West v. Walker

¹ Reported in 231 N.W. 826. The appeal is from a judgment rendered on the pleadings.

The action is to recover damages for false and fraudulent misrepresentations whereby plaintiff was induced to enter an executory contract for the purchase of a building and lot in the city of Moorhead, Minnesota. The price was $7,500, of which approximately $3,300 has been paid and $1,000 has been expended in necessary repairs. It is alleged that the property was not worth more than $4,000. Plaintiff also avers that defendant in bad faith has served notice of cancelation of the contract, and he demands judgment for $4,300 and also asks such amount be applied on the contract and defendant be restrained from dispossessing him until the final adjudication herein. The answer, in addition to a general denial, alleged in substance that the contract of purchase was executed on March 28, 1924, that $300 was paid down, and that plaintiff agreed to pay the balance of the purchase price of $7,200, in monthly instalments of $100 each, with interest on deferred payments at seven per cent, and all taxes and assessments levied subsequent to 1923; that plaintiff entered into possession thereunder and has continued in possession ever since; that on December 1, 1928, plaintiff was in default in the monthly payments in the sum of $2,643.24 and $254.32 for taxes and penalties; that defendant has paid the registration tax on the contract; that on December 15, 1928, defendant caused notice of cancelation of the contract for the said default to be served on plaintiff; that the notice expired on January 14, 1929, without any payment, and that proof of the cancelation was duly filed for record and recorded in the register of deeds' office of Clay county, wherein is the property, on the 16th day of January, 1929. In addition the answer avers that plaintiff became aware of the condition of the premises when he took possession in March, 1924, and has paid a number of monthly instalments since, as well as the taxes for several years, and thereby waived any claim for fraud; and also that on January 16, 1929, plaintiff was duly adjudged a bankrupt in the United States district court of Minnesota, sixth division. There was no reply.

The time to make good the default expired on January 14, 1929. The complaint is dated the next day, so the right to pay up and reinstate the contract was terminated before the action was begun. But even on the 15th, on proper showing, plaintiff could have prevented the recording of the proof which made the cancelation legally effective. Freeman v. Fehr, 132 Minn. 384,157 N.W. 587; Follingstad v. Syverson, 160 Minn. 307,200 N.W. 90. We think the instant case is not distinguishable from Olson v. N. P. Ry. Co. 126 Minn. 229, 148 N.W. 67, L.R.A. 1915F, 962, where it was held that a right of action for damages for fraudulent representations inducing the purchase of land upon an executory contract does not survive the cancelation of the contract. Besides the two cases above cited, the Olson case has been recognized as stating the law in this state in International R. S. Corp. v. Vanderpoel, 127 Minn. 89,148 N.W. 895; Seerup v. Goraczkowski, 159 Minn. 364,199 N.W. 94; Andresen v. Simon, 171 Minn. 168, 213 N.W. 563; Smith v. Dristig, 176 Minn. 601, 224 N.W. 157; Blythe v. Kujawa, 177 Minn. 79, 224 N.W. 464; Moorhead Inv. Co. v. Carlson, 177 Minn. 174, 224 N.W. 842. When the cancelation is completed there remains to neither vendee nor vendor any cause of action against the other growing out of the land transaction, except that the vendee might sue for money had and received as stated in the last paragraph of the Olson case. The vendor cannot enforce a judgment previously obtained for an instalment of the purchase price. Warren v. Ward, 91 Minn. 254,97 N.W. 886; Moorhead Inv. Co. v. Carlson, 177 Minn. 174,224 N.W. 842. If a vendee has rescinded by his own act, the vendor cannot give the statutory notice so as to cut off the right of the vendee to bring an action to recover what he has parted with and which would be forfeited to the vendor were the contract canceled. Blosick v. Warmbold, 151 Minn. 264,187 N.W. 136.

The complaint in the instant case cannot be construed as one for money had and received with any better success than in the Olson case. Plaintiff did not rescind by his own act. In fact he is in possession and insists on retaining it, claiming that the contract is still subsisting notwithstanding the admission that it has been legally canceled or foreclosed in accordance with the statute.

Whatever may be said of the law established by the decision in Olson v. N. P. Ry. Co. 126 Minn. 229, 148 N.W. 67, L.R.A. 1915F, 962, it seems to attain just results in practice. This as well as other subsequent cases for damages shows little merit. Here, being in possession for years, plaintiff must from the first have known whether or not he was defrauded; and when, after many months of defaulted payments the contract is terminated legally and defendant is without remedy, this action for large damages is started.

We need not stop to consider whether the complaint states a good cause of action for fraudulent misrepresentations, nor whether the suit is moot because plaintiff was adjudged a bankrupt the same day the summons was served.

The judgment is affirmed.