Full opinion text
PAUL, District Judge. In 1939 A. Z. Litz and others were the owners or purported owners of lands in McDowell County, West Virginia, of an area of approximately 2,400 acres. The owners of the land and their respective undivided interests therein were A. Z. Litz. 17/48; Etta V. Litz, 4/48; J. N. Harman, Jr., 1/48; Mamie M. Sanders, 2/48; J. J. Sperry, 12/48; the estate of H. E. Harman (Cary H. Biggs and James W. Harman, executors), 12/48. During the latter part of 1939, negotiations were initiated between A. Z. Litz and the Carter Coal Company for a sale to the latter of what are described as the underwater seams of coal on the 2,400 acres of land at a price of $75 per acre. Mr. Litz was the owner of the single largest share in the land. He apparently had more experience and knowledge of coal lands and of this tract in particular than any of his co-owners and the negotiations, including the correspondence relating to the proposal, were conducted between the Carter Company and him. There is no evidence that Litz held any power of attorney or any instrument constituting him agent for the other owners, but it is clear that the latter acquiesced in and approved of his conduct of the negotiations. However, Litz did not purport nor attempt to bind the other owners and when the written offer of purchase was made by the Carter Company, all of the owners recorded their individual acceptances. The original written offer of purchase was dated October 24, 1939, and was accepted conditionally. One of the conditions was the vendors would be able to secure a release from the Premier Pocahontas Collieries Company, to which the premises were then under lease; the other conditions related to the nature of the warranty of title to be given by the individual grantors and to certain terms of payment. These matters were satisfactorily settled and the parties came to a complete agreement as to the terms of sale, subject to examination and approval of the title to the land by the vendee; and it was agreed that the matter should be closed not later than June 30, 1940. As a result of the examination of the title to the lands, the attorney employed by the vendee for that purpose reported that in his opinion the title was good as to a portion of the land, comprising 1,349 acres; but that as to the remainder of the land, 1,051 acres, there was a question as to the title arising as follows: It appears that the 2,400 acres of land was made up of various separate tracts in which one W. L. Taylor had owned various undivided interests prior to the year 1924. In that year a creditors suit was instituted against Taylor under the style of Abraham P. Thompson et al. v. W. L. Taylor et ah, as a result of which Taylor’s interest in these lands, as well as other real estate owned by him, was decreed to be sold. At the sale, which was a public one under decree of court, A. Z. Litz had become the purchaser of Taylor’s interests in all of the parcels going to make up the 2,400 acres. As a result of his examination of this link in the chain of title the attorney for Carter Coal Company was of opinion that, due to a misdescription of certain of the lands in the decree of sale in Thompson v. Taylor, A. Z. Litz had not acquired the entire interest of W. L. Taylor in 1,051 acres of the land but that as to this tract there was still outstanding a 750/1900 interest in the heirs of W. L. Taylor. Taylor had died in 193?. In view of this question it was agreed that the vendors should undertake to procure from the Taylor heirs a quit claim deed to any interest they might have and apparently, in anticipation that this could be procured, the vendors under date of June 28, 1940, executed a deed to the 2,400 acres of land and the Carter Coal Company gave certain checks to the respective grantors for a cash payment on the property and executed certain notes for the balance, as well as a deed of trust securing the payment of the notes. Negotiations with the Taylor heirs were then conducted both by personal interview and correspondence in an attempt to get a conveyance of the Taylor interests, but after several months it was found that this could not be done. The vendors and the vendee then had further discussions and as a result it was agreed that the deed of June 28, 1940, conveying the 2,400 acres and the attendant papers be cancelled and that the property be handled as two parcels and conveyed in separate deeds; but that as to the 1,051 acre tract the deed, the purchase money notes, and the deed of trust securing the notes should be placed in escrow for a period of not exceeding three years, during which the grantors should take steps to clear the title. The parties drafted a written agreement covering this and the other terms of the transaction. While neither this agreement nor the deeds executed in pursuance of it were in fact entered into or executed until sometime during the fall of 1940, the parties for purposes of their own agreed that the agreement and the deeds and other papers should all be dated as of June 28, 1940. Accordingly a deed, dated June 28, 1940, was executed by the grantors conveying the 1,349 acres, title to which was not in question, reciting the payment of $36,000 in cash with the balance of the consideration evidenced by notes payable to the several grantors in the amounts of their respective interests. These notes aggregated $65,175, bore interest at 5 per cent payable semiannually, and were payable in ten equal annual installments; their payment was secured by a deed of trust. At the same time there was executed a deed to the 1,051 acre tract reciting a consideration of $78,825, all of which was evidenced by notes payable to the several grantors in the amount of their respective interests. A deed of trust was executed by the grantee to secure payment of the notes and, pursuant to the agreement of the parties, these deeds, deed of trust and notes were delivered to a selected trustee to be held in escrow for a period not exceeding three years, the period agreed on for clearance of the title. The agreement provided that, in case the title was not cleared within three years, the grantee might either extend the period or terminate the escrow, in which latter event the deed, deed of trust and notes were to be returned to their respective makers. The agreement made no specific provision as to how the failure to clear title to the 1,051 acre tract should affect the transaction as related to the 1,349 acres; but did provide that “except as specifically provided herein, this agreement shall not be construed as a release or waiver of * * * any of the interests, rights or claims of any of such parties as against any other or others of the parties, pursuant either to the contract of sale or to any other agreements, deeds * * * or other instruments, or otherwise, Pursuant to the agreement to clear the title to the 1,051 acre tract a suit for this purpose was instituted on June 21, 1941, in the Circuit Court of McDowell County, West Virginia, under the style, of J. J. Sperry et al. v. Walter L. Taylor, Jr., et al. A. Z. Litz had died in November, 1940, and his heirs, together with the other vendors, were the plaintiffs in this suit and the vendee (Carter Coal Company) also joined as a plaintiff. The defendants were W. L. Taylor, Jr., Ryland Craft, Ann Craft, Bettie Craft and Ryland Craft, Jr. The first of these was a son of W. L. Taylor and the others were respectively the surviving husband