Court Opinion

ID: 9553206
Source: CourtListenerOpinion
Date Created: 2023-08-07 19:25:24.343429+00
Date Added: 2024-06-11T15:30:19.601276
License: Public Domain

McGIIEE, Justice (dissenting). Because of changes made in the majority opinion after I submitted my dissent, changes of which I was not advised, my former dissent is withdrawn and the following substituted therefor: What appears to be a statement of facts in the second paragraph of the majority opinion is, in fact, a summary of allegations in the complaint. No finding was made or requested by the plaintiffs regarding the existence of a supposed mortgage to the First National Bank of Albuquerque, -and the majority opinion correctly holds the findings on the other allegations above referred to could not, under the record in the case, sustain the decree of rescission. The only material finding of fact left is number 6 set out in the majority opinion. True, the majority hang on a statement there was a false representation that the only indebtedness against the property was a $77,000 mortgage to the First National Bank of Albuquerque, but there is no finding of fact to support it, and none was requested. Thus, only the claimed concealment of the pyramided contracts remains to support the decree, and the finding of concealment of the contract from Truitt to Beeble dated September 20, 1949, must be eliminated, as it was the one assigned by Beeble to Agnew, and read by the latter. Agnew also testified that he knew Beeble was paying on a contract with Truitt. Evidently Agnew did not believe he had been induced to enter into the contract by any representations as to a mortgage at the bank or the concealment of the pyramided contracts, or else felt he had not proved such fact, for when he filed his requested findings of fact and conclusions of law approximately 23 months after the close of the trial, his requests as to the claimed false representations which induced him to enter into the contract read: “V. “That the defendant Landers and the agent Pinkston, in the presence of Landers, made certain representations which were false representations as follows : “a. That the income realized from the Apache Lodge was $2,000.00 per month during the summer months and $1,200.00 per month during the winter months. “b. That W. R. Beeble was an experienced auto court operator, was a man of considerable means and was reliable. “c. That an assignment of collateral security from Beeble to plaintiff Agnew would be more effective security for Agnew than would a second mortgage.” In the next paragraph he asked the trial court to find: “That in reliance upon such false representations the plaintiff Agnew deeded the property * * * ”. I agree with Agnew that he had not established a claim he was deceived by representations as to the contracts and mortgage. But, even if it be conceded Agnew had a right to rescind at one time, he still is not entitled to a decree of rescission because of his delay in acting. He knew in January before filing the complaint in July that the First National Bank did not have a $77,000 mortgage; in March preceding the filing of complaint he knew in detail about the sales contracts, if he did not in fact know about them previously. He also knew in March that Beeble was not keeping up the payments and visited with him about the matter; he had his attorney contact Mrs. Motto who held the No. 1 contract in an unsuccessful effort to get her to reduce the payments. When in April Mrs. Motto gave notice that she would take back the property in accordance with her contract unless the default was cured within thirty days, the Agnews were promptly advised of such fact. Instead of then rescinding and thus allowing Landers to step in and protect himself, Ag'new did nothing until in July, when the property had been irretrievably lost in May. Apparently the only New Mexico case treating this problem directly is that of Putney v. Schmidt, 1911, 16 N.M. 400, 120 P. 720, 723, where it is said: “It is not disputed that where a party received something of value under a contract, if he seeks to rescind the same upon the ground of fraud, he must immediately, upon discovering the fraud, restore, or offer to restore, all that he has received under the contract, as a condition precedent to his right to rescind the same. If he fails to do this, or if, after discovering the fraud, he takes any steps in affirmance of the contract, he will be held to have elected to affirm the same ■ and will not thereafter be granted relief in equity from the burdens of the contract. * * * ” The Restatement, Restitution, § 64, p. 248 states: “An unreasonable delay in manifesting an avoidance of a transaction after the acquisition of knowledge of the facts terminates the power of rescission for fraud or mistake, and the consequent right to restitution, if the interests of the transferee or of a third person are harmed or were likely to be harmed by such delay.” In the Restatement illustrations to this section appears the following: “9. A, induced thereto by B’s misrepresentation as to the geological formation of the land, purchases from B leases upon undeveloped oil lands. After discovery of B’s misrepresentations A does nothing for six months, during which time the value of such oil lands has been rapidly fluctuating over a wide price range. A is not thereafter entitled to restitution.” (p. 253) To the same effect is 2 Black on Rescission and Cancellation, (2d Ed.) § 536, pp. 1316, 1320, 1321: “One possessing the right to rescind a contract on the ground of fraud, mistake, or other sufficient cause, and desiring to exercise such right, must not be guilty of any unreasonable or unnecessary delay in the assertion of his purpose and in taking steps to make it effective, or he will be denied relief in equity on the ground that such delay is tantamount to a waiver of his objections to the contract, or is a manifestation of his election to affirm it rather than to repudiate it. * * * The true doctrine is that, after discovering the facts justifying rescission, the party is entitled to a reasonable time in which to decide upon the course he will take. But this does not mean that he will be indulged in a vacillating or hesitating course of conduct, but that he must act with such a measure of promptness as can fairly be called ‘reasonable’ with reference to all the circumstances of the particular case. Particularly, he must, if possible, avoid such a delay as will make the ensuing rescission injurious to the other party or to the intervening interests of third persons. * * * ” See also, 12 Am.Jur. (Contracts) § 447; 24 Am.Jur. (Fraud and Deceit) § 208; and 17 C.J.S., Contracts, §§ 431, 432a. The only authority cited by the majority in support of their opinion is an excerpt from Brown v. Norman, 1888, 65 Miss. 369, 4 So. 293, but the facts in that case and this one are entirely different. That case was before the court on a complaint and demurrer. It was alleged the defendant induced the plaintiff to trade his farm at a value of $3,100 plus $500 in cash for a third interest in a partnership, the assets of which were $5,000 and its indebtedness was $12,000; that it was represented the firm was in a solvent and prosperous condition and that a false statement of its assets and liabilities had been furnished for his inspection; that the false representations and trade were made in October, 1885, and the firm and business was placed in receivership the following March at the request-of one of the .partners; that the plaintiff did not learn of the facts until shortly before the business was placed in receivership. Truly, what the plaintiff in that case received could not be classed as more than moonshine, but an additional reason was given for holding the complaint good on demurrer — that when the defendant sold his interest in the partnership he was no longer a partner, and he could not have been re-admitted to partnership without the consent of the two remaining partners. In this case there is not-a word of testimony that the Apache Lodge was not worth everything there was against it — no such claim that I can find is made by the Agnews. The Apache Lodge had 18 rental units, plus living quarters, was reasonably new and the tract of land was 250 yards in length and 96 yards in width, less some conveyed to the county evidently for right of way; also, it was located on Highway 66 immediately west of Albuquerque. Brown v. Norman, supra, except for the lifting of some comforting words for the hard pressed majority is not authority for excusing the delay in this case. I dissent.