Samuel W. D. Frith (Plaintiff) Appellant;
and
The Alliance Investment Company (Defendants) Respondents
1913: November 4; 1914: January 21.
Present:—Sir Charles Fitzpatrick C.J. and Davies, Idington,
Duff and Anglin JJ.
ON APPEAL FROM THE SUPREME COURT OF ALBERTA.
Sale of lands—Contract—Agreement for re-sale—Novation—Rescission
— Specific performance—Defence to action—Practice—Evidence—Statute of Frauds—Principal
and agent—Agent purchasing—Disclosure—Findings of fact.
[Page 384]
In a suit for specific performance of a contract for the sale
of lands an agreement for the re-sale of the lands may be set up as a defence
notwithstanding that such re-sale agreement does not satisfy the requirements
of the 4th section of the Statute of Frauds. Judgment appealed from (10 D.L.R.
765) affirmed.
Such an agreement for re-sale affords a sufficient reason for
refusing a decree for specific performance of the original contract for sale.
The Supreme Court of Canada refused to review the finding of
the courts below that the defendants, while agents for the sale of the property
in question, when purchasing it themselves under the contract for re-sale, had
discharged their duty towards the plaintiff in regard to disclosure of material
facts relating to the value of the property.
Per Davies and Idington JJ. — Where the parties to a
contract come to a fresh agreement of such a kind that the two cannot stand
together the effect of the second agreement is to rescind the first.
APPEAL from the judgment of the Supreme Court of Alberta,
affirming the judgment of Harvey C.J., at the trial,
by which the plaintiff's action was dismissed with costs and the counterclaim
of the defendants was disallowed without costs.
The action was brought by the appellant for speci-
[Page 385]
fic performance of an agreement by the
company to sell certain lots in Calgary, Alta., to him. Being dissatisfied with
the situation of the property the plaintiff had listed it for sale with the
company which, being unable to secure a purchaser, offered to buy the property
back and, owing to what took place between them, the defence of the company was
that the appellant had resold the property to them and they relied upon this
also by counterclaiming for specific performance of the alleged agreement by
the appellant to re-sell the property to them. At the trial Chief Justice
Harvey dismissed the plaintiff's action with costs, and, on account of the
agreement for re-sale being ambiguous and not available as a memorandum in
writing within the Statute of Frauds, the counterclaim was disallowed without
costs. It was also contended, on the appeal, that the defendants were in a
fiduciary relationship towards the appellant; that they had information as to
increased value of the property which they did not communicate to the
appellant, and that, on the whole evidence, there should have been a decree for
specific performance of the agreement to sell to him.
W. B. A. Ritchie K.C. and J. Leslie Jennison K.C.
for the appellant.
Aimé Geoffrion for the respondents.
THE CHIEF JUSTICE.—I have had an opportunity of reading
the notes of Mr. Justice Anglin and I agree that this appeal should be
dismissed for the reasons stated by him.
DAVIES J.—I concur in dismissing this appeal for the
reasons stated by Mr. Justice Idington.
[Page 386]
IDINGTON J.—The appellant bought from the respondent, for
$641.25, some property, of speculative value, paid part of the price,
complained of its being unprofitable, listed it with respondent to re-sell at
$900, and, respondent's officials, concluding it was good value at that,
decided on behalf of respondent to offer the appellant this price on the terms
in his listing, but varied the terms so as to please him, and, so varied, he
accepted the offer.
The first transaction is in writing, and so is the last also, but
ambiguously so, by reason of the cancellation of some words in the receipt
rendering it doubtful if it fulfils the requirements of the Statute of Frauds.
This defect arose from the effort of the respondent to so vary it
as to meet appellant's views.
He seeks specific performance of his contract to purchase, whilst
repudiating his contract to re-sell to his vendor; after having for a month $50
of respondent's money in his pocket and having enjoyed its forbearance during
that month and many previous months in regard to his overdue payments under the
contract he sues on.
The parties, instead of simplifying matters by striking a balance
between them and making one transaction of these two, let each contract take
care of itself, and thus left it open for appellant, by way of experimental
litigation, to claim that he was entitled to specific performance of his
contract, in April, when the last payment should fall due thereunder, and that
respondent could not set up this contract of re-sale to his vendors either as
rescission of the first or an answer to the claim for specific performance.
