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STANLEY ANDERSON et ux., Respts.,

V.
F. W. ANDERSON et al., Appts.

Washington Supreme Court (Dept. No. 1) - February 28, 1924.

(128 Wash. 504, 223 Pac. 323.)

Contracts, $ 1574 – effect of oral agreement to rescind land contract.

1. An oral agreement to rescind a written contract for purchase of real estate, unaccompanied by part performance, is invalid under the Statute of Frauds.

[See note on this question beginning on page 294.] Vendor and purchaser, $ 36 — effect property, the responsibility for securof failure to execute papers.

ing which has been assumed by the 2. Failure of a vendor of real es

purchaser, is immaterial where the

purchaser is in default in payment of tate to execute papers necessary to interest and has failed to secure the secure a renewal of a mortgage on the mortgagee's assent to a renewal.

APPEAL by defendants from a judgment of the Superior Court for Spokane County (Blake, J.) in favor of plaintiffs in an action brought to recover an instalment alleged to be due as a portion of the purchase price of a contract of sale of certain land. Affirmed.

The facts are stated in the opinion of the court.
Mr. D. R. Glasgow for appellants. was $12,091.50, to be paid by the de-

Messrs. W. F. Morrison and Hanna, fendants, assuming the payment of Miller, & Hanna for respondents. the principal and interest on the

Parker, J., delivered the opinion mortgage debt, which was to mature of the court:

November 1, 1922, and $2,000 to be The plaintiffs, Stanley Anderson paid on November 1, 1922, $2,000 on and wife, seek recovery of an instal

November 1, 1923, $2,000 on Noent of $2,000 and interest claimed vember 1, 1924, and $1,091.50 on to be due to them from the defend- November 1, 1925, with interest on ants, F. W. Anderson and E. E. these instalments until paid. It Mayer, as a portion of the purchase being contemplated that the defendprice of a contract by which the ants might desire to have the mortplaintiffs agreed to sell and the de- gage loan renewed upon maturity, fendants agreed to purchase a tract they agreed “to assume responsibilof land in Spokane county. A trial ity for the renewal thereof when in the superior court for that county the same matures;" the plaintiffs, sitting without a jury resulted in however, agreeing to aid the defendfindings and judgment awarding to ants in securing such renewal in so the plaintiffs recovery as prayed for, far as it might be necessary for the from which the defendants have ap- plaintiffs to execute "such papers pealed to this court.

as may be required to accomplish On January 19, 1922, the plain- such result.” It was so agreed tiffs, being the owners of the land manifestly because the principal of in question subject to a mortgage se- the mortgage debt was to become curing an indebtedness of $5,000, due on November 1, 1922, when the and interest, owing to the Phoenix record title to the land would still Mutual Life Insurance Company, be in the plaintiffs. The contract entered into a written contract for further recited and provided as folthe sale of the land to the defend lows: “Parties of the first part ants. The agreed purchase price [plaintiffs] have this day executed

rescind land

(128 Wash. 504, 223 Pac. 323.) a warranty deed in favor of parties scission."

scission.” Viewing this finding in of the second part [defendants), the light of the evidence, purely as subject only to the mortgage here- a question of fact as to whether or inabove referred to, which deed, to- not the minds of the parties so met, gether with a copy of this contract, it seems to us that the trial judge shall be placed in escrow in the Se- must have meant thereby nothing curity State Bank of Palouse, Wash- more than that the defendants atington, where the payments provid- tempted to so effect a rescission of ed for hereunder shall be made, and the contract; since the evidence, it conditioned that, upon full compli- seems to us, wholly fails to show a ance with the terms of this contract, meeting of the minds of the parties said deed shall be delivered to par- as to any agreement for mutual reties of the second part."

