Cooper v. Hillsboro Garden Tracts

Mr. Justice Harris delivered the opinion of the court. 1, 2. This record presents a situation where the plaintiff seeks to rescind, not only his own contract to purchase land, but also to cancel nine similar agreements which had been executed by different persons and afterward assigned to him, predicating his prayer for relief upon representations which related either to the land itself, or to what the defendant would do,- or the purchaser could do. The defendant interposes an objection at the very threshold of the inquiry; and the Hillsboro Garden Tracts contends that the complaint does not sufficiently plead fraud, and that therefore it is neither necessary to determine what representations were made by the defendant, nor to decide whether they are actionable. The essence of the argument is that the pleading does not point out wherein the representations were untrue, and that a mere narrative of the statements made by the defendant, when supplemented only by a general declaration of falsity, is not enough to sustain a decree, and does not measure up to the standard fixed in Specht v. Allen, 12 Or. 117 (6 Pac. 494); Misner v. Knapp, 13 Or. 140 (9 Pac. 65, 57 Am. Rep. 6); Leasure v. Forquer, 27 Or. 334 (41 Pac. 665); Leavengood v. McGee, 50 Or. 233 (91 Pac. 453); McMillan v. Batten, 52 Or. 218 (96 Pac. 675). The first — 83 — cause of suit is a fair example, and may be used as an illustration of all the causes of suit. In addition to a detailed specification of the statements made by the defendant the complaint in substance avers that the claims, statements and representations made by the defendant were false, and were well known to it, at the time when made, to be wholly untrue, and that the statements were made to the plaintiff for the purpose of deceiving, overreaching, and inducing plaintiff to purchase the land and to make the cash payment. The pleading also gives notice to the defendant that the plaintiff entered into the agreement because he believed and relied upon all the false statements, representations and promises made by the defendant, and that he would not have signed the contract nor made any payment had he not believed in and relied upon the representations, all of which were untrue, and known to the defendant to be false when made. The defendant did not attack the complaint by filing a demurrer, but contented itself by waiting until the trial had commenced, when an objection was offered to the introduction of testimony. The complaint might have been vulnerable to a demurrer if interposed before the commencement of the trial; but, no objection having-been made until the introduction of testimony, the complaint must be liberally construed, and is entitled to all the intendments in its favor which could be invoked after a decision on the merits of the controversy: Schoellhamer v. Rometsch, 26 Or. 394 (38 Pac. 344); Currey v. Butcher, 37 Or. 380 (61 Pac. 631); Creecy v. Joy, 40 Or. 28 (66 Pac. 295); Patterson v. Patterson, 40 Or. 560 (67 Pac. 664); Bade v. Hibberd, 50 Or. 501 (93 Pac. 364); Davis v. Mitchell, 72 Or. 165 (142 Pac. 788); Weishaar v. Pendleton, 73 Or. 190 (144 Pac. 401); Smith v. National Surety Co., 77 Or. 17 (149 — 84 — Pac. 1040). The averment that the statements made by defendant were false and known to it to be wholly untrue was, in the absence of an objection by demurrer, sufficient notice to the defendant that the plaintiff would contend at the trial that the declarations made by the agents of the corporation were utterly untrue, and that the Hillsboro Garden Tracts made the representations for the purpose of deceiving the plaintiff, with the intention of not fulfilling any of them; and therefore the complaint is not fatally deficient. 