Brown v. Gordon-Tiger Co., 44 Colo. 311

44 Colo. 311 | Colo. | 1908

Mr. Justice Goddard

delivered the opinion of the court:

It is manifest from the express provisions of the contract that the furnishing of the mill and machinery specified and the diligent operation of the mine were the principal inducements to Brown to sell the property, upon the condition that the balance of the purchase price should be paid only out of the profits derived from the ore mined and sold. To emphasize the importance of taking immediate control of the property by the company and the construction and continuous operation, of the reduction plant, it was -further provided that six months was sufficient time to procure and put the plant in operation, and while it was understood that, if the party of the second part could not, by using reasonable diligence, complete the plant within that time, it should not be cause for rescission or damages, yet it was expected that payments to the party of the first part would begin ninety days after the plant was in successful operation.

As above stated, the defendant did not place or attempt to place any mill or machinery of any kind or character on the mines; nor has it paid to the plaintiff any part of the agreed balance of the purchase price; nor has it attempted to comply with the contract in this or any other respect, except to pay the lien claims above mentioned; nor does it express any intent or desire to fulfill its contract, but offers excuses for its past and continuing failure to perform its important and material obligations imposed by the contract, which are manifestly frivolous and insufficient.

The defect in the title, however it may affect 'the rights* of the respective parties in other respects, certainly affords no excuse for, and was not the cause of, the delay in the erection of the mill within the time provided. During this time the defendant was under the impression that the title to the property was perfect. It did not ascertain anything to the contrary until about March 7, 1901, being about eleven months after the date of the contract. The condition of the title, therefore, cannot now be availed of as an excuse for its nonperformance in this respect.

Nor is there any merit in the further, excuse urged for its delay that Brown failed to furnish a schedule of the liens against the property. The contract of April 9 limited the application of the $60,000 to the payment of liens against the property. To constitute a claim a valid lien against the property to the prejudice of the defendant, it must have appeared of record. The evidence discloses that Mr. Denison, as representative of the defendant, examined the records and made out a schedule of the liens appearing thereon. He, therefore, had all the information there was to he had in reference .to such liens as existed against the property, and the defendant was fully protected by the deeds from Brown, which were of record, from any liens that might be recorded thereafter. The most that could be predicated upon the failure of Brown to furnish the schedule, if he did so fail, would be to give the defendant further time in which to make such payments. It could in no way operate -to excuse the delay in building the mill.

As a further reason justifying the failure of the defendant to comply with its contract in its most important respect, was the fact that one Keegan brought suit against the Browns and garnished the defendant company, and thus tied up the balance of the $60,000. This garnishment having been ultimately discharged, at most delayed the application of the $10,000 to the purpose specified; and we do not think that this circumstance, nor the opinion of the engineer that he did not deem it advisable to build the mill under these circumstances, in any way justified the willful violation on the part of the defendant of the express provisions of the contract requiring an early pinchase and erection of the mill and machinery.

' The complaint sets out a cause of action, and the evidence introduced in support of its allegations discloses a state of facts that entitles the plaintiff to some relief, notwithstanding the fraudulent representations made by S. P. Brown in regard to the death of James W. Brown. Whether in the circumstances she is entitled to the specific relief asked, it is unnecessary, if not improper, to determine on the present review. It is sufficient to say that upon the evidence presented, the court below erred in holding that the defendant company was entitled to a rescission of the contract and to he reimbursed for the money expended thereunder. It may he conceded that the defendant had the right to rescind the contract upon the discovery of the falsity of the statement of SP. Brown in regard to the death of James W. Brown, and his consequent inability to convey the title to an undivided one forty-eighth of the property by his own deed, as he purported to do; but having failed to avail itself of that right in apt time and by recognizing the contract as in force thereafter,.it waived the .right to rescind, and became as conclusively hound by the contract as if the fraud had not intervened.

This rule is too well settled to admit of controversy. In Grymes v. Sanders et al., 93 U. S. 55, 62, the rule is thus stated:

“Where a party desires to rescind upon the ground- of mistake or fraud, he must, upon the discovery of the facts, at once announce his purpose, and adhere to it. If he he silent, and continue to treat the property as his own, he will he held to have waived the objection, and will he conclusively bound by the contract, as if the mistake or fraud had not occurred. He is not permitted to play fast and loose. Delay and vacillation are fatal to the right which had before subsisted.”—Shappirio v. Goldberg, 192 U. S. 232; Richardson v. Lowe, 149 Fed. 625; Auld v. Travis, 5 Col. App. 535; Stockham v. Adams, 96 Ill. App. 152.

In Richardson v. Lowe, supra, Judge Adams, speaking for the court, said:

“Rescission of a contract on the ground of fraud is not a mental process undisclosed and unacted upon. It requires affirmative action immediately on its discovery; some overt act and outward manifestation of the intention to clearly apprise the other party to the contract of the right asserted.—Melton v. Smith, 65 Mo. 325; Walters v. Miller, 10 Iowa 427. * *' * The following cases afford apt and persuasive authority for the. application of the doctrine to this case: Romanoff Mining Co. v. Cameron, 137 Ala. 214, 33 South. 864; Shiffer v. Dietz, 83 N. Y. 300; Booth v. Ryan, 31 Wis. 45; Greenwood v. Fenn, 136 Ill. 146, 26 N. E. 487; Dennis v. Jones, 44 N. J. Eq. 513, 14 AtL 913, 6 Am. St. Rep. 899; Downer v. Smith, 32 Vt. 1, 76 Am. Dec. 148. The duty of rescinding arises immediately upon acquiring knowledge of the substantial and material facts constituting the fraud. It is not requisite that the defrauded party shall be acquainted with all the evidence constituting the fraud before the duty to act by way of rescission arises.—Campbell v. Flemming, 1 A. & E. 40; Fry Sp. Perf. Cont. (2d ed.), §§ 703, 704; Bach v. Tuch, 126 N. Y. 53, 26 N. E. 1019; Taylor v. Short, 107 Mo. 384, 17 S. W. 970. When he has evidence sufficient to reasonably actuate him to rescind the contract and on which he has once acted, no subsequent discovery of cumulative evidence can operate to excuse waiver of the fraud if one has in the meantime occurred, or to revive a once lost right of rescission. The election to waive the fraud, once deliberately made, is irrevocable. Vacillation or speculation cannot be tolerated. ’ ’

The defendant, having waived the right to rescind the contract upon the ground of Brown’s .fraudulent representation, is conclusively bound by the contract and cannot now urge the defect in the title as an excuse or justification for its failure to perform the obligations imposed upon it by its express terms; in other words, it cannot retain the possession of the property and successfully evade its obligations thereunder. In the event that it shall carry out the contract on its part and the defect in the title is not “made good,” as provided in the contract, any damages it may suffer by reason of such defect can be availed of as a defense pro tanto to the recovery of the purchase price.

Since it becomes necessary to reverse the judgment of the court below and remand the cause for the reasons already given, it becomes unnecessary at this time to consider the refusal by the court to peiv mit the plaintiff, through the intervention of the conservator of the lunatic, to supply the title to the undivided one forty-eighth interest.

The judgment is reversed and the cause remanded. Reversed and remanded.

Decision en banc.

Mr. Justice Campbell and Mr. Justice Maxwell not participating.