*1 Argued 8; May 29, March affirmed
ANDERSON LAWS et al.
(159 (2d) 201) P. Justice, Chief Before Kelly, Belt, Rossman, Associate Justices. Hay, Lusk, Bailey, *2 Sylvanus Dolph and Smith, D. Neil both of Charles appellant. for Carl O. Portland, Anderson, Hy respondent Roy Samuels, Portland, D. Laws. J.
LUSK, against Roy an This was action for deceit D. Laws and A. Clarence Wicks. The defendant Laws moved for
judgment pleadings, granted. on the which was Prom judgment plaintiff appealed. the has complaint
The sets forth a cause of action based on representations inducing purchase by fraudulent on March 28, 1944, $8,000.00,of an in- by terest in a business conducted the defendants as a partnership under the names of Wicks & Slifman. The misrepresentations alleged related to the value of the business. The defendant Wicks filed a demurrer, plaintiff, rights confessed tbe of defendant are not now involved. The defendant Laws filed an allegations answer which he denied the alleged affirmatively and fraud, that the two defend- ants and together associated themselves purpose forming a to be known Company, carry Wicks Construction which was to partnership on the business of Wicks & Slifman and to partnership; take over the assets of plain- that the agreed pay tiff $8,000.00for his interest the cor- poration; thereafter filed articles of incorporation with the commissioner of capital agreed Oregon, divide
the State of equally among before the themselves, that, corporation, organization “com- of the plained mis- that there been of these defendants representations him connection with the sale made to ’’ corporation. purchase interest in said of his reply foregoing allegations all admitted are plaintiff. filed alleges notwithstanding further that,
The answer misrepresentations plain- complaints about such together April defendants, with the tiff, corporation, organization completed “pursuant an entered into the terms of wages drew stockholders, between the per corporation in the month” and sum $300 management part operation in the “took an active filing corporation” until the time of about *3 complaint and reason action, in this that of these estopped asserting his should be facts the alleges present answer then that about claim. The April claim released his 7, 1944, following agreement the defendants: into AGREEMENT, made and entered into “THIS Roy A. D. Wicks, and between Clarence Laws, Anderson. and Carl O. parties agreement “WHEREAS, to are capital all the the owners of of the Wicks Oregon corporation, an Co., Construction Anderson claims at whereas Carl O. that the time purchased corporation, his interest in said there in were certain misstatements made connection with corporation. assets of said Now, therefore, satisfy the claims of Carl order to O. Anderson, the mutually agree as follows: steps immediately will be taken “That to sell dispose capital of the stock owned Carl O. which, paid $8,000. the sum of Anderson, for he has period hereof, from date for a of three weeks That Roy A. have the D. Wicks shall Laws and Clarence provided, right dispose stock, of said sole of to sell price to Anderson is course, that the Carl O. approval his receive for said stock shall meet with payment manner of thereof and that the terms and approval. expiration shall of the the event also meet with his At hereof, three weeks of the date Roy A. D. have Clarence Wicks and Laws not com- pleted belonging a sale of the stock to Carl O. Anderson forth, then, have the the terms and conditions above set that event, Carl O. Anderson shall dispose sell of his stock ill any upon any manner and terms and to whomsoever expiration as he shall deem best. At the six of weeks from the date not sold as herein parties if hereof, Carl O. Anderson’s stock is provided, then, that event, the mutually agree corporation
hereto moneys paid upon will be dissolved and the first liquidation corporation paid of said valí be over to Anderson, Carl O. and no divisions will be made be- Roy tween Clarence A. Wicks and D. Laws until Carl O. Anderson shall have received his full $8,000.00.”
It is further steps that the defendants took plaintiff’s sell stock, but were unable to do so in the specified agreement; time in that thereafter plaintiff attempted to sell stock, but, as far as the defendants were able to determine, had not done so; meeting on June 8, 1944,at a although which the did not attend, he was ad vised properly adopted thereof, resolution was liquidate in order to fulfill the terms April 7, 1944. *4 reply
The in his admitted “that he earned wages performed certain sum of for work for the agree- signed that he admitted defendants”, April he 1944, ment of did not attend the 7, June, corporate meeting 1944. 8, Otherwise, on allegations all summarized in the denied preceding paragraph hereof.
