Martin-Barris Co. v. Jackson

48 N.Y.S. 586 | N.Y. App. Div. | 1897

Follett, J. :

When a vendor has, by the fraud of a vendee, been induced to enter into a contract by which the former parts with his property,, the vendor may rescind the contract, if he acts promptly on the discovery of the fraud, and recover the property from the vendee by an action of replevin, or he may recover the value of the property in an action for its conversion (trover), and perhaps he may recover the value of the property in an action on the case stating the facts (an action ex delicto) without resorting to an action in replevin or in trover. But, before the vendor can maintain an action in either of these forms, he must first legally rescind the contract. To effect a legal rescission of the contract he must give notice of his rescission, and must return, or offer to return, whatever he has received under the contract, which must be done promptly on the discovery of the fraud. If he fails to disaffirm the contract promptly he is deemed to have ratified it, and can recover his damages, if any have been sustained, only by an action on the contract for a breach of warranty or for false representations.

The first question presented is whether the plaintiff by its acts effected a legal rescission of the contract so as to entitle it to maintain .an action for the recovery of the value of the property which its predecessor delivered to the defendant. The plaintiff alleges that its predecessor was induced to enter into the contract and deliver the lumber thereunder by reason of the false representations of the defendant as to the usefulness and value of the cultivators. It is also alleged that the defendant misrepresented to the plaintiff’s predecessor the use he proposed to make of the lumber purchased ; that he intended to use it in manufacturing cultivators, but that the defendant instead of so using it sold it to various purchasers. It is difficult to see that this last representation afforded any legal ground for relief as it could make no difference with the plaintiff whether the defendant used or sold the lumber. Fifty-two of the cultivators, all that were called for by the plaintiff, were delivered in June, 1889. The plaintiff had in its possession the model, upon the strength of which the cultivators were purchased. A cultivator is not a complicated machine, and it was easy for the plaintiff to have discovered, on inspection, whether the cultivators delivered corresponded with the model and with the representations made. No complaint was made until September 25, 1889, upon the receipt of a letter from the defendant claiming a shortage in the lumber delivered. Then the plaintiff stated that the cultivators were not new ones, but old ones of different patterns, and wholly unlike the model. The plaintiff had then discovered the fraud, if fraud there was. It did not rescind the contract, but, on the contrary, demanded that the defendant remit by draft the difference between the contract price of the lumber and the contract price of the cultivators, which was in affirmance and not in disaffirmance of the contract. October 14, 1889, the plaintiff again demanded the payment of the difference in the price between the lumber delivered and the cultivators received. Nothing further was done until October 30, 1890, nearly a year later, "when the plaintiff wrote the defendant stating that several cultivators were due, that those received were worthless, and asked if the defendant could furnish cultivators corresponding with the model shown and according to the representations made. There is no hint in this letter that the plaintiff intended to disaffirm the contract; on the contrary, the letter evinces an intention to affirm it. November 4, 1890, the defendant replied that he had cultivators on hand to complete the contract and that he had been sued for shortage on the lumber. April 27, 1892, the plaintiff wrote the defendant, again stating that the cultivators were valueless, and notified him that they were subject to his order and would be returned upon receiving shipping directions, and also demanded the payment of $2,112.79, the value of the lumber alleged to have . been obtained fraudulently, besides interest and expenses. So it appears by the correspondence between the litigants that the plaintiff did not attempt to rescind this contract until after a lapse of two years, ten months and fourteen days from the date of the contract. Besides this, the attempted rescission was not made until after the lapse of two years, seven months and two days after the discovery of the fraud, as appears by the plaintiff’s letter of September 25, 1889, and after, as before stated, the plaintiff had three times written, after its alleged discovery of fraud, demanding that the contract be performed. Twice the plaintiff had demanded a payment of the difference in cash between the -prices of the commodities exchanged, and once that cultivators, corresponding with the sample, should be delivered. By these letters and by the long delay the plaintiff lost its right to rescind the contract. (Kinney v. Kiernan, 49 N. Y. 164; Strong v. Strong, 102 id. 69 ; Hallahan v. Webber, 7 App. Div. 122.) The rule expressed in these cases is a universal one, and is stated by all the text books where the subject of rescission is discussed.

The judgment and the order are sought to be sustained on the theory that it was a question of fact for the jury whether the attempted rescission of the plaintiff was made within a reasonable time. There is no dispute in the evidence about the facts bearing upon the question of the attempted rescission, and the question whether the attempted rescission was made within a reasonable time was a question for the court. (Roth v. Buffalo & State Line R. R. Co., 34 N. Y. 548, 553 ; Hedges v. Hudson River R. R. Co., 49 id. 223; Nunez v. Dautel, 19 Wall. 560 ; Kimball v. Howard Fire Ins. Co., 8 Gray, 33; May Ins. [3d ed.] 368; 19 Am. & Eng. Ency. of Law, 640.)

Under the undisputed evidence in the record the plaintiff did not attempt to rescind the contract within a reasonable time, and the court should have so held as a matter of law and granted the defendant’s motion for a nonsuit.

Again, the court erred in rejecting the defendant’s offer to prove the quality and value of the lumber delivered. In an action t-o recover property or the value thereof, fraudulently acquired from the plaintiff, he may recover its value, whether it be more or less than the contract price. (Terwilliger v. Knapp, 2 E. D. Smith, 86.) The plaintiff could not stand on the contract as fixing the price or value, and yet recover on the theory of a rescission of the contract. A party to a contract, if he attempts to rescind it, must rescind it in toto.

For these errors the judgment and order must be reversed, and a new trial granted, with costs to the appellant to abide the event.

All concurred, except Ward, J., who concurred on last ground stated in opinion.

Judgment and order reversed and a new trial ordered, with costs to the appellant to abide the event.