tions as to its profitableness, may rescind, and recover back what he gave for it, but in so doing he must account for the receipts derived from the business while he was in possession. 269

271

§ 635. Allowance for Cost of Keeping and Expense of Restoration. The party rescinding a contract, or receiving notice of a rescission from the other, must thereupon do all that is reasonably in his power to prevent further loss or damage to the other, though this may call for affirmative action on his part and the incurring of expense.270 Hence if the property in his possession and which is to be returned to the other party is of such a nature as to require the expenditure of money in taking care of it until it can be so returned, he is entitled to be reimbursed for such expense, and also for the expense, if any, of returning the property.2 On a similar principle, where a vendee of land rescinds the contract because adjoining property encroaches on that contracted to be sold, he is entitled to recover the reasonable expense incurred in making a search of the title and obtaining a survey of the property.272 But it seems that the purchaser of goods, who rescinds for defective quality, cannot require the seller to reimburse him for freight charges and cartage which he has expended for their transportation.273 and one who was under the necessity of moving somewhere, and would have done so had he not moved onto the place which he bought, cannot recover for the expense of such moving, on obtaining the rescission of the contract for false representations, as such expense was not a direct and proximate result of the misrepresentations.274 And while a defrauded vendor, seeking to rescind, must restore to the other party the consideration paid, he is under no obligation to

269 Keefuss v. Weilmunster, 89 App. Div. 306, 85 N. Y. Supp. 913. 270 Dillon v. Anderson, 43 N. Y. 231. And see Mincho v. Bankers' Life Ins. Co., 124 App. Div. 578, 109 N. Y. Supp. 179.

271 Berkey v. E. Lefebure & Sons, 125 Iowa, 76, 99 N. W. 710; Ford v. Oliphant (Tex. Civ. App.) 32 S. W. 437. Contra, see Whiting v. Sullivan, 7 Mass. 107. And see Coon v. Reed, 1 Hilt. (N. Y.) 511. Compare Brundy v. Canby, 50 Mont. 454, 148 Pac. 315.

272 Klim v. Sachs, 102 App. Div. 44, 92 N. Y. Supp. 107.

273 Estes v. Kauffman, 44 Pa. Super. Ct. 114.

274 Neely v. Rembert, 71 Ark. 91, 71 S. W. 259.

pay the fraudulent vendee's expenses incurred by the latter to other parties in carrying out his fraudulent scheme.275

§ 636. Allowance for Improvements and Repairs.-In the accounting which should take place upon the rescission or cancellation of a contract for the sale of land, the vendee, having been in possession, will ordinarily be entitled to a proper allowance for the expense incurred by him in making valuable and permanent improvements.276 Or he may physically remove from the premises improvements which he has placed thereon, if this is practicable and if it can be done without injury to the freehold,277 though neither the vendor nor the court can compel him to take this course if

275 J. I. Case Plow Works v. Ross, 74 Mo. App. 437.

276 Hawkins v. Merritt, 109 Ala. 261, 19 South. 589; Baptiste v. Peters, 51 Ala. 158; Thompson v. Lee, 31 Ala. 292; Bryant's Ex'r v. Boothe, 30 Ala. 311, 68 Am. Dec. 117; Foster v. Gressett, 29 Ala. 393; Weaver v. Jones, 24 Ala. 420; Byers v. Fowler, 12 Ark. 218, 54 Am. Dec. 271; Swanston v. Clark, 153 Cal. 300, 95 Pac. 1117; Fountain v. Semi Tropic Land & Water Co., 99 Cal. 677, 34 Pac. 497; McIntire v. Pryor, 10 App. D. C. 432; Lytle v. Scottish American Mortg. Co., 122 Ga. 458, 50 S. E. 402; Fabrice v. Von Der Brelie, 190 Ill. 460, 60 N. E. 835; Leach v. Leach, 4 Ind. 628, 58 Am. Dec. 642; Veeder v. Veeder, 141 Iowa, 492, 120 N. W. 61; Campbell v. Spears, 120 Iowa, 670, 94 N. W. 1126; Read v. Loftus, 82 Kan. 485, 108 Pac. 850, 31 L. R. A. (N. S.) 457; Halley v. Winchester Diamond Lodge, 97 Ky. 438, 30 S. W. 999; Hewitt v. Berryman, 5 Dana (Ky.) 162; Wheeler v. Preston, 32 Ky. Law Rep. 791, 107 S. W. 274; Griffith v. Depew, 3 A. K. Marsh. (Ky.) 177, 13 Am. Dec. 141; Burch v. Jones, 9 Ky. Law Rep. 458, 5 S. W. 408; Smith v. Townshend, 27 Md. 368, 92 Am. Dec. 637; Johnson v. Paulson, 103 Minn. 158, 114 N. W. 739; McClure v. Lewis, 72 Mo. 314; Kirkpatrick v. Downing, 58 Mo. 32, 17 Am. Rep. 678; Coffman v. Huck, 19 Mo. 435; Reed v. Exum, 84 N. C. 430; Williamson v. Moore, 2 Disn. (Ohio) 30; Owings v. Turner, 48 Or. 462, 87 Pac. 160; Jones v. Shefler (Or.) 151 Pac. 463; Tyler v. Cate, 29 Or, 515, 45 Pac. 800; Witherspoon v. McCalla, 3 Desaus. (S. C.) 245; Treece v. Treece, 5 Lea (Tenn.) 221; Winters v. Elliott, 1 Lea (Tenn.) 676; Smithson v. Inman, 2 Baxt. (Tenn.) 88; Humphreys v. Holtsinger, 3 Sneed (Tenn.) 228; Moore v. Giesecke, 76 Tex. 543, 13 S. W. 290; Patrick v. Roach, 21 Tex. 251; Hays v. Bonner, 14 Tex. 629; Foster v. Eoff, 19 Tex. Civ. App. 405, 47 S. W. 399; Kilborn v. Johnson (Tex. Civ. App.) 164 S. W. 1108; McComas v. Easley, 21 Grat. (Va.) 23; Irick v. Fulton's Ex'rs, 3 Grat. (Va.) 193; Snarski v. Washington State Colonization Co., 53 Wash. 221, 101 Pac. 839; Worthington v. Collins' Adm'r, 39 W. Va. 406, 19 S. E. 527.

