Bridgmon v. Walker , 218 Or. 130 ( 1959 )

PERRY, J.

Raymond D. Bridgmon and Betty R. Bridgmon, husband and wife, as plaintiffs, brought this suit in the Circuit Court for Multnomah County against George B. Ruschka, J. J. Walker and John P. Celoria, as defendants. The body of their complaint alleges:

“V

“That the making and execution of the aforesaid written agreements and the performance thereof by the plaintiffs according to the said terms as above set forth were procured by the fraud and deceit of the defendants exercised by them and each of them upon the plaintiffs for that purpose through the wilfully false and fraudulent representations and statements made to the plaintiffs by the defendants as follows:

“1. That the house was made of all new materials.

“2. That the house had a cement foundation and was properly supported.

“3. That the land upon which the property stood was properly drained; that the water supply was pure, wholesome, and adequate; and that the sewage was properly disposed of.

“4. That the building in all respects conformed to the state building and sanitation codes.

“5. That the building in all respects conformed with the Federal Housing Administration requirements and standards.”

They sought $6,000 as compensatory and $6,000 as punitive damages. The jury returned a verdict for compensatory damages in the amount of $4,500. From the judgment entered the defendants appealed.

The facts disclose that plaintiffs Raymond D. Bridgmon and Betty R. Bridgmon entered into a contract to purchase real property owned by defendant George B. Ruschka. The defendants John P. Celoria and J. J. Walker are real estate agents, and as agents of Ruschka effected the sale of this property to Bridgmons. The total consideration for the purchase of the Ruschka property was $8,450. The plaintiffs transferred to Ruschka their $1,150 equity in a house they were purchasing as a down payment and agreed to make monthly payments upon the balance due. In October, 1951, the plaintiffs Bridgmon moved into the property where they resided for several years before moving from the property. Mr. Bridgmon stated their reason for moving from the property as follows:

“Q Why did you move out?

“A Why, the cost of the repairing of the foundation and stuff—it was more than I could afford so I let it go.”

While this statement of plaintiff’s indicates a complete abandonment of the contract, we will consider the matter as a statement of attempted rescission.

After the plaintiffs Bridgmon had given up possession of the property, Ruschka resold the property, but there is no evidence that this action was taken in furtherance of a mutual rescission.

After the appeal had been filed, the defendant Ruschka and the plaintiffs Bridgmon entered into an agreement whereby for the sum of $900, which was to apply against the judgment, Ruschka was released from all liability and the rights of the plaintiffs in the judgment as against the defendants Walker and Celoria were retained. On a motion of the plaintiffs this court dismissed the appeal as to George B. Ruschka. Also, a motion was granted in this court substituting for Raymond D. Bridgmon as plaintiff Samuel A. McAllister, Trustee in Bankruptcy of Raymond D. Bridgmon.

The defendants Walker and Celoria contend the trial court erred in failing to sustain their motion for an involuntary nonsuit, a directed verdict, and in instructing the jury that the measure of damages was the difference between the amount the plaintiffs agreed to pay for the property and the reasonable market value of the property at the time of sale.

Assuming, as the jury must have, that the defendants by fraud induced the plaintiffs into entering into the contract, it is well-established in this jurisdiction that a vendee who has been deceived into entering into a contract of purchase may upon discovery of the fraud either affirm or rescind the contract. These rights are not concurrent, but are inconsistent. Amort v. Tupper, 204 Or 279, 282 P2d 660; Taylor v. Grant, 204 Or 10, 279 P2d 479; Widmer v. Leffelman, 187 Or 476, 212 P2d 737, 196 Or 401, 249 P2d 476; Baker v. Casey, 166 Or 433, 112 P2d 1031; Belanger v. Howard, 166 Or 408, 112 P2d 1022; Crouch v. Butler, 119 Or 344, 248 P 849; Fairbanks v. Johnson, 117 Or 362, 243 P 1114; T. B. Potter Realty Co. v. Breitling, 79 Or 293, 155 P 179; Scott v. Walton, 32 Or 460, 52 P 180.

If defrauded party elects to affirm the contract, he may sue for the benefits to which he is entitled thereunder or for damages for the deceit. Selman v. Shirley, 161 Or 582, 85 P2d 384, 91 P2d 312, 124 ALR 1; Burgdorfer v. Thielemann, 153 Or 354, 55 P2d 1122, 104 ALR 1407; McFarland v. Carlsbad Sanitorium Co., 68 Or 530, 137 P 209.

If, on the other hand, the defrauded party elects to disaffirm the contract, his remedy lies in restoration to his former position. Such defrauded party need not in all circumstances find relief only in a court of equity, but he may seek this restoration as damages in an action at law. Nisson v. Tillman et ux., 213 Or 133, 323 P2d 329; Kruse v. Bush, 85 Or 394, 167 P 308.

Therefore, it is the fraud in the securing of the contract that gives plaintiffs any right of recovery, for “* * * In the absence of fraud or some other ground for rescission, the vendee cannot escape the obligations he has assumed in the contract of purchase, nor can he recover back the purchase money which he had paid.” Kruse v. Bush, supra, 85. Or 394, 397.

The election of a vendee to rescind the contract is, therefore, a waiver of his right to sue a vendor for damages based on the fraud arising out of the contract.

Since the evidence conclusively discloses that the plaintiffs elected not to affirm the contract, the plaintiffs are not entitled to the benefits they would have received thereunder nor are they entitled to damages for deceit. They are only entitled to such sum as will restore them to their condition as it existed before the contract was entered into.

The pleadings in this case will not support an action for rescission, and the trial court erred in failing to grant the defendants’ motion for a non-suit and directed veridct.

The cause is reversed with directions to enter judgment for defendants.