74

specified time is allowed for rescission after failure to perfect title, a rescission may be had immediately after the expiration of the time or within a reasonable time thereafter.73 One who waits four years after the discovery of fraud, and then does not offer to restore the real property, can have no standing in court, and if the buyer has been put upon inquiry he cannot wait three years to rescind; although a more lenient rule applies where there are fiduciary relations between the parties, and neither party has changed his position.76 One is too late in seeking a rescission when he waits until the vendor has acquired title and offered to convey upon payment of the amount due." A buyer will be denied relief because of his laches where he has purchased property for speculative purposes and held and advertised it for sale at an advanced price during a time when the real estate market was advancing and when he might reasonably expect to make a sale upon a profit, and then, after the market declines, seeks to rescind because of false representations.78 The taking of possession of land by a purchaser under a promise that he will subsequently receive an abstract of title showing satisfactory title, and that the vendor will proceed with a quiet title action and the making of improvements upon the land, do not work an estoppel against the purchaser's right to rescind if the vendor fails to perfect the title.79 The right to rescind because of a false representation of ownership of a certain undivided interest in the property is waived by the failure to make a prompt offer of rescis

73 Reed v. Witcher, 23 Cal. App. 136, 137 Pac. 294; Fountain Valley L. & I. Co. v. Wagoner, 59 Colo. 55, 147 Pac. 333.

74 Seeck v. Jakel, 71 Or. 35, L. R. A. 1915A, 679, 141 Pac. 211.

75 Whitney v. Bissell, 75 Or. 28, L. R. A. 1915D, 257, 146 Pac. 141.

76 McNiel v. Holmes, 77 Or. 165, 150 Pac. 255.

77 Morris v. Columbia Canal Co., 75 Wash. 483, 135 Pac. 238.

78 Kornblum v. Arthurs, 154 Cal. 246, 97 Pac. 420.

79 Read v. Loftus, 82 Kan. 485, 31 L. R. A. (N. S.) 457, 108 Pac. 850.

sion, but the buyer is entitled to a pro tanto reduction of the purchase price.80

84

§ 5732. Payment and delivery-Mutual agreements.— An agreement by which the vendor is to offer title within a reasonable time must also be performed by the purchaser within a reasonable time.81 A tender must be made in good faith and must be made to the other party himself if he can be found with reasonable diligence.82 The word "forfeiture" means nothing more than that upon the failure specified the contract is to terminate.88 The fact that the vendor does not have a marketable title does not excuse the purchaser from making payments; but where the seller agrees to furnish an abstract showing clear title and payment is to be made upon delivery of the same with deed, the buyer is not in default for not paying where no effort is made by the seller to clear the title.85 Mere forgetfulness on the part of the purchaser is no sufficient excuse for not making a payment on time.86 Where a vendor, during the life of a contract, mortgages the land he cannot put the vendee in default by demanding payment while the mortgage remains. 87 Where a vendor leads a buyer to believe that he will wait for overdue payments he cannot insist upon a forfeiture without giving reasonable notice.88 The acceptance of payments which are in default is a waiver of a stipulation that upon a default the payments made may be forfeited at the option of the vendor,

80 Brown v. Gordon etc. Co., 44 Colo. 311, 97 Pac. 1042.

81 Collins v. Keller, 62 Or. 169, 124 Pac. 681.

82 Fox v. Robinson, 18 Cal. App. 585, 123 Pac. 813; Cal. Civ. Code, 1489, 1493, 1495.

83 Fratt v. Daniels-Jones Co., 47 Mont. 487, 133 Pac. 700.

84 Barrows v. Harter, 165 Cal. 45, 130 Pac. 1050.

85 Brown v. Reichling, 86 Kan. 640, 121 Pac. 1127.

86 Fratt v. Daniels-Jones Co., 47 Mont. 487, 133 Pac. 700.

87 Gibson v. Rouse, 81 Wash. 102, 142 Pac. 464.

88 City of Los Angeles v. Krutz, 170 Cal. 344, 149 Pac. 580.

and prevents a subsequent enforcement of such provision except after notice.89 Where no forfeiture is declared by the terms of the contract, equity will relieve the vendee from a mere failure to pay upon the day named," but if time is of the essence, a tender of the balance due by a judgment creditor of the purchaser made after forfeiture cannot reinstate the contract.91 Where a contract for the sale of land has been partly performed and the vendor is not in default, and the conduct of the vendor in no way misleads the purchaser, the mere fact that the two parties were negotiating with reference to the subject of the contract does not relieve the purchaser from complying with its terms.92 The absence of the vendor from the state will excuse the tender of payment and relieve the vendee from default.93 A vendor who fails to keep his appointment as to the time and place of performance thereby waives a formal tender.94 Acceptance of past due payments does not always waive the forfeiture clause as to subsequent payments.95

§ 5734. Notice of rescission.-A vendee cannot complain because a vendor gives notice on the 27th of January and commences an action upon February 4th, where the vendee cannot show at the trial that he was able to make the payment required under the contract.96 Where the contract

89 Pearson v. Brown, 27 Cal. App. 125, 148 Pac. 956; Suburban Homes v. North, 50 Mont. 108, 145 Pac. 2; Miller v. Beck, 72 Or. 140, 142 Pac. 603; Boone v. Templeman, 158 Cal. 290, 139 Am. St. Rep. 126, 110 Pac. 947; Noyes v. Schlegel, 9 Cal. App. 516, 99 Pac. 726.

