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diction of the Circuit Court, but it is sufficient for present purposes
to say that, in my judgment, the action was improvidently and pre
maturely brought. The orders should be reversed.
EL PASO CATTLE CO. v. STAFFORD et al.
1. WENDOR AND PURCHASER (§ 110*)—SALE ContRACT-RESCISSION.—DEFECTs
A contract for the sale of land required the vendor to furnish at his own expense abstracts of title, and submit them for examination, and, in event that the vendees' attorney found any substantial defect, the vendor On request was to use his best efforts to correct the defect, and, if he was unable to do so, then the vendees might, at their election, rescind and receive back the earnest money. Held, that the vendees' right to rescind was conditional on substantial defects in the title and the failure or inability of the vendor, on request, to correct them, and that a rescission, because of the vendor's failure to furnish a complete abstract of title without any showing that the vendor was unable or unwilling to submit a proper abstract, was unauthorized.
[Ed. Note—For other cases, see Vendor and Purchaser, Cent. Dig. 3 196; Dec. Dig. § 110.*]
2. WENDOR AND PURCHAser ($ 110*)—PERForMANCE By VENdor—REscission.
* Wowbox and Punchases ($ 92*)—CoNTRAct—BREACH By VENDEEs.
with further performance of the contract, and tantamount to a refusal by the vendees to perform, authorizing the vendor to treat the contract us terminated.
[Ed. Note.—For other cases, see Wendor and Purchaser, Cent. Dig. 3 149; Dec. Dig. $92."]
5. Assign MENTs ($ 94*)—RIGHTs of Assignees. Where vendees, under contract for the sale of land, did not assign their rights under the contract, including an alleged right to recover a deposit to secure performance to plaintiff until more than three years after they had repudiated all obligation under the contract, plaintiff was bound by the acts of the vendees.
6. WENDoR AND PURCHAser ($ 334*)—ContRACT-REscission—REcovery of • DEPoSIT-QUASI Conte ACT. Where vendees deposited $15,000 to secure performance of a written contract for the sale of land and having rescinded the contract for the vendor's alleged breach, their assignee sued on the contract for the recovery of the deposit in which action it was determined that the vendees and not the vendor had broken the contract, and that their rescission was not justified, their assignee could not recover any part of the deposit in such action on the theory of quasi contract that it was money which the vendor in equity and good conscience ought not to keep.
[Ed. Note.—For other cases, see Wendor and Purchaser, Cent. Dig. § 959; Dec. Dig. § 334."]
Error to the Circuit Court of the United States for the Northern District of Ohio.
Action by the El Paso Cattle Company against Oliver M. Stafford and another. Judgment for defendants, and plaintiff brings error. Affirmed.
The El Paso Cattle Company, a Nebraska corporation, brought this action in the court below against Oliver M. Stafford, a citizen of Ohio and resident of Cleveland, and the Broadway Savings and Loan Company, an Ohio corporation. The object of the action was to recover for breach of contract certain damages against Stafford and also to recover of him and his codefendant certain money previously deposited with the latter pursuant to the contract.
The contract, dated January 4, 1902, was in writing and made between Stafford of the one part and Edward J. Carter and Jeptha D. Ryan of the other part. It provided for the sale by Stafford to Carter and Ryan of about 2,000,000 acres of land in the state of Chihuahua, Mexico, for the sum of $300,000, payable $15,000 cash upon execution of the agreement and the balance upon delivery and acceptance of the deed of conveyance. The latter sum was the amount deposited with the defendant savings company.