and the three infant children of a deceased daughter of W. L. Taylor. In their bill the plaintiffs set forth the nature of their title to the 1,051 acres, alleged themselves to be the sole owners thereof and prayed that certain old deeds through which the Taylors claimed an interest be declared void as a cloud upon the title. On September 2, 1941, the defendants filed an answer in which they not -only claimed an interest in the 1,051 acres but in support thereof asserted matter which constituted a claim to an interest in the entire 2,400 acres. This claim was based on the following facts and assertions. As before stated, the sale in the creditors ■suit of Abraham P. Thompson et al. v. W. L. Taylor et al. had resulted in a sale of Taylor’s undivided interests in various tracts which now make up the 2,400 acres involved in the instant case. At this sale A. Z. Litz became the purchaser of the Taylor interests in these lands for the sum of $57,500. This sale was made at public auction, was confirmed by the court and a deed was made to Litz by J. N. Harman, Jr., and G. W. Howard, Special Commissioners, by deed dated May 1, 1925. In their answer in the suit of Sperry et al. v. W. L. Taylor, Jr., et al., the Taylors asserted that Litz’s purchase at the sale in the old creditors suit had been in pursuance of a previous agreement between him and W. L. Taylor whereby Litz was to bid in the. lands and obtain a deed therefor and re-convey the lands to Taylor’s wife and children within the period of five years after the sale upon the payment to Litz of the sum of $86,250, against which latter sum Litz was to credit any amount received by him as rents or royalties from the land during the five years. The Taylors contended that as a result of this understanding the deed conveying the lands to Litz did not invest him with the fee simple absolute but that it was in legal effect “a mortgage or trust” with the right in the wife and children of W. L. Taylor to redeem the lands. It was further asserted that at the expiration of the five years a further agreement was entered into granting a further period of three years within which the Taylors might redeem the lands, but so modified as to apply to only a 60 per cent interest therein. It was further asserted that, prior to the expiration of the extended agreement, W. L. Taylor, Jr., had attempted to redeem the lands and had been prevented by the failure of Litz to furnish an accounting or statement of the amount necessary for such redemption. The answer, which was in the nature of a cross bill, prayed that the deed from Harman and Howard, Special Commissioners, to A. Z. Litz of May 1, 1925, be decreed to be a mortgage with a right of redemption in the defendants as to 60 per cent undivided interest in the lands conveyed thereby; and that the heirs of Litz be required to make an accounting of all rents and royalties received by him from the land and applicable to the debt which such mortgage secured. Following the filing of the answer in the suit of Sperry et al. v. W. L. Taylor, Jr., et al., the Carter Coal Company, on September 25, 1941, notified the grantors not to negotiate any of the notes given in the purchase of the lands and, on October 6, 1941, sent to each of the grantors a notification that it (the Coal Company) had rescinded and disaffirmed its agreement to purchase the 2,400 acres of land and all contracts executed in pursuance thereof. It tendered a reconveyance of the land and demanded the return to it of all amounts paid on the purchase price and of the notes evidencing the balance. The reasons given by the vendee for its rescission, as stated by it, were “material non-disclosures, material misrepresentations, material failures of consideration, and material breaches of contract” — presumably based upon the contents of the answer in the West Virginia suit. On October 28, 1941, the demands of the vendee not having been complied with, it instituted the present action in this court. The complaint sets out the course of the transactions heretofore related and alleges that the vendors (defendants here) misrepresented that the title to the land was good and concealed the fact of the outstanding claim of the Taylors, that such claim was unknown to the vendee and by its concealment the vendee was induced to enter into a contract which it would not have done had it known of such claim; and that such claim was disclosed to it for the first time by the contents of the answer in the West Virginia suit. It does not assert that any damage has accrued to the vendee nor that its right to the possession or use of the land has been interfered with or questioned other than by the assertions of the Taylor heirs in their answer. The prayer of the complaint is (1) that the agreement for purchase of the 2,400 acres of land “be adjudged to have been rescinded”; that the defendants be required to redeliver to plaintiff the purchase money notes executed by it and the deeds of trusts securing the same; that the defendants be required to pay to the plaintiff all amounts paid by the latter in cash; and, in event any of the purchase money notes cannot be redelivered by reason of having been transferred to bona fide purchasers for value or for any other reason, that defendants be required to pay the amount thereof to the plaintiff; and that plaintiff have such other, further and different relief as may be proper. On November 13, 1941, the defendants (vendors) filed their separate answers. While the general content of these answers is the same, that filed by the heirs of A. Z. Litz is the most pertinent inasmuch as he had been the active negotiator of the sale and it was to him that the charges of misrepresentation and concealment were more particularly directed. He himself had! died after the agreement of sale had been entered into and before the bringing of the suit in West Virginia. The answer of his heirs asserted that there had been no-representations by any of the grantors as to the title to the land or any part of it; that there was no misrepresentation or concealment and that the vendee at all' times had as full knowledge and the same knowledge as the vendors as to the existence of any claims of interest; that neither A. Z. Litz or any of the vendors had knowledge of any claim by the Taylors affecting the 1,349 acre tract until the answer was filed in the West Virginia suit; that Litz had never had any such transactions with W. L. Taylor as those alleged in the answer and on which Taylor’s claim was based nor any knowledge of any facts leading to a belief that such a claim would' be made. It was further asserted that the deed to A. Z. Litz following his purchase of the W. L. Taylor lands at the judicial sale invested him with the fee simple title absolute and that any contention that it was intended as a mortgage or to create a trust, or that it did so, was without foundation or merit. It was admitted that Litz following his purchase had on May 1, 1925, executed an instrument giving to Ada Taylor, Cecil Taylor Craft and W. L. Taylor, Jr., the wife, daughter and son of W. L. Taylor, the right to purchase the lands within five years upon certain conditions; and that on April 17, 1930, this agreement was renewed for a period of three years as to a portion of the lands. But it was asserted that both of these instruments were merely options to purchase, neither of which was ever accepted or exercised and all rights under which had expired not