Graybill v. Drennen

ANDERSON, J. This- bill- Ava-s filed to-cancel-a sale of 90 bonds-and 1,495 shares of stock in a certain company made by the respondents to the complainants, upon the ground of--false representations made to-complainants by respo3idents- A\diiclr induced them to- purchase-said bonds and stocks. A court of equity avüI rescind-a contra et of sale, at the-instance of'the-purchaser, on account of the-vehd'or’sefalse representations of material-facts not open to inspection, upon Avhicli the purchaser had the right to rely, did rely, andkas thereby injured; but- if the representation related to a matter equally open to the'inspection dr- inquiries of-both parties,- or-if the purchaser did not in fact rely on it, but sought and-relied on other means of information, or if he negligently failed to use the means or opportunities in his poAver to ascertain the facts, belief aat.11 not be granted.—New Orleans Co. v. Musgrove, 90 Ala. 428, 7 South. 747; Crown v. Carriger, 66 Ala. 590. Nor will a party be permitted to rescind and’ cancel a. contract, if he fails, to promptly disaffirm same after a discovery of the fraud. He cannot deal Avith the property acquired under the sale as his own after discovering the.fraud and afterAvards rescind.—Stephenson v. Allison, 123 Ala. 439, 26 South. 290; Mason v. Bovet, 1 Denio (N. Y.) 69; 43 Am. Dec. 651; Dill v. Camp, 22 Ala. 249; Burnett v. Stanton, 2 Ala. 181. The chancellor erred in holding respondents’ third plea to be sufficient. It does not ansAver the bill as to the bonds, nor does it aver that the complainants did not act upon the representations of the respondents, or that they acted upon the result of the investigation. The fifth plea was insufficient. It does not chargetbat the complainants discovered the fraud, or that they AA’ere negligent in- not doing so, during the time they AA'ere in the possession of the property. The sixth plea was bad. It does not charge laches or ratification 'with notice. It. charges the complainants with notice of all facts connected Avith the issuance of” [232] the bonds, but does, not charge notice or knowledge as to the condition of the mine or business. There are misrepresentations averred as to the mine and business, and the plea is not an answer to the bill. The seventh plea is bad. It charges a ratification of the sale on the part of complainants, but pretermits any notice or knowledge of the falsity of the facts complained of in the bill of complaint at the time of the alleged ratification. The chancellor erred in holding these pleas sufficient, and the decree is reversed, and one is here rendered hold,ing said pleas insufficient. Reversed and rendered. ■ Tyson, C. J., and Dowdell and McClellan, JJ., concur.