Harter v. Morris , 72 Ind. App. 189 ( 1919 )

Nichols, J.

.—This is a suit in equity by the appellee against the appellant to compel the specific performance of a contract for the exchange of real estate. The appellant demurred to the second amended complaint, which demurrer was overruled and to which ruling appellant excepted. Appellant then answered by general denial and other special answers to which a reply was filed by the appellee. The cause was tried by the court, and a finding and judgment rendered for appellee, decreeing specific performance of the contract sued on. After motion for a new trial, which was overruled, the appellant prosecutes this appeal.

The errors assigned and relied upon for the reversal of the judgment are: (1) The court had no-jurisdiction over the subject-matter of the action. (2) The court erred in overruling the demurrer to the second amended complaint. (3) The court erred in overruling the motion for a new trial.

The second amended complaint filed by the appellee is in substance as follows: On August 17, 1911, the appellant was the owner in fee simple of the following described real estate in Rush county, Indiana (description), containing in all 84.17 acres. On said date appellant made a written offer or proposition to the appellee to exchange said real estate for 365 acres of land owned by the appellee in Starke county, Indiana (description). By the terms of said Written proposition appellant agreed to accept the farm of the appellee subject to a $3,000 mortgage due January 1, 1913, and drawing six per cent, interest, and it was therein stipulated that the said Harter should retain possession of his farm until January 1, 1913, with the exception that the appellee would be permitted to sow wheat during the fall of 1911, upon any part of the farm of said appellant; appellant was to have possession of said Starke county farm as soon as the deal between appellant and appellee was closed and consummated and appellant was also by said proposition to give the appellee a first mortgage of $1,800 on the Starke county land in the manner provided for in said proposition; appellee and appellant were each to furnish a good abstract of title brought down to date showing good fee-simple title in said parties respectively, free and clear from any and all liens and incumbrances, except those mentioned in said proposition, and appellant and appellee were to assume and pay the taxes for 1911 on each farm so exchanged. In order .to be effective, said proposition was to be accepted by the appellee and his wife on or before 7 o’clock p. m. of August 18, 1911; appellee and his wife accepted said proposition at 9:30 o’clock a. m. August 18,1911, and at said time so notified appellant of such acceptance, and such acceptance was indorsed on said proposition and a copy of said proposition sent to said appellant. The contract and acceptance are marked exhibit A and made a part of the complaint. ' The Starke county land was worth the reasonable value of $25 per acre and the appellant’s land was worth the reasonable value of $110 per acre, and said farms were of such respective values at all times hereinbefore referred to. The Eush county land owned by appellant was at all times referred to as of “peculiar” value to the appellee by reason of the location thereof; said land is located near the Indianapolis and Eastern Traction Company’s line of railway and on and near the National Eoad and is of easy access to the city of Indianapolis, in which the appellee resides; that unless appellee is granted specific performance of this contract he will suffer irreparable damages and injury which cannot be fully compensated in damages and appellee has not an adequate remedy at law; that appellee has duly performed all conditions of said agreement on his part to be performed and prior to the bringing of this action tendered to appellant the deed in fee simple of the Starke county- land, duly executed and acknowledged by appellee and his wife with covenants of general warranty, and demanded of appellant that he perform his part of said contract by executing to this appellee a deed, mortgage and note as provided in said contract. Appellant refused and still refuses to perform his part of the contract. Appellee is still willing to comply with his said contract and to deliver said deed for the said Starke county land, and now brings the same into court together with the abstract of title down to date showing a good fee-simple title in appellee, free and clear from all incumbrances for the use of the appellant. There is a demand that the appellant be required specifically to perform said agreement.

Exhibit A, which is the offer and acceptance and which is made the basis of the suit, is as follows:

“Indianapolis, Indiana.

August 17, 1911.

“Mr. J. Edward Morris,

“City.

“Dear Sir: I hereby agree to the following exchange of farms and on the basis hereinafter mentioned as follows: I will give you my farm upon which I now reside consisting of 84.17 acres more or less and located about 1% miles south of Charlottesville, Indiana, and in the northwestern part of Ripley Township of Rush County. Indiana, the same being all and the only land now owned by me in said township and county at this time, for your tract of 360 acres of land being the N. E. Quarter and the north half of the S. E. % and the east % of the N. W. % and the N. E. % of the S. W. % all in Section 11, Township 35 north, range 1 west, Washington Township, Starke Co., State of Indiana.

“You are to accept my farm subject to a $3,000 mortgage due January 21st, 1913, and drawing 6 per cent, interest and allow me possession until January 1st, 1912 with the exception that you will be permitted to sow wheat this Fall on any part of the farm you desire.