LUSK, J. reply signed admitted his that he April which shows on its 7, 1944, face that it was entered into after learned that question- he had been deceived. The for decision is right whether this conduct he waived his recover fraud. § In 24 Am. Fraud and Deceit, 214, it is 42, Jur., general said to be the rule that “if one induced misrepresentations acquire, or fraud to deal or or to acquisition prop enter into a contract for the or use erty knowledge deception, thereafter, re party guilty from the of fraud ceives some substantial respect concession or enters into a new contract in thereby relinquishes right all transaction, to re recoup misrepresenta or cover because of the tions.” far as we have So been able to ascertain, the validity principle questioned by of this has never been may any applied It court. be found enunciated and foregoing numerous cases cited text and in the A. L. R. annotation in 106 case of Bonded Adjustment (2d) v. Anderson, Co. Wash. 57 P. A. R. 106 L. 166. question
It should be observed that the here not relate to a mere does waiver to rescind ‘‘ may brought by any delay That contract. about (the part, party’s) especially his defrauded remaining possession property received
473 ’’ dealing with it as his own. him under the contract, 120 253 P. Brothers, 607, 611, Or. Grant v. Cartozian But Walton, 32 P. 180. 460, 464, v. Or. 52 531; Scott damages by pro right to the fraud one the recover ceeding not an affirmance of the contract is party easily so and the defrauded who does lost, may partly performed the until he has discover fraud go keep contract, he forward the what received his action for it, under still maintain (McCabe 608); Kelleher, v. 90 175 P. 45, 51, Or. thereby although he waives his to rescind (Cameron Edgemont Co., 136 Investment Or. 385, 698). agree plain P. We, therefore, with the performance the tiff’s contention that of work for the acceptance wages or the defendants and of discovery the after the fraud to no more than amounted the affirmance of con the argument by tract. much So was conceded on the respondent. counsel for the entering
But the act into .the new respect alleged contract fraudulent transac after he that he had tion, knew been deceived, in a is category. distinguished different The case not to be Lee, on facts from Burne v. 221, 104 its Cal. P. 438. That case also involved an fraudulent sale of corporate stock. The action was one to recover dam ages misrepresentations caused fraudulent as to value of the stock. defendant, his answer, discovering pleaded that, after the fraud, the agree him to to rescind tried induce but contract, they agreed writing refused, property of the should sold, and out proceeds, paying expenses, plain after all money tiff would be refunded amount of paid for his stock and the remainder he had would pending go and that there was then defendant, brought by seeking another suit agreement. specific performance of A demurrer judgment was overruled and entered answer appeal. which was affirmed defendant agree- into later that, held The court knowledge constituting facts ment with *6 plaintiff recover for fraud, his the waived applicable wrong. stated in sub- rule was the Jurisprudence, quoted from American as above stance apply contract is an exe- whether the and was said executory or contract. It was said the cuted super- original or rather abandoned, “was contract by by 17th, contract of November seded, the new plaintiff voluntarily latter into the the any right damages he have waived for which deemed to orig- might the have had he stood had, otherwise ’’ The court continued: inal contract. discovery rights plaintiff upon the of of “The any opened up nego- alleged fraud and before he clearly were defined in defendant, tiations with the might original have contract law. stood his He damages might he deceit, for or and sued contract, and had con- have rescinded the defendant would then have had no sented thereto right Neither of these action over the deceit. of things, Plaintiff not stand however, was done. did original and his effort at on his contract rescission agreement relating in a new to the cor- resulted obligated porate in which the defendant him- disposition a of entire of self to make business repayment, pro- from purchase price paid plaintiff for his ceeds, of the agreement, shares of stock. Under it was plaintiff’s of sale interest in the business ownership represented one-half of of the is- which,repayment corporation from sued stock of the of the price purchase made, to be his stock was of might payment preferred which but was to be necessitate proceeds application of of the entire agree- Obviously, payment. this new sale towards its of the ineffectual effort into as a result ment entered upon the consent to discovery an actual rescission obtain by plaintiff, open to the of the fraud compromise and was a claim of defendant that it adjustment rights plaintiff springing of all the superseded from the contract of that contract