I think it is quite possible to hold that, in light of
[Page 387]
all that transpired between the parties,
rescission is, in truth, what they intended, subject merely to this, that the
ultimate result of the financial adjustment (balancing accounts as the
respondent's payments fell due and were made) should be left to work itself out
in the few months that they had to run.
Such conditional rescission might well be treated as a complete
answer to the claim for specific performance.
For purposes, not involving the bringing of an action, a contract
falling within the fourth section of the Statute of Frauds is valid if
otherwise binding and not illegal.
Such a contract may and has often been held a complete answer by
way of defence to an action for specific performance, and the cases so
maintaining were cited in argument before us and relied upon herein and in the
courts below.
It is urged, however, with some force, that, however that may be,
when the new contract involves rescission, it cannot be so in a case where the
parties contemplated the continued existence of the contract.
It is always desirable to look at the substance of what the
parties in litigation had in view in their transactions out of which the
litigation has arisen, and to discard, if possible, the mere form of
expression, if clearly but a mere form of expression.
It is upon this or something like this principle that the legal
rights of these parties must be decided.
It is laid down in Fry on Specific Performance (4 ed.), section
1031, thus:—
Where the parties to a contract come to a fresh agreement of
such a kind that, the two cannot stand together, the effect of the second
agreement is to rescind the first. This is one form of novatio in Roman
law.
[Page 388]
He then reviews a number of authorities and in conclusion, in
section 1039, says, as follows:—
But where the new contract is relied on only as an
extinguishment of the old one, the mere fact that it is not in writing, and so
could not be put in suit, seems to be no ground for denying its effect in
rescinding the original contract. The Statute of Frauds does not make the parol
contract void, but only prevents an action upon it; and it does not seem to be
necessary to the extinction of one contract by another that the second contract
could be actively enforced. The point has never, it is believed, been matter of
decision. But, in point of principle, it seems to stand on the same footing as
a simple agreement to rescind.
I think his conclusion fits this case and puts the principle on
which it must be decided in its true light.
Again, let us assume the receipt in question herein constitutes a
compliance with the Statute of Frauds, and the appellant's action was resisted
upon no other ground than thus furnished: Does any one believe that a court
proceeding upon the fundamental principles upon which the right to specific
performance rests, would listen to such a claim for a moment — as to enforce a
conveyance in April when clearly there must be a re-conveyance in August
following?
Such a thing, I imagine, would be treated by a court so appealed
to as most palpably trifling.
Then, if the written contract of re-sale is a bar, so must the
oral one, or partly written partly oral, be a complete defence upon the
authority of the cases cited.
And, as to the question springing from the relation of principal
and agent, I do not think on the evidence before us there is anything open to
the appellant herein.
There was no concealment by respondent, no failure on
respondent's part to disclose anything known
[Page 389]
to it, but unknown to appellant. Each
used his own judgment. The respondent's may have been better than that of the
appellant, tout that is always liable to happen.
The law has not pushed the principles governing the relation of
principal and agent so far as to preclude that sort of thing, or it would
render it impossible for an agent ever to buy from his principal.
The dealing must be fair, but is not impossible.
And the evidence of the opinion of others next day in regard to
values in a highly speculative market can be of no value, standing alone, as a
test of what is fair.
The appellant was a speculator himself and his opinion is just as
good. See Kelly v. Enderton.
The appeal should be dismissed with costs.
DUFF J.—I have come to the conclusion that, in the absence
of any defence based upon the 4th section of the Statute of Frauds, the
respondents would be entitled to enforce against the appellant the agreement of
the 18th of February. The real question is whether (there being no memorandum
sufficient under that enactment) that agreement was an answer to the
appellant's action. At the date of the trial, 7th February, 1912, the
respondents would have been entitled under the terms of the agreement of
February, 1911 (assuming that agreement enforceable) to demand an assignment of
the appellant's interest in the lands on payment of the purchase price; and, in
these circumstances, I think the Chief Justice of Alberta was right in refusing
specific performance of the earlier agreement.
