Manget v. Cunningham , 166 Ga. 71 ( 1928 )

Hines, J.

(After stating the foregoing facts.)

Conceding that the agents who represented Mrs. Treadwell in the sale of this property perpetrated a fraud upon Manget by representing that the property was bringing in a monthly rental of $300 and that there was outstanding on the property a first mortgage of $14,500, which representations were made to induce Manget to enter into the contract to purchase, made in January, 1923, and which did induce him to enter into said contract by which he agreed to pay for said property $21,500, to be paid by the assumption of an incumbrance of .$14,500 on the property, $2000 in cash, and to give twenty-five notes for $200 each; and conceding further that this fraud authorized Manget to refuse to carry out the terms of the contract made in January, 1923, we do not think that he was induced to enter into the final contract of purchase by reason of any fraud, or that he was entitled for any reason to recover damages for the fraud or to have the contract rescinded. The contract made in January, 1923, was mutually abandoned by the parties. After its abandonment they entered into a new contract. The evidence does not authorize a finding that Manget was induced to enter into this contract by reason of fraud perpetrated upon him by the agents who represented Mrs. Treadwell in the negotiations which led up to the final agreement under which Man-get purchased this property. On March 10, 1923, when Mrs. Treadwell conveyed this* property to Manget for a reduced consideration of $18,000, the evidence demands a finding that no fraud was perpetrated by these agents on Manget when he closed the final deal. At that time he knew that the previous representation of these agents that this property was bringing in a monthly rental of $300 was not true. At that time he was not deceived by the previous misrepresentation of the agents of the seller that there was a first mortgage of $14,500 on this property. On March 8, 1923, Manget wrote to J. W. Harris, one of the agents of the seller, that he wished to again reiterate his oft-repeated statement to Harris that he had never felt that Harris misled him intentionally in regard to these matters, and that he did not then judge that any one else willfully misled Harris, but at the same time that he was seriously misled, and his agreement of January, 1923, to purchase this property was based on the information brought to him by Harris that there was a first mortgage of $14,500' on this property. He then states that after he found out the first mortgage was for only $6000 he turned the deal down, and that when Oglesby, the other agent, came to see him with Harris he told them then he would not split hairs on the information that there was a mortgage of $14,500 on the property, and that he then told these agents that he would yet take the property, provided there was a bona fide mortgage on the property, based on the value of the property, for that sum.

If nothing further appeared, it might be well said that Manget agreed to still take this property, provided there was a bona fide mortgage upon it, based on its value, for that sum. But in this letter he goes on to say: “I have found out that the mortgage that is proposed to be placed is not such a mortgage, and I feel again entirely relieved of any obligation whatever. The records show that, two or three weeks after I agreed as above, a deed was recorded in favor of Mrs. Treadwell, and the consideration was $15,000.” After thus finding out that Mrs. Treadwell had paid $15,000 for this property, in this letter he further wrote; “Bather than have a lawsuit I will pay $3000 more than the party paid who bought it since I made the agreement with you. I will also give you a twelve months contract that if the property is sold above this sum I will allow whatever amount it brings above the price I paid to be applied to making up the price I originally agreed to pay, namely, $20,750.00, based on the information as outlined above, which I have found not to be correct. For this difference I will give you twelve monthly notes of three hundred dollars each; you to collect the rent and credit on these notes the amount agreed upon as rental for the property.” At this time Manget knew that a mortgage for $14,500 did not exist on the property. He further knew that the mortgage that was proposed to be placed upon the property was not a bona fide mortgage for said sum. With this knowledge he agreed, upon having learned that Mrs. Treadwell had paid for this property $15,000, to pay her $3000 more than she had paid for it. In pursuance of this new agreement she executed and delivered to Manget her deed to this property for a consideration of $18,000; and in this deed Manget assumed a loan of $14,500. So it clearly appears that in closing this deal and in accepting this deed Manget did not rely upon the previous representations of the agents of Mrs. Treadwell that there was a first-mortgage loan of $14,500 on this propertj', and that it was bringing in a monthly rental of $300. lie was their acting upon information that Mrs. Treadwell had paid $15,000 for this propertjr, and on this information he made his offer to buy it for a consideration of $18,000. The deed from Upchurch to Mrs. Treadwell recited a consideration of $15,000. It was made subject to two loans, one for a balance of $4893.74, and one for $1000. It was dated February 7, 1923, and was duly recorded.