later than April 16, 1933; and that these options gave no countenance or basis for a claim such as made by the Taylor heirs. The answers of the other vendors were of the same general tenor and also assert that they know nothing of any past transactions between A. Z. Litz and W. L. Taylor upon which the Taylors based their claim. The vendors had on October 21, 1941, filed in the suit of Sperry et al. v. Taylor et al. their special reply to the answer and cross bill of the Taylors in that suit, in which reply they asserted the unfounded and spurious nature of the Taylors’ claims on the same grounds and in substantially the same language as in their answers in the instant case. The issues thus raised in the West Virginia suit as to the merits of the Taylor claim were pending and undetermined when the vendee instituted the instant action on October 28, 1941, and when the vendors answered in this case on November 13, 1941. On March 2, 1942, the heirs of A. Z. Litz asked leave to file a supplemental answer in the instant case and, over the opposition of plaintiff, leave was so granted. The supplemental answer set forth that since filing their original answer these defendants had compromised and settled all claims of the Taylor heirs to any part of the 2,400 acres of land and had obtained deeds releasing all claims of the Taylors; that the adults among the Taylor heirs had executed release deeds in their own right and that the interest of the infants had been conveyed by a special commissioner appointed by the West Virginia court after it had considered and approved the settlement. The defendants exhibited copies of these deeds and tendered a quit claim deed to the plaintiff to complete the latter’s title. The plaintiff declined this and has pursued its remedies in the present action. A fact to be borne in mind is that the claim as asserted by the Taylors was distinctly different from that noted by the title examiner. The latter related to an interest in part of the land amounting to 1,051 acres, due to failure of a decree of sale to describe correctly the amount of the interest ordered sold. This question was known to all the parties and the suit of Sperry v. Taylor had been instituted to correct it. The claim as asserted by the Taylors in their answer was to an equitable ownership of an undivided interest in the entire 2,400 acres. It was this claim that caused the plaintiff to disaffirm the contract on the ground that the existence of this claim had been concealed from it and that it had no knowledge of such a claim until it was set up in the answer in Sperry v. Taylor. A second fact to be borne in mind is that the plaintiff announced its rescission and brought the instant suit without waiting for any determination by the West Virginia court of the merits of the Taylor claim. As has been pointed out in the course of the foregoing recital, the claim asserted by the Taylors in their answer in Sperry v. Taylor rested on agreements evidenced by two written instruments dated May 1, 1925, and April 17, 1930, respectively. Because of the controversy over the nature of these papers, it is desirable that the pertinent part of their contents be recited in full. The writing dated May 1, 1925, recites, as preliminary, that on March 21, 1925, certain lands (which are described) were sold in the creditors suit of Thompson v. Taylor; that at such sale these lands had been purchased by A. Z. Litz for $57,500; that the sale had been confirmed by the court and that Litz would, upon payment of the purchase price, be entitled to a deed. The writing then proceeds: “Now, therefore, this Optional Agreement, Witnesseth: “That for and in consideration of the sum of One Dollar ($1.00), cash in hand paid, the receipt whereof is hereby acknowledged, and of the mutual stipulations, covenants and agreements hereinafter set out, the undersigned, A. Z. Litz and Etta V. Litz, his wife, do hereby give and grant unto Ada Taylor, Walter Lee Taylor, Jr. and Cecil Taylor Craft, all, either or any of them, the exclusive right to purchase from him all of the said six tracts of land hereinbefore described for the period of five (5) years from this date, upon the price, terms, stipulations, and agreements hereinafter set out. “The said Ada Taylor, Walter Lee Taylor, Jr., and Cecil Taylor Craft, all, any, or either of them, shall upon the exercise of this option, if all, any or either of them desire to exercise the same, pay the said A. Z. Litz for the said six tracts of land the sum of $86,250.00, cash in hand upon the execution and delivery of an apt and proper deed, containing covenants of Special Warranty of title; the said Litz agreeing and binding himself to execute to the said Ada Taylor, Walter Lee Taylor, Jr., and Cecil Taylor Craft, all, any, or either of them, who exercises the said option and pays the said money, a deed with covenants of special warranty conveying all of the said tracts of land, when all of said money is so paid. “It is distinctly understood and agreed that any amounts which the said Litz may receive during the said period of five years as rents or royalties from said land that the same shall go as a credit on the amount above specified, but without said Litz being liable for any interest thereon, in the event the said optionees, or any, or either of them shall exercise their rights under this option, but if none of said optionees desire to exercise their rights under this option and pay the said amount above specified, then the said rents and royalties so received by the said Litz shall be his free from any claim of any kind or character whatsoever of either W. L. Taylor or of the optionees. “The said A. Z. Litz agrees not to sell or incumber the said lands within the said period of five years without first obtaining permission of the said optionees and W. L. Taylor.” This instrument was signed by A. Z. Litz and his wife, Etta V. Litz. On April 17, 1930, a second writing was. executed which, after the same preliminary recitations as used in the instrument of May 1, 1925, continues: “Whereas, by writing dated May 1, 1925, said A. Z. Litz granted unto the parties of the second part, all, either or any of them, the exclusive right to purchase from him all of the said six tracts of land hereinbefore described for the period of five years from May 1, 1925, upon the price, terms, stipulations and agreements therein set forth, to which option contract reference is here made; and, “Whereas, the parties hereto have mutually agreed to cancel and annul said option contract of May 1, 1925, and in lieu thereof the said parties of the first part agree to execute to the parties of the second part a hew option to purchase from the parties of the first part sixty percent of the property so purchased by said A. Z. Litz at said public sale and fully hereinbefore described: “Now, therefore, in consideration of the premises and of one dollar and other valuable considerations in hand paid by the parties of the second part to the parties of the first part, receipt of which is acknowledged, the said A. Z. Litz and Etta V. Litz, his wife, do hereby give and grant unto Ada Taylor, Walter Lee Taylor, Junior, and Cecil Taylor Craft, all, either or any of them, the exclusive right to purchase from the parties of the first part sixty percent of the said properties so purchased by said A. Z. Litz at said public sale and hereinbefore described for the period of three years from this date upon the