73 N.J. Eq. 678 | N.J. | 1908
The opinion of the court was delivered by
The complainants’ bill was filed to set aside an executed contract of sale by which John Doyle, the defendant, had turned over to the complainants the steamboat “Major Reybold” and
In the view that we take of the case it is unnecessary for us to determine whether the conclusions of fact reached by the learned vice-chancellor are justified by the proofs. For if it be assumed that the representations of Doyle as to the receipts and profits of the boat were proven so that the purchasers upon the discovery of their falsity were entitled to elect to rescind the contract of sale on that account, still such election to have weight in equity must have been made promptly and unequivocally upon the discovery of the fraud, i. e., it must have been an unqualified election to repudiate the entire bargain made with reasonable promptness after its fraudulent nature became apparent. Assuming fraud in a vendor and its discovery by the vendee an election by the latter to rescind the contract of sale cannot follow an election not to rescind; and mere delay, i. e., lack of reasonable promptness in rescission after the discovery of the fraud is evidence from which an election not to rescind may be inferred. There is, in fine, in equitable contemplation, but one juncture at which a purchaser who has been induced by fraud to enter into a contract of sale may elect on that account to rescind the contract, and that is upon his discovery of the fraud or within a reasonable time thereafter; beyond this period mere delay in rescission may be satisfactory evidence of a waiver of the right to rescind. That
The application of these general rules to the case in hand will be apparent upon a brief resumé of the facts and dates established by the testimony. In the summer of 1905 John Doyle, as owner of the boat “Reybold,” is said to have made the representations as to the earnings of the boat to a broker who was not at that time negotiating with the complainants. Nearly a year later these representations were communicated by the broker to the complainants and induced their purchase of the boat. On March 1st, 1906, the sale was executed and the property turned over by Doyle to one Sproule, the representative of the purchasers. On March 5th, two weeks before the complainants began running the boat, Doyle, according to the complainants, informed Sproule, then their trustee, that the boat was worn out, that no one would ride in her and that the complainants would be unable to make both ends meet. At this same time Doyle exhibited his check for $1,500, stating that it was the amount of the commission he was to pay to two members of the purchasing syndicate, whose personal interest in effecting the sale was a surprise to the other purchasers and threw light upon an advance of $1,500 on the purchase price made pending negotiations. On March 19th the complainants began operating the “Reybold” between Philadelphia and Salem, New Jersey, and early in April, according to the complainants, Doyle told the president.of the company that the boat would not make the amount that he had said she would, a fact' that was indeed otherwise self-evident. Notwithstanding these circumstances and disclosures which constitute the proof of the falsity of Doyle’s representations, the complainants continued to operate the boat during the spring, summer and fall of that year, and not until December 16th, 1906, was the election'to rescind the contract communicated to Doyle by a written tender to him of the property, after he had refused to entertain an offer to repurchase it made to him a short time previously. That this delay of several months was with the purchasers’ knowledge of the fraud that had been practiced upon them is frankly admitted on the witness stand by Mr. Sproule, who throughout the transaction had been
The facts that were before this court in the case of Dennis v. Jones, already cited, are in their essential features so nearly identical with the facts now before us that the equitable rule then applied is obviously applicable to the present case.
In Dennis v. Jones the essential facts were that on February 14th, 1885, Jones agreed to sell his skating rink to Dennis and Woglom for $10,000, of which sum the purchasers paid $5,000 upon entering into possession and secxxred the remaining $5,000
“I think,” the opinion concludes, “that in "the case now considered it is plain that after the appellants had knowledge of all the substantial features of the alleged fraud and were fully aware of the deceit which had been practiced upon them, they so acted as to afford plenary evidence of an election to abide by their contract. Their election thus made was irrevocable.”
The case now before us is even stronger upon its facts than that just cited for the reason that the nature of the enterprise and the relative situation of the parties more imperatively called for promptness in the restoration of the original status. Dojde was a South Jerseyman, a resident of Salem county, with a lifelong acquaintance among the shippers of that farming community. He had worked on the “Major Reybold” first as a deck-hand, afterward as fireman, then as second engineer, and finally as chief engineer, and in 1893 purchased the boat and became her captain. It is fair therefore to assume that Doyle was a well-known character in Salem county and that the local business he controlled was largely due to his personality and wide acquaintance. The complainants, on the other hand, were strangers to Salem county, and were not steamboat men at all. During the period, therefore, that the boat was being operated by these novices in the business it was naturally to be anticipated that the trade previously held together by Doyle would slip away or be diverted into other channels, and also that active and permanent opposition would be invited and developed. Such was actually the case. When, therefore, in December, 1906, the purchasers made their belated election to return the boat to
Other cases illustrative of this rule are Arnold v. Hagerman, 45 N. J. Eq. (18 Stew.) 186; Norfolk, &c., Hosiery Co. v. Arnold, 49 N. J. Eq. (4 Dick.) 390; Conlan v. Roemer, 52 N. J. Law (23 Vr.) 53.
The decree of the court of chancery is reversed, and the record remitted that the complainants’ bill may be dismissed.
For affirmance — -None.
For reversal — The Chancellor, Chiee-Justice, Garrison, Swayze, Trenchard, Parker, Bogert, Yroom, Green, Gray, Dill — 11.