Court Opinion

ID: 7971072
Source: CourtListenerOpinion
Date Created: 2022-09-09 00:55:12.850912+00
Date Added: 2024-06-11T16:34:46.670918
License: Public Domain

MITCHELL, J.
In concurring in the result arrived at in the foregoing opinion, I wish to state briefly the grounds upon which I have arrived at this conclusion.
While in one sense this action is one. to enforce a constructive trust, yet it is essentially an action by a vendor to rescind a sale on the ground of the joint fraud.of the vendee and of the vendor’s own agent. The rights of the plaintiffs, if any, all depend upon and grow out of the right of rescission, hence the action is controlled by the rules of law applicable to the subject of the right of the rescission of contracts on the ground of fraud. The distinction must be kept in mind between an action for damages and one for rescission. The property (a number of lots in Old Superior) had for many years remained unimproved, unproductive, and virtually unsalable. Its value was wholly speculative and prospective. The sudden and wild “boom” which enabled Jefferson and Kasson in less than two years to sell the-larger part of the property for so great an advance over what they paid for it had not yet arrived, although some things then existed which men might or might not (according to their past experience or natural temperaments) have considered signs of a coming “boom.” Burhans’ statement as to the value of the property was made before Jefferson and Kasson appeared on the scene, and, so far as appears, before they were thought of as possible purchasers of the property. Under such circumstances, I very much doubt whether there is any evidence to justify the court in finding that Burhans’ statement as to value was fraudulent, or anything but an honest expression of opinion.
*392It seems to me, therefore, that for their right to rescind the plaintiffs have to stand upon the propositions — First, that the relations of trust and confidence between them and Burhans, as their agent, were such that his taking an interest in the purchase without their knowledge was a constructive fraud upon them; and, second, that Jefferson and Kasson had knowledge of facts sufficient at least to put them upon inquiry as to the relations between plaintiffs and Burhans, and hence that they were chargeable with notice of the fraud. I assume, without discussion, that the evidence was sufficient to justify the court in finding in favor of-the plaintiffs on both these propositions. The finding of the court, supported by conclusive evidence, is that the plaintiff James P. McQueen had notice of all the facts constituting the fraud as early as November, 1892. In my opinion, notwithstanding the finding of the court to the contrary, the evidence was also conclusive that the plaintiff John McQueen had the same notice at the same date. At this time the sale was already over three years old. No claim was asserted, or any fiotice given that any would be asserted, against the defendants for some four years, and no suit was brought to rescind, until over five years after these two plaintiffs obtained knowledge of the facts. Neither was any excuse for nor explanation of this delay given. I think -this amounted to a waiver of the right to rescind,’ and to an implied ratification of the sale notwithstanding the fraud.
The contention of the plaintiffs is, in substance, that, where there has been, no affirmative act of ratification of a contract voidable on the ground of fraud, no mere delay, however long, short of the statute of limitations, will amount to a ratification or a waiver of the right of rescission, unless the other party has in the meantime, by reason of the delay, been misled, or has changed his position to his prejudice. And it is .urged that in this case the plaintiffs have never affirmatively ratified the sale since their discovery of the facts, and that the defendants have in no way changed their position since such discovery in November, 1892. I do not think that either principle or the weight of authority will justify so broad a statement of the law.
The courts have always refused to lay down any hard and fast rule on the subject, but have left each case to be determined largely *393upon its own particular facts. In treating of the subject of the rescission of voidable contracts, they have usually laid down the reasonable rule that a party must rescind, or at least give notice of his intention to do so, within a reasonable time after discovery of the facts giving the right to rescind. And, in my opinion, under many circumstances there may be and are cases where mere delay and silence after discovery of the facts may be so long and unreasonable as to amount to an implied election to waive the right to rescind and to ratify the contract. Acts of omission frequently speak as loudly as those of commission.' This, I think, is just such a case, at least as to the plaintiffs James P. and John McQueen (themselves experienced lawyers), especially considering the speculative and fluctuating value of the property which was the subject of the contract. And who can say that Jefferson and Kasson have not been prejudiced in more ways than one by the delay? It at least appears that in the meantime they have been engaged in protracted litigation with Burhans as to the amount of his share in the proceeds of the property, which has resulted in a large judgment against them.
It follows that defendants are entitled to a new trial, at least as to two of the plaintiffs. Without considering the evidence as to the other two, I think, for reasons suggested in the opinion, the proper disposition of this appeal is to grant a new trial of the whole case as to all of the plaintiffs.