Jordy v. Dunlevie

Evans, P. J.

(After stating the foregoing facts.)

1. ' The gravamen of the complaint is that tire defendant fraudulently represented that he had not sold the timber to any of the plaintiff’s customers, and because ’of such fraudulent representation he settled his claim for commissions for the sale of the timber for five hundred dollars. The plaintiff charges that the defendant misrepresented the matter to him, deceived him, and that the settlement was obtained by deceit. He does not charge that he and the defendant -agreed on a contract of settlement, such as would be expressed in the receipt after eliminating the words which he alleges he did not observe. Courts will reform a writing to speak the real agreement of the parties, in a proper case, but will not reform a writing into a contract to which the parties did not mutually assent.

2. We will not enter into any discussion of the plaintiff’s right to recover his commissions (see Doonan v. Ives & Krouse, 73 Ga. 295), for the reason that he is estopped by his acceptance of five hundred dollars in satisfaction of all sums due him for services. We will assume that he earned his commissions; and undertake to show that he surrendered his right to recover them by the acceptance of the five hundred dollars under the circumstances alleged in the petition. The plaintiff had negotiations with several prospective purchasers of the timber, whom he referred to the defendant. He then entered into a contract of settlement with his client, by which he received five hundred dollars, which was accepted in complete, full, and final settlement of all claims and demands against the defendant for expenses, commissions, or otherwise, in connection with the .sale of the timber on the Liberty county lands. This amounted to an accord and satisfaction of the plaintiff’s right to commissions under his contract, and forecloses any action therefor, unless he is entitled to rescind the settlement agreement on the ground of fraud.

While it is true that fraud vitiates a contract, yet such contract is nevertheless not void, but voidable only, at the instance of the person defrauded., “A contract may be rescinded at the instance of the party defrauded; but in order to the rescission he must promptly, upon discovery of the fraud, restore or offer to restore to the other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, i£ it be of any value.” Civil Code, § 4305. As appears from the marginal reference, the foregoing section was a codification of the principle announced and applied in the case of East Tennessee &c. Railway Co. v. Hayes, 83 Ga. 558 (10 S. E. 350). An examination of that case, as well as those cases cited in the opinion, discloses that the principle which was incorporated in the code section is predicated on the broad equitable doctrine that he who asks equity must do equity. If a party intends to rescind a contract on the ground of fraud, he must promptly disown it, return the property, and restore the status. Some of the authorities declare that he must act at once. Grymes v. Sanders, 93 U. S. 55 (23 L. ed. 798). Others demand action with reasonable promptitude. Bigelow on Fraud, 436. But in the great mass of adjudicated cases, of which Gould v. Cayuga National Bank, 86 N. T. 75, may be said to be a leading exponent, the requirement is that one who seeks to rescind an accord and satisfaction on the ground of fraud must promptly on the discovery of the fraud restore, or offer to restore, to the other party whatever of value he has received by virtue of it. What is the meaning of the word “promptly” as used in the statute? Some of its synonyms are, at once, quickly, readily, seasonably, timely, expeditiously. Webster’s New International Dictionary. When the fraud is discovered the party defrauded is put to his election to disaffirm the contract. He should, not delay without cause. He has in his possession the property or money of the other party, which he can not retain if he intends to rescind. He must therefore 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. What might be termed as prompt action in one case might in another instance be regarded as inexcusable laches.

There is a statute in California very similar to ours. It declares that the party “must rescind promptly upon discovering the facts which entitle him to rescind; and . . he must restore to the other party everything of value which he has received from him under the contract,” etc. California Civil Code (1909), § 1691. Under this statute it has been held that a delay of three months after the discovery of the fraud, in offering to return what was received, prevented a rescission of a contract to purchase stock in a corporation. Marten v. Burns etc. Co., 99 Cal. 355 (33 Pac. 1107). In another case four and one half months was held to be too long a time to wait- before offering to restore the property. Gamble v. Tripp, 99 Cal. 223 (33 Pac. 851). No reasonable excuse was offered in either case for the delay in making the offer to restore tlie status. Our statute requires restoration (or an offer to restore) of whatever of value has been received, as a condition precedent to rescission. It is not sufficient that a party on discovery of the fraud gives notice to the other party of his intention to disaffirm the contract. He must go further and offer to restore the status, as required by the statute. When the opposite party gets the notice of his election to rescind the contract, he has the right, under the law, to expect the prompt return of his property in the possession of the person claiming to be defrauded. If the latter waits an unreasonably long time to tender it back, the other party may well assume an abandonment of the' effort to rescind. After discovery of the fraud, and notice of an intention to rescind the contract, what equitable right has the defrauded party to retain or use the consideration of the alleged fraudulent contract, when the statute is mandatory that he shall promptly offer to return it? Such conduct would be inconsistent with his previous notice to rescind. If he waits unreasonably long before making a tender, he forfeits his right to rescission. In the case in hand the plaintiff waited 16 months after the discovery of the fraud, and after giving the defendant notice of his intention to rescind the contract, before offering to return the money which he received in consideration of a settlement of his commission.

Let us see if there is any excuse for this long delay in tendering back the consideration of the contract of settlement. Immediately upon the discovery of the fraud the plaintiff began an action in the city court of Savannah to recover his 'commissions. On the trial of the ease, 16 months thereafter, he made a tender of the money he had received from the defendant. This tender was ineffectual to save the action, as was held in the case in 83 Ga., cited supra. The suit in the city court was dismissed. The tender was renewed and declined, and about six months after the dismissal of the city-court suit the present action was brought. It is clear that the suit in the city court did not relieve the plaintiff of the necessity of returning the money, and certainly did not prevent him from making an earlier tender. So this can not serve in any way to excuse the plaintiff’s laches in making the tender.

It is no answer to the charge of laches to say that tender is excused because, under the facts alleged, and admitted on demurrer to be true, the plaintiff would recover largely in excess of the amount be received. Tbe acceptance of a sum in settlement of the original cause of action discharged all liability thereon, so long as the contract of settlement is not rescinded. This was expressly-ruled in East Tenn. Railway Co. v. Hayes, supra.

The plaintiff waited sixteen months after the discovery of the fraud before offering to return the money accepted in settlement of his commissions for the sale of the land. This, in the absence of some excuse shown for the delay, is certainly not the prompt action required by the code as a condition precedent to rescission. There was no error in dismissing the petition on demurrer.

Judgment affirmed.

All ike Justices concur.