196 F. 627 | 6th Cir. | 1912
Complainants filedl their bill to rescind their contract of purchase, of a tract of land in Coahoma county, Miss., sold to them by' defendants. The Circuit Court entered a decree dismissing the bill, and appeal is taken from that decree. The important facts are these:
Complainants are husband and wife, and in 1906 resided at Mattoon, Ill.; Mr. Roseboom being a broom corn broker, and having considerable money for outside investment. Defendants resided at Memphis, Tenn., and were engaged in handling real estate, partly their own and partly for others. They owned the tract in question. May 16, 1906, complainants bought from defendants this tract, known as the “Gold Dust Plantation.” The price to be paid was $20,000, of which $5,000 was paid in cash, $8,420.34 by way of assumption of existing liens against the tract, the remaining $6,579.66 being represented by complainants’ notes, secured by deed of trust upon the premises bought. The written description of the tract taken from the land agent’s books, a copy of which was furnished complainants during the negotiations for purchase, contained the following items, among others:
“Acres No. 373. * * * Acres in cultivation, 225. Acres deadened, No. 148. * * * Rents for three years for $1,600.00 per year.”
The premises were at the time under lease given by defendants to one Ross, running from July 18, 1905, to December 31, 1908. By its ■terms Ross was to have the use of the place for the remainder of the year 1905 without charge, and was to have certain property then on the place. For 1906 he was to pay $900 and for each of the years 1907 and 1908, $1,000. He was to put in cultivation, during the year 1906, 50 acres of land never before cultivated, and to properly deaden, prior to September 1, 1906, all the remainder of the timber, except that no cypress should be cut or deadened without defendants’ permission. He was also to do all ditching necessary to be done, to put the place in good condition for cultivation, at á cost of not less than $250. He also agreed that at the expiration of the lease there should have been in cultivation during the year 1908 not less than 225 acres of land, that for any amount remaining uncultivated at that date he was to pay $20 per acre, and for any portion not deadened prior to Sepr
“Canceling an executed contract is an exertion of tile most extraordinary power of a court of equity. The power ought not to he exercised except in a clear case, and never for an alleged fraud, unless the fraud he made clearly to appear; never for alleged false represen!ations, unless their falsity is certainly proved, and unless the complainant has been deceived and injured by them.”
As expressed in Files v. Brown (C. C. A. 8) 124 Fed. 133, 139, 59 C. C. A. 403, 409:
“If there is one proposition in the law regarding the rescinding of contracts and the cancellation of muniments of title that is established beyond ■doubt or cavil, it is that the complainant must establish the essential facts*630 of Ms cause of action with clearness and certainty, to entitle Mm to any relief.”
2. What has been said respecting the necessity of clearness and certainty in proof of misrepresentation to give right' to rescission applies to the alleged misrepresentation regarding the cultivated acreage. It is difficult to determine satisfactorily what representations were actually made upon this subject. Complainants testified that Corbitt represented that 225 acres were under cultivation when the sale was made' and that an additional 50 acres was to be put under cultivation during Ross’ tenancy. Corbitt denies this, and says that the 50 acres were to be part of the 225 acres to be left by Ross at the end of his tenancy. Ross claims not to have understood that he was to cultivate an additional 50 acres, except as he was to have 225 acres cultivated at the end of his term, and states that he was under the impression that there was the latter amount of cultivated acreage when he went onto the place in 1903. The amount of new land cultivated by Ross is not definitely shown. He says that he cleaned up, planted, and plowed a “great big patch of land” at Rose-boom’s direction, and that the latter said that if the 225 acres had been all plowed up and cultivated that year he would be satisfied. •In view- of all the testimony, complainants have not sustained the burden of satisfying us that they had reason to understand that 50 acres were to be put into' cultivation in addition to the 225 acres. We think defendants’ construction of the representations made quite as consistent with the testimony taken together as is that of complainants, and that we are justified in accepting the view that the deficit in cultivated acreage is due to the default of Ross rather than to misrepresentations by defendants. In our opinion, the proof of misrepresentation regarding the cultivated acreage is not such as to justify a decree of rescission.