277 Cutter v. Wait, 131 Mich. 508, 91 N. W. 753, 100 Am. St. Rep. 619; Glass v. Hampton (Ky.) 122 S. W. 803; Morgan v. Combs, 33 Ky. Law Rep. 817, 111 S. W. 294.

he elects rather to claim compensation in money for his improvements.278 If an allowance is to be made in money, some of the cases hold that its amount is not to be measured by the actual cost of the improvements, but only by their reasonable cost or reasonable value.279 But a majority of the decisions follow the general rule that this allowance is not to be measured by either the actual or the reasonable cost of the improvements, but by the amount to which they have permanently increased the vendible value of the estate.280 But although it does not necessarily follow that land is enhanced in value to the same amount as the cost or value of the improvements placed upon it, the court may fairly infer that such is the case if there is no other evidence on the subject.281 And where the rescission of the contract of sale is effected in pursuance of an agreement to that effect, permitting the vendor to re-enter upon certain conditions, one of which is that the vendee shall be repaid for all improvements which he has made, it is said that the measure of valuation in settlement is the cost of the improvements, and not the enhanced value of the land, the rule governing actions for mesne profits not being here applicable.282

It should be remembered that, as pointed out in an earlier section,288 the vendee is chargeable for the rents received, or the rental value of the property, while in his possession, and this may be set off against his claim for improvements, and no allowance will be made for such improvements if it is not shown that they exceed in value the rents or rental

278 North v. Bunn, 128 N. C. 196, 38 S. E. 814.

279 Fountain v. Semitropic Land & Water Co., 99 Cal. 677, 34 Pac. 497; Mootz v. Petraschefski, 137 Wis. 315, 118 N. W. 865.

280 Conlan v. Sullivan, 110 Cal. 624, 42 Pac. 1081; Halcomb v.. Ison, 140 Ky. 189, 130 S. W. 1070; Floyd v. Mackey, 112 Ky. 646, 66 S. W. 518; Combs v. Combs, 23 Ky. Law Rep. 1264, 65 S. W. 13; Lainhart v. Gabbard, 28 Ky. Law Rep. 105, 89 S. W. 10; Thornton v. Ogden, 41 N. J. Eq. 345, 7 Atl. 619; Jones v. Sandlin, 160 N. C. 150, 75 S. E. 1075; Gillis v. Arringdale, 135 N. C. 295, 47 S. E. 429; North v. Bunn, 128 N. C. 196, 38 S. E. 814; Smith v. Stewart, 83

N. C. 406; Smoot v. Smoot, 12 Lea (Tenn.) 274; Smithson v. Inman, 2 Baxt. (Tenn.) 88; Burwell v. Sollock (Tex. Civ. App.) 32 S. W. 844. 281 Owen v. Pomona Land & Water Co., 131 Cal. 530, 63 Pac. 850, 64 Pac. 253.

