Cochran v. Pascault

Miller, J., delivered the opinion of the Court. The main question arising on these appeals is presented in this way:—On the 5th of August, 1871, Francis R. Pascault and Catharine H. Pascault his wife, and Louisa Lusby, sold and conveyed two parts of a tract of land in Cecil County, called “ Greenfield,” to Henry S. Cochi’an for the sum of $40,000, and on the same day Cochran and wife executed a mortgage of the land to Mrs. Catharine Pascault to secure the purchase money, which, by the terms of the mortgage, was made payable in instalments, and on a long credit. Cochran having made default, the mortgagee, on the 20th of August, 1878, filed a bill for the sale of the mortgaged property to pay the instalments then due and unpaid. Instead of answering this bill, the mortgagors, on the 17th of October, 1878, filed a cross-bill, praying that the sale may be rescinded, and the deed and mortgage cancelled, and the question is, are they entitled to this relief? ¹¹ • The ground of complaint is, that at the time of the purchase representations were made hy the vendors to the vendee as to their title to the land, which the latter, a few days before the filing of his cross-hill, had discovered to he untrue, and he charges that he made the purchase, accepted the deed and executed the mortgage, relying upon the truth of these representations, and was misled and deceived thereby.

These representations are in the recitals of the deed, and are to the effect, that Mrs. Pascault was “seized in fee in her own right of,” one part of Greenfield, which is described and conveyed, “ which she acquired under the will of her late mother, Mary C. Lushy, deceased, which will was proved and recorded in the office of the Register of Wills for Baltimore City, in Liber I. P. C., No. 31, folio 336, &c., and which said lands were allotted to her in the partition of her mother’s estate, as set forth among the records of the Orphans’ Court, in Liber Proceedings, I. P. C., No. 38, folio 105, &c.; ” and that Mr. Pascault was “ seized of an equitable estate in fee of” the other part “which had been allotted to Augusta W. Lusby in the allotment aforesaid, and which comprises all her share of Greenfield, except the part thereof she sold to John P. Walmsley.” The deed also contains a covenant (and it is the only covenant in it) on the part of Pascault and wife, that they will execute and deliver, or procure to be executed and delivered, such other and further assurances as may be necessary and proper to secure the said lands. This will was admitted to probate in 1863, and the partition referred to was made in 1861, by the executors under the order and direction of the Orphans’ Court. It is conceded that that Court had no authority or jurisdiction in the premises, and consequently Pascault and wife did not by this partition acquire the legal title in severalty to the part thus allotted to the wife, and no deeds, at the time, were executed between the parties in pursuance of the ¹² partition. It appears, however, from the statement of facts, that Pascault and wife, immediately after the partition was made, entered and held exclusive possession of the part thus allotted to the wife up to the date of the deed to Cochran, when they delivered possession thereof to him, in pursuance of the deed, and he has never been evicted or in anywise disturbed in that possession.

Pascault and wife admit they made the representations as to title set out in the deed, and testify that they believed them to be true, and continued in that belief until a few days before the cross-bill was filed, when they were first made aware of the defect through information received from Cochran. On the other hand, Cochran and wife testify that they would not have accepted the deed, nor have executed the mortgage but for the fact that they relied upon and were misled and deceived by these representations. It is conceded there was no fraudulent intent or purpose on the part of the vendors, and from the fact that the source of title was disclosed to the vendee and stated on the face of the deed, it is evident that both parties supposed the partition referred to was valid and effectual to convey in severalty the parts allotted to the several devisees. It was, therefore, a case of mutual mistake as to a question of law.

Shortly after the cross-bill was filed, and before they answered it, Pascault and wife obtained from all the other parties interested, (all of whom were of full age,) a conveyance, by which the legal title to this land was vested in them, and they then executed a deed, conveying the same to Cochran, and tendered it to him, but he refused to receive it, save upon conditions which they declined to accept. There can be no question but that this deed effectually cured all defects of title. This then is a case in which a vendee of real estate, after seven years of undoubted possession, seeks in a Court of equity the rescission of an executed contract of ¹³ sale, the annulment of the deed by which it was consummated, and cancellation of the mortgage given to secure the purchase money. And he seeks this relief without pretence or proof of any actual, positive or intentional fraud on the part of the vendors, or of any damage or injury to himself resulting from the alleged misrepresentations, and that too in a case where the source of the title in respect to which the representations were made and in which the defect existed, was stated on the face of the deed, and where, pending the suit for rescission, the vendors, in compliance with their covenant for further assurance, have, at their own cost, acquired the title which their deed recited, and have tendered to the complainant a conveyance which will make his title perfect.