“It is understood that I am to have possession of the Starke County farm as soon as the deal is closed and I am to give you a first mortgage of $1,800 on the land drawing 6 per cent, from date of closing, said note to mature January 21st, 1913, and to provide the usual prepayment privileges.

“It is understood that each of us are to furnish good abstract brought down to date showing good fee-simple title in us free and clear of any and all liens and incumbrances whatsoever except those herein mentioned and except also that each of us agree to assume and pay the taxes of 1911 due and payable in 1912 on each farm.

“It is also understood that conveyances are to be made by good and sufficient general warranty deed properly executed.

“This proposition to be effective must be accepted by you and your wife on or before 7:00 o’clock P. M. August 18th, 1911.

“R. R. Harter.

“Accepted 9:30 A. M., August 18th, 1911.

“J. Edward Morris.

“Isa Morris.”

The demurrer to this. complaint was for want of •facts to constitute a cause of action against the appellant.

1. Appellee contends that appellant has presented no question for the consideration of this court for the reason- that he failed to comply with clause 5, of Rule 22 of the court in the preparation of his brief. While it is true that appellant has not strictly followed said rule, still his brief contains enough and is so arranged as to advise the court of the questions presented. A good-faith effort is shown and the purpose of the rule has been served. Repp v. Indianapolis, etc., Traction Co. (1916), 184 Ind. 671, 675, 111 N. E. 614; Howard v. Adkins (1906), 167 Ind. 184, 78 N. E. 665; Foote v. Foote (1913), 53 Ind. App. 673, 102 N. E. 393; Berkey v. Rensberger (1912), 49 Ind. App. 226, 96 N. E. 32; Geisendorff v. Cobbs (1911), 47 Ind. App. 573, 94 N. E. 236.

2-4. It has been expressly held by both the Supreme and Appellate Courts of this state that a complaint for specific performance to be sufficient should allege facts that would have been sufficient upon a default to enable the court to draft the decree from its averments. Burke v. Mead (1902), 159 Ind. 252, 259, 64 N. E. 880; McCauley v. Schatzley (1909), 44 Ind. App. 262, 88 N. E. 972. Applying this principle of law to the complaint in suit, we must hold'that it is insufficient to withstand the appellant’s demurrer. The complaint is based upon a contract that provides, among other' things, that an $1,800 first mortgage is to be executed by appellant to appellee which should draw six per cent, interest from date of closing to maturity, January 21, 1913, and that such note should provide for “the usual prepayment privileges.” We are not prepared to say what such usual prepayment privileges are. Sometimes the privilege granted is to make prepayment at the will of the mortgagor, sometimes to make payments at interest-paying dates, sometimes quarterly, or semiannually, or annually. There is no certain amount which appellee will be permitted to prepay. The contract is certainly indefinite as to the privileges of payment that should be granted to appellant, and we do not see how the court in rendering a decree for specific performance upon default could have determined upon the privilege to be extended. ■If he could not do so, then the complaint does not measure up to the requirements of the authorities cited. It is not necessary for the purpose of the demurrer to the complaint that we shall decide that the contract is an illegal contract, or that there is no remedy at law under it. We do decide, however, that more certainty is required in a contract where specific performance is invoked than is required where the remedy is sought at law by way of damages. The contract may be legal and yet of such a character that specific performance thereof will not be enforced.

5. Appellee, in his brief, has quoted at length the opinion of the trial court in which such court, speaking with reference to the $3,000 mortgage, states that from the language alone it would necessarily follow that he, appellee, assumed what was due on the mortgage, further accrued interest, or interest from and after the transaction. This statement is ambiguous to us, but, if we rightly interpret it, it does not seem to have been the interpretation placed upon this particular part of the contract by the appellee. It appears by appellee’s original complaint, which was introduced in evidence, that at the time certain papers were thereafter placed in the hands of a third person, it was mutually agreed between the appellee and the appellant that the appellee should assume the interest on such mortgage at the rate of six per cent, interest per annum from the date of the consummation of the transaction. We quote this, together with the statement from the opinion of the trial court, for the purpose of showing the confusion in the minds of the persons involved in the transaction, and of the court, as to the matter of the interest upon the $3,000 mortgage, and for the purpose of confirming our opinion that the contract was uncertain and indefinite as to this interest. Appellee contends that the construction which the parties thereafter put upon the contract by the execution, of the deeds and mortgage, which were deposited with a third party, may be considered by the court in determining the intention of the parties; and that such construction was put upon it by the acts of the parties as to make the contract certain and definite, even if it be conceded by appellee that there was any uncertainty in it. But we are now passing upon the sufficiency of the complaint which is based upon the contract, in which complaint we find nothing pleaded that shows the construction placed upon the contract by the parties. The complaint is insufficient and the demurrer to it'should have been sustained. Williams v. Stewart (1879), 25 Minn. 516; Burnett v. Kullak (1888), 76 Cal. 535, 18 Pac. 401; Moore v. Galupo (1903), 65 N. J. Eq. 194, 55 Atl. 628.