[Page 390]
I shall assume that, under the law of Alberta, the appellant, by
virtue of the agreement of April, 1910, acquired before the second agreement
was entered into an interest in the lands in question that would be an
"interest in lands" within the meaning of the Statute of Frauds (4th
section). The law of England is clear enough that a purchaser under an
agreement for the sale of lands still in fieri, the circumstances being
such that on the performance of his obligations he would be entitled to a
decree for specific performance of it, has such an interest in the land; but
the interest is an equitable interest and it rests upon the fact that there is
an agreement of sale in respect of which a court of equity would decree
specific performance. The existence of an agreement enforceable by action at
law only would not vest in him an interest in the land. Primarily the
(equitable rights were rights in personam, but the peculiar nature and
efficacy of the remedies available in the Court of Chancery for the enforcement
of such rights together with the effect of the equitable doctrine of notice, in
enormously widening the field over which rights in personam would
otherwise have been enforceable, eventually led in certain cases to such rights
being regarded as jura in re and protected as rights of ownership. But
every merely equitable right of ownership or interest in the property owes its
vitality to the jurisdiction of the Court of Chancery.
The question to be determined here is whether, notwithstanding
the agreement of February, 1911, the appellant is entitled to demand the
exercise of that jurisdiction by way of decreeing specific execution of the
contract of April, 1910. I concur with Har-
[Page 391]
vey C.J. in thinking that the existence
of the subsequent agreement is a proper ground for refusing the equitable
remedy.
All the other points resolve themselves in questions of costs in
regard to which this court ought not to intervene.
ANGLIN J.—There is much in the circumstances under which
the defendants procured from the plaintiff the contract for the re-sale of the
property in question that is calculated to arouse a suspicion that they failed
to make to him that full disclosure of material facts which is incumbent on
agents for sale when they themselves become purchasers. But the trial judge has
said that it was
established to my entire
satisfaction that the plaintiff knew he was dealing with the defendants as
purchasers, and that no advantage whatever had been taken of him.
Although, in appeal, Mr. Justice Walsh expressed his dislike of
at least one
incident in connection with the dealings between the parties on this re-sale,
he accepted, as did Mr. Justice Scott and
Mr. Justice Simmons, "the findings of fact adverse to the plaintiff."
While not satisfied that, if I had been presiding at the trial of this action,
I should, upon my present appreciation of the evidence, have reached the
conclusion that the defendants had fully discharged their duty to the plaintiff
as his agents, I am not prepared to reverse the concurrent finding of two
courts upon that point, which must to a considerable extent, in the case
of the learned trial judge, have rested upon the view taken by him of the
credibility and weight of the testimony of the several witnesses.
[Page 392]
On the other branch of the case, while, in my opinion, the
contract of re-sale did not effect and was not intended to effect a rescission
of the original contract— the terms of the re-sale contract, the conduct of the
parties in regard to the payments and the- retention by the defendants of the
purchase money paid on the original contract make that very clear — I do not
think the plaintiff is entitled to invoke the exercise of the equitable
jurisdiction of the court to decree specific performance. He made a contract of
re-sale which is unenforceable by action only because an ambiguity in the
receipt which he gave for the first instalment of the purchase money renders it
insufficient as a memorandum to satisfy the requirements of the fourth section
of the Statute of Frauds. Under that contract, if enforceable, the defendants
would be entitled on their counterclaim to a decree for specific performance of
it and a re-conveyance to them of the property in question concurrently with
the decree which the plaintiff claims requiring the defendants to convey the
same property to him. Under such circumstances the court should not, I think,
decree specific performance in favour of the plaintiff. While not available to
support an action, the contract of re-sale may be used as a defence. To that
the Statute of Frauds offers no obstacle. Given as a defence the effect which
it would have had in an action upon it, if properly evidenced, the contract of
re-sale affords a sufficient answer to the plaintiff's claim to a decree for
specific performance.
Whatever may be thought of the conduct of the defendants, the
plaintiff's own course of dealing in
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this matter was not such as to entitle
him to any special consideration from a court of equity.
I would dismiss the appeal with costs.
Appeal dismissed with costs.
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