We have found no well considered case which has decided that under such circumstances it is competent for a Court of equity to rescind the contract. There is no question here of specific performance. The object is to rescind an executed contract for the sale of real estate, consummated and evidenced by the most solemn instrument known to the law. To do this is an exertion of the most extraordinary power of a Court of equity, a power that ought not to he exercised except in a clear case, and never for an alleged fraud unless the fraud he made clearly to appear; never for alleged false representations unless their falsity is certainly proved, and unless the complainant has been deceived and injured by them.

Atlantic Delaine Co. vs. James, 4 Otto, 207 ; McShane vs. Hazlehurst, 50 Md., 107 . Injury resulting from the misrepresentations, even when they are knowingly and fraudulently made, is as esseirtial to relief in equity where rescission of an executed contract is sought, as it is in an action at law for deceit. The case of Kimball vs. West, 15 Wallace, 379, (a case in one respect very similar to this,) affords a strong illustration of this doctrine. There a hill was filed to rescind a contract for the sale of lands ¹⁴ "which had been fully executed by a conveyance with a covenant of warranty, and payment of the purchase money.

The bill averred that the vendor fraudulently represented to the agent of the purchasers that his title to the whole tract was perfect, and fraudulently concealed the pendency of an ejectment suit for the more valuable part of it, in which a recovery was subsequently had against him. On this question of concealment and fraudulent representations testimony was taken on both sides, which (as the report states,) did not leave the matter free from doubt. ‘But before the cause came to final hearing, the defendant purchased the outstanding and conflicting title to the part involved in the ejectment suit, and tendered 'to the complainants such conveyances as made their title perfect, and the Court therefore dismissed their bill. On appeal it was argued by the appellants’ counsel that there was confessedly misrepresentations by the vendor as to five-twelfths of the whole tract, and that he could not by coming in now at the • eleventh hour and offering a good title destroy their right to a rescission of the contract, or at least to compensation for the portion included in the ejectment suit, and to illustrate he puts this case: “ Suppose the purchasers bought for immediate re-sale on a high but falling mai'ket, obviously they are not made whole by the tender of a good title now, their opportunity of sale is gone and their lost time and pains is their profit.” But the Supreme Court speaking by Mr. Justice Mtt,t,utí. puts aside all consideration of the question of fraud, and expresses its views of the case briefly thus: “We are of opinion the decree of the Court below was clearly right. The plaintiffs had paid their money and accepted of the defendant his deed with a clause warranting the title.

For any defect.in that title the law gave them a remedy by an action on the covenant. But when declining to pursue that remedy, they apply to a Court of equity to rescind the whole contract, thereby compelling ¹⁵ the defendant to repay the sum of $22,000, and receive back the title which he had conveyed to the plaintiffs, the necessity for such a decree to obtain the ends of justice must be very clear before it will be given. When therefore it appears that at the time of the hearing the defendant is able to remedy the supposed defect in his title, and in point of fact secures and makes good to the complainants, at his own cost, all that he conveyed to them originally, the complainants must show some loss, injury or damage by the delay in perfecting the title, before they can claim a rescission of the- contract. And even if this could be shown, which is not attempted in this case, the Court, as a general rule, would not be authorized to decree a rescission, if compensation could be made for the injury arising from the delay in making good the original defect in the title.” So again in Clanton vs. Burgess, 2 Dev.

Eq., 13 , (which is also a case in many respects similar to this,) there was a bill to rescind a contract for the sale of land consummated by a deed in fee, with covenant for quiet enjoyment, and also praying for an injunction to restrain execution of a judgment upon the bond given for the purchase money. The bill charged that the vendor represented he had a good title in fee, that the complainant made the purchase confiding in this representation, and that in truth the defendant had not an estate in fee simple in the