The land belonged to and stood in the name of the Northwestern Colonization & Improvement Company, a corporation of New Mexico. That company also held certain concessions under the national government of Mexico, granting exemption from taxation and certain customs duties for a period of fifteen years respecting the land and the importation of materials for its improvement, subject to obligation to colonize people on the land in certain numbers. The contract provided that Stafford should “arrange an agreement with the national government of Mexico for the transfer of these concessions” to Carter and Ryan or their assigns or nominee, and that Stafford should comply with the concessions regarding the placing of colonists on the land. It appears in a preamble to the contract that through Stafford's ownership and control of the stock and bonds of the colonization company he claimed and was advised that he could by proceedings to foreclose the mortgage securing the bonds, make good title to the land, and that Carter and Ryan were
•For other cases see same topic & S NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes
willing to purchase the land provided Stafford was “so able to make good title." The other relevant features of the contract are stated in the opinion. The rights of Carter and Ryan under the contract were ultimately in terms transferred to the plaintiff. Allegations of the petition of due performance on the part of Carter and Ryan and refusal of performance by Stafford were brought to issue by answer and cross-petition of Stafford; the latter also charging failure and refusal of Carter and Ryan to perform, and asking damages in consequence. Trial before the court and a jury resulted in a directed verdict for defendants. The cause is here upon proceedings in error.
J. M. Dawson, for plaintiff in error.
Before LURTON, SEVERENS, and WARRINGTON, Circuit
WARRINGTON, Circuit Judge (after stating the facts as above). The assignments of error disclose many complaints of the manner in which the case was disposed of in the court below. These complaints seem to have originated in a difference of opinion between court and counsel as to the effect of certain evidence, which was offered early in the trial. The court regarded plaintiff's cause of action as based on a charge that Stafford had committed a breach of the contract, and this evidence as showing that plaintiff's assignors were alone chargeable with its breach. It was for this reason that the court excluded much of the evidence offered by plaintiff in error, and of its own motion directed a verdict to be returned for defendants.
It is true that the action is founded on the contract of January 4, 1902, and the alleged performance by Carter and Ryan and their assignee, the plaintiff, of “each and every of the terms, provisions and Conditions of said contract on their part stipulated to be done and performed,” and also upon the alleged failure and refusal of Stafford and his codefendant to perform any of the acts or things required of them under the contract. In short, the petition contains only one count. and is framed on the theory of a contract made and kept on plaintiff's side, and made and violated on defendants' side. In order rightly to understand the ruling under review, it is necessary to examine the evidence upon which the court acted.
Plaintiff offered as a witness at the trial its president, McPherson, who seems to have been authorized to act for Carter and Ryan, and who testified that he was also cashier of the Union Stockyards National Bank, South Omaha, Neb.; that on June 28, 1902, defendant Stafford called upon him at the bank “* * * to make, as he said, a tender of what purported to be a deed of the lands covered by that contract and other papers in connection with the deal. At that time Mr. Stafford demanded payment of the balance of the purchase price due under that contract, and I said it was impossible to make that payment at that time without having thoroughly examined the documents, the originals of which were in Spanish, and what purported to be the copies of those originals were in many cases attached. * * * After on extended interview on the subject, Mr. Stafford prepared a receipt for papers which he described, * * * and I signed that receipt as
cashier of the bank; the bank being designated as custodian of those 'papers. * * * * The receipt so referred to was identified by McPherson in his crossexamination, and received in evidence against objection of plaintiff's counsel. The witness in his cross-examination also identified a letter to him from Stafford, and admitted his signature to an appended receipt other than the receipt before mentioned. These latter papers appear to have been signed at the foregoing interview. They were received in evidence over objection of plaintiff's counsel, and are as follows: “South Omaha, Nebraska, June 28, 1902. “Mr. T. B. McPherson, South Omaha, Nebraska—Dear Sir: Referring to my contract of January 4, 1902, with Messrs. Edward Carter, of Chicago, and Jeptha D. Ryan, of Leavenworth, Kansas, I beg to say, I am now ready on my part to fulfill all obligations of this contract, and I offer you herewith a deed conveying good and sufficient title to Messrs. Carter and Ryan of the land purchased by them under this contract. Also an agreement for transfer of the concession of Mexican government to said Ryan and Carter, as in said contract provided. “I also submit abstracts of title showing good and legal title in the grantor in the deed which I tender you. This tender I make to you as representing Messrs. Carter and Ryan, and respectfully request of you the payment of the balance of purchase money due under said contract. O. M. Stafford.” “On behalf of Messrs. Edward J. Carter and Jeptha D. Ryan, I acknowledge receipt of the above letter from O. M. Stafford, and also that he offered to me the instruments of transfer referred to in his foregoing letter, and claimed by him to legally and effectually to transfer the property and concession referred to in said contract, and also requested of me the payment of the balance of the purchase money due under said contract. “Thos. B. McPherson.”
