Wheeler v. Mather.

WHEELER, appellant, v. MATHER.

(56 Ill. 241.)

Real estate-rescission of contract of sale-action to recover purchase-money.

A vendor, in consideration of the prompt payment of a sum of money, agreed to sell lands on condition that, in case of the failure of the vendee in the performance of all or either of the covenants on his part, the vendor should have the right to declare the contract void, and take immediate possession of the premises. In the construction of this contract, held, that where the vendee enters upon the performance of the contract, and, paying part of the purchasemoney, makes default which is inexcusable, and the vendor, being without fault, exercises the right given by the contract of declaring the same terminated, and in doing so acts fairly and within the scope of the power, then no action can be maintained by the vendee to recover back what he has paid; but a vendor who is himself in fault for fraud or violation of his contract, cannot exercise the power so given without making restoration of what he has received under it. In such case the law would imply a promise to repay the purchase-money received, and an action for money had and received would

lie.

ACTION of assumpsit. The opinion states the case.

Vallette, Parks & Beaver, for appellant.

H. Snapp, for appellee, cited Chrisman v. Miller, 21 Ill. 235; Moore v. Smith, 24 id. 515; Smith v. Lamb, 26 id. 398; Gehr v Hagerman, id. 441; Murphy v. Lockwood, 21 id. 619; Smith v. Doty, 24 id. 165; Jennings v. Gage, 13 id. 612; Buchenau v. Horney, 12 id. 338; Foster v. Jared, 12 id. 455; Trimble v. Reeves, 25 id. 214; Anderson v. White, 27 id. 57; 2 Hill (N. Y.) 293; 5 id. 390; Bowen Schuler, 41 Ill. 192; Ryan v. Brant, 42 id. 84.

U

MCALLISTER, J. This case is again before the court upon a rehearng, granted at the instance of appellee. It has received an extended and careful reconsideration. But the court finds no reason for varying from the conclusion arrived at in the first instance. In order to a proper appreciation of the additional reasons and authorities given, it is necessary that a re-statement of the case should be given. It is an action of assumpsit, upon the common counts, brought by a pur.

Wheeler v. Mather.

chaser of real estate, to recover back money which he had paid the vendor, and the case was this: The appellee, plaintiff below, was the only witness on his behalf. He introduced in evidence articles of agreement, under seal, bearing date April 1, 1861, whereby appellant, as party of the first part, in consideration of the prompt payment of the money to be paid by appellee, agreed to sell appellee lands therein described, subject to a mortgage, appellee covenanting to pay for them $1,892, as follows: $550 cash, at the time of making the contract; $550 on the first day of June, A. D. 1861, and the balance, $792, on the first day of April, 1862. Time was made of the essence of the contract. Appellant covenanted that, on the payment of the principal and interest, as specified, he would, without delay, convey all his right, title and interest in the premises, by deed, with full covenants of warranty. The articles contained the proviso that they were upon the express condition that, in case of failure of the party of the second part (appellee) in the performance of all or either of the covenants on his part to be performed, the party of the first part (appellant) should have the right to declare the contract void, and take immediate possession of the premises.

Appellee then produced in evidence a notice, signed by appellant, dated August 2, 1862, and served on him about that time, which, after describing the contract, and reciting appellee's failure in making his payments, notified him that appellant declared the contract void and terminated.

From his own testimony, it appears that appellee had paid only part of the installment of $550 due June 1, A. D. 1861, and no part of that of $792, due April 1, 1862. Nor did he offer any excuse for such default, or claim that there was any fraud or default on the part of appellant, but says he never demanded any deed from him. Under this state of facts the court, on behalf of plaintiff below, instructed the jury:

"1. That unless the contract between the plaintiff and defendant, offered in evidence, provides that the plaintiff shall forfeit all that he had paid upon the rescission of said contract; and if they shall further believe, from the evidence, that defendant declared a forfeiture of said contract at his option, under said contract, and that said contract had not been rescinded by the plaintiff, then there was no forfeiture of the amount paid by the plaintiff to the defendant, and plaintiff has a right of action to recover back whatever he paid to defendant on said contract.

Wheeler v. Mather.

"2. That if the jury believe, from the evidence, that the contract of sale of the land mentioned in the articles of agreement offered in evidence by the plaintiff was rescinded by the defendant, then the plaintiff can recover from the defendant the sum or sums paid upon said land.”

These instructions base the right of recovery upon the mere fact of appellant having declared the contract terminated, without reference to any question whether appellee was in fault or appellant without fault; and which, for this reason, were erroneous and must have misled the jury. There is no theory upon which this action can be sustained, if at all, except that of an implied promise.

If appellant had violated the contract, or it had been rescinded by mutual consent, then the law would imply a promise on his part to pay back the consideration received. Faxon v. Mansfield, 2 Mass. 147; Seymour v. Bennet, 14 id. 266.

