Jolley v. Idaho Securities, Inc. , 90 Idaho 373 ( 1966 )

McQUADE, Justice

(dissenting).

The majority opinion makes reference to several terms in the contract, one of which has been selected as not merging in the deed. Sufficient authority is cited for this exception to the general rule that all conditions relating to a transfer of property are merged in the deed upon its delivery.

A condition in the agreement between the parties for the conveyance of their properties not included by the majority opinion within the exception to the general rule is:

“It is understood and agreed that this entire transaction is conditional upon the Buyers [the Jolleys] being able to increase the Travelers Insurance Company loan on the Lemhi County property in the additional amount of $10,000.00, as a minimum. This is to be done in the Buyers name, and the Seller [Idaho Securities, Inc.] is to assume and pay in full this additional obligation, promptly and before any delinquency. Any such refinancing costs are to be promptly paid by the Seller. The gross proceeds of this loan are to be disbursed as follows: $10,000.00 to the Buyers, which sum the Buyers are to use to pay the back real estate taxes on the Saratoga Hotel property, and any gross sum over $10,000.00, to the Seller.”

I agree with the majority that those conditions which are to be performed in the future, separate and distinct from the deed, are not merged therein. It was said in Reid v. Sycks et al., 27 Ohio St. 285 (1875):

“There is no presumption that a party, in giving or accepting a deed, intends to give up the covenants of which the deed is not a performance or satisfaction.”

The June contract between the Jolleys and Idaho Securities, Inc., was conditioned on additional $10,000 financing which Jolleys were to obtain. It was the express agreement of both parties that in the absence of Jolleys’ obtaining $10,000 or more through a refinancing of the Lemhi County ranch, the contract was null and void and their properties would not be exchanged. See Morris v. Whitcher, 20 N.Y. 41 (1859) ; and Price v. Woodward-Brown Realty Co., Sup., 190 N.Y.S. 561 (1921).

After they were unable to obtain refinancing as provided for in the contract, the Jolleys communicated this circumstance to Jacobson in July of 1963. Jacobson in turn attempted without success to obtain sufficient monies to fulfill the contractual requirement. In October the Jolleys commenced this action for a rescission of the deeds and return of the properties to the respective parties. It cannot be said that Jolleys were guilty of laches in their conduct or in commencing this action. Rather, Jacobson takes the view that had not the action been commenced, he could have secured the additional financing. Apparently the majority opinion presumes that this portion of the agreement was merged in the deed. There is no evidence in the record supporting the theory that the Jolleys abandoned the benefit of this covenant. The evidence does establish. that the Jolleys diligently brought to the^ attention of Jacobson the difficulty in securing an additional loan and also made known the various claims being made ^ against the hotel property. The Jolleys had a right to ask for rescission of the contract and return of their ranch property. Christiansen v. Intermountain Assn., 46 Idaho 394, 267 P. 1074 (1928). A case which has substantially the same factual circumstances as the case at bar is that of Dunseath v. Hallauer, 41 Wash.2d 895, 253 P.2d 408 (1953). In the Washington case the parties by written contract agreed to an exchange of properties and provided in the agreement that the seller of each was to assume the risk of any damage to the property prior to closing of the deal. Deeds were exchanged. The 'Washington court held that the assumption of risk provision of the contract was not merged in the deeds. See also Mayer v. Sumergrade, 111 Ohio App. 237, 167 N.E.2d 516 (1960).

By reason of the failure to comply with the contractual provision, together with the additional encumbrances on the hotel property which had not been disclosed by Jacobson, the trial court should have found as a matter of law there were material breaches of the contract. Such material breaches significantly affected the consideration paid for the property.' The judgment denying rescission should be reversed.