price, terms, stipulations and agreements hereinafter set out. “The said Ada Taylor, Walter Lee Taylor, Junior, and Cecil Taylor Craft, all, either or any of them shall upon the exercise of this option, if all, either or any of them desire to exercise the same, pay the said A. Z. Litz for said sixty percent of the said properties so purchased by the said A. Z. Litz at said public sale and hereinbefore described, the sum of twenty four thousand two hundred and ninety eight dollars and twenty-nine cents ($24,-298.29), cash in hand upon the execution and delivery of an apt and proper deed containing covenants of special warranty of title; the said parties of the first part agreeing and binding themselves to execute to -the said Ada Taylor, Walter Lee Taylor, Junior, and Cecil Taylor Craft, all, either or any of them who exercise the said option and pay the said money a deed, with covenants of special warranty conveying sixty percent of the said properties hereinbefore described when all of the said money is so paid. “It is further understood and agreed between the parties hereto that in cancelling said original option of May 1, 1925, and executing this new option that the said A. Z. Litz has given to the parties of the second part credit on the original consideration of $86,250.00 for all rents and royalties accruing on said properties up to December 31, 1929; and it is further understood and agreed that sixty percent of any amounts which the said A. Z. Litz may receive during the said period of three years from this date, or until this option is accepted by the parties of the second part, all, either or any of them, if the same be accepted prior to the end of said three year period, as rents or royalties from said lands shall go as a credit on the said consideration of $24,-298.29 whiéh credit shall be applied on said consideration of $24,298.29, as and when received by him, in event the said optionees, or any or either of them, shall exercise their rights under this option but if none of said parties desire to exercise their rights under this option and pay the said consideration of $24,298.29 above specified, then the said rents and royalties so received by the said A. Z. Litz shall be free from any claim of any kind or character whatsoever of either W. L. Taylor or of the optionees hereunder. “It is further understood and agreed that said consideration of $24,298.29 shall-bear interest at the rate of six percent per annum from May 1st, 1930, until paid, subject to any credits that may be applied thereon, as hereinbefore set out or otherwise. “It is further understood and agreed that the said original option contract of May 1, 1925, is hereby cancelled and that this new option is executed in the place and lieu thereof. “It is further understood and agreed as a part of the consideration for the execution of this new option that in event the optionees, all, either or any of them, accept the terms hereof within said period of three years from this date that in addition to the payment of said consideration of $24,298.29 above mentioned, with interest, as aforesaid, that they are also to pay to the said A. Z. Litz the balance that may be owing by W. L. Taylor to said A. Z. Litz on two notes which the said A. Z. Litz holds against the said W. L. Taylor, one being originally for $10,-000.00, and the other being originally for $1,000.00, but which two notes are subject to credits and adjustment of rents between the said A. Z. Litz and W. L. Taylor and Ada Taylor. “The said parties of the first part agree not to sell or encumber the sixty percent of the lands herein optioned within the said period of three years from this date without first obtaining permission of the said optionees and W. L. Taylor.” This paper was signed by A. Z. Litz and his wife and by W. L. Taylor, Ada Taylor, W. L. Taylor, Jr., and Cecil T. Craft. Both of the papers were duly acknowledged but it appears that neither was ever recorded. To summarize, the positions of the litigants may be stated as follows: The plaintiff contends that when it entered into the contract of purchase it knew nothing of the claim of the Taylors affecting title to' the 2,400 acres of lands as later asserted by them and had no means of knowing of it. That A. Z. Litz concealed from the plaintiff his agreement with W. L. Taylor made at the time the latter’s interests were sold in the creditors suit and on which the Taylor claims were based and that this concealment amounted to a material misrepresentation as to the title. That had the plaintiff known of any such claim, it would not have contracted to purchase the property and that when the claim of the Taylors first came to plaintiff’s knowledge through the answer and cross bill filed in Sperry v. Taylor, the plaintiff promptly disaffirmed and rescinded the contract as it had a right to do; and that it now demands the return to it of the money and notes given for the purchase price and the deeds of trust securing the notes. It contends further that the plaintiff having on October 6, 1941, notified defendants of rescission of the contract, this right of rescission is not affected by the offer made by defendants, since the institution of this suit, to perfect the title through the quit claim deed from the Taylor heirs. It is contended also that the defendants have not, even now, perfected the title and that it is still seriously defective. The defendants assert that at no time did they misrepresent the title to any part of the lands or conceal any material facts relative thereto. That there was no defect in the title to any part of the lands except the question raised by the title examiner as to 1,051 acres thereof which question was known to all parties and noted in their contract. That the further claims of the Taylors, as asserted in the answer in Sperry v. Taylor, were without merit in fact. That the instruments dated May 1, 1925, and April 17, 1930, were merely options and created no rights in the Taylors other than the right to purchase upon the terms and within the time set out in the options; and that these options had long since expired and constituted no cloud upon or claim adverse to the title of A. Z. Litz. That in fact the plaintiff knew of these options at the time of its purchase. That the assertion in the answer in Sperry v. Taylor that these instruments created “a mortgage or trust” was the first that defendants ever knew of such a claim and that plaintiff had seized upon this spurious claim in an unjustified effort to escape from its contract. And that, in any event, the defendants have now acquired any and all interests which the Taylors had or might have had and have tendered a perfected title to plaintiff; and that the plaintiff has no ground for rescission. Discussion At the outset it is required that there be determined the nature of this proceeding. This seems necessary because of the earnest insistence of the plaintiff that it is not a suit for rescission; that (to use its own words),' “the rescission has already occurred and the Coal Company is here asking for relief upon the basis of a fully executed rescission”. Just what is the purpose of insistence on this contention or what result advantageous to plaintiff’s position is thought to flow there^ from has not been made clear to the court. Apparently the view is that a vendee in a sale has a' right to rescind at anytime and demand the return of the purchase price, subject only to a showing by the vendor that the