90 Davis v. Wilson, 55 Or. 403, 106 Pac. 795.

91 Johnson v. Sekor, 53 Wash. 205, 101 Pac. 829.

92 Prairie Dev. Co. v. Leiberg, 15 Idaho, 379, 98 Pac. 616.

93 Christy v. Baiocchi, 53 Wash. 644, 102 Pac. 752.

94 Painter v. Fletcher (Fletcher v. Painter), 81 Kan. 195, 105 Pac. 500.

95 Cash V. Meisenheimer, 53 Wash. 576, 102 Pac. 429; Garvey v. Barkley, 56 Wash. 24, 104 Pac. 1108.

96 Barrows v. Harter, 165 Cal. 45, 130 Pac. 1050.

provides for its termination upon the vendee's failure to make payment, without any option as to the right of the vendor to declare forfeiture, the vendor is not required to give notice of a maturing installment, or that a strict compliance with the terms of the contract will be required.97 Where the purchaser sues to rescind, it is immaterial that the vendor has waived the time clause.98 The fact that a vendor during the term of the contract transfers the land to a third party does not of itself abandon the contract with the purchaser.99 A contract for the sale of a lot is not rescinded by the vendor agreeing to a sale of a larger tract, which includes the lot.100 In a notice of rescission, the use of the word "cancel" is equivalent to the word "rescind. "'101

§ 5737. Time of the essence of the contract.-Where a contract requires the purchaser to make certain payments at stipulated times, the time of payments becomes of the essence of the contract.102 Where an offer to sell is made conditional upon an acceptance by a certain time, time is of the essence.103 A contract which provides that the deal must be closed within sixty days does not make time the essence of the contract.104 Where time is not of the essence a reasonable time must be given for compliance with the demand.105 Where the purchaser admits his inability to make payment the question of time being of the essence is immaterial.106

97 Fratt v. Daniels-Jones Co., 47 Mont. 487, 133 Pac. 700.

98 Myers v. Calhoun, 85 Wash. 689, 149 Pac. 19.

99 Parkside Realty Co. v. MacDonald, 166 Cal. 426, 137 Pac. 21. 100 Nance v. Avenall, 26 Cal. App. 551, 147 Pac. 583.

101 Pearson v. Brown, 27 Cal. App. 125, 148 Pac. 956.

102 Smith v. Post, 167 Cal. 69, 138 Pac. 705; Potter v. Post, 167 Cal. 796, 139 Pac. 283.

103 Sorenson v. Smith, 65 Or. 78, Ann. Cas. 1915A, 1127, 51 L. R. A. (N. S.) 612, 129 Pac. 757, 131 Pac. 1022; Gray v. Pelton, 67 Or. 239, 135 Pac. 755.

104 Knipe v. Troika, 92 Kan. 549, 141 Pac. 557.

105 Nason v. Patten, 88 Kan. 472, 129 Pac. 138.

106 Cook-Reynolds Co. v. Chipman, 47 Mont. 289, 133 Pac. 694.

§ 5738. Defense of defective title.-A purchaser under a warranty deed may set up broken covenants of seizin as a defense to a suit for the purchase money.107 A mistake as to the amount of land included in a legal subdivision, in the absence of any misrepresentation by the seller and in the presence of negligence on the part of the buyer, will not justify a rescission.108 A purchaser under an executory contract cannot take and hold possession and refuse to pay the price upon the ground that the title is defective, in the absence of fraud, insolvency of the debtor, or some other special circumstance, but should offer to return and rescind.109

§ 5741. Possession as notice.-The doctrine that possession of the grantor is constructive notice of any right claimed in hostility to the deed cannot be extended to a case where the grantor has expressly relinquished all equitable claim in his deed.110 If the vendor is in apparent possession, a purchaser finding the title of record in the vendor is put to no further inquiry even though there may be other persons upon the premises.111 A purchaser of real property must take notice of the right of persons in possession.112 One who purchases land from a grantee while the grantor is yet in possession must take notice of the right of the grantor which may exist outside of the deed.113 The purchase of a water right from the record owner made in

107 Brady v. Bank of Commerce, 41 Okl. 473, Ann. Cas. 1915B, 1019, 138 Pac. 1020.

108 Coolin v. Anderson, 26 Idaho, 47, 140 Pac. 969.

109 Harrell v. Neef, 80 Kan. 348, 102 Pac. 838; Pugh v. Stigler, 21 Okl. 854, 97 Pac. 566.

110 Sanguinetti v. Rossen, 12 Cal. App. 623, 107 Pac. 560.

111 Campbell v. Grennan, 13 Cal. App. 481, 110 Pac. 156.

112 Whitham v. Lehmer, 22 Okl. 627, 98 Pac. 351; Runyan v. Snyder, 45 Colo. 156, 100 Pac. 420; Morris v. Blunt, 35 Utah, 194, 99 Pac. 686; Turner v. Creech, 58 Wash. 439, 108 Pac. 1084; McBee v. O'Connell, 19 N. M. 565, 145 Pac. 123; Beeler v. Sims, 91 Kan. 757, 139 Pac. 371.

113 Telschow v. Quiggle, 74 Or. 105, 145 Pac. 11; contra, see Crawford v. Timm, 85 Wash. 568, 148 Pac. 886.