3. The defendant contends that Cooper is precluded from rescinding the agreement. It will be recalled that the plaintiff entered into the land contract on February 12, 1912. Cooper immediately took possession of and occupied the property, and at once commenced to make improvements, the value of which the complaint asserts is $1,435.85. The plaintiff says that about three weeks after he took possession he ascertained that some things were not as represented; that at the end of about three months, which would be in May or June of 1912, he told the defendant “that the matter had been misrepresented, ’ ’ and ‘ ‘ denied nearly all of their representations, except what they represented to me what could be grown on the land, and I told him that I didn’t know anything about that.” On August 28, 1912, Cooper and others addressed a communication to the Ada Land Company, requesting a statement ‘ ‘ of the inducements and improvements of property the Ada Land Company offered to” them “if they would purchase land from the Ada Land Company. ’ ’ On December 12, 1912, Cooper wrote a letter to the defendant, expressing a desire to lease 2% acres owned by the corporation and located near the land occupied by plaintiff. On April 23, 1913, Cooper — 85 — rented the land described in his contract to Wm. Hickethier for a period of one year, commencing with May 1, 1913; and on April 28th, five days afterward, four land contracts were assigned to the plaintiff for the purpose of enabling Cooper to commence this suit. It is true that the latter testified that he had made all arrangements for the commencement of this suit before entering into the lease with Hickethier, but the fact nevertheless remains that the lease was made before the complaint was filed. It must also be noted that in January, 1913, Cooper consulted with an attorney with reference to commencing a suit for the cancellation of his contract; and afterward, in September, 1913, he built a cow bam on the premises. Before signing the agreement with the defendant, Cooper went over the land and carefully examined it; he saw that water was over a portion of the premises; he could see that his land was “pretty near all on the hillside” and slopes down into the bottom; he observed that the land was new, had never been plowed, and he saw where stumps had been pulled out with a donkey. It is apparent from his own testimony that the plaintiff became aware of all the facts, except the fertility of the land, as early as May or June in 1912, and he certainly became aware of the quality of the land not later than the fall of that year; and, moreover, the overwhelming weight of the evidence establishes the fact that the soil is of an excellent quality. He admits that he consulted an attorney in January, 1913, with a view of rescinding, and yet in the following April he leased the land in dispute, and subsequently placed permanent improvements on the property. The delay on his part, together with his remaining in possession of the land and treating it as .his own, evidence an intention to abide by the contract, and therefore he forfeited any — 86 — right to rescind the writing signed by him: Scott v. Walton, 32 Or. 460 (52 Pac. 180); Vaughn v. Smith, 34 Or. 54 (55 Pac. 99); Elgin v. Snyder, 60 Or. 297 (118 Pac. 280); Van De Wiele v. Garbade, 60 Or. 585 (120 Pac. 752); Whitney v. Bissell, 75 Or. 28 (146 Pac. 141, L. R. A. 1915D, 257); Precious Blood Society v. Elsythe, 102 Tenn. 40 (50 S. W. 759); Bell v. Keepers, 39 Kan. 105 (17 Pac. 786). 4, 5. The defendant challenges the right of Cooper to maintain a suit for the rescission of the land agreements which were assigned to him. It is a rule of general application that a mere litigious right cannot be assigned: 4 Cyc. 8, 13; 2 R. C. L., p. 612; Gruber v. Baker, 20 Nev. 453 (23 Pac. 858, 9 L. R. A. 302). Private contracts may usually be assigned (4 Cyc. 20); and, although it is frequently stated that the right to complain of fraud is not a merchantable commodity (Tufts v. Matthews (C. C.), 10 Fed. 611)', nevertheless, a claim arising out of a tort affecting the estate of the Assignor may be assigned, survivorship being the test of assignability (Dahms v. Sears, 13 Or. 47 (11 Pac. 891); Sperry v. Stennick, 64 Or. 96 (129 Pac. 130); Zabriskie v. Smith, 13 N. Y. 322 (64 Am. Dec. 551); Graves v. Spier, 58 Barb. (N. Y.) 349; 4 Cyc. 23; 2 R. C. L. 613; 2 Am. & Eng. Ency. Law, 1017, 1023). While the naked right to complain- of a fraud may not be assigned separate and apart from a claim or thing having a legal existence and value owned by the assignor, nevertheless the assignment of the claim or thing owned generally carries with it all of