282 In re Sutton's Estate, 13 Pa. Super. Ct. 492.

283 Supra, § 634.

value of the estate. 284 Moreover, there are numerous decisions which make the question of allowing the vendee for improvements depend on his good or bad faith, and which hold that, if he obtained a conveyance of the land by means of fraud practised upon the vendor or false representations made to him, he is not a holder in good faith, and has no equity to claim any reimbursement whatever for the amount he has expended in making improvements.285 And on the same principle, the vendee should not be allowed compensation or credit for improvements made by him after the institution of a suit against him to rescind the sale,286 or after he has discovered that he was tricked into making the purchase by false representations, and so knows or ought to know that he himself will seek a rescission,287 and where a parol contract for the sale of land is repudiated by the vendor, the vendee is not entitled to damages for improvements placed on the land prior to the contract of sale.288 It has also been held that if the purchaser constructs valuable improvements on the land in reliance on the ability of the vendor to give him a good legal title, he cannot recover for their value, though he rightfully refuses to take the title

284 Gage v. Pike, 1 Smith (Ind.) 145; Bozarth v. Banister, 143 Ky. 476, 136 S. W. 902; Alvey v. Alvey, 30 Ky. Law Rep. 234, 97 S. W. 1106; Stephenson v. Stephenson, 24 Ky. Law Rep. 1873, 72 S. W. 742; Meriwether v. Meriwether, 3 Litt. (Ky.) 417; Godwin v. Parker, 152 N. C. 672, 68 S. E. 208; Hoover v. Calhoun, 16 Grat. (Va.) 109.

285 Jackson v. Ludeling, 99 U. S. 513, 25 L. Ed. 460; Blank v. Aronson, 187 Fed. 241, 109 C. C. A. 327; Dean v. Roberts, 182 Ala. 221, 62 South. 44; Reeder v. Meredith, 78 Ark. 111, 93 S. W. 558, 115 Am. St. Rep. 22; Mosely v. Miller, 13 Bush (Ky.) 408; Linthicum v. Thomas, 59 Md. 574; Suburban Homes Co. v. North, 50 Mont. 108, 145 Pac. 2; Moore v. Brown, 15 Tex. 129; Chambers v. Wyatt (Tex. Civ. App.) 151 S. W. 864; Jinks v. Moppin (Tex. Civ. App.) 80 S. W. 390; Knox v. Earbee (Tex. Civ. App.) 35 S. W. 186; Prickett v. Muck, 74 Wis. 199, 42 N. W. 256. But compare Chaney v. Coleman, 77 Tex. 100, 13 S. W. 850; McAlister v. Barry, Fed. Cas. No. 8,656. In Louisiana, a purchaser in bad faith cannot demand restitution of sums paid for improvements as a condition precedent to an action against him for nullity, but he may claim such sums in reconvention, and claim the payment of them, or judgment for them, in case he is evicted. Mallerich v. Germaine, Man. Unrep. Cas. (La.) 444.

286 Thompson v. Kilcrease, 14 La. Ann. 340; Snider v. Snider, 3 W. Va. 200.

287 Neely v. Rembert, 71 Ark. 91, 71 S. W. 259. 288 North v. Bunn, 128 N. C. 196, 38 S. E. 814.

finally offered,289 and that a vendee who incurs a forfeiture of his contract by failing to make the stipulated payments in due time, or who admits his inability to make such payments and abandons the possession, is not entitled to be compensated for his improvements.200 At any rate, a forfeiture is not inequitable, though resulting in the loss of valuable improvements, where the vendee was in possession, not to make improvements, but to diminish the value of the property by removing minerals or stone therefrom,291 or where the contract stipulated that the land "and all improvements thereon" should revert to the vendor on the vendee's failing to pay a certain sum at a certain time,292 or where the contract provided that the vendee should improve the property for the better security of the unpaid purchase money.293 Where, in a suit to recover land on rescission of a contract of sale, the defaulting vendee claims compensation for improvements, and the vendor disputes the value of the improvements or is unwilling to pay for them, there must be an accounting, and the decree should provide for the sale of the land, and direct the proceeds to be applied first to the amount found due and the surplus to the vendee.294

On the rescission of a contract for the sale of lands, the purchaser in possession is entitled to be reimbursed for the cost of repairs effected by him upon the property, to the extent to which the same were reasonably necessary for the preservation of the premises or to render them habitable,"

289 McMulkin v. Bates, 46 How. Prac. (N. Y.) 405.

295

290 Coleman v. Stalnacke, 15 S. D. 242, 88 N. W. 107; Rainer v. Huddleston, 4 Heisk. (Tenn.) 223; Banks v. McQuatters (Tex. Civ. App.) 57 S. W. 334; First Nat. Bank v. Jackson (Tex. Civ. App.) 40 S. W. 833.

291 Axford v. Thomas, 160 Pa. 8, 28 Atl. 443.

292 Cook v. Enright, 134 Cal. 1, 66 Pac. 3.

293 Watt v. Hunter, 20 Tex. Civ. App. 76, 48 S. W. 593, 49 S. W. 412.

294 Lytle v. Scottish American Mortg. Co., 122 Ga. 458, 50 S. E. 402.

295 Cordes v. Cushman, 79 Kan. 702, 101 Pac. 460; McKenzie v. Bacon, 41 La. Ann. 6, 5 South. 640; Farris v. Ware, 60 Me. 482; Canada v. Canada, 6 Cush. (Mass.) 15; Wilhelm v. Federgreen, 157 N. Y. 713, 53 N. E. 1133. See Domeracki v. Janikowski, 255 Ill. 575, 99 N. E. 579.