rescission was unjustified, as to which showing the vendor has the burden of proof. The theory seems further to be that when the vendee disaffirms the contract and unsuccessfully demands return of the purchase price, the ensuing action is necessarily one at law and not in equity. It is undoubtedly true, as plaintiff points out, that where one has purchased property on the inducement of fraudulent representations, there are several remedies that may be open to him. If he has paid the purchase price he may sue for its recovery. Or if he has not paid the purchase price he may refuse to pay, abandon the property or refuse to take possession, and set up the fraud as a defense when sued. Or he mp.y retain the property and sue the vendor for such damages as may have been incurred from the fraud. Or he may bring a suit in equity praying for a judicial recission of the contract and for all such other action as is necessary for full relief. But the choice of the course to be pursued is ordinarily one to be determined by the position in which the vendee finds himself and what steps he thinks necessary to afford him relief. If he merely desires to recover a judgment for the purchase price already paid or for damages occasioned by the fraud, an action at law for a money judgment is appropriate. Weigel v. Cook, 237 N.Y. 136, 142 N.E. 444. If however he desires other remedies, not within the purview of an action at law, such as a decree rescinding the contract and ordering the cancellation of instruments of conveyance and the return to him of notes or other obligations of debt, his remedy is in equity, which alone has power to grant such relief. Bruner & McCoach v. Miller, 59 W.Va. 36, 52 S.E. 995, 999. But, as pointed out in Newberry v. Ruffin, 102 Va. 73, 78, 45 S.E. 733, 734, these are merely different “modes of redress” applicable to particular cases. And see Riverside Residence Co. v. Husted, 109 Va. 688, 691, 64 S.E. 958. The mode of redress invoked by a plaintiff is that applicable to the particular redress which he seeks and raises the procedural question of whether he may sue at law or must go into equity. Its choice is of importance in those jurisdictions which maintain the distinction between courts of law and courts of equity and which deny relief in a suit in equity if adequate relief can be obtained at law. And it will be found that practically all the cases in which the courts have discussed the variety of remedies open to a plaintiff in such cases as this and the distinction between such remedies arose in jurisdictions where the distinction between procedure in law and in equity is maintained; and that the question before the court was whether the plaintiff had sought the proper forum as determined by the nature of the relief sought. But in none of the cases, or elsewhere, do I find that the mode of redress invoked by a plaintiff alters the essential nature of his case so far as its merits are concerned or relieves him of the duty of proving the facts which justify him in refusing to abide by his contract. “Rescission, whether the object of a suit in equity or forming the basis of an action at law, is governed by equitable principles.” 17 C.J.S., Contracts, § 413, p. 899. Unless the parties have contracted as to the grounds on which a contract may be rescinded or have acquiesced in a rescission, the mere announcement by one of them that he rescinds invests him with no different status than if he resorts to court to effectuate his rights. “As a contract is made by the joint will of two parties, it can be rescinded only by the joint will of the two parties. It is obvious that one of the parties can no more rescind the contract, without/the other’s express or implied assent, than he alone can make it.” 12 Am.Jur. ,1011. And see Chicago, etc., R. R. v. Nebraska, 170 U. S. 57, 72, 18 S.Ct. 513, 42 L.Ed. 948. Therefore the insistence of the plaintiff that this is not a suit for rescission but is an action for relief on the basis of “a fully executed rescission” seems rather meaningless. It is to all effects and purposes a suit in equity for rescission of a contract and for relief incidental thereto obtainable only in equity. The prayer of the complaint is that the contract “be adjudged to have been rescinded” and that the court order “the redelivery to the plaintiff of the * * * deeds of trust * * * and of * * * the promissory notes” executed by plaintiff; that the defendants be enjoined, pendente lite, from transferring the notes in any form and for such further relief as may be proper. These remedies are peculiarly equitable ones. The Rules of Civil Procedure in the federal courts have abolished the procedural distinctions between law and equity by providing for one form of action in all civil cases, Rule 2, Rules of Civil Procedure; and have largely discarded the terms “at law” or “in equity” as legal nomenclature. But they have not abolished or discarded the principles of equity, nor their application in appropriate cases. Rule 1, while providing for uniformity of procedure in all civil suits, recognizes the distinction in the nature of such suits. The same applies to the various forms of procedure known familiarly as “Code Pleading”. As said in Philpott v. Superior Court, 1 Cal.2d 512, 36 P.2d 635, 636, 95 A.L.R. 990, 992: “The Legislature, in providing that ‘there shall be but one form of civil action,’ cannot be supposed to have intended at one fell stroke, to abolish all distinction between law and equity, as to actions. * * =:= The innovation extends only to the form of action and the pleadings, while the technicalities of pleading have been dispensed with; * * *. So cases legal and equitable have not been consolidated; and though there is no difference in the form of a bill in chancery, and a common law declaration, under our system, where all relief is sought in the same way from the same tribunal, the distinction between law and equity is as naked and broad as ever.” In a discussion of the Rules of Civil Procedure in 30 Ill.Law Rev. p. .445, the situation is well summed up in these words: “In developing one form of civil action it is well to bear in mind that whatever else may have been abolished, actions at law and suits in equity still remain, not, it is true, as independent systems of procedure, but within a system which provides for both.” In an excellent opinion by Judge Yankwich, in the case of Wenzel & Henoch Const. Co. v. Metropolitan Water Dist., D.C.Cal., 18 F.Supp. 616, discussing jurisdiction as between law and equity in suits involving fraud, it is said in part (18 F.Supp. at page 620): ■ “But whether a cause of action is legal or equitable does not depend upon the form adopted, or the name which the pleader may have given to it. It depends upon the facts pleaded or the remedy sought. If the facts pleaded are such that their determination depends upon the application of the principles of equity, jurisprudence, the action is equitable. If the remedy sought calls for the exercise of the powers which only a chancellor can exercise, the cause of action is, likewise, equitable. [Citing various cases.] Behind these principles is the fundamental fact that law and equity are dissimilar. The dissimilarity lies in the substantive rights which they administer. Even the reformed code procedure, which has abolished the distinction between actions at law and suits in equity and allows remedies both legal and equitable to be administered in the same forum