27 Wash. 297 | Wash. | 1902
The opinion of the court was delivered by
This Action was brought by respondent against appellant in the court below to rescind an executed contract for the purchase of 40,000 shares of the capital stock of appellant company, and for the return of $10,000 paid therefor, on the ground of false and fraudulent representations made by the agent of appellant in inducing respondent to purchase the stock. These fraudulent repre
There are some, disputed facts in the case, as follows: Baker testified that, before the time of the sale, he informed Eldridge that he was not a mining man himself; that what information he had concerning this property he had obtained from others, and that he informed Eldridge of this, and told him that the estimated amounts of ore on the dump and in the mine were all taken from the reports of the experts who had examined the property; that he believed the reports to be correct, and that Eldridge saw and read these reports; that he was not asked concerning commissions and made no statements concerning the same; that he stated that the net proceeds of the
At the trial, plaintiff asked the court for leave to amend the complaint by inserting an allegation of fraud upon this ground; and, over the objection of the defendant, the court, after denying the request for a continuance so as to give defendant an opportunity to meet this allegation, permitted the amendment and made a finding thereon. Under these circumstances the court should have denied the application to amend, or should have granted the continuance requested. We are satisfied from the record that whatever fraudulent representations there were, if any, binding upon the company, the undisputed evidence in the case shows a subsequent ratification by the plaintiff, which prevents, in this case, a rescission of the purchase of the stock. After the purchase of the stock the plaintiff visited the mine, on December 22, 1898, and saw the condition of the mine and the mill in the course of construction. At that time, it is true, the dumps were covered with snow and he had no opportunity to inspect them. At this time, after seeing the general condition of things, he purchased 2,000 shares for a friend with whom he had agreed to sell 2,000 shares of his own 40,000, so that his 40,000 might remain intact. The effect of this purchase was 2,000 shares for himself. He also telegraphed another friend as follews: “Young America mine better than reported. Delighted with conditions.” He visite'd the mine in June of the year
In the case of Grymes v. Sanders, reported in 93 U. S. 55, the court says:
“A mistake as to a matter of fact, to warrant relief in equity, must be material; and the fact must be such that it animated and controlled the conduct of the party. It must go to the essence of the object in view, and not be merely incidental. The court must be satisfied that but for the mistake the complainant, would not have assumed the obligation from which he seeks to be relieved;”—
citing Kerr, Fraud & Mistake, 408; Trigg v. Read, 5 Humph. 529 (42 Am. Dec. 447) ; Jennings v. Broughton, 17 Beav. 541; Thompson v. Jackson, 3 Rand. 507 (15 Am. Dec. 721) ; Harrod’s Heir v. Cowan, Hardin, 543; Hill v. Bush, 19 Ark. 522; Juzan v. Toulmin, 9 Ala. 662 (44 Am. Dec. 448).
“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- be silent, and continue to treat the property as his own, he will be held to have waived the objection, and will be 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. These remarks are peculiarly applicable to speculative property like that here in question, which is liable to large and constant fluctuations in 'value;”—
“Eor the party to treat the contract as if still binding, after he has discovered that he was drawn into it by fraud, will ordinarily have the effect to waive the right to treat it as invalid.”
At page 436 it is said:
“The defrauded party to a contract has but one election to rescind the same. If he once determine his election, it is determined forever. Hence if it be shown that he has at any time after knowledge of the fraud, either by express words or by unequivocal acts, affirmed the contract, his election is irrevocable.”
To the same effect, see Kerr, Fraud & Mistake, p. 298 et seq.; 2 Parsons, Contracts (8th ed.), 906, * p. 871 et seq.; 2 Pomeroy, Equity Jurisprudence (2d ed.), § 964; 2 Addison, Contracts (Abbott & Wood), p. 776, * p. 1178 et seq. This rule is based upon sound principles, and is peculiarly applicable in this case. Before the sale had been consummated, Eldridge says, he was willing to invest $15,000 in the property if he could have the benefit of his own eyesight, — if he could go there and look at it; and a very few days thereafter he did go and look at it, and expressed himself as satisfied. If he had waited until that time before he purchased the stock, and then bad purchased $15,000 worth of stock at twenty-five cents per share, he certainly could not have rescinded his contract. Southern Development Co. v. Silva, 125 U. S. 248 (8
There are many other questions presented by both appellant and respondent, but this view of the case makes the consideration of other questions unnecessary. The cause will be reversed, with instructions'to the lower court to dismiss the same.
Reavis, C. J., and Dunbar, Hadley, Fullerton, White and Anders, JJ, concur.