Kruse v. Bush

Mr. Justice McCamant delivered the opinion of the court. 1. The defendants challenge the right of plaintiff to maintain her action for money had and received, claiming that rescission is an equitable remedy and that plaintiff has no remedy at law except an action for damages. This contention is reserved by the demurrer to the amended complaint and by motions for a nonsuit and for a directed verdict, exceptions being taken to the denial of these motions. It is said in 39 Cyc. 1253, with reference to contracts for the purchase of real estate, that: “Fraud renders the contract voidable at the option of the injured party and entitles him to rescission of the same at law so long as it is executory.” [397] The contracts with which we are concerned were executory; the quitclaims were required only because plaintiff and her assignor had recorded their contracts. In 39 Cyc. 1997 it is said: ‘ ‘ One who has been induced by fraudulent representations to become the purchaser of property has, upon the discovery of the fraud, three remedies open to him, either of which he may elect: He may rescind the contract absolutely and sue in an action at law to recover the consideration parted with upon the fraudulent contract ; he may bring an action in equity to rescind the contract and in that action have full relief; lastly, he may retain what he has received and bring an action at law to recover the damages sustained. ’ ’ Plaintiff in this case has elected to pursue the first of these remedies. Her right to do so is recognized by Warvelle on Vendors, § 918; Mael v. Stutsman, 60 Or. 66, 69 (117 Pac. 1093); Koehler v. Dennison, 72 Or. 362, 366 (143 Pac. 649); T. B. Potter Realty Co. v. Breitling, 79 Or. 293, 305 (155 Pac. 179). 2,3. Defendants also claim that plaintiff has no remedy so long as she and her assignor have not paid all .the purchase price called for by their contracts and the defendants are still willing to consummate the sales. None of the authorities cited by defendants on this branch of their contention were cases involving fraud. In the absence of fraud or some other ground for rescission, the vendee cannot escape the obligations he has assumed in the contract of purchase, nor can he recover back the purchase money which he has paid. But the rule is otherwise when the vendee is entitled to rescind: Livesley v. Muckle, 46 Or. 420, 423 (80 Pac. 901); Jeffreys v. Weekly, 81 Or. 140 (158 Pac. 522). If plaintiff and her assignor were to disaffirm the contracts, it was necessary for them to act promptly on discovery of the fraud. The continued payment of [398] the installments called for by the contracts would have been evidence of a ratification of the contracts and would probably have defeated the remedy here invoked : T. B. Potter Realty Co. v. Breitling, 79 Or. 293, 305 (155 Pac. 179). 4. Defendants challenge the right of plaintiff to sue on the second cause of action set up, on the ground that Mrs. Tanna’s claim was not assignable. It is clearly alleged and proved that Mrs. Tanna elected to rescind on the discovery of the alleged fraud; that she quit-claimed the property to defendants and demanded the repayment to her of the sums paid the defendant Borthwick on the contract. The pleadings admit that she then assigned her cause of action to plaintiff. The claim was assignable within the principles announced by Mr. Justice Moore in Sperry v. Stennick, 64 Or. 96 (129 Pac. 130). If after making discovery of the alleged fraud Mrs. Tanna had merely assigned her contract to plaintiff or if, without exercising her election to rescind, she had merely assigned her litigious right, the case would come within the rule laid down by Mr. Justice Harris in Cooper v. Hillsboro Garden Tracts, 78 Or. 74, 86-88 (152 Pac. 488). But here plaintiff’s assignor exercised her right to rescind, demanded repayment of the money she had paid and put defendants in statu quo by quitclaiming the property to them. Having thus become entitled to sue for money had and received, she assigned her claim to plaintiff and plaintiff is entitled to assert it. 5. The court instructed the jury as follows: “It is not necessary that the plaintiff should prove that all the representations she claims were made and were false. It is sufficient if she proves that a single one of such representations was made and that it was false and that the other elements which will be described to you, were present. However, because of [399] the seriousness of the charge of fraud, the law says that the proof of fraud must be clear and convincing, and you must so find in this ease before you can say that there was fraud. “Now, in order to constitute fraud there are certain elements which must be established by the plaintiff. You must find, first, that the defendants made the representations, or at least one of them. You must find further that the defendants made those representations for the purpose of circumventing or deceiving this plaintiff. You must further find that the representations were made for the purpose of inducing the plaintiff to act upon them and you must find that the plaintiff did rely and act upon them and was induced by them to enter into the transaction in this case. Then you must find as a further element that the further representations were false, if you find they were made, and you must find either that the defendants knew them to be false or else made them recklessly and with a disregard to the truth or falsity of them, and you must further find that the defendants made them for the purpose of inducing the plaintiff to act upon them as I said before. Now, if you find that there was fraud, as it has been defined to you by the court, then such fraud would justify the plaintiff in rescinding these contracts, plaintiff and her assignor in the second cause of action, and she would be entitled to recover the money which she had paid, or her assignor has paid on account of these contracts, with interest from the dates of payment.” Defendants complain that this charge permitted the jury to find for plaintiff if in a single respect the representations of defendants were false and fraudulent, even though the departure from the truth was inconsequential. The jury was not authorized under the above charge to find for plaintiff unless it found that the fraudulent representations were the inducing cause of the contracts. This portion of the charge covered the question of the materiality of the representations. [400] 6. Plaintiff was not required to show a total failure of consideration. Her right of action was based on fraud and her testimony was sufficient to take the case to the jury- We have patiently examined the authorities cited by counsel for defendants, but it is not considered necessary to review them in this opinion. The questions mooted are for the most part settled by the decisions of this court. We find no error and the judgment is affirmed. In justice to the defendant Borthwick it should be said that the evidence fails to connect him personally with any of the representations leading up to the execution of these contracts. Aeeirmed. Mr. Chiee Justice McBride, Mr. Justice Moore and Mr. Justice Bean concur.