But this contract was not rescinded by mutual consent. Appellee violated it, and then, as a consequence, appellant declared it terminated; and it was no breach of the contract on his part to do so. In Battle v. The Rochester City Bank, 3 Comst. 88, where the contract contained a similar provision and the right was exercised, the court said: "The rescission of the contract in question by the bank was not a breach of it, but was in pursuance of a provision contained in it; and the defendants are chargeable with no violation of it whatever."

We believe it to be a sound principle, supported alike by reason, authority and good morals, that no man can make his own infraction of his agreement the basis of an implied undertaking in his favor, or of an action for money had and received against the other party who stands fair and innocent. It was upon this principle that the right of recovery was denied in the case of Ketchum v. Evertson, 13 Johns. 359, cited in the original opinion in this case. "It would," said the court, "be an alarming doctrine to hold that the plaintiffs might violate the contract, and, because they chose to do so, make their own infraction of the agreement the basis of an action for money had and received. Every man who makes a bad bargain, and has advanced money upon it, would have the same right to recover it back that the plaintiffs have."

In Green v. Green, 9 Cow. 47, Chief Justice SAVAGE reviewed all the former cases in New York on the subject, and closes his review by saying: "I forbear the citation of more cases. I have found

Wheeler v. Mather.

none of a recovery, where the party wishing to consider the contract rescinded has not shown a breach of the contract on the other side, or what was equal to it."

The case of Battle v. The Rochester City Bank, 5 Barb. 414, involved the precise question in the case at bar. The contract contained the proviso that the vendors might declare it void for default of the vendee in making his payments. Default was made, the right was exercised, and the vendee sued to recover back what he had paid. WELLS, J., who delivered the opinion of the court (and it was afterward affirmed by the court of appeals, 3 Comst., supra), said: "In the case at bar it is not pretended that the defendants have not fulfilled to the letter every part of the agreement on their part to be fulfilled, and the plaintiff, by his counsel, in his opening, admits that he neglected to pay the first of the annual installments mentioned in the contract. I confess myself entirely unable to find, in any elementary treatise or reported case, a principle recognized, which would allow the plaintiff to recover."

Stark v. Parker, 2 Pick. 267, is a case where the plaintiff had agreed to work for the defendant a year for $120; worked part of the time, then quit without any fault on the part of defendant, and sued upon a quantum meruit for what he had done. LINCOLN, J., in delivering the opinion of the court, uses this language: "Nothing cau be more unreasonable than that a man, who deliberately and wantonly violates an engagement, should be permitted to seek in a court of justice an indemnity from the consequences of his voluntary act, and we are satisfied that the law will not allow it."

Rounds v. Baxter, 4 Greenl. 454, is very similar in its facts to the case of Ketchum v. Evertson, supra, and the court there said: "The failure in the article of performance, then, was owing to the plaintiff's own fault, negligence or inattention, and we are to decide whether the law, in such circumstances, will furnish him an indemnity against the consequences of this fault, negligence or inattention. It is a proverbial principle that a man is not permitted, in a court of justice, to take advantage of his own wrong or neglect. The principle is founded in the highest reason. The defendant never made an express promise to repay the money in question, and why should the law imply one in favor of a man who has violated his contract on the part of one who stands fair and innocent? If a man gives his neighbor $100, he cannot by law recover it back; no promise of repayment is implied, and when the

Wheeler v. Mather.

plaintiff concluded not to perform his contract, but abandon it, we must consider him as waiving all claim to what he had paid, as much as if he had given it without any pretense of consideration received."

In the case of Hansbrough v. Peck, in the supreme court of the United States, the contract contained a similar power, and also a clause authorizing the vendor to retain such purchase-money as had been paid. The court, however, does not place the decision upon that ground; because, that being a case in chancery, such a clause, if it operated as mere forfeiture, would receive but little countenance from a court of equity. But recognizing the rule as laid down in Ketohum v. Evertson, supra, the court said: "And no rule in respect to the contract is better settled than this: That the party who has advanced money or done an act in part performance of the agreement, and then stops short and refuses to proceed to its ultimate conclusion, the other party being ready and willing to proceed and fulfill all his stipulations according to the contract, will not be permitted to recover back what has been advanced or done." 5 Wall.

The cases of Smith v. Lamb, and Same v. Powell, 26 Ill. 396, are in perfect harmony with the principles above enunciated. There the vendor was in fault, and the vendees were not. The first three payments had been made and accepted, and, if not made in time, the vendor had made no objection; but, when the time came to make the last payment, he refused to convey, declared his inability to convey a good title for the reason that he had none and never had, and the court said: "Then it appeared that the vendor was not entitled to, and could not receive, the purchase-money, and he had no right to claim a tender of money which he had no right to receive. The purchaser had a right to repudiate the contracts as forfeited by the vendor, or rather, as never having been rightfully executed by him, because he had no right to make them. The plaintiffs had a right to say, you have received our money wrongfully, and even fraudulently, and you must pay it back to us as if you had never made these contracts, which you cannot perform, and which you should never have made."

So of the case of Gehr v. Hagerman, 26 Ill. 438. The right of rescission on the part of the vendee was based upon an alleged breach of the contract by the vendor. And so far from recognizing the right of a vendee who had made part performance and then