Faulkner v. Wassmer

The opinion of the court was delivered by Garrison, J. We agree with the learned vice-chancellor that Mrs. Faulkner purchased the lot in question upon an untrue representation of such a nature that, upon the discovery of its untruth, she was entitled to elect to rescind the sale. We do not, however, agree that such election was still open to her four months later when the present bill of complaint was filed declaring for the first time her election to rescind. At this time, viz., November 28th, 1908, her right to elect, which arose on or about July 10th, 1908, no longer existed, not upon the doctrine of laches, discussed in the conclusions filed in the court below, but upon the ground that the lapse of such a length of time under the circumstances afforded plenary proof of an election by her not to rescind to which conclusive effect should have been given. The learned vice-chancellor was in error in testing the complainant’s right to elect solely by the doctrine of laches and notably so in conceiving that the decision of this court in Dennis v. Jones, 44 N. J. Eq. (17 Stew.) 513, turned upon that doctrine [543] which, in point of fact, was not even mentioned in the opinion of Chancellor McGill in this court. Dennis v. Jones was decided not upon the gwsi-estoppel that is involved in the doctrine of laches, but upon a totally different ground, viz., that of conduct-evidence. Authorities cited by Chancellor McGill had settled the law “that the defrauded party to a contract has but one election to rescind, that he must exercise that election with reasonable promptitude after the discovery of the fraud and that when once he elects he must abide by his decision;” other cases cited in the opinion had held that “delay in the rescission of the contract is evidence of a waiver of the fraud and an election to treat the contract as valid.” The approval and adoption of both of these lines of decision by this court in Dennis v. Jones resulted in our holding “that, after the appellants had knowledge of all the substantial features of the alleged fraud and were fully aware of the deceit which had been practiced upon them, they so acted as to afford plenary evidence of an election to abide by their contract,” and that “their election thus made was irrevocable.” It is this rule, and not the doctrine of laches, that Dennis v. Jones lays down and illustrates. To the same effect is the more recent case of Clampitt v. Doyle, 73 N. J. Eq. (3 Buch.) 678. The rule of Dennis v. Jones is so clearly stated by Chancellor McGill that in actual practice the only question likely to arise is whether or not the delay was such as to warrant its application, i. e., whether the vendee’s failure to act extended beyond the period within which one would naturally act who knew that to act effectively he must act promptly. The question in itself is not peculiar to this class of cases; it is present in all cases involving a reasonable time, concerning which, it is admitted, that no hard and.fast rule obtains and also that the difficulty that exists in cases that lie close to the line disappears with the lapse of time that has been permitted to intervene. Thus the question whether a landowner, who is under a duty to make repairs upon notice, is in default on the very day he had notice or the day after may present difficulties that entirely disappear if he has suffered weeks and months to [544] elapse. The case before us is of this latter character in that an election that could in reason have been made within a few days, or at most a few weeks after the right to make it arose, was, without any adequate excuse that was consistent with promptitude of action, delayed for months. It is precisely this conduct that (as we decided in Dennis v. Jones and Clampitt v. Doyle) affords plenary proof of an election to abide by the contract, which is irrevocable. For this reason the 'bill of complaint should have been dismissed by the court of chancery, and for this reason the decree of that court must be reversed. This result renders it unnecessary to do more than allude to the fact that the prayer of the complainant’s bill with respect to the several sums to be paid to her by the defendants in excess of purchase price, interest, insurance and taxes, is made up for the most part, if not wholly, of items for which a court of equity, upon the rescission of a contract, gives no compensation; as to some of them, because they are in the nature of unliquidated damages, and as to others, because of the essential difference in this respect between the rescission of a contract and an action for deceit based thereon. To obtain the former, the complainant must show a material misrepresentation not necessarily untrue to the knowledge of the defendant; whereas the gist of the action for deceit is conscious falsification — hence the injured party may not, by selecting the action that is the more easily proved, obtain in equity the measure of redress that is recoverable only when the more onerous burden has been sustained in a court of law. This distinction is pointed out in Redgrave v. Hurd, 20 Ch. Div. 1; Newbigging v. Adam, 34 Ch. Div. 582; 13 App. Cas. 308, and is treated extensively in the notices in 6 Eng. Rul. Cas. 754 et seq. The theory of the complainant’s bill as exemplified by its specific prayer for relief is entirely indefensible, and the decree, therefore, granting such relief in general terms is, upon its face, erroneous. The learned vice-chancellor, however, in his conclusions expressly disavowed the purpose of allowing unliquidated damages, and confined his order of reference to such improvements as were [545] the “necessary and proper consequences” of the sale that was set aside. Inasmuch, however, as “necessary” is quite generally construed to mean “suitable,” rather than “indispensable” (New Jersey, &c., Railroad Co. v. Hancock, 35 N. J. Law (6 Vr.) 537; Camden, &c., Railroad Co. v. Woodruff, 36 N. J. Law (7 Vr.) 94; Morris, &c., Canal Co. v. Love, 37 N. J. Law (8 Vr.) 60), it may be doubted whether the error of the decree was thereby removed or rendered harmless to the defendant. The matter, however, need not be further pursued since the decree must be reversed and the bill dismissed for the reason first given. To this end the decree is reversed. For affirmance — None. For reversal — Tiie Ci-iiee-Justice, Garrison, Swayze, Trenchard, Parker, Bergen, Voorhees, Minturn, Bogert, Vredenburgi-i, Vroom, Gray, Congdon — 13.