6-12. In. his motion for a new trial, appellant challenges the sufficiency of the evidence to sustain the finding and judgment of the court. In determining • this question, we do so with the following established principles of equity jurisprudence before us: An application for specific performance is not a matter of right, but is addressed to the sound discretion of the court, in view of all the circumstances. The application of the principle is guided by established rules ■ and practice in equity, which are advisory rather than mandatory. The contract must be certain, just and equal in all its parts, and for an adequate consideration. It must not have been obtained under unfair circumstances, and it must not be hard or unconscionable. It must be capable of being performed without adding to its terms and nothing must be left to the future. It must appear that the plaintiff has no adequate remedy at law, and that a refusal to perform the contract would be a fraud upon him. It is not necessary that the plaintiff be convicted of fraud in order that specific performance be denied him. There may even be no blame attached to him, but, if there, is a want of equality and fairness within the contract itself, the court will not exercise its extraordinary jurisdiction in specific performance. In determining the fairness of the contract, the court will loot. to the surrounding circumstances, such as incapacity or inequality of the parties, the manner of the execution of the contract, the experience or inexperience of the contracting parties and their opportunity to advise with others of experience in such transactions. If greater wrong is likely to result to the defendant on account of the granting of specific performance than the plaintiff will suffer in case it is withheld, equity will deny it. The court will consider the facts that the plaintiff has not parted with any consideration, and that he is in statu quo at the commencement of the suit. Ash v. Daggy (1855), 6 Ind. 259; Modisett v. Johnson (1831), 2 Blackf. 431, 439; Louisville, etc., R. Co. v. Bodenschatz Stone Co. (1895), 141 Ind. 251, 263, 39 N. E. 703; Gas Light, etc., Co. v. City of New Albany (1894), 139 Ind. 660, 39 N. E. 462; Ames v. Ames (1910), 46 Ind. App. 597, 91 N. E. 509; Horner v. Clark (1901), 27 Ind. App. 6, 60 N. E. 732; Mather v. Simonton (1881), 73 Ind. 595; Shubert v. Woodward (1909), 167 Fed. 47, 92 C. C. Q. 509; Starcher Bros. v. Duty (1907), 61 W. Va. 373, 56 S. E. 524, 9 L. R. A. (N. S.) 913, 123 Am. St. 990; Friend v. Lamb (1893), 152 Pa. 529, 25 Atl. 577, 34 Am. St. 672; Falcke v. Gray (1859), 4 Drewry 651; 3 Elliott, Contracts §2277; Willard v. Tayloe (1869), 8 Wall. 557, 19 L. Ed. 501.

13. It appears by the undisputed evidence in this case that appellee was, at the time of the transaction involved, a real estate agent of several years’ experience, and located in the city of Indianapolis; that he was at said time president of the Indiana Real Estate Association; that he owned 360 acres of undrained, unimproved and uncultivated land in Starke county, Indiana, which he had advertised in the Indianapolis News, and by this means his negotiations opened with appellant; that appellant was a farmer, owning a farm in Rush county, Indiana, consisting of 84.17 acres of well-improved land in a good state of cultivation, upon which he had lived alone, and which he had farmed for about twelve years; that he knew nothing of Starke county land and farming conditions in that country, and, except for the hour, or at most two hours of inspection of the 360-acre tract involved he necessarily depended in a large measure upon appellee for his knowledge thereof. On August 17, 1911, appellant met appellee in Indianapolis, and together they visited the Starke county land. Arriving at Plymouth, a few miles from the land, appellant says: “Had some difficulty in getting a conveyance, I ran into Mr. Grams that' I had met before. We took lunch along and went out to the land in an automobile. Mr. Grams having lived in ■ the neighborhood, Mr. Harter asked him some questions.” Mr. G-arns later testified that he was a real estate agent and had been for about nine years, and that he lived at Plymouth; that he had this land listed for sale, and on this day had a talk with appellee before he met appellant, after which he took them to the land in his automobile. Appellee did not know of Mr. Garn’s agency. Without going into details of the hour or two hours of inspection of the land, we note that by some means appellant received an exalted impression of its present and prospective possibilities and value as compared with that given by appellee’s witnesses who lived near the land and were acquainted with it. Appellant says that appellee told him that 140 acres of the land, or like that, was suitable for onion culture, while appellee’s witness Haines says that it is not onion land. Witness Boots says that there is some onion land in northeast corner. Witness Watkins says, if land were cleared, that only a small part would be suitable for onions. Witness Peters says that he understands that the north part would be suitable for onion culture—might be forty to sixty acres suitable, and that he knows of “raise in price of from $7.00 to $100.00 per acrd on onion land.” This possible increase in the value of the onion land together with appellee’s representation of the onion acreage, which representation he does not dispute, may account for the appellant’s exalted impression of its present and prospective value as compared with its .value as an onion proposition as given by appellee’s own witnesses. This value as fixed by appellee’s witnesses is much discounted by appellant’s witnesses. After the inspection of the land, the parties returned to Indianapolis where they arrived at about eleven o’clock at night, negotiating the terms of their deal on the way.

