Morey v. Pierce

McAllister, P. J. The direction by the court to the jury, that the covenants in the lease given in evidence were not binding on the plaintiff, if the jury should believe from the evidence that the plaintiff was induced to sign said lease by the fraud and misrepresentations of the defendants, as charged in the declaration, was equivalent to telling the jury that such lease was void as to her, if she were so induced to sign it, irrespective of subsequent circumstances. We think the instruction was wrong and misleading. The fraud set out in the declaration did not amount to fraud in the execution of the instrument, but merely to a fraudulent misrepresentation as to a collateral matter. Though collateral it was material, and if established would have justified her, upon discovering it, to have disaffirmed the contract, surrendered the premises to the lessor, and then, if this was done with the promptitude required by law, the contract would, as to her, have become void. But if, on the other hand, she, after the discovery of thefrand, omitted to disaffirm, and continued in the occupation of the premises, the law will regard her as having made the lease good and binding upon her by electron. There was evidence in the case tending to show that the plaintiff held the possession of the premises after she had discovered the fraud. In Allaire v. Whitney, 1 Hill. (N. Y.) 484, which was a case of alleged fraudulent misrepresentation by a lessor, the court says: “It is not necessary to deny that where a vendee or lessee takes or holds possession after he has discovered the fraud of the vendor or lessor, he shall not be allowed to rescind the contract; in other words, to say, as he always may do in the first instance, that the whole is void.” The same doctrine is re-affirmed in the same case by the title of Whitney v. Allaire, 4 Denio, 554. The position of a lessee in this respect is precisely the same as that of a vendee of real or personal property. The general rule is well stated in Mason v. Bovet, 1 Denio, 69. The court, by Beardsley, J., says: “A person who is induced to part with his property on a fraudulent contract may, on discovering the fraud, avoid the contract and claim a return of what he has advanced upon it. Brand destroys the contract db initio, and the fraudulent purchaser has no title (Chit. on Cont. 406, 678 to 681, Am. ed. of 1842). But if the party defrauded would disaffirm the contract he “must do so at the earliest practicable moment after discovery of the cheat. That is the time to make his election, and it must be done promptly and unreservedly. He must not hesitate; nor can he be allowed to deal with the subject-matter of the contract and afterward rescind it.” To the same effect is Hall v. Fullerton, 69 Ill. 448. The case of Allaire w. Whitney, supra, is authority for the position that even if the plaintiff, by her acts, is to be held to have affirmed the lease and made it good by election, she is not thereby debarred of her action to recover such damages as were the natural and proximate result of the fraud if the fraud shall be proved. But whether she affirmed or dis-affirmed the lease upon discovering the fraud would be very material in determining the proper rule of damages. If the lease was absolutely void, as the court told the jury it would be if she was induced to sign it by the fraud and misrepresentations charged, then it would follow as settled law that she would be entitled to recover back for all she had paid or done under it; while on the other hand, if she had affirmed it or made it good by election, then she would not necessarily be entitled to recover back the rent she had paid, or for what she had done under it, because it had been paid and done in performance of a valid covenant; and she may have derived some benefit from the lease and use of the premises. Besides, snch fact of affirmance might be an important element as regards the question whether she used the diligence to prevent the accumulation of damages, which the law in such cases requires. The last clause of the instruction assumes the fact.of fraud and misrepresentation by defendants when the evidence was conflicting as to that fact. For the giving that instruction, we must reverse the judgment and remand the cause for a new trial. Reversed and remanded.