Court Opinion

ID: 9851880
Source: CourtListenerOpinion
Date Created: 2023-09-24 05:20:54.832699+00
Date Added: 2024-06-11T09:22:18.605906
License: Public Domain

WOOD, J., Dissenting.
I dissent. On March 23, 1937, plaintiffs purchased from defendant corporation six lots in a tract of land which defendant corporation was placing upon the„ market, the total purchase price being $5,700, of which $300 was the initial payment. On May 16, 1937, *300plaintiffs wrote the selling agents this letter: “It is with regret that I am forced to discontinue arrangements to gain title to the six lots which I picked out in Bixby Terrace. I find myself in an embarrassing position through matters beyond my control and will not be able to go ahead with my contract of purchase. I have paid you $300.00 which, according to the contract belonged to you the first of May and I hereby tender you the same and ask that you release me from further obligations in connection with this purchase.” Not having secured a release from their obligation, plaintiffs paid the balance of the purchase price on August 7, and on September 15, 1937, a deed to the property was delivered together with a title certificate. On November 1, 1937, notice of assessment of $10 for each lot was mailed to plaintiffs by the committee to enforce protective restrictions affecting the tract of which the six lots were a part. On November 8, 1937, plaintiffs gave notice of rescission to defendants.
There was on record in the county recorder’s office prior to March 23, 1937, a document known as “Declaration No. 1 of establishment of basic and local protective restrictions, conditions, covenants, reservations, liens and charges affecting the property known as Bixby Terrace.” In the original agreement of purchase it was provided that plaintiffs agreed to purchase the lots “subject to conditions, restrictions, reservations and easements of record”. On the back of the agreement there was printed the inspection report of the real estate commissioner in which it was stated: “Attention is called to conditions, reservations and restrictions which run with the land, . . . plans for dwellings must also pass approval of an architectural committee.” The deed delivered in September contained this provision: “The above described property is conveyed, and this conveyance is accepted upon and subject to each and all of the conditions, restrictions, reservations, charges, liens and covenants and the jurisdiction rights and powers of the Association and Architectural Board particularly set forth in that certain Declaration No. 1 of Establishment recorded March 18, 1937, ...”
In my opinion the trial court committed reversible error in sustaining objections to proof on the part of defendants that plaintiffs suffered no pecuniary damage on account of the existence of Declaration No. 1 and the further proof *301offered by defendants that the value of the lots sold to plaintiffs was actually enhanced by the authority given the committee to levy the assessments in question. The Bixby Company went to much expense in preparing Declaration No. 1, which covers seventeen closely printed pages. By this declaration the owners of the tract undoubtedly sought by means of a nonprofit corporation, composed of the lot owners, to provide effective means for enforcement of the various restrictions in force on the tract and to increase the desirability of the lots being sold for residential purposes. The power given to assess an amount not to exceed $10 per year per lot was given to the architectural committee in the interest of the purchasers of the lots.
Although some conflict among the authorities exists elsewhere, it is the established law in California that an action for rescission of a contract and the return of money paid thereunder may not be maintained without proof of some pecuniary injury. In Darrow v. Houlihan, 205 Cal. 771, 774 [272 Pac. 1049], We find: “It is equally well settled, however, that fraud, unproductive of injury, ‘will not justify a rescission, nor support an action either for rescission or damages . . . The court referred to Spreckels v. Gorrill, 152 Cal. 383, 388 [92 Pac. 1011, 1014], in which, like the case under review, the plaintiff sought to recover money which had been paid to the defendant as the price of certain property. The court stated: “It may be conceded that it must be shown that the plaintiff, by reason of the fraud, suffered an injury of a pecuniary nature, that is, an injury to his property rights, as distinguished from a mere injury to his feelings, but it will be sufficient if the facts alleged show that material injury will necessarily ensue from the fraud, although the amount of the pecuniary loss is not stated.” The situation of the parties in California Credit etc. Corp. v. Goodin, mentioned in the majority opinion, was different from the situation of the litigants in the present action. In that case the plaintiff sued upon a promissory note the execution of which had been obtained by fraud. In affirming a judgment for the defendant the reviewing court said: “As shown, defendant asks for no affirmative relief. He merely interposes a defense involving an objection to the enforcement of the .note on the ground that *302it is in law without obligatory force for the reason that he was procured or induced by plaintiff’s assignor to execute and deliver it to the latter by fraud or false representations. That such a defense is available in a case of this character— that is, where defendant has not received anything of value from the other party, as has been shown is true here—is definitely attested by the authorities . . . Nor, in a case of this character, where the consideration has not passed, is it necessary for the defendant to plead and prove damage.”
The original complaint in the present action was silent on the subject of damage to plaintiffs but an amendment to conform to proof was allowed by which were added the words “to the damage of the plaintiffs”. The court found that an assessment was levied “to the damage of the plaintiffs”. Not only was there no evidence introduced to support this finding but defendants were denied the right to show that the assessment and the right to make the assessment increased the value of the lots and actually benefited plaintiffs.
I am also of the opinion that the findings on the subject of fraud are not sustained by the evidence. No statement was made to plaintiffs by any of the defendants that the lots were not subject to assessment nor did the court find that such a statement was made. There was a conversation between Mr. Wood and Mr. Smith, the salesman, on the subject of assessments for various improvements such as streets, sidewalks, curbs and lights. Mr. Smith told Mr. Wood that there would be no assessment, evidently referring to the improvements under discussion. Mr. Wood suggested that the matter be placed in writing and accordingly a letter was obtained from the Bixby Company under date of April 24, 1937, in which Mr. Wood was assured that the cost of the improvements would be paid by the sellers. The letter stated in part: ‘ ‘ The cost of all of the above work is to be paid by the Jotham Bixby Company. No part thereof is to be covered by bond or in any way made a lien against the property or the purchasers of lots in said tract.” Mr. Wood testified that this letter covered what he had in mind at the time of the conversation. In view of the circumstances under which the statement was made it cannot be held that Mr. Smith stated that no assessment of any kind would be made. Neither can it be held that Smith’s statement was a repre*303sentatiou of a present fact or condition as distinguished from a prediction as to the future. Since it was made with reference to various street improvements it has not been shown that the statement was untruthful.
At the time plaintiffs received the deed and certificate of title they were charged with notice that the committee had jurisdiction to assess the lots in a sum not to exceed $10 each for the purposes set forth in Declaration No. 1. Mr. Wood testified that when he received the deed and certificate of title he read and accepted them. It is my opinion that Mr. Wood waived any right he might have had to a rescission by his acceptance without objection of the deed and certificate proffered to him. (Smiley v. Read, 163 Cal. 644 [126 Pac. 486]; Cavalieri v. Hess, 205 Cal. 703 [272 Pac. 295].) The general rule that a waiver must be pleaded is subject to the qualification that where the defendants have pleaded facts which, if established, would estop plaintiffs from asserting a right to rescind, it is not necessary to set forth the waiver in more formal language. (Smiley v. Read, supra.) Here defendants pleaded that plaintiffs received and accepted the deeds and policies of title insurance showing the true condition of the title.