Burks v. Davies

Paterson, J. On August 8, 1887, the defendant executed and delivered to the plaintiff a contract, the material portions of which, so far as this case is concerned, are as follows: “Received of J. H. Burks one thousand dollars, in purchase of option to buy the undivided one third of [certain lands particularly described]; said option to be from this date to the first day of September next. .... In case said purchase is made during the time above mentioned, the amount this day received is to be deducted from first payment; but in case the said purchase is not made in said time, then the amount this day received shall be forfeited, and no part of said option money is to be returned. Time is the essence of this contract.” The court found that at the time of the transaction the plaintiff understood that the defendant was the owner of an undivided one third of the lands referred to in the agreement, and that the remaining two thirds were owned by others, and being desirous of purchasing the whole of the lands, had concluded an agreement with the other parties respecting their interest, substantially the same as the one above referred to, of all of which defendant had actual notice; but, as a matter of fact, the defendant and the other parties referred to were not the owners of the entire tract of land. Five acres thereof were owned by George H. Smith. The court found that the defendant had notice at the time of the execution of the contract that Smith was the owner of the five acres, but neglected to communicate the fact to plaintiff, although he knew plaintiff was relying on his ability to purchase the whole of the land, and would not have entered into the contract had he known of the defect in the title. Prior to the first day of September, plaintiff was notified by Smith of the latter’s claim to the land, and having satisfied himself [112]that Smith’s claim was well founded, he promptly rescinded the contract, and demanded repayment of the one thousand dollars paid by him to the defendant.

The plaintiff had judgment in the court below for one thousand dollars and costs of suit, and defendant appealed.

It is said by Sugden, in his treatise on Vendors, that “ where a person sells an interest, and it appears that the interest which he pretends to sell was not the true one, .... the purchaser may consider the contract at an end, and bring action for money had and received, to recover any sum of money which he may have paid in part performance of the agreement for sale.” It is admitted by counsel for appellant that it is the duty of one who has made an unconditional agreement to sell land to perfect his title at once, if he desires to hold the vendee to his bargain, but they claim “no such imperative duty rests upon one who has merely sold an option. His obligation to convey does not arise until the other party has notified him that he intends to purchase; .... a party need not own property in order to sell an option to purchase it; .... the plaintiff never could recover the one thousand dollars unless he alleged and proved either that the defendant failed to convey after demand and tender of the purchase-money, or else some facts which excused such demand and tender on his part.”