Arriving in Indianapolis, they went to the appellee’s private office, where the appellee wrote the proposition involved in this suit, which was thereupon signed by the appellant between eleven and twelve o’clock at night, and then left with the appellee for acceptance by himself and wife. We do not deem it necessary to go further into details regarding the negotiations between the appellant and appellee for the purposes of this decision, though, viewing the transaction as a whole, we are satisfied that the equities of the case are with the appellant and that the specific performance should not be enforced, but we do not rest our decision on this conclusion alone.

14. At 9:30 on the next morning the acceptance was signed by the appellee and his wife. However, it was never delivered to the appellant. That afternoon, appellee testifies, that he told appellant that they had accepted the proposition and says that he had the contract there and exhibited it to Mr. Hughes. He also says that he showed appellant that he had accepted, but appellant says that he did not see it until long after the suit was brought. Witness Hughes, one of the attorneys for the appellant, says that the contract was not produced, that it was not shown to him the next day, and that he never saw it until it was thereafter produced for inspection by attorneys for the appellee in their office in the city of Eushville. There is no claim made anywhere that there was a delivery of the acceptance by the appellee to the appellant. This-failure to deliver an acceptance of the contract to the appellant, or to place it with certain papers prepared upon that occasion and deposited with Mr. Hughes, may be accounted for by the fact that it appears by the evidence that both the appellee and the appellant had stated that they might not want to. go ahead with the deal. The contract being for the sale of real estate, in order to bind the appellee under the statute of frauds, must of neessity be in writing and signed by him. §7462 Bhrns 1914, §4904 E. S. 1881. An oral acceptance of a contract of sale of land has been held sufficient,-but this was in a contract of. sale in which there was a money consideration. In the case now1 being considered, the contract was for an exchange of lands which contemplates a sale, not only by appellant, but also by the appellee, and he could not satisfy the statute by signing an acceptance of such a contract and then placing it in his pocket without delivering, thereby keeping it within his own control. He did not thereby bind himself to convey his tract of real estate to the appellant. Montauk Assn. v. Daly (1900), 32 Misc. Rep. 558, 67 N. Y. Supp. 312.

15. It will hardly be contended that, if appellant had brought this action against appellee to compel him to convey to appellant the Starke county land under this same contract, he could have prevailed in his suit, for appellee would have been permitted to show that there has been no valid acceptance of the contract on his part. If the contract could not be enforced against the appellee because of the want of valid acceptance, then certainly appellee should not be permitted to enforce performance of the contract when he himself is not bound thereby. If there was a valid acceptance of this contract, and its specific performance were enforced, then the appellant would be put in possession of the Starke county land, undrained, uncultivated and without improvements, incumbered with an $1,800 mortgage and without the necessary means of paying it, with which mortgage the land must be incumbered as a part of the transaction. The appellee has not parted with any consideration for the real estate, the conveyance of which he seeks to enforce, and was at the commencement of the suit in statu quo. The refusal to enforce performance of the contract can work no fraud upon him. We are satisfied that a greater wrong is likely to result to the appellant if specific performance is enforced than the appellee would suffer in case it is denied. We cannot hold in this case that the appellee will suffer irreparable injury by reason of any failure in the performance of the contract, and that at the time of the commencement of the suit, if he had made a valid acceptance, we hold that he had a complete remedy at law.

The judgment is reversed, with instructions to the trial court to grant a new trial, and to sustain the demurrer to the second amended complaint, and for such other proceedings as are in harmony with this decision.