and in the same action, has not abolished the substantive distinction between law and equity.” Measured by these standards, or by any others, the instant case is one in equity and its solution is dependent upon whether, in the application of the principles of equity, the plaintiff is entitled to the relief sought. The evidence presented in this case, both by oral testimony and exhibits,, is voluminous and no effort can be made to refer to all of it in detail. Likewise the arguments of counsel have covered a wide range of legal questions, extended consideration of all of which will not be necessary to a determination of the case. In the end the questions of determining importance, as conceded by the plaintiff, are: I. Whether the claim by the Taylors to an interest in the entire 2,400 acres as asserted by them in their answer in Sperry v. Taylor was of such substance as to raise a material question as to the title. II. Whether the Carter Coal Company had knowledge of the Taylor claims prior to closing the contract with defendants in October, 1940. III. The effect on plaintiff’s rights of the purported perfection of the title subsequent to institution of the suit. IV. Whether any defects in the title were in fact cured by the settlement which the grantors effected with the Taylors. I. The whole case of the plaintiff rests upon the merit of its contention as to the nature of the title which A. Z. Litz acquired when he purchased the W. L. Taylor interest in these lands at the judicial sale on March 21, 1925, in the suit of Thompson v. Taylor; which, in turn, involves the conditions under which Litz purchased the Taylor interest and the terms of any understanding or agreement between him and the Taylors as to the conditions under which Litz acquired or held title. The plaintiff has devoted much discussion to what it terms the “TaylorLitz transactions” out of which it advances various contentions most of which the court is forced to conclude, after a diligent study of the record, rest only upon the imagination of counsel. It is first argued that the purchase by Litz at the judicial sale was -the result of a scheme between him and W. L. Taylor whereby the property was to be purchased at an inadequate price, constituting a fraud upon the creditors of W. L. Taylor and upon the court under whose decree the land was sold. I can find nothing whatever to justify such an assumption. On the contrary, so far as the record shows, the creditors suit and all steps taken in the course of it were regularly conducted in every respect. There is no denial that the property was sold at a public sale after due advertisement; that the sale was publicly attended and that Litz became the purchaser because he was the highest bidder; that the special commissioners of sale recommended confirmation of the sale as a fair one and that the court confirmed the sale; that the purchase money for this land, as well as that for other tracts sold at the same time to other parties, was paid in full and regularly distributed to the creditors in accordance with the court’s decrees. In the light of this it is impossible to see how any fraud was perpetrated on the creditors of W. L. Taylor or how they could possibly have any further claims against the land even though its proceeds may not have been sufficient to pay their debts in full. The fact, even if it be a fact, that Litz became a bidder for the property at the suggestion or request of Taylor does not alter the situation. Neither Taylor nor Litz controlled the sale or the amount of the purchase price, except as Litz was willing to pay more for it than any other bidder. Neither ds there any implication of fraud in the fact that Litz may have agreed before the sale that in case he became the purchaser he would give the Taylor family an opportunity to buy the land from him at some future time. As a matter of fact, there is no evidence to show that any agreement affording the Taylors an opportunity to repurchase the land was made until after the sale to Litz had been made and confirmed by the court. But even had such an understanding existed prior to the time that Litz bid on the property that fact alone would not make -the situation any different. It is noc unusual that a debtor, seeing his property sold by court decree, requests some more affluent relative or friend to purchase the property with the purpose in mind that the debtor may continue to occupy or use the premises through rental or that the debtor, if his fortunes should so mend as to permit it, might at some future time have an opportunity to reacquire title to the property by purchase. In the realm of kinship and friendship such incidents are common and furnish no foundation for a charge of fraud. The court ordering a sale and the creditors whose suit has required it are interested only in seeing that the sale is publicly and fairly conducted and realizes the highest obtainable sum; and there is no evidence that these conditions did not obtain here. So far as the record shows, the only agreement between A. Z. Litz and W. L. Taylor or members of the Taylor family relating to Litz’s purchase of the property is that set out in the instrument dated May 1, 1925, and the later modification of April 17, 1930. It is evident from all the circumstances, and there is no evidence to the contrary, that these instruments were born out of the hope of W. L. Taylor that he might so recoup his fortunes as to become financially able to reacquire his interest in these lands for the benefit of himself or of his family. To the fulfillment of this hope A. Z. Litz was willing to contribute by giving him the opportunity to purchase. The designation of Taylor’s wife and children as the optionees was, no doubt, due to the existence of unsatisfied judgments against W. L. Taylor which would have made it inadvisable to take title to himself. I can find nothing to indicate that the instruments in question are anything more than what they purport on their face .to be, namely, options to purchase within a limited time and upon named conditions. The paper of May 1, 1925, does nothing more than give the right to the Taylor family to purchase at any time within five years tbe entire undivided interest of W. L. Taylor which had been sold. There is nothing in the conditions of purchase which in itself affects the nature of the instrument. Options to purchase may, like other contracts, contain any conditions the parties choose to agree on. The advance in price at which the option was given was not unnatural when it is considered that it was an exclusive option for an extended period of time. The condition that any rents or royalties during the five years should be credited on the purchase price would appear to indicate merely that Litz was willing to accord the Taylors every reasonable help in their effort to acquire the property and to an understanding that the removal of coal from the land would result in a depreciation of its value of which the royalties for the coal would furnish a measure. I say that this appears to be true because there is nothing in the evidence to indicate the contrary. The Taylors did not exercise their right to purchase under the instrument of May 1, 1925, and shortly before its expiration, on April 17, 1930, another instrument was drawn giving a new option to purchase for a further period of three years from the last named date, upon modified conditions. The last paper granted the Taylors the right to