
    BECHARD v. BOLTON.
    1. Vendor and Purchaser — Rescission—Restoration to Status Quo — Equity—Decrease in Purchase Price.
    Where a suit has been brought in equity to reseind a land contract and the parties cannot be restored to the status quo that previously existed, it may be equitable to decrease the purchase price or make allowance because of some slight defect in the title.
    2. Same — Razing on Dilapidated Garage — Rescission.
    Razing of old garage, which had been used as a shelter for an automobile, by purchasers under land contract would not prevent them from having rescission where evidence 'shows that garage was in sueh a dilapidated condition that there was imminent danger of its falling down.
    3. Same — Rescission—Accounting—Equity.
    Rescission and accounting should not be granted in a suit to rescind a land contract if the results would be unjust and inequitable.
    4. Same — Title—Encumbrances—Rescission.
    Where such title to 200-aere farm as vendors under land contract could convey was subject to an easement to a power company over a 'small portion and did not include mineral rights to 40 acres nor a strip 33 by 2,640 feet on one side of part of it, purchasers held, entitled to rescission notwithstanding they had razed a dilapidated garage, where they did not discover sueh defects until abstract of title was furnished.
    Rescission, conditions, see 1 Restatement, Contracts. § 481.
    
      •5. Same — Rescission—Discretion oe Court.
    The granting or withholding rescission of a land contract is not a matter of right but rather one of grace, and lies largely within the court’s discretion.
    6. Same — Possession — Rent — Interest — Taxes — Improvements — Crops—Rescission—Lien s.
    Where purchasers, seeking rescission of .land contract for purchase of 200-aere farm, had the right of possession to the property from the date of the contract for upwards of three years and have used it to a considerable extent, the rental value offsets the interest, taxes, improvements made, or crops sown, hence rescission is granted where defects in title of which plaintiffs did not have notice rendered it less merchantable and vendors are ordered to make repayment of a' sum with legal interest from date of entry of decree in Supreme Court with lien on the land to secure'repayment.
    Appeal from Alcona; Dehnke (Herman), J.
    Submitted June 5, 1946.
    (Docket No. 25, Calendar No. 43,378.)
    Decided October 7, 1946.
    Bill by Alfred A. Becliard and wife , against Miriam Gf. Bolton to 'cancel a land contract, to require payment by defendant of amounts received by her on land contract and for a lien. Decree adjusting selling price. Plaintiffs appeal.
    Reversed and decree entered for plaintiffs.
    
      Charles A. Lorenzo, for plaintiff.
    
      William Pb. Barber,* for defendant.
   Butzel, C. J.

On March 1, 1943-, Alfred A. and Louise Bechard, plaintiffs, entered into a land contract to purchase from Miriam Gf. Bolton, defendant, 200 acres of land in Alcona county for the sum of $3,500. They made an initial, payment of $1,000 and agreed to pay the balance with 6 per cent, interest at the rate of $75 quarterly, beginning June 1, 1943. The contract provided for an abstract of' title showing a merchantable title and a warranty deed subject to liens and incumbrances thereafter created. Prior to the purchase, defendant’s husband wrote to Mr. Bechard that there were 40 acres on the north side of Hubbard Lake Road and 160 acres on the south side, and that 55 acres of the latter were cleared and 105 acres in heavy woods. Shortly thereafter Mr. Bolton drove out to the farm with Mr. Bechard. There was heavy snow on the ground. They went to the house on the premises and Mr. Bolton pointed out the line as they drove down the road. . Mr. Bechard testified that Mr. Bolton told him there were 40 acres on one side of the road and 160 acres on the other. The abstract was furnished plaintiff when they were prepared to pay the balance and take title. The abstract showed (a) that a strip, 33 by 2,640 feet long, of the 160-acre tract had been conveyed to the county off the west side; (b) that in a prior conveyance the State of Michigan had reserved the mineral rights to ’ 40 acres of the property; (c) that the power company had an easement over a small portion of the property. Plaintiffs claimed that they did not know of these incumbrances until plaintiffs were furnished with the abstract. Upon discovering these defects in the title they brought suit in equity to rescind the contract and recover the moneys paid to defendant and the amounts expended for taxes and improvements.