scission, with that degree of cerThe deed so executed and a copy tainty required in cases of this naof the contract were accordingly ture. But, if we are in error in placed in escrow with the Security this view as to the failure of the State Bank of Palouse. The first in- meeting of the minds of the parties stalment of $2,000 and interest being evidenced by their oral expressions, unpaid, on January 13, 1923, the still the Statute of Frauds stands plaintiffs commenced this action in the way of any seeking recovery from the defend- such orally agreed Contracts

effect of oral ants of the amount of that instal- rescission becoming agreement to ment, and also interest claimed by in law effective; contract. them to be then due upon all of the since the evidence, instalments. At that time the de- we think, as the trial court manifendanis were in default in the pay- festly did, wholly fails to show any ment of the principal of the mort- acts of part performance on the part gage debt and a considerable of any of the parties with reference portion of the interest thereon. Evi- to any such oral agreement, or any dently because of this fact a renew- acts done by either of them in pural of the mortgage could not be ob- suance of any such oral agreement, tained from the insurance company, placing either of them in any difat least not until the interest should ferent position so far as prejudicbe paid. However, as we think the ing their rights is concerned, with record clearly shows, the plaintiffs reference to the subject-matter of were ready and willing to execute the contract. The original contract any papers necessary to accomplish being in writing, and the subjectsuch renewal. All that the defend- matter being such as to require it to ants had to do to that end was to be in writing, any agreement for pay the interest and induce the in- rescission of it must also be in writsurance company to accede to such ing, unless a mutual oral rescission renewal of the mortgage as to which of it be rendered effective by part they had agreed “to assume respon- performance. Woolen v. Sloan, 94 sibility.” The trial court found Wash. 551, 162 Pac. 985; McInnis "that there was an attempted oral v. Watson, 116 Wash. 680, 200 Pac. rescission of the contract, but same 578. was not sufficiently acted upon.” Some contention seems to be made

The principal contention here in behalf of the defendants, rested made in behalf of the defendants

upon the theory that the plaintiffs seems to be that there was a mutual neglected and refused to execute oral rescission of the contract. The papers necessary to the renewal of finding of the trial court on that the mortgage, and that thus the desubject, touching the question of fendants were privileged to elect to whether or not there was in fact rescind the contract as for default such an agreement between the par- upon the part of the plaintiffs. ties, goes no farther than finding This, we think, is effectually anthat there was “an attempted re- swered by the fact that the defend

of failure to

ants failed to pay the interest on the in the contract they assumed the re

mortgage debt and sponsibility of inducing the insurVendor and purchaser-eflect failed to induce the

ance company to assent to a renewal insurance company of the mortgage. Not having done execute papers.

to assent to a re- this, they manifestly cannot comnewal of the mortgage. Any failure plain of the plaintiffs' neglect to of the plaintiffs to execute papers execute the necessary papers to that necessary to the renewal of the end. Besides, we are convinced, as mortgage becomes of no conse- the lower court manifestly was, that quence in view of this fact. Con- the plaintiffs have at all times been ditions had not arisen where it be- ready and willing to execute such came necessary for the plaintiffs to papers whenever the defendants execute any such papers looking to would place themselves in such a the renewal of the mortgage. The position that they would be entitled failure of the necessary conditions

to have such papers executed. precedent to the obligation of the

The judgment is affirmed. plaintiffs to execute such papers was wholly the fault of the defendants Main, Ch. J., and Tolman, Holthemselves. By express agreement comb, and Mackintosh, JJ., concur.

ANNOTATION.

Applicability of Statute of Frauds to agreement to rescind contract for sale of

land.

I. Introduction, 294.
II. Rule that oral rescission is good:

a. In general, 295.
b. Theory, 297.

c. Facts, 299.
III. Rule that oral contract must be acted

upon to make the rescission

good:
a. In general, 301.

III.—continued.

b. Theory, 303.

c. Facts, 304.
IV. Rule that oral rescission is invalid:

a. In general, 304.
b. Theory, 307.

c. Facts, 308.
V. Rule denying specific performance of

contract that has been orally rescinded, 308.

I. Introduction.

and does not apply to its discharge. The weight to be given to many of Under such a theory an oral rescisthe cases passing upon the validity of sion, wholly executory, would be susan oral rescission of a written con- tained. The theory of other cases sustract for the sale of land is difficult taining the oral rescission is not so to determine, because of the fact that clear. In many of them the fact that it does not appear whether or not the action has been taken on the oral reoral rescission was acted upon. Ac- scission is doubtless an important elecording to other cases, this fact is de- ment, although this may not expressly terminative. See infra, III. Again, appear in the opinion. Conversely, in other cases emphasize the form of ac- cases denying the validity of an oral tion. In suits for specific perform- rescission, it is doubtless an element ance, where the oral rescission is of weight in the decision that the oral pleaded on the defensive, the courts rescission was wholly executory, alare more apt to sustain the oral re- though this may not be expressly made scission than in an action in which a condition of the denial of the vathe rescission is the basis of an action lidity of the rescission. As hereinfor affirmative relief. See infra, V. after shown, other cases expressly The validity of an oral rescission is base the denial of the validity of the sustained in some cases on the theory oral rescission upon the fact that it that the Statute of Frauds relates only was wholly executory. to a contract for the sale of real estate, The surrender of a written lease by

