Booth v. Ryan

Dixon, C. J. The defendant does not claim a rescission of the contract, and that the deed, bond and mortgage be set aside and the parties restored to their original position, because of the failure of the plaintiff’s title at the time of his conveyance to the defendant. Executory agreements for the purchase or conveyance of land may be rescinded on that ground, and the contracts cancelled, but as to executed agreements, or conveyances made and possession delivered or taken under them, the rule is different, and the power has never been exercised. In such case, the rule of caveat emplor applies, and mere failure of [59] title will not suffice to rescind. The purchaser is presumed to have bought at his peril, or to have relied upon the covenants of Ms deed, to which resort must be had for damages in case of loss or eviction. A rescission will not be decreed. And this principle is freely conceded in the brief of the defendant in person. He says : “ The general rule that a defect in the mortgagee’s title cannot be set up as a defense against foreclosure of a mortgage given to secure the purchase money, except in case of fraud or misrepresentation, is conceded.” The defense proceeds, and the rescission is claimed, therefore, on the ground of fraud or misrepresentation, and not on that of mere failure or defect of title. The fraud or misrepresentation is alleged to have consisted in the plaintiff’s having fraudulently procured a false abstract of title, and presented the same to the defendant as true, on the basis and supposed truth of which defendant was induced to enter into the agreement and make the purchase. This ground of defense, and for the relief demanded in the answer, if established in evidence, and if still open to the defendant, would, no doubt, be valid. But we are of opinion that the defendant is precluded from taking advantage of it, or from availing Mraself of fraud as a defense, however the fact might be found with respect to it. It is a principle which has been too long and too thoroughly established in our law to admit of any doubt or discussion, either as to the principle itself or the reasons upon which it is founded, that a party claiming to rescind a contract on the ground of fraud must do so promptly on discovery of the facts, and that if he delays, or takes any further steps in the execution of the contract, or does any act recognizing its validity, after discovery, he loses all right to this particular form of relief. Such delay, or other act recognizing the validity of the contract, is regarded as an unqualified waiver of the fraud for this purpose, or as an assent to the contract, notwithstanding the fraud, so far as the right of rescission is concerned. And tMs is so, whether at law or in equity, and whether the - subject of [60] tbe contract or purchase be real or personal property. He may recover damages ior tbe fraud by bis action at law, where that remedy is proper and tbe law gives damages; but bis right to rescind is lost. In this case the defendant discovered tbe fraud or mistake in tbe abstract, and tbe defect in tbe title, about one month after be made tbe purchase, and after tbe deed, bond and mortgage were executed. About four months afterwards, be made a payment of $1,000 upon tbe bond. And about seven months later still, when another instalment became due, it appears that in conversation with tbe plaintiff be proposed to pay that instalment and made no objection on tbe ground of fraud or defect of title. No objection was taken at tbe time tbe $1,000 were paid, and no proceedings were instituted or notice given to, or demand made of tbe plaintiff to rescind, prior to tbe commencement of this action, which was about one year and a half after discovery of tbe facts; and during that time tbe defendant continued in possession of tbe premises. These facts, we think, and especially tbe payment of tbe $1,000, were an effective waiver of tbe right to rescind on tbe ground of fraud. It is urged that tbe defendant and bis counsel, after discovery of tbe deed suppressed from tbe abstract of title, believed that tbe defect could be easily cured by proper conveyances, and therefore it was lightly regarded. Hence tbe subsequent payment. If tbe defendant, immediately on discovering tbe facts, bad communicated them to tbe plaintiff, and given notice of bis intention to rescind unless tbe defect should be cured, and, adhering to such intention, bad given notice thereof at tbe time of payment, and that tbe payment was not regarded as a waiver, it is possible tbe right to rescind might have been saved. But tbe payment under tbe circumstances was, we think, within all tbe authorities upon tbe subject, a waiver too clear and emphatic to permit of disregard or excuse on tbe ground suggested. We think tbe judgment must be affirmed. [61] By the. Court.— Judgment affirmed. A motion lor a rebearing was denied at tbe January term, 1872.