the remedies which might have been available to the assignor: Howd v. Breckenridge, 97 Mich. 65 (56 N. W. 221). The case of Sperry v. Stennick, 64 Or. 96 (129 Pac. 130), furnishes an apt illustration of the assignability of a right of property, and similar exemplifications ap — 87 — pear in Graves v. Spier, 58 Barb. (N. Y.) 349, and Haight v. Hayt, 19 N. Y. 465. There are numerous holdings to the effect that where, by means of fraudulent practices, A has been induced to convey his land to B, and afterward A deeds the same land to C, the latter may. successfully maintain a suit against B for the annulment of the conveyance which was obtained by fraud; and many illustrations may be found in authoritative cases where the assignee of a claim may prosecute a suit to set aside a conveyance which was made for the purpose of defrauding creditors even though the deed was executed before the assignment of the claim. Examples of the first class may be found in Dickinson v. Burrell, L. R. 1 Eq. 337; McMahon v. Allen, 35 N. Y. 403; Traer v. Clews, 115 U. S. 528, (29 L. Ed. 467, 6 Sup. Ct. Rep. 155); Connecticut Mut. Life Ins. Co. v. Smith, 117 Mo. 261 (22 S. W. 623, 38 Am. St. Rep. 656), and in Houston v. National etc. Loan Assn., 80 Miss. 31 (31 South. 540, 92 Am. St. Rep. 565). Illustrations of the second class appear in Emmons v. Barton, 109 Cal. 662 (42 Pac. 303), National Valley Bank v. Hancock, 100 Va. 101 (40 S. E. 611, 93 Am. St. Rep. 933, 57 L. R. A. 728), and Howd v. Breckenridge, 97 Mich. 65 (56 N. W. 221). An analysis of Sperry v. Stennick, 64 Or. 96 (129 Pac. 130), and kindred cases and an examination of the other two classes of adjudications will at once reveal the fact that there the maintenance of a judicial proceeding, even though resting upon an accusation of fraud, is quite consistent with the act of assignment. When A conveys land to C, after having deeded the same land to B, the very act of making the conveyance to C is of itself a declaration that A refuses to abide by the transfer to B, where the latter, employed fraud in procuring the land. It must be borne in mind, how — 88 — ever, that this is a proceeding brought for the pürpose of rescinding the transaction in its entirety and placing the parties, as near as the circumstances will permit, in the same positions they occupied before signing the agreement; and the plaintiff must, of necessity, accept one of two alternatives: Either, that the assignors parted with all their rights by making an absolute transfer of their entire interests in the contracts and in the lands; or else that the sole purpose of the assignment of the contracts was to enable Cooper to sue. When the assignments were made, not only Cooper, but the assignors, knew all that was known to them at the time of the trial; the contracts were transferred with full knowledge of the alleged fraud; and therefore the assignments of all the rights arising out of the contracts were themselves acts which affirmed rather than disaffirmed the agreements: Scott v. Walton, 32 Or. 460 (52 Pac. 180). If by affirming the contract the assignor waived his right to object, then Cooper cannot complain of any fraud practiced upon the assignor, because the plaintiff cannot have any greater right than was possessed by his assignor. Cooper cannot repudiate these land contracts if, with a knowledge of all the facts, the assignors affirmed them. If the plaintiff hangs his case upon the other horn of the dilemma —and he does, because he says in his brief that the “assignors of plaintiff assigned their interest in the lands for the purpose of bringing action and for the purpose of rescission” — then he is confronted with the rule that a mere naked right to sue for a fraud cannot be transferred alone and by itself: Ryan v. Miller, 236 Mo. 496 (139 S. W. 128, Ann. Cas. 1912D, 540); Gruber v. Baker, 20 Nev. 453 (23 Pac. 858, 9 L. R. A. 302). The plaintiff has, by his own conduct, waived any right to rescind his individual contract; and he cannot main — 89 — tain.this suit as assignee of the other contracts. The decree is reversed, and the complaint and suit are disr missed. Dismissed. Mr. Chief Justice Moore, Mr. Justice McBride and Mr. Justice Bean concur.