Thompson v. Lyons — 54 N.Y. Super. Ct. 101

Majority

p. 101

ANDREW THOMPSON, Respondent, v. JEREMIAH C. LYONS, Appellant.

Headnote

Stipulation, mutuality of—Rescission of contract, mutual effect of.

Where both parties to a contract sign a stipulation to the effect that the contract entered into by them was on the day fixed for its completion rescinded, such stipulation means presumptively a mutual rescission; and the party who made a payment to the other on account of the contract is entitled to recover it back. But damages as for a breach of contract—such as expenses of examining title—can neither be recovered, counter-claimed or recouped.

Before Sedgwick, Ch. J., Van Yorst, and Freedman, JJ.

Decided December 17, 1886.

p. 102

Appeal from judgment.

Plaintiff and defendant entered into a contract whereby defendant agreed to convey to plaintiff certain premises, and plaintiff “ in consideration and payment thereof ” was to convey certain other premises to defendant, pay $1,900 in cash, and assume a mortgage existing on defendant’s said property. At the time of execution of this agreement plaintiff paid to defendant $500 of said $1,900. On the day fixed for the consummation of the contract defendant refused to complete. Thereupon plaintiff brought this action to recover said $500. Defendant denied his liability therefor, and pleaded a counter-claim of $442.65 for expenses incurred in the examination of title, surveying the property, and broker’s fees on the sale of his property.

The cause was tried before the court without a jury.

On the trial of the action the following stipulation was made and signed by the parties: “It is agreed

that on the day of the closing of the title, tender was made by plaintiff, and that defendant refused to take the real estate mentioned in the contract, on the ground that the wall of the owner adjoining on the East side encroached between 8 and 12 inches on plaintiff’s land, and thereupon the contract was rescinded.

“ It is further stipulated that plaintiff has demanded of defendant the $500, claimed in his complaint, and that payment thereof was refused, and that there is no dispute as to the amount of each respective item mentioned in defendant’s bill of particulars, but plaintiff disputes defendant’s right to recover any part thereof.”

The learned judge before whom the cause was tried rendered a decision in favor of the plaintiff, on which judgment was entered adjudging that plaintiff recover of defendant $560, with $76.34 costs, amounting in all to $636.34.

From this judgment defendant appealed.

p. 103

Souther & Stedman, attorneys, and C. E. Souther, of counsel for appellant, on the questions considered in the opinion, argued:

I. The contract was not a “ contract of exchange,” and by this error the case below throughout was permeated and infected (Wilcox v. Randall, 7 Barb. 638 ; 3 R. S. [Throop’s ed.], 2197, § 3). Not being an “ exchange,” it was simply the instrument to an ordinary transfer of real estate (from defendant as vendor), where the consideration therefor (from plaintiff as vendee was to be part money and part land; and the case is wholly without evidence that “ it was mutually rescinded;” or that it “was agreed to he rescinded, and was rescinded by the parties; ” or that “ it was thereupon rescinded by mutual consent.”

The breach by plaintiff conferred on defendant the right of rescission, “ thereupon the contract was rescinded,” i. e., of course, by defendant, as the only one having that right, and by him simply because if plaintiff could not pay for the thing, defendant need not continue bound to sell it.

Kelly & Macrae, attorneys, and Wm. F. Macrae, of counsel for respondent, on the questions considered in the opinion, argued:

I. The defendant having backed out from the contract, and the contract having been rescinded by consent, the parties were placed in statu quo, and defendant was hound to refund the $500 (Green v. Green, 9 Cow. 50 ; Thrasher v. Bentley, 2 T. & C. 309 ; Weaver v. Bentley, 1 Caines, 47; Utter v. Stuart, 30 Barb. 20 ; Cockroft v. N. Y. & N. H. R. R., 69 N. Y. 207 ; Tice v. Zinsser, 76 Ib. 552 ; Graves v. White, 87 Ib. 463 ; Bigler v. Morgan, 77 Ib. 312).

BE. The defendant entirely mistakes the law applicable to this case in his insistence on his counter-claim for expenses. The rescission absolutely foreclosed and cut off any claim of that kind. It is only on the theory of a breach of an obligatory contract that defendant’s ex

p. 104

penses could be counter-claimed, and as the rescission entirely abrogated the contract no breach can be assigned as against either party predicated thereon (Bigler v. Morgan, supra).

The stipulation made and signed by the parties showed that the contract was rescinded. This presumptively meant a mutual rescission, and, in the absence of evidence rebutting the presumption, justified the finding that the rescission was by mutual agreement. This being so, although the contract was not strictly one for the exchange of real estate, the plaintiff became entitled to recover back what he had paid on account of the contract and the defendant could not maintain recoupment. There cannot be a rescission in part and an affirmance in part. The learned judge below was therefore right in the determination made by him.

The judgment must be affirmed with costs.

Cases cited

Utter v. Stuart 30 Barb. 20 N.Y. Sup. Ct. 1858-10-19 p. 103