Fletcher v. Fletcher , 158 Ga. 899 ( 1923 )

Hines, J.

1. Under the oral contract between T. Y. Eletcher and E. L. Fletcher, by which they agreed to exchange lands, for the failure of T. Y. Fletcher to perform his agreement therein to lift the encumbrance on his tract, so that the same could be conveyed to E. L. Fletcher free therefrom, and to build thereon a dwelling, E. L. Fletcher could, without the consent of T. Y. Eletcher, rescind the incompleted contract of exchange, upon restoring the latter to the condition in which he was before the contract was made, T. Y. Eletcher being insolvent and unable to respond to E. L. Eletcher in damages for the breach of his agreements in the respects mentioned. Civil Code (1910), § 4306.

2. The right of one party to rescind a contract, for non-performance by the other party of his obligations thereunder is not confined to covenants in their strict legal sense, but extends to agreements other than such covenants. Sentell v. Mitchell, 28 Ga. 196; Willingham v. Hooven, 74 Ga. 233 (58 Am. R. 435); Williams Mfg. Co. v. Warner Refining Co., 125 Ga. 408, 412 (54 S. E. 95); Georgia Supply Co. v. Coffee, 8 Ga. App. 502 (69 S. E. 1083).

3. This ease does not come within the rule that an absolute deed of conveyance will not, at the instance 'of the grantor, be cancelled merely because of a breach by the grantee of a promise made by him in consideration of which the deed was executed (Brand v. Power, 110 Ga. 522, 36 S. E. 53; Christian v. Ross, 145 Ga. 284, 88 S. E. 986; Moore v. Turner, 146 Ga. 197 (3), 91 S. E. 13; Whidhy v. Willis, 151 Ga. 43, 105 S. E. 470), because the present suit is not one to cancel an absolute conveyance, and because the vendor in this ease is insolvent. In eases of covenants, a breach thereof, coupled with insolvency of the covenantor, will authorize a decree of cancellation of an absolute deed of conveyance, although the instrument contains no condition upon the happening of which the estate is to determine. McCardle v. Kennedy, 92 Ga. 198 (17 S. E. 1001, 44 Am. St. R. 85); Wyatt v. Nailer, 153 Ga. 72 (111 S. E. 419). By parity of reasoning, a court of equity will more readily decree the rescission of an incomplete and unconsummated oral agreement for the exchange of lands, where one of the parties fails to perform his part of the contract, upon performance of which the oral agreement was to be consummated by the execution' of proper instruments of conveyance.

4. The. erection by a party to an oral agreement for the exchange of lands of valuable improvements on the tract which he receives and takes possession of under the exchange, such party taking possession and making such improvements relying upon the promise of the other party to perform his obligations under the agreement, upon the performance of which the trade was to be consrunmated by the execution of the necessary papers, will not prevent such party from seeking a rescission of such oral agreement, for the non-performance by the other party of his obligations thereunder, in consequence whereof such party entirely loses the tract which he was to get under the exchange, the party so failing to perform having become insolvent and unable to respond in damages to the party seeking the rescission. Restoration does not require that the opposite party shall be placed in the exact situation in which he was before the exchange, but only that he be placed substantially in his original position, and that the party rescinding shall derive no unconscionable advantage from the rescission. 4 R. O. L. 511, § 23. The rescinding party, not being in default, would be entitled to an allowance for the value of permanent, substantial improvements erected by him on the land of his adversary. Lytle v. Scottish American &c. Co., 122 Ga. 458 (12) (50 S. E. 402). Likewise, the fact that the plaintiff had disposed of timber on the land so received by him under the exchange, and that one of the mules received by him under the exchange had died, would not deter him from rescission, he offering to account for the value of the timber and the mule.

5. The petition sufficiently alleges that the plaintiff notified the defendant 1 of his intention to disaffirm the contract, and that he had offered to restore the status before the institution of this suit.

6. Where the defendants took possession of the land of the plaintiff under the parol contract of exchange hereinbefore mentioned, and received therefrom rents and profits sufficient to discharge the debt secured by the plaintiff’s deed to the defendant, Fletcher, the plaintiff by appropriate equitable pleadings could sue f'or a rescission of the parol contract of exchange, and an accounting and recovery of the land, the last relief being based on the ground -that such rents and profits were sufficient to discharge the debt; and if on the hearing it should appear that the plaintiff was entitled to rescission of said contract, and that the ‘secured debt had not boon wholly discharged, a vetdict may be rendered fixing the amount of the debt remaining unpaid, and finding the property for the plaintiff on payment of such amount. Waller v. Dunn, 151 Ga. 181 (106 S. E. 93). An accounting between the parties being necessary to fix the amount of the secured debt, no formal tender of the actual amount which may be due the defendant and grantee in the security deed was necessary; and it was sufficient for the plaintiff in his petition to offer to pay whatever amount might be found to be due to the defendant, Fletcher, upon an accounting. Wynne v. Fisher, 156 Ga. 656 (119 S. E. 605).

7. The equity under a contract for value is superior to that of a mere volunteer. Civil Code (1910), §4525. It follows that the equity of a party to an oral contract for the exchange of lands, who is entitled to a rescission of such contract for non-performance by the other party thereto of his covenants thereunder, is superior to the equity of a donee who claims, under gift from the party in default, the land of the party seeking to rescind the contract, and to recover the land which he was to exchange for the land of the party so in default.

Nos. 4080, 4093. September 30, 1923.

8. The plaintiff’s amendment to his petition did not set up a new and distinct cause of action, and the trial court properly overruled an objection to its allowance on this ground.

9. Applying the above principles, the court below erred in sustaining the demurrer, either upon its general or special grounds.

Judgment reversed on the main hill of exceptions, and affirmed on the cross-hill.

All. the Justices concur, 'except Russell, O. J., dissenting. A. J. & J. C. McDonald and Eldridge Cutís, for plaintiff. Wall & Grantham and Quincey & Bice, for defendants.