buy sixty per cent of the original Taylor interest and it fixed a new price based on the lesser interest and on amounts theretofore received by Litz from royalties. And it further provided that the optionees, in consideration of having been granted the new option, should, if they decided to exercise their rights under it, pay Litz a debt owing him by W. L. Taylor in the amount of $11,000. In other words, the paper of April 17, 1930, is plainly an extension of the rights granted in the first option made applicable to a sixty per cent interest and reciting the fact that the extension is granted on the consideration that if the option was exercised the optionees would pay the option- or an outstanding debt due the latter. In its efforts to show the nature and intent of the transactions between A. Z. Litz and W. L. Taylor, the plaintiff relies on the testimony of W. L. Taylor, Jr., and to a lesser extent on that of Ryland Craft, these being the son and son-in-law respectively of W. L. Taylor. It appears however that neither of these men had any personal knowledge of the conditions under which Mr. Litz purchased at the judicial sale or under which the option dated May 1, 1925, was given. Admittedly their statements were based entirely on what W. L. Taylor had told them at later times. This evidence was plainly inadmissible. Sect. 6209 of the Virginia Code, through which plaintiff seeks to sustain its admissibility, is not applicable. This and related sections of the code deal with the competency as a witness of one party to a contract where the other contracting party is incapable of testifying by reason of death or other cause. Under the Virginia Code of 1887, the surviving party was not competent to testify except under limited conditions; Code of 1887, Sect. 3346. Under the Code of 1919, the last named section was repealed and the incompetency thereby removed, but Section 6209 was newly enacted in the Code of 1919 to limit the probative effect of such testimony. See Revisors’ Note to Code of 1919; and see Epes’ Adm’r v. Hardaway, 135 Va. 80, 115 S.E. 712; Robertson’s Ex’r v. Atlantic Coast Realty Co., 129 Va. 494, 106 S.E. 521. This statute makes no attempt to change the traditional objection to evidence which is purely hearsay, and which would be inadmissible under any circumstances. But even if the testimony of Taylor, Jr. and Craft as to what W. L. Taylor told them were admissible, an examination of it discloses nothing inconsistent with the recital of events heretofore given or contradictory of the conclusion that the instruments designated as options to purchase were anything more than that. I am unable to find anything that justifies the contention that the purchase by Litz at the judicial sale and the subsequent options to the Taylors created a “mortgage” or “a trust”; and there is no indication that, prior to the sale of this land to the plaintiff, anyone ever so contended. This appears to be of recent origin and born out of the exigencies of this litigation. It was in the answer of the Taylors filed in the West Virginia suit of Sperry et al. v. Taylor in September, 1941, that it was first alleged that the deed to Litz following his purchase at the judicial sale in 1925 was “not an absolute conveyance but was in legal effect and meaning a mortgage or trust with the right in these defendants to redeem said lands * * No attempt was made to elaborate this general and indefinite statement by pointing out the nature of the trust or mortgage. The plaintiff here has seized on this allegation and pressed it but with a similar lack of definiteness. There is nothing to show and it is not contended that Taylor owed Litz $86,250 or $57,500 or any other sum to which a mortgage would have been applicable. There is no contention that W. L. Taylor furnished any part of .the purchase price at -the judicial sale thereby creating a resulting trust in his favor. In fact there is no suggestion of any trust relationship other than that Litz, having agreed to give the Taylors an opportunity to reacquire the land, held title to it subject to this obligation. In this sense every option is a trust. And if this be deemed to create a trust, then it need only be pointed out that trusts are terminable by agreement of the parties and that these options terminated at times specifically provided in them. To avoid this result the plaintiff contends that the Taylors sought to exercise their rights under the second option prior to its expiration but were prevented from doing so toy the refusal of Litz to give them a statement or accounting of the amount necessary to be paid. Again I find no evidence fairly justifying such a belief. Prior to the expiration of the first option Ryland Craft, the son-in-law of W. L. Taylor, made an attempt to interest some outside capitalist in furnishing the money to take up the option and to take a part interest in the property. Admittedly this effort failed and thereafter the second option was sought and granted. Nothing more seems to have been done until in April, 1933, a few days before the second option expired, when Mr. Craft and W. L. Taylor, Jr. (W. L. Taylor had died in 1932), went to see Mr. Litz at his home in Tazewell, Virginia. This visit was not for the definite purpose of taking up the option but to confer with Mr. Litz and to find out what amount would be required to take it up in order that they might make an election based on that knowledge. Mr. Craft says of the purpose of this visit that they “had in mind exercising the option if the property was not going to cost too much money”, and “of course, in .the settlement, if it ran higher than we thought the property was worth, we wouldn’t have taken it”. He says further: “We thought probably we would owe him about $12,000”. Asked if he would have exercised the option if he had found that, instead of $12,000 the cost had been as much as $20,000, he stated: “We might have paid $20,000, but we would not have gone any further than that, because we didn’t think as much of that property as we had before”. They obtained from Mr. Litz a statement of the royalties collected during the life of the option but he was unable to furnish them with a statement of the credits to which they believed themselves entitled on the W.. L. Taylor notes which the optionees had agreed to pay in case they exercised the option. It was understood that the notes were subject to some credits from rents on a building in Welch, West Virginia, in which W. L. Taylor and Ada Taylor had at one time in previous years had an interest jointly with Litz. The rents for this building had been collected by an agent of the owners in Welch and Mr. Litz told Craft and Taylor, Jr., that the information would have to be obtained there. It was suggested that they go together to Welch, about sixty miles away, in an effort to obtain the information and they did so. Shortly after reaching Welch Mr. Litz left there on some other business and the other parties did not see Mr. Gray, the agent whom they had gone to see; but no reason appears why they did not do so. On the return-to the home of Mr. Craft in Gate City, Va., he and Taylor, Jr., drove by Tazewell, the home of Mr. Litz, but found he had not returned there. Nothing more seems' to have been done until on September 30, 1933, after the option had expired, Taylor, Jr., wrote to Mr. Litz a letter in which he mentions that he has never received a statement as to the rents on the Welch property, tout