Shiverick v. Bonsall

Putnam, J.: Had an action been seasonably brought to disaffirm the entire Bayonne transaction, plaintiff might have contended that as she had just emerged from her minority, and was still under the influence of defendant as her stepfather and [344] testamentary guardian, a transaction of this kind should be set aside as manifestly unfit for a young woman just come of age. (Gale v. Wells, 12 Barb. 84.) Although the property was of great value with prospective increase, an outlay of $400,000 in a manufacturing plant is not to be recommended to one of her inexperience. But that is not the plaintiff’s position. She invokes the court for an accounting, after repeated ratification, indeed a series of acts of control and of ownership. This purchase was soon followed by an action for broker’s commission, which was tried in 1912, in which plaintiff and defendant were witnesses. Defendant then testified in the hearing of the plaintiff: “It is her investment pure and simple.” Plaintiff testified that she was not present when the purchase contract was made, but said: “ I knew about it.” In her cross-examination in the trial at the Special Term she also admitted that when this property was purchased she knew that a sawmill was to be erected there. When that sawmill was first started, plaintiff was present with friends, and received their congratulations. While acts of an inexperienced girl may be of less effect, we have later the plaintiff as a married woman, and her husband the active manager and vice-president of the operating company running this plant. After the outbreak of the war, while defendant was absent in Europe, Mr. Shiverick’s letter reveals him in active management. Though present on the trial, he was not put on the stand. After the Bayonne fire and on April 28, 1915, Mr. Shiverick came over to the Bayonne plant with Mr. Gaynor, plaintiff’s attorney of record. The superintendent asked him for a pass. He answered that he did not need one in order to look over his wife’s property. In Mr. Gaynor’s presence, Mr. Shiverick said that he could write his own pass and further told the superintendent, “ I own the ground that you stand on.” When the superintendent still declined, Mr. Gaynor interposed and reminded his client that the superintendent was rightly carrying out his orders. Mr. Gaynor, however, did not retract or qualify his client’s assertion of right and title. [345] On April 2, 1915, the date of the summons and of the plaintiff’s verification of her complaint, we have very definite assertions of plaintiff’s legal claim in the avails of this insurance, not from Mr. Shiverick, but from Mr. Gaynor, in his capacity of the plaintiff’s attorney. Such is his explicit notice to the insurance adjusters. In his letter to the New York Board of Underwriters he formally notified them “ not to conclude the adjustment, nor make any payment of the loss without her consent, given by her individually or through me as her attorney. In other words, no one save Mrs. Shiverick or myself, has any authority to act in the matter for her, and if any authority ever existed, it is hereby revoked.” A month later, on May tenth, a question arose about the keys of the Bayonne property, which were sent to the plaintiff. The next day plaintiff put her watchman in charge. Afterwards, on the twelfth, Mr. Gaynor sought to qualify this as “ without prejudice,” to which defendant’s attorney did not accede. There was a further participation still more significant. While this action was pending, Mr. Gaynor, as attorney, appeared before the Bayonne tax board and applied for' a reduction of its assessed valuation. Such acts by the attorney in the cause sufficiently evince knowledge, approval and ratification. They are a sequel to plaintiff’s personal attitude of steadfast approval of the enterprise. Formal intervention in the insurance proceeds — taking over the keys of the property — and finally appearing as owner’s representative before the tax. board — all constituted a ratification, complete and now irrevocable. Where large financial transactions go on for several years, the effects of a rescission lead to increased losses with every day’s delay. One of adult age, having such right, cannot put off action so as to speculate upon the outcome. To undo her acts, and those based on her acquiescence, a prompt election is indispensable. Otherwise a rescission might work a greater wrong than could flow from the contract thus rescinded. In Strong v. Strong (102 N. Y. 69, 73) Huger, Ch. J., said: “ It is a settled rule, however, that the right to rescind a contract for fraud must be exercised immediately upon its discovery, and that any delay in doing so, or the continued employment, use and occupation of the property received under the contract, will be deemed an [346] election to affirm it.” (See, also, Calhoun v. Millard, 121 N. Y. 69, 77; Brazee v. Schofield, 124 U. S. 495; Anderson v. Fry, 123 App. Div. 46, 60; affd., 194 N. Y. 515; Pom. Eq. Juris. [3d ed.] § 917.) The repeated applications during the trial to look at defendant’s private check book and his private accounts were properly denied. (Clarkson v. De Peyster, Hopk. Ch. 424.) Here is a preliminary agreement, drawn somewhat informally, looking to a future leasing, the covenants and conditions whereof are mentioned in very general terms. Furthermore, we have reached the view that the agreement of which this was a part, though not fraudulent, was part of a method of investment from which plaintiff might have been relieved by a decree setting same aside, had she promptly sought to rescind. While, therefore, we must deny affirmative relief by rescission, we are still empowered to limit the scope of this preliminary agreement to meet a situation since developed. The instrument did not provide for rebuilding, after destruction of the first factory buildings. The plaintiff having herself paid the insurance premium, is entitled to the insurance proceeds collected. (Harvey v. Cherry, 76 N. Y. 436.) She may further elect to regard the destruction of essential portions of an integral plant as a frustration of the entire object of the proposed adventure. Hence this interlocutory judgment should clearly recognize her right now to withdraw from any reinvestment. If so advised, she should have the right to terminate the investment by a sale or other disposition free and clear of all rights of the defendant. Therefore, paragraph IV of the interlocutory judgment should be modified in two respects: First, to declare affirmatively plaintiff’s right to elect to dispose of the property, independently of the defendant, upon giving him sixty days’ notice of such election. Second, the present decretal provision in paragraph VI for rebuilding the burned structures and equipment within six months, in which event the defendant is to have a lease of the plant, should further provide that such lease, besides the six months’ cancellation clause, is to include a provision that defendant as lessee is to pay rent from a specific date, also that every three years the lessee, or any sublessee from him, shall make good any depreciation of the plant and structure, [347] at Ms own cost — wMch covenant as a rectification of the agreement would be according to defendant’s intended purpose, as he testified on the trial. I advise that with such modification the interlocutory-judgment appealed from be affirmed, but -without costs. Jenks, P. J., Thomas and Kellt, JJ., concurred; Mills, J., read for reversal and a new trial.