and resulted for 6th; October any in a waiver claim otherwise deceit which ’’ might have had. Except in the instant case not, did appears, far so first seek a contract, rescission substantially thing he did as the same supra. Lee, Burne He obtained an if defendants that his stock should not be sold property six weeks the should be paid proceeds sold he should be out of the first paid amount he had for his stock. He did this, pleading “complained as his admits, after *7 these misrepresenta- defendants that there been pur- tions made to him in connection with the sale corporation”. chase of his interest in said And, as if agreement to leave no doubt that this was intended, supersede original California court said, to con- tract, the it to therein recited that that claimed such misstatements had been made and they entering that were into “in order satisfy to the claims of Carl O. Anderson”. plaintiff,
The authorities relied in our opinion, point. are exception not in With the of a de- cision of the Texas they court, which we shall notice, merely deal purchaser with conduct of the defrauded
476 contract, as, to further than affirm went no which Snyder, example, Kan. 157 P. 102, v. 98 Natta for Van purchaser, a after dis- L. A. where 1918A, 102, R. 432, pay covering to continued deceived, that she had been purchase price; given for the balance *8 4 <7 paid par for their that he and others had who equal given in number stock should be additional shares they bought. held that The court those for fraud. The there was no waiver of the to sue reasoning upon dissenting opinion casts doubt of a may but, however that decision; be, correctness of the distinguishable, clearly ground the case is because the of decision was that “when the stock was donated purpose stockholders it was for the of three relieving company the financial condition of purpose compensate no shows Bender for in- juries; purpose part did not exist either on the of part the donors or or on the part present of Bender”. But in the case the writing expressed purpose satisfy plain- their by entering agreement. tiff’s claim into the argued question governed by It is also the law accord and satisfaction; that at most the agreement executory an binding accord, was or en without forceable question satisfaction; that, if there abe as to whether the accepted was to be question satisfaction is at most a fraud, by jury. fact to be determined We think that the new arrangement, being executory instead of a mere accord, supra, rather, as the court said v. Lee, Burne * * ° may compromise agreement “what be called a plaintiff against under which the claim of the defendant settled”; that, was to as that case holds, the plaintiff’s right waiver of the to sue for fraud was based a sufficient considera namely, promise tion, of the defendants to sell all property “which included, of own primary course, it, their interest possibly plaintiff”. sole benefit It is true *9 question one to waive a known intends whether usually like where but in case this fact, is one of conclusively pre dispute the law
the facts are yield person’s conduct. To from the sumes the intent firmly argument reject plaintiff’s a rule would be to no fraud. There seems to be the law imbedded question among’ the courts about existence of applica although its are differences about there rule, Bickley, particular of fact. See Bean states tion dissenting opin 174 N. W. Iowa, Schagun Mfg. Judge Co., v. Scott ion of Sanborn (C. bring A.) facts F. That the ease 209. C. rule clear. within judgment foregoing is affirmed. reasons the
For the notes McCarthy, McKay N. 146 W. 546, 755, v. Iowa 123 (N. purchaser S.) a L. A. where stock R. learning But in later of the fraud. Iowa sold after Gurnsey, N. 206 Iowa v. W. case of Timmerman held to recover court 879, the seem been circumstances which for fraud had waived present those in the instant conclusive than to us less given was one to recover on notes for The action case. years. lease run two The rent a which to under inducing pleaded fraud the execution of the defendants action in court held their lease, provided agreement, for the cancella- a into new portion lease and released them a tion of the asking and in additional it, rental reserved pay rental consti- notes, to one time which the defendants, a The court said that “in tuted waiver. ought important per- getting be concession not to such purpose an intent reserve in concealment mitted to directly indirectly payment they, to avoid of what or knowledge deliberately agreed the facts, full pay.” Kennedy to is case above referred The Texas S. W. The Bender, Tex. 524. case involved 149, 135 discovery sale of stock. After fraud a fraudulent by plaintiff complaint made to defendants, thereof meeting the defendants offered stockholders’ at a corporation certain shares of their stock donate to company, financial condition of such to relieve the fifty placed market at cents' on the share. agreed to a demand made defendants then