Mrs. Roseboom had in 1906 information tending to show that the rent paid by Ross was less than $1,600. But we have not taken this information into account as a substantive ground of laches or estoppel, or as putting complainants to an election at that time as to the course they should pursue; for Mrs. Roseboom testifies that defendant Biles, on being confronted by her with the information referred to, while admitting that the rent for 1906 was to be paid to the exfent of $700 by way of. the improvements mentioned, asserted that for each of the remaining two years the rent was $1,600,. and defendant Biles does not explicitly deny making this statement. We have thus not found it necessary to consider the testimony objected to by defendants as incompetent under the Tennessee statute forbidding husband and wife to testify as to matters occurring between them by virtue or'in consequence of the marital relation. We are satisfied, however, that complainants had knowledge of the contents of the Ross lease before the payment and discount referred to, and-in April, 1908, when the lease was turned over to Mr. Roseboom. Complainants were thus, in our opinion, definitely apprised that the amount of rental paid by Ross had been misrepresented. We reach this conclusion upon these reasons: Whatever may have been complainants’ understanding when the purchase was made as to the manner in which Ross was to pay his rent, Mrs. Roseboom had received in 1906 information which apparently caused her to believe that the rent paid by Ross was less than $1,600, and that complainants had been deceived and defrauded in that regard. The only reasonable construction of her testimony regarding her interview with Biles immediately following that information is that the latter assured her that the work done by Ross was to be paid in reduction only of the first year’s rent. The necessary inference from her testimony is that she understood that the rent for the remaining two years was payable in money. Her knowledge affected both complainants. Reference to the lease itself showed that the money payable for each of the last two years was but $1,000. The natural effect of this discovery, taken in connection with the information received previous to the interview with Biles and the assurances given by the latter, was to apprise complainants that the amount of rental paid by Ross
In Mudsill Mining Co. v. Watrous, 61 Fed. at pages 186, 187, 9 C. C. A. at pages 438, 439, Judge (now Mr. Justice) Lurton said:
“Before a purchaser is compelled, to elect whether he will affirm or dis-affirm. he must be aware of the facts which raise such an election. Delay will not defeat his right to relief, unless the fraud was known to him or ought to have been known by due diligence'.” And again: “Neither rumors nor suspicion required an election. Either would demand diligence in effort to discover the truth, for, after facts are known calculated to excite suspicion, laches would he imputed if there was negligence in inquiry.”
And in Alger v. Keith, 105 Fed. at page 120, 44 C. C. A. at page 386, the same learned judge said that in cases such as there presented “courts of equity will look with some indulgence when the defense is laches or acquiescence, and require very clear evidence that the defrauded party has assented after full knowledge of the fraud and his rights in the matter.” The two cases last cited are relied upon by complainants, but are readily distinguishable from the case before us.
In the Alger Case, complainant was held not to have lost the right of rescission by reason of payment of deferred installments of purchase price after knowledge that misrepresentations had been made as to the thickness of veins of coal in the land bought or by long delay thereafter in filing bill to rescind. And in the Watrous Case it was held that complainants did not lose such right by remaining in possession of the mining property several months after they discovered that it had been “salted.” 13ut in each of those cases the purchaser had bought upon his own examination or that of his agent, and there was no right of rescission by reason of the discovery, in the one case of the mere act of “salting,” or in the other case of the
Complainants were thus charged, by the information given by the Ross lease, with the duty of electing promptly whether to affirm the contract and hold on to the land (which would have left a right of recovery for such legal damages as had been suffered by defendants’ action), or to disaffirm and repudiate the contract and rescind the sale. The two remedies are absolutely inconsistent.
“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 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.” Grymes v. Sanders, 93 U. S. 55, 62 (23 L. Ed. 798).
As expressed by Judge Rurton in Mudsill Mining Co. v. Watrous, 61 Fed. at page 186, 9 C. C. A. at page 437:
“When a purchaser acquires knowledge that he has been defrauded, he has an election of legal remedies. He may keep the property and sue for damages, or repudiate the contract and demand rescission. These remedies are not concurrent, but inconsistent, and the adoption of one of necessity excludes the other. The rule is well settled in equity that after knowledge of the fraud the party must within reasonable time make an election as to whether he will affirm the trade, -notwithstanding the fraud, or offer to restore the property and demand the return of his purchase money. If, after the knowledge of the facts which entitle him to rescind, he deal with the property as owner, it is evidence of acquiescence and an affirmance of the contract. The authorities to this point are numerous, and the principle well settled.”
See, also, McLean v. Clapp, 141 U. S. 429, 432, 12 Sup. Ct. 29, 35 L. Ed. 804; Shappirio v. Goldberg, 192 U. S. 232, 242, 24 Sup. Ct. 259, 48 L. Ed. 419, and cases cited in Mudsill Mining Co. v. Watrous, 61 Fed. at page 186, 9 C. C. A. at page 437.
■ The rule is well settled that any decisive act of a patty, with knowledge of his rights and of the-facts, determines his election in the case of inconsistent remedies (Robb v. Vos, 155 U. S. 13, 15 Sup. Ct. 4, 39 L. Ed. 52; Stuart v. Hayden, 169 U. S. 1, 15, 18 Sup. Ct. 274, 42 L. Ed. 639), and an election to rescind or not to rescind a contract once made is final and conclusive (Pence v. Langdon, 99 U. S. 578, 25 L. Ed. 420). It is true that bringing suit upon a contract is one of the most unequivocal acts of affirmance; but suit is not in all cases necessary to election. “Taking any steps to enforce the contract was a conclusive election not to rescind it on account of anything known at the time.” See Robb v. Vos, supra, 155 U. S. at page 42, 15 Sup. Ct. at page 14 (39 L. Ed. 52). Actual collection without suit of the note given by defendants for the 1908 rent was as effective an election as collection by suit would have been. The
In our opinion, complainants must be held to have ratified the purchase, and the decree of the Circuit Court is, accordingly, affirmed with costs.