This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
If a contract for the sale of realty is executory on both sides, failure of title is failure of consideration. The vendee may rescind and recover what he has paid on such contract1 on surrendering possession to the vendor if the vendee has taken possession under the contract.2 If the vendor renounces the contract the vendee may recover what he has paid in.3 So if the vendor has withdrawn his deed from escrow, contrary to the terms of the contract, the vendee may resist collection of his note for the property in the vendor's hands.4 So if the vendor conveys the realty to another, the vendee may resist the collection of notes given by him for the purchase price if not in the hands of a bona fide holder.5 If the vendor refuses to deliver a deed when called upon the vendee may rescind and recover the purchase price already paid in by him.6 A vendee in possession cannot have indemnity against incumbrances.7
24 Piedmont, etc., Co. v. Machine Co.. 96 Ala. 389; 11 So. 332.
25 Powers v. Powers (Ky.), 39 S. W. 825.
26 Martin v. Martin (Ky.), 20 S. W. 375.
27 Chapman v. Long, 66 Vt. 656; 30 Atl. 3. (The grantee refused to make a new and valid reconveyance.)
28 Barker v. Smith, 92 Mich. 336; 62 N. W. 723.
29 Riley v. Allen. 54 N. J. Eq. 495; 35 Atl. 654.
1Tupy v. Kocourek, 66 Ark. 433;
51 S. W. 69; Morris v. Goodwin. 1 Ind. App. 481; 27 N. E. 985; Blanck v. Sadlier, 153 N. Y. 551; 40 L. R. A. 666; 47 N. E. 920; Duncan v. Gisborn, 17 Utah 209; 53 Pac. 1044.
2 Sayre v. Mohney, 3Q Or. 238; 47 Pac. 197.
3 Elder v. Chapman, 176 111. 142;
52 N. E. 10; reversing, 70 111. App. 288.
4 Maydale v. Peterson, 7 Ida. 502; 63 Pac. 1048.
5 Battery Park Bank v. Lougb-ran, 126 N. C. 814; 36 S. E. 281.