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parol is discussed in the annotation in thority of this case is seriously im4 A.L.R. 666.

paired, if not overruled, by the subse

quent decision in Ely v. Jones (Kan.) II. Rule that oral rescission is good.

supra, where the Kansas court makes a. In general.

some distinction between the case at It is a rule announced in a number bar and the facts in Carr v. Williams. of cases that a parol discharge of a

The court in the later case, however, contract for the sale of land is valid.

concludes that "the statement in the Kansas.-Ely v. Jones (1917) 101 opinion in Carr v. Williams (Kan.) Kan. 572, 168 Pac. 1102.

supra, that such an agreement falls Kentucky.—Keeney v. Waters (1909) within the Statute of Frauds, and is 135 Ky. 525, 122 S. W. 837; Warden v.

void unless in writing or fully executBennett (1911) 145 Ky. 325, 140 S. W.

ed, is disapproved, and we hold, with 538; Osborn v. Osborn (1924) 204 Ky.

what we consider to be the weight of 144, 263 S. W. 738; McKinney v. Flan- authority and sound reasoning, that ery (1924) 205 Ky. 766, 266 S. W. 629; such a contract is not required to be in Asher v. Helton (1907) 31 Ky. L. Rep. writing, and may be established by 9, 101 S. W. 350.

the same kind of proof as other simple New Hampshire. --Buel v. Miller

contracts.”
(1827) 4 N. H. 196.

See E. F. Rowson & Co. v. McKin-
New Jersey. King v.
Morford ney (1913)

Tex. Civ. App. —, 157
(1831) 1 N. J. Eq. 274. But see Huff- S. W. 271, infra, IV. a.
man v. Hummer (1866) 18 N. J. Eq. At least, the parol rescission is good
83, 2 Mor. Min. Rep. 242, infra if accompanied by the destruction of
(theory).

the contract. Sieker v. Sieker (1911) New Mexico. Epstein v. Waas 89 Neb. 123, 130 N. W. 1033. (1923) 28 N. M. 608, 216 Pac. 506. In many of the cases it appears that

New York.-Davis v. Willis (1890) possession had not been delivered to 57 Hun, 200, 10 N. Y. Supp. 883; Proc- the vendee, without any point being tor v. Thompson (1883) 13 Abb. N. C. made of this fact. See North Carolina 340.

cases, infra, III. c. In some cases a North Dakota. Mahon v. Leech point is made of this fact, and it is (1902) 11 N. D. 181, 90 N. W. 807. held that where possession has not This case has been approved and fol- been taken by the vendee, there may lowed in Wadge v. Kittleson (1903) 12 be a valid rescission of the contract N. D. 452, 97 N. W. 856; Haugen v. by oral agreement. Jones V. Booth Skjervheim (1905) 13 N. D. 616, 102 (1882) 38 Ohio St. 405, denying speN. W. 311; Wisner v. Field (1905) 15 cific performance after such rescisN. D. 43, 106 N. W. 38; Ottow v. Friese sion. In Arrington v. Porter (1872) (1910) 20 N. D. 86, 126 N. W. 503, and 47 Ala. 714, the parol rescission of a Harrington v. Eggen (1924) - N. D. sale of land was sustained although - 199 N. W. 447.

the vendor had conveyed the same by Oregon. - Guthrie v. Thompson a deed, and taken a mortgage back, (1861) 1 Or. 353; Elliott v. Bozorth where the original purchase price had (1908) 52 Or. 391, 97 Pac. 632.

not been paid, and the vendor obtained South Carolina. Moseley v. Witt the deed, which he had executed and (1907) 79 S. C. 141, 60 S. E. 520; Lewis delivered, and received possession of v. Cooley (1908) 81 S. C. 461, 62 S. E. the land with the consent of his ven868.

dee. The court states that a rescisIn some of the North Dakota cases sion of the sale under such circumthere seems to have been an abandon- stances is virtually a sale of the land ment of the contract, rather than an by the original vendee to the vendor. agreement of rescission.