suggests other plans by which the Taylors could acquire a minor interest in the land, pending the carrying out of which he suggests that a further extension be granted. This letter, so far as appears, was never answered and during the succeeding period of approximately seven years no effort was made to take up the option and nothing was done by or on behalf of the Taylors to assert any rights in the land or to indicate that they considered themselves to have any rights. It might be added that it appears from the testimony of Mr. Gray, the rental agent for the building in Welch, that he had furnished to W. L. Taylor in the latter’s lifetime a statement of the rents on the building, this having been done in 1925 at or about the time W. L. Taylor’s interest in the building was sold in the creditors’ suit. An interest in the building owned by Ada Taylor had been sold by her in March, 1926. It seems therefore that W. L. Taylor had full opportunity to know of the disposition of the rents on the property during the entire period when he and his wife owned any interest therein and that he obtained such information from the rental agent up to the time that his interest was terminated. It may be that these records were incomplete or not understandable or otherwise unsatisfactory ibut if so there is nothing to show that -the task of straightening them out rested on one of the joint owners more than upon another. The substance of the evidence on this phase of the case has been set out fully because it is upon these facts that there is rested the contention that the Taylors sought to exercise the option and were prevented from doing so by the refusal of A. Z. Litz to give an accounting of the amount necessary to do so. As throwing further light upon this feature of the case, as well as upon the rights possessed by the Taylors and claimed by them at that time, the following may also be noted. On March 6, 1933, shortly before the last option expired, Mr. Craft had occasion to write to the First Huntington National Bank a letter saying in part: “Wish to advise that we believe you do not correctly understand this contract between Mr. Litz and Mr. Taylor and Mrs. Taylor. The contract is an option given by Mr. Litz to W. L. Taylor, Jr., Mrs. Ada Taylor and Cecil Taylor Craft whereby they can purchase, if they so desire, an interest in die lands now leased to the Premier Coal Co. Mrs. Taylor is ill and Mrs. Craft is dead and it is by no means certain that we will want to exercise this option.” The letter states that while “we will in all probability want to buy this property”,; the purchase is dependent on certain information which they have so far been unable to secure. On the s'ame date Mr. Craft wrote to Mr. Litz, in part as follows : “We have been unable to secure very much information about the Premier Company and do not yet know whether we want to buy this property or not. We are also uncertain about the amount of credit we are entitled to on a settlement between you and Mr. Taylor for rents etc. * * * If the information about the Premier Company is satisfactory we will in all probability want to exercise this option or make you a payment and request an extension of time on the balance of it. “If you will secure information as to just how much is owing the Taylors I will be glad to come to Tazewell and go over this matter with you. I am asking you to get this information since you were associated with them in this project and you can easily get information about it that it would take me a lot of time and money to get.” The statements quoted are plainly not consistent with any “trust” or “mortgage” theory, nor are they consistent with any contention that the Taylors had a fixed and definite intention of exercising their rights under the option and failed to do so only because they were prevented by Mr. Litz. On the contrary, they show that Mr. Craft, the spokesman for the family, understood that what they had was only an option to purchase and that the exercise of the option was dependent on what the property would cost. It shows also that Mr. Craft asked Mr. Litz to obtain the information necessary to calculate the purchase price merely because he thought the latter could obtain it more readily than Mr. Craft could. Instead of trying to prevent the exercise of the option it would appear that the attitude of Mr. Litz was to the contrary. At the interview at Tazewell he furnished Mr. Craft and Mr. Taylor with a statement of the royalties from the Premier Coal Company and suggested where they might obtain the other data which he was unable to furnish. It is admitted that he advised Mr. Craft and Taylor, Jr., to exercise the option because the property was “too valuable to let go”, and that he granted a thirty-day extension of their rights. On the other hand, it appeared that the royalties from the Premier Coal Company, the lessee of the land, had fallen off between 1930 and 1933 and it was apparent that in any event the sum necessary to be paid on an exercise of the option would have been substantially more than the $12,-000 which Mr. Craft had estimated before getting a statement of the royalties. As a result of Mr. Craft’s inquiries he had been led to believe that the lessee was in financial difficulties. The general business depression was at its worst and the condition of the coal business and its future prospects were both very gloomy and according to Mr. Craft’s own statement he “didn’t think as much of that property as we had before”. It would seem that these were very probably the reasons why no real effort was made to exercise the option and account for the indifferent efforts to obtain an exact statement of the amount required to be paid. Every indication is that any intention to exercise the option was abandoned because the optionees did not believe the property worth what it would have cost. This conclusion is strengthened by the fact that shortly after the option expired Mr. Litz sold an interest in the land to H. E. Harman and that the Taylors knew of this sale as early as August, 1933. Yet at that time they raised no question of the right of Litz to sell nor did they assert any interest in the land or show any concern over any alleged rights until seven years thereafter and after plaintiff had purchased the land. Their indifference to the sale to Harman would indicate their belief that their only rights were under the option and expired with the option. It is clearly inconsistent with the “trust” or “mortgage” theory now pressed by the plaintiff. This emphasizes the statement heretofore made that the “trust” or “mortgage” theory emanates from the pressure of this litigation and the suit of Sperry v. Taylor, rather than from the actual nature of these transactions even as understood by the Taylors themselves. During all the years until this litigation they referred always to their right as an “option to purchase”. Even in his testimony in the present case Mr. Craft states that he considered the instrument of April 17, 1930, as being only an option to purchase and that the only rights of the Taylors were those set out in the instrument. W. L. Taylor, Jr., testifies that it was not until July, 1940, that he conceived the idea that the instrument in question constituted a mortgage; that this was after he had been approached about a quit-claim deed to the 1,051 'acre tract; that he then began “running down the law” and construed the writings of May 1, 1925, and A