The witness further testified that, after he received the papers, “he referred the matter” to their attorneys, and subsequently received a report from them. Plaintiff offered in evidence a letter from Ryan, one of the signers of the contract, to Stafford, dated July 14, 1902, as follows:
“Dear Sir: I am advised by Mr. McPherson, with whom you left certain papers, covering the title to Mexican lands and the concession included in our mutual contract of January 4, 1902, that the attorneys to whom this matter has been referred, inform him that there are among the papers left with him no abstract of title that will enable them to pass upon the title to the lands in question.
“The attorneys also say that the so-called consent to the assignment of the concession does not comply with the terms of the aforesaid contract. I have, therefore, to request that you instruct the Broadway Savings & Loan Co. Bank to remit the Union Stockyards National Bank of South Omaha, Neb., the money deposited in escrow with it and payable to us under the terms of the contract of January 4, 1902.
“I have transmitted a carbon copy of this letter by registered mail to the Broadway Savings & Loan Co. Bank for their information.”
Plaintiff offered in evidence the following letter dated July 19, 1902, from Stafford to McPherson, in which was inclosed the above letter from Ryan to Stafford:
“The inclosed letter from Mr. Ryan, of July 14, 1902, explains itself. * * * May I ask you to tell me frankly by return mail what your position is, that I may be able to decide upon my future course in the premises.”
In the cross-examination of McPherson a letter from McPherson to Stafford, dated July 21, 1902, was introduced, as follows: “I have yours of the 18th inst., also yours of the 19th, and in reply have to
say that the letter sent you by Mr. Ryan is final so far as the contract of January 4, 1902, is concerned. * * *”
Plaintiff also offered in evidence the following letter from Stafford to McPherson, dated July 26, 1902: “I beg to acknowledge receipt of yours of the 21st inst., and enclose you a
reply which I have sent to Mr. Ryan in answer to his letter of the 14th inst. * * * *
Plaintiff then offered in evidence the letter from Stafford to Ryan, referred to in the one just set out: “I have your favor of the 14th inst., in which you make the surprising demand that the fifteen thousand dollars ($15,000.00) paid by you and your associates under our mutual contract of January 4, 1902, should be remitted for your account to the Union Stockyards National Bank. “I have fulfilled all the obligations of our contract of January 4, 1902, upon my part to be performed. You and your associates on the contract are in default of performance, and I suppose I am to understand your letter as a refusal to accept the deed which has been tendered you and make payment of the balance of the purchase money which is due. “You will therefore please take notice that I no longer am bound to make a conveyance of said property. * * * As you and your associates are in default and not I, the money belongs to me, and I shall retain it, and shall further look to you and your associates to make me good for the damages Sustained by your failure to comply with your contract obligations.”
The correspondence seems to have been closed by a letter from Ryan to Stafford dated August 20, 1902, in which he attempts to interpret the past acts of the parties rather than to state anything of an evidential character. If the letter from Stafford to McPherson dated June 28, 1902, and the receipts given by McPherson on that day were alone considered, it would appear that Stafford seasonably tendered a deed purporting to convey the land in question to the purchasers, Carter and Ryan, and also a form of agreement for transferring the concessions. These papers with others were referred to plaintiff's counsel, who, as appears in Ryan's letter of July 14, 1902, above quoted, made objections to them in a report to McPherson. But the importance of these objections is greatly diminished, if not destroyed, in this action, by the conduct of the purchasers. Instead of communicating the objections to the seller and furnishing him an opportunity to make corrections, they forthwith demanded return of the $15,000, which in pursuance of the contract had been deposited with the defendant Savings & Loan Company. The contract required Stafford, party of the first part, to “* * *
furnish at his own expense abstracts of title to the said lands and to
submit the same to the attorneys of the party of the second part for examination, and, in event that said attorneys find said titles in any substantial respect defective, said party of the first part, upon request, $grees that he will use his best efforts to correct such defects, and if he is unable to do so, then and in such event, the party of the second Port may, at their election, rescind this contract, and upon the exercise of such election, shall be entitled to receive from the party of the