It is stated, further, that possession An executory agreement to abandon by the purchaser with the consent of a land contract was held invalid under the vendor, under a parol contract of the Statute of Frauds in Carr v. Wil- sale, takes the case out of the Statute liams (1877) 17 Kan. 575. The au- of Frauds. It is stated, further, that,

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upon the rescission of the contract, the purchase price was virtually paid by the original vendor by the extinguishment of the original purchase price, and that, having obtained possession of the land, there was only needed a proper conveyance to complete the sale; that either party could enforce this.

A contract for the sale of timber in exchange for an automobile, which had been executed by the delivery of a deed to the timber and a note evidencing the balance of the purchase price for the automobile, and the delivery of the automobile to the vendor of the timber, but under which the purchaser of the timber had not taken possession thereof, was held revocable by an oral agreement under which the purchaser of the automobile redelivered it, although the purchaser of the timber failed to surrender the timber deed, or convey it back to the original owner. Robertson v. Lain (1925) Ark. 269 S. W. 574. It was accordingly held that the original owner of the timber could defend an action by the purchaser thereof to quiet title to the land.

See Dougherty v. Catlett (1889) 129 Ill. 431, 21 N. E. 932, infra, III. a.

Other cases lend indirect support to the general theory discussed in this subdivision. Parol proof of a release from a valid contract in writing regarding real estate is recognized in Crancer v. Lareau (1924) 1 F. (2d) 117, but it is held that it must be clearly and convincingly established. The court in Davis v. Benedict (1887) 9 Ky. L. Rep. 200, 4 S. W. 339, seems to recognize the sufficiency of the parol agreement to rescind a contract for the sale of land, but holds that the proof of such a rescission by parol should be clear and convincing, and the testimony in that case was held to fall far short of this test. In Flaherty v. Goldinger (1924) 249 Mass. 564, 144 N. E. 374, the court states in a case in which there was no express agreement that the contract should be rescinded, that the circumstance that the contract related to real estate did not prevent the parties rescinding it orally by mutual consent. In Ballou

v. Billings (1884) 136 Mass. 307, an action by the purchaser of land to recover money paid under the contract of purchase, upon refusal of the ven. dor to convey, the court states that it has been held in that jurisdiction that a contract under seal may be rescinded by parol, citing Hill v. Green (1826) 4 Pick. (Mass.) 114, and Munroe v. Perkins (1830) 9 Pick. (Mass.) 298, 20 Am. Dec. 475. It is stated in Negley v. Jeffers (1875) 28 Ohio St. 90, that “where the original contract is in writing as required by statute, it may be varied as to the time of payment, or wholly waived or discharged as to such payment, by subsequent parol contract founded on a new consideration.” An agreement between the vendor and vendee of land, title to which was in the United States, and the holder of a certificate of entry of the land, who was under contract to transfer the certificate to the vendor, that the holder of the certificate should transfer it directly to the vendee, and that the vendor and the holder of the certificate should pay the vendee sufficient to obtain the patent to the land, on the conclusion of which agreement the vendor and vendee gave an order upon the custodian of the land contract to deliver up the same to be canceled, was held in Reed v. McGrew (1832) 5 Ohio, 375, to be a discharge of the vendor's agreement to convey.

But see Ohio cases discussed in IV. a, b.

It is stated in Brownfield v. Brownfield (1892) 151 Pa. 565, 25 Atl. 92, that a contract in writing for the purchase and sale of land may be rescinded by parol. The case of Boyce v. M'Culloch (1842) 3 Watts & S. (Pa.) 429, 39 Am. Dec. 35, is stated to have decided that question. The court in Boyce v. M'Culloch, however, does not go to that extent, as appears infra,

It is further stated in Brownfield v. Brownfield, however, that, to make a parol rescission effectual as against the purchaser, there must be a yielding up of the possession or some other equally unequivocal act.

In an action of ejectment in which the defendant set up a verbal contract

V. a.

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