Whitney v. Bissell

146 P. 141 | Or. | 1915

Mr. Justice Bean

delivered the opinion of the court.

1, 2. It is admitted that the statement of the returns for the crop of 1910 was greatly in excess of the amount realized, which was about $700. Whitney asserts that he did not furnish Zimmer with the information, but that he stated that he had not then received the returns from the fruit association of Medford which marketed the crop, and could not state the amount; that Zimmer, the agent of Dr. Bissell, was the authority for the representation. Zimmer testified positively that he obtained the information from Whitney. Dressier at first by affidavit corroborated Zimmer, but upon further consideration and reflection testified in substance the same as Whitney. According to our view of the case, this statement in regard to the proceeds of the crop of 1910 was made in behalf of plaintiff Whitney as an inducement to Dr. Bissell to make the deal. The latter, relying upon the representation, consummated the purchase of the fruit orchard. Plaintiff, having accepted the benefit of the contract negotiated by his agents, is not in a position to repudiate that part of the transaction by means of which the agreement was obtained. He cannot ratify the contract in part and repudiate it in part. When a principal elects to ratify any portion of an unauthorized act of an agent, he must ratify the whole of it. Pie cannot avail hdmself of such acts so far as beneficial to him and repudiate the remainder: La Grande National Bank v. Blum, 27 Or. 218 (41 Pac. 659); McLeod v. Despain, 49 Or. 536, 552 (90 Pac. 492, 92 Pac. 1088, 124 Am. St. Rep. 1066, 19 L. R. A. (N. S.) 276); Grover v. Hawthorne, 62 Or. 77, 96 (114 Pac. 472, 121 Pac. 808). It is stated in 31 Oyc. 1603, as follows:

“A contract induced by the fraud or misrepresentation of an agent while acting within the real or apparent scope of his authority cannot be enforced by the principal against the party misled even though the principal did not authorize the agent to act fraudulently or to misrepresent.”

When Whitney agreed to pay Zimmer a commission, if he had knowledge that Zimmer was already employed by Dr Bissell, and if the latter did not assent thereto, Whitney and Zimmer were both guilty of a wrong committed against the first employer, as such employment would be a temptation to the agent not to give his best efforts to Dr Bissell. A contract entered into through such means is in fraud of the rights of the defendant Bissell: Bell v. McConnell, 37 Ohio St. 396 (41 Am. Rep. 528). Whitney was responsible for the misrepresentation made to Dr. Bissell by which he was induced to make the agreement, and the contract was voidable: Kreshover v. Berger, 135 App. Div. 27 (119 N. Y. Supp. 737).

3. Defendant J. H. Bissell testified that he came to Oregon the next season after the deal was made, cared for the orchard, and set out about 50 new trees, receiving but little returns from the orchard • the first two years; that the first year he lost a part of the crop by frost, and the second the apples were not thinned enough; that in 1913, he received as returns from the orchard some over $1,200, after deducting the expenses for three years, not taking into consideration his own labor; that in May, 1913, he first learned that the representation made to him in regard to the crop of 1910 was false; and that he thereupon notified plaintiff "Whitney that he rescinded the contract, offered to reconvey the orchard, demanded a return of the money paid and the notes, and a reconveyance of the Minneapolis property. He states that he was injured on account of the small income from the investment, but that he does not know whether or not he paid too much for the fruit orchard; that the tract is about the same as others in the neighborhood, except that the kind of fruit is different and needs cross-pollenizing in order to bear abundantly. Plaintiff "Whitney asserts that the place was cheap at $14,500. Dr. Bissell listed the property for sale for about one year at $17,-000, and afterward lowered the price to $13,500. He applied to Whitney and was granted an extension of time for the payment of interest on the notes.

4. It is contended by counsel for plaintiffs that, by the delay in attempting to rescind and by his treating the contract as effectual and occupying the property for about 2% years, defendant Bissell forfeited his right to rescind the contract. As held in Scott v. Walton, 32 Or. 460 (52 Pac. 180), a party induced by fraud to make a contract has, upon the discovery of the fraud, an election of remedies either to affirm the contract and sue for damages, or disaffirm it and be reinstated in the position in which he was before it was consummated. The adoption of one of these remedies, which are wholly inconsistent, is the exclusion of the other. If he desires to rescind, he must act promptly and return, or offer to return, what he has received under the contract. He cannot retain the fruits of the contract awaiting further developments to determine whether it .will be more profitable for him to affirm or disaffirm it. Any delay on his part, especially in remaining in possession of the property received by him under the contract and dealing with it as his own, will be evidence of Ms intention to abide by the contract: See, also, Vaughn v. Smith, 34 Or. 54 (55 Pac. 99); Sievers v. Brown, 36 Or. 218 (56 Pac. 170); Elgin v. Snyder, 60 Or. 297, 302 (118 Pac. 280).

The purpose of obtaining the information as to the returns of the orchard for 1910 was obviously to base thereon an estimate of the value of the real property and the income that might be expected therefrom. When Dr. Bissell arrived upon the ground in the spring of 1911, this was not his only source of information. It. is well known that the products and the net returns from the fruit industry vary with the seasons and prices. It is not suggested why the crop of 1910 would be any better criterion by which to estimate the income than that of 1911 or 1912. General information in the usual way in regard to the value of orchards and the income therefrom was available to the defendant Bissell, and by the use of due diligence he could have discovered the fraud during the season of 1911. It seems somewhat strange that for about 2% years Bissell should have relied upon the statistics for 1910, without apparently making any effort to inform himself in regard to the value of the property or the income therefrom, until about the time of suit upon his notes.

5. The rule as to the knowledge of the fraud before there would be an acquiescence therein is subject to the principle that notice of acts and circumstances which would put a man of. ordinary prudence and intelligence upon inquiry is equivalent in the eyes of the law to knowledge of all the facts a reasonably diligent inquiry would disclose: 6 Cyc. 305; Clark on Contracts, p. 236. During the season of 1911, Dr. Bissell had sufficient information to put him, as a man of ordinary prudence and intelligence, upon inquiry. If lie had made investigation, he could have secured all the essential details regarding the income from this orchard, or could have obtained the amount of returns for 1910 from the fruit association in Medford which handled the product and kept the accounts. Indeed, his evidence does not disclose that he is yet thoroughly convinced that with the administration of his skill as a horticulturist he will not be able to produce an abundant crop and realize a profitable return on his investment provided he is allowed sufficient time. He appears to think the.money is in the land, and the only complaint he makes is in getting it out or in regard to the income. Under the circumstances of this case, it does not appear that defendant Bissell indicated a desire to rescind the contract within a reasonable time after he could have discovered the alleged fraud by the use of due diligence, which amounts to the same thing as a discovery. He failed to act promptly in the matter, retained the possession of the land, cultivated the same for a long time, set out fruit trees, speculated upon a rise in the market both as to crops and real estate, and asked and obtained an extension of time for the payment of a portion of the interest, a part of which he paid on his notes, without making any complaint after he knew or should have known the condition of affairs. "We think he should be deemed to have affirmed the contract and waived his right to rescind: See Strong v. Strong, 102 N. Y. 69 (5 N. E. 799); Kingman v. Stoddard, 85 Fed. 740 (29 C. C. A. 413); Van Gilder v. Bullen, 159 N. C. 291 (74 S. E. 1059); Simon v. Goodgear Metallic Rubber Shoe Co., 105 Fed. 573 (44 C. C. A. 612, 52 L. R. A. 745).

The decree of the lower court is therefore affirmed.

Affirmed.

Mr. Chief Justice Moore, Mr. Justice Burnett and Mr. Justice Harris concur.