. A mutual mistake as to the subject matter of a contract is ground for rescission of the contract, unless the injured party can be adequately compensated for the mistake. 2 Restatement of the Law, Contracts, § 502. This Court has consistently held that rescission is a matter of grace and that a land contract will not be rescinded for a shortage of area when the purchaser can use the remaining part of the land and he is adequately compensated by an abatement of the purchase price in the amount of the value of the deficiency. See Browne v. Briggs Commercial Development Co., 271 Mich. 191; Baughan v. Mortgage Contract Co., 263 Mich. 249; Kavanau v. Fry, 273 Mich. 166; and cases cited therein. This is the only equitable solution on the facts here, and will dispose of all the questions raised. Testimony on the part of the defendants indicates that the property was worth $200 per foot at the time of its purchase but that it is worth $215 per foot at the present time. Attorneys for the plaintiffs stated in the argument in this Court that they were satisfied with the price of $200 per foot if defendants are awarded a decree on their cross bill. Under the circumstances, we believe that this is a fair price.
There is some testimony in the record that would indicate the deficiency is slightly less than 6 feet. However, the parties in their briefs have not raised this point but speak of it as being 6 feet and the trial judge rendered his decree on that basis. We hold, therefore, that the balance due on the purchase price should be reduced by the sum of $1,200, and the interest should be computed from the date of the contract as if the purchase price had been $1,200 less than the amount stated in the contract, thus defendants will be entitled to a rebate on the interest heretofore paid. Also as the balance due on the purchase price is reduced by $1,200, the amount of interest thereon will be likewise reduced in computing the balance due on the contract. Defendants claim that they made a tender of the balance due plaintiff when they arranged for a mortgage loan in order to pay the balance due. At the time of the tender a representative of the bank accompanied Mr. Axline as it was necessary to obtain a deed to consummate the mortgage loan. Obviously they would have had to pay interest thereon. They should be required to pay interest up to the date they tender the amount due under the decree of this Court. Ordinarily a tender of the entire amount due stops payment of interest. Cousins v. Melvin F. Lanphar Co., 312 Mich. 715. In allowing $200 a foot for the shortage of 6 feet, no value was computed on the house. The original contract price of $8,000 was figured at the rate of $200 a foot for 40 feet. We believe the equities balance themselves.
Plaintiffs in the decree to be entered in this Court will be required to furnish a warranty deed, conveying the northerly 34 feet of the property described in the land contract, within a reasonable time, upon being tendered the balance due computed in accordance with this decree.
The decree below is set aside and a decree will be entered in this Court in accordance with this opinion. Defendants and appellants shall recover costs of both courts.
SHARPE, C.J., and BUSHNELL, BOYLES, REID, NORTH, DETHMERS, and CARR, JJ., concurred.