O'Donnell & Duer Bavarian Brewing Co. v. Farrar

Mr. Justice Wilkin delivered the opinion of the court: On the first day of October, 1894, appellees filed this bill, alleging that they were induced to enter into the contract of purchase, and the lease, through the fraudulent representations of appellant, the allegation being: “For the purpose of inducing complainants to purchase a saloon and take a lease thereof, represented that the saloon was first-class in every respect and was well fitted up; was doing a fine and profitable business, which was mostly glass trade; that the income was $20 a day, and that the net profit would be $4000 in two years; that the only reason for the sale was the ill-health of the manager’s wife;” that relying upon such representations the purchase was made and a lease entered into; that said representations were false; that complainants, learning that fact, offered to return to the defendant the saloon and property, provided defendant would release them from the obligations of the lease. The answer denies all the allegations of fraud. On the hearing of the cause, the witnesses being examined in open court, a decree was rendered according to the prayer of the bill, ordering the defendant to surrender up the lease, releasing all claim on complainants for rent, vacating and setting aside the judgment of $764.68, ordering the defendant to release to complainants all claim for the $187.30 indebtedness for beer, as above stated, and also ordering it to repay to the complainants the sum of $500, being the $400 cash payment and the $100 rent paid. On appeal to the Appellate Court that decree was affirmed, except as to the order in regard to the $187.30 indebtedness for beer, which was reversed, and the appellant now prosecutes this appeal. It is insisted by appellant that the decree below is erroneous for three reasons: First, that the evidence fails to show that the alleged false representations were made; second, that there is no proof of the falsity of any representation which in law entitles the complainants to rescind the contract; and third, conceding complainants to be otherwise entitled to the relief prayed, they have waived any right to rescind the contract by failing to take steps to do so promptly upon the refusal of the defendant to consent to the rescission. As to the first question there is a direct and positive conflict between the parties as to the representations set up in the bill, complainants testifying that they were made and induced the purchase, whereas two members of the defendant company testify to the contrary. The circuit court saw the witnesses and heard them testify, and C found the facts against the defendant. That finding having been affirmed by the Appellate Court, we do not feel inclined to a contrary conclusion. As to the second question, it is undoubtedly true that some of the representations set up in the bill amount to no more than the expression of an opinion as to the value of the property and business or a recommendation of the property of the seller. Certainly, whether the saloon was first-class in every respect and was well fitted up were matters about which the purchasers could judge as well as the seller, and whether the business would yield a profit of §4000 in two years was the expression of an opinion, which the law would not treat as fraudulent. On the other'hand, that the saloon was doing a profitable business, mostly glass trade, and especially that the income was $20 per day, were statements of fact which, if false, (as they were found to be by the court below,) would entitle the complainants, upon discovery of the real facts, to a rescission of the contract. Allin v. Millison, 72 Ill. 201; Hicks v. Stevens, 121 id. 186. The third question is one which must be disposed of as a mixed question of law and fact. It is undoubtedly the law that if a party seeks to rescind a contract on account of fraud he must act promptly, and, upon a refusal of the other party to acquiesce in the rescission, do no act which will amount to treating the contract as valid, —as, for instance, a party attempting to declare a rescission of the contract, who afterwards exercises acts of ownership over the subject matter of the contract, treating it as his own, will be held to have waived his right to rescind. “In order that this effect may be produced, the acquiescence must be with knowledge of the wrongful acts themselves and their injurious consequences. It must be voluntary,—not the result of accident,—and it must last for an unreasonable length of time, so that it will be inequitable, even to the wrongdoer, to enforce the peculiar remedies of equity against him after he has been suffered to go unmolested and his conduct apparently acquiesced in.” 2 Pomeroy’s Eq. sec. 817. ' Under this rule of law counsel for appellant contend, that after complainants offered to return the keys to the defendant, and it refused to receive them, they continued to carry on business in the property, and thereby waived any right which they had at the time of the offer to return the keys and rescind the contract. If there were no other facts connected with the transactions between the parties this position would be well taken. The evidence, however, shows that continued efforts were made by the complainants to bring about an adjustment and settle-, ment of the matters in dispute. We think it is fairly inferable, from all the testimony, that the complainants did not determine definitely to rescind the contract until about the time of bringing this suit, and that their previous conduct, after discovering the alleged fraud, was not such as should estop them from insisting upon it as they did in their bill. It is quite clear that the order of the circuit court releasing complainants from their indebtedness to defendant for beer purchased during the conduct of the business was erroneous, both because no claim of that kind was made in the bill and because that transaction was wholly independent of the contract, which it is claimed was induced by fraud. We find no reversible error in the record. The judgment of the Appellate Court must be affirmed. Judgment affirmed.