There is nothing in the evidence to indicate that Mrs. Treadwell did not pay Upchurch $15,000 for this property. On the contrary the evidence discloses that she paid that sum for it. In his letter to Harris, Manget wrote that the record showed that, two or three weeks after he had agreed to buy this property m January, 1923, a deed was recorded in favor of Mrs. Treadwell and that the consideration of this deed was $15,000. It was upon this information that Manget offered to pay Mrs-. Treadwell $3000 more than she gave for it. He was not then relying upon any statement of her agents that there was an incumbrance amounting to $14,500 on this property. Furthermore, in his letter he states that the mortgage which they proposed to put upon the property was not a bona fide mortgage for $14,500. With full knowledge of the true facts, and not relying upon any representation made by the agents of Mrs. Treadwell as to the incumbrance upon the property, but relying upon the fact that she had paid $15,000 for it, he expressed his willingness to pay her $3000 more than she had paid for it; and in accordance with this offer she executed to him her deed for a consideration of $18,000, subject to two loans aggregating $14,500. Furthermore, the evidence demands a finding against the contention of Manget that these loans were fictitious and did not represent any money advanced by the husband of Mrs. Treadwell when she purchased this property from Upchurch. There is no evidence authorizing a finding that the husband did not advance for his wife $7250 on the purchase of this property. On the contrary the evidence shows that the money paid to Upchurch was paid by the husband, and that most of the money advanced to the wife by Cunningham was used in discharging the incumbrances on the property at the time she purchased it from Upchurch, and which she assumed and agreed to pay. In these circumstances the vendee was not entitled to recover any damages for the fraud alleged to have been perpetrated upon him in originally entering into the contract of purchase, and to have such damages set off against the purchase-money which he agreed to pay for this property; nor was he entitled to a rescission of the trade. In this situation it does not concern him whether the incumbrances which he assumed were without consideration.

The pleadings of Manget do not make a case for rescission of the trade between him and Mrs. Treadwell. It is indisputable that he knew, on May 30, 1925, of the alleged fraud on account of which he seeks rescission of the trade and cancellation of the instruments made to carry it into effect. On that date he instituted the present action, and in his petition set out this fraud. So beyond doubt he knew all about this fraud at that date. Yet he took no steps to rescind the trade and to cancel these instruments until July 15, 1926, when he filed his answer to the intervention of the receiver of the estate of B. H. Treadwell. So he first took steps to secure the rescission of this trade and the cancellation of these instruments after the lapse of more than one year after he had full knowledge of the fraud upon which he seeks the rescission and cancellation. 'A contract may be rescinded at the instance of the party defrauded; but in order to rescind he must promptly, upon discovery of the fraud, restore or offer to restore to the other whatever he has received by virtue of the contract, if it be of any value. Civil Code, § 4305. The party seek- - ing rescission must proceed with his offer to restore what he has received, with that promptitude which the nature of the case and environment of the circumstances would require, as manifesting an intention to treat, from the discovery of the fraud, what he has received as the property of the other party. If he waits an unreasonably long time to tender back the subject of the contract, the other party may well assume an abandonment of the effort to rescind. Jordy v. Dunlevie, 139 Ga. 325, 330 (77 S. E. 162). Ordinarily he who knowingly accepts and retains any benefit under a contract which he has been induced to make by fraud, after he has knowledge of such fraud, affirms the validity of the contract and will not be heard thereafter to repudiate it under this section. Legg v. Hood, 154 Ga. 28 (113 S. E. 642). Rescission of the contract must go to the whole. There can be no rescission of a contract in part. Baker v. Corbin, 148 Ga. 267, 270 (96 S. E. 428). The restoration must place the parties in the status they were in prior to the contract. Booth v. Atlanta Clearing-House, Association, 132 Ga. 100 (63 S. E. 907).

When a vendee is induced to enter into a contract for the purchase of land by the fraud of the vendor, when the former discovers the fraud he has an election of remedies. One of such remedies is to rescind the contract, and another is to affirm the contract and sue for damages for the fraud. Hunt v. Hardwick, 68 Ga. 100; Wright v. Zeigler, 70 Ga. 501; Bacon v. Moody, 117 Ga. 207 (43 S. E. 482); Tuttle v. Stovall, 134 Ga. 325, 328 (67 S. E. 806, 20 Ann. Cas. 168); Joiner v. Southern Land Sales Cor., 158 Ga. 752 (2) (124 S. E. 518). One who seeks rescission of a contract on the ground of fraud must restore or offer to restore the consideration therefor as a condition precedent to bringing the action. Williams v. Louche, 157 Ga. 227 (121 S. E. 217). After discovery of the alleged fraud and with full knowledge of all the facts, Manget instituted the present proceeding for the recovery of damages which he claimed he sustained, and sought to have these damages set off against the amount of purchase-money due by him on this land, and to have canceled, as clouds upon his title, the deeds on this property, securing loans which he had assumed as a part of the purchase-money, to the extent of the damages so sustained. He thus claimed some benefit under his purchase, and sought cancellation only pro tanto. This he could not do. Furthermore, in none of his pleadings did he allege that he had restored or offered to restore the land to his vendor in the condition in which it was when he bought it, prior to the institution of his proceedings to have the same cancelled. He elected in the beginning a remedy which was inconsistent with the rescission and cancellation of the trade in toto. By this course ho affirmed the trade. For all of these reasons he was not authorized to seek a rescission of the trade and the cancellation of the instruments made to carry it out in its and their entirety. So we are of the opinion that the court did not err in refusing to cancel this trade and these instruments.

Judgment affirmed.

All the Justices concur.