Fratt v. Fiske & Loring

Baldwin, J. delivered the opinion of the Court Field, C. J. concurring. Plaintiff brought suit on a note and mortgage, the consideration of which was the conveyance of certain land in Yolo county. The defendants were in possession of a portion of this land at the time of the conveyance by the plaintiff, which was by deed with warranty; another portion was conveyed, of which the defendants went into possession. The defendants set up fraud in this, that the plaintiff represented the title was confirmed by the Federal Government, which representation, the defendants aver, was false. It seems that the defendants have been in possession since the conveyance, and no offer was made, so far as appears, until the suit and the filing of the answer, to rescind the contract; and it does not appear, nor is it averred, that the defendants had no notice of the fraud until the answer. On the contrary, there seems, tó be some proof that the defendants employed counsel to contest, and were contesting, the plaintiff’s title to the ranch, after the making of this contract. The rule is, that a party entering by virtue of a contract, and holding possession under, and enjoying the fruits of a contract, if he desires to rescind it for fraud, must act promptly and give notice promptly of his intention to rescind it; otherwise he will be held to have waived the fraud. He cannot lie by and enjoy the benefits of a contract until the other party seeks to enforce it, and then set up its invalidity, when he knows that the representations which induced him to make it were fraudulent. (3 Johns. Ch. R. 23; 17 Johns. 437; 1 S. & M. Ch. R. 390; 9 Porter, 420.) But we think the defendants were not entitled to a rescission without placing the plaintiff in statu quo. By the deed, the plaintiff remitted all control over the land sold to the defendants, and could not have used it or rented it. He was entitled, therefore, to the value of the rents and profits of it upon a rescission of the contract; [385] or at the very least, it should have been averred and proved that the use of the land was of no value to the defendants, and would not have been of any to the plaintiff. This observation is made in reference to the eleven hundred acres not in possession of defendants at the time of the contract; for in respect to the four hundred acres in their possession at that time, if the fraud be established, probably a Court of Equity would hold that the plaintiff should derive no benefit from a contract thus tainted. (6 Cal. 182.) It is not necessary to pass definitely upon the question whether a party can go into equity to set aside a contract for a fraudulent representation as to the title, when he has been let into and enjoyed peaceably the possession, and when the vendor has executed a deed with warranty, and there is no charge of insolvency. (See, however, 1 Sug. on Vend. 320; 22 Pick. 546; 5 Hill, 6; 2 Ala. 108; Id. 632 ; 3 Id. 251; [see the last three cases for a qualification of the rule] 3 Ala. 406 ; 4 Ala. 21.) We reverse the judgment, that the case may be retried in accordance with the principles of this opinion.