The record does not show that there was any bad faith on defendant’s part. The court, however, found, and the testimony sustains him, that the plaintiffs had also acted in good faith, and there was something more substantial on their part than a desire to ‘ ‘ escape a bad bargain; ’ ’ that there was no evidence that the price agreed upon in the first instance was unreasonable, and tbe court also found that the farm prices bad continued on tbe increase since tbe date of tbe contract. He further found that bad plaintiffs given notice of rescission, surrendered possession and sued at law for tbe money paid on the contract, they would have been entitled to a directed verdict. Lavey v. Graessle, 245 Mich. 681 (64 A. L. R. 1477), and Porter v. Ridge, 310 Mich. 425. In tbe latter case, it was held that a right of way to lay, maintain, operate and remove telephone lines over property sold under a land contract was an incumbrance and would prevent the purchaser from obtaining a merchantable title. Frequently where, suits have been brought in equity, and tbe parties cannot be restored to tbe status quo that previously existed, tbe trial judge has made an equitable adjustment by decreasing tbe purchase price or making allowances because of some slight defect in tbe title.

In tbe case at bar, tbe trial judge denied rescission to tbe plaintiffs but gave them an election to be made within 10 days either to accept a deed subject to tbe defects and incumbrances mentioned with a reduction of $400 in tbe purchase price, or take a deed to tbe land as described except tbe southeast quarter of tbe northwest quarter of section 31 (in which tbe State owns tbe mineral rights), and subject to tbe other defects and incumbrances listed, with a reduction of $700 in tbe purchase price. Further, if defendant believed that her loss would be less by tbe entry of a decree of rescission, she might so elect. Neither party having made an election within the time stipulated, tbe court entered a final decree fixing $400 as tbe damages because of tbe three defects, and reduced tbe purchase price from $3,500 to $3,100, less taxable costs of tbe suit.

Plaintiffs appeal, and claim that under the facts, the court should have granted rescission. Defendant claims that there should he no rescission, because she claims the property cannot be restored 1o the condition it was in before the contract was. made. It was shown that an old garage that had been used as a shelter for an automobile, had been lorn down by the plaintiffs. The testimony shows that it was in such a dilapidated condition that there was imminent danger of its falling down, and, therefore, it was razed.

We have held that rescission and accounting should not be granted if the result would be unjust and inequitable. Amster v. Stratton, 259 Mich. 683. We, however, find nothing unjust or inequitable in allowing rescission in the instant case. The granting or withholding rescission is not a matter of right but rather one of grace, and lies largely within the court’s discretion. Baughan v. Mortgage & Contract Co., 263 Mich. 249; Bonninghausen v. Hall, 267 Mich. 347. The court referred to Hyman v. Boyle, 239 Mich. 357; Amster v. Stratton, supra; Baughan v. Mortgage & Contract Co., supra. There were circumstances in these cases which would have made it inequitable to order rescission, and, therefore, a reduction in the purchase price or some other relief was granted, because of the defects. We find no such circumstances in the present case and believe under the facts contained herein rescission should have been ordered. However, the plaintiffs had the right of. possession to the property from the date of the contract and have used it to a considerable extent. We, therefore, hold that the rental value of the property should offset all interest and taxes paid, and that there should be no recovery because of the improvements made or crops sown. Plaintiffs should not be obliged to accept a title with the defects mentioned which later would affect its merchantability and would in other respects make the property less valuable.

The decree may provjde that defendant shall repay to plaintiffs $2,034.73 with interest at the rate of 5 per cent, per annum from the date of the decree to be entered in this Court, • and that such payment shall be secured by a lien upon the land in suit. Plaintiffs shall have costs.

Carr, Bushnell, Sharpe, Boyles, Reid, and North, JJ., concurred. Starr, J., took no part in the decision of this case.  