Opinion
June Term, 1896.
Benjamin H. Bayliss and Paul C. Cloyd, for the appellants.
Theodore H. Friend, for the respondent.
In the cases of Masson v. Bovet (1 Den. 69); Cobb v. Hatfield ( 46 N.Y. 533); Hammond v. Pennock (61 id. 145); Schiffer v. Dietz (83 id. 300); Strong v. Strong (102 id. 69), and many other cases which might be cited, it is stated that it is a settled rule that the right to rescind a contract for fraud must be exercised immediately upon its discovery, and that any delay in doing so will be deemed an election to affirm the contract.
Applying this rule to the facts disclosed by the record before us in the case at bar, it is evident that the plaintiff was not in a position on the 10th of July, 1894, to attempt to rescind the contract of the 13th of January, 1894, between the defendant Webber and herself upon the ground of fraud, as she endeavored to do. It appears from the evidence in this case that as early as the 9th of April, 1894, the plaintiff was aware of the fraud which had been perpetrated upon her; and that she waited for the purpose of seeing whether it would be more advantageous to allow the contract to stand or to disaffirm the same; and that it was only after a delay of three months, when she became convinced that she could get more money by disaffirmance, that she took any action tending towards this end. She knew in April that the assignee of the defendant Webber, the person with whom she had made the contract of sale, was endeavoring to dispose of the assigned property. She waited until after that sale had taken place. In June she inquired as to the prospect of a dividend under the assignment; and not until July the tenth did she attempt to rescind. Where a party upon discovering fraud in a contract lies by and speculates as to which is the better policy to pursue — to disaffirm or to allow the contract to stand — he cannot be permitted, after the course of events has demonstrated that disaffirmance is the better policy, to rescind. Equity requires that he should elect promptly and not delay action and permit the other party to treat the contract as existing and act accordingly.
In the case at bar the plaintiff permitted the assignee to have the care and custody of this property, the proceeds of which she now claims upon the ground of the alleged fraud of the assignor. She allowed him to have the trouble and expense of selling it, and she permitted its sale, all the time being cognizant of the fraud which she alleges was perpetrated upon her.
Whatever may be the true interpretation of the rule in England as laid down in the case of Clough v. L. N.W.R. Co. (L.R. [7 Exch.] 26), upon which the learned judge below relied in coming to the conclusion which he did in deciding this action, in this State reasonable promptness of action in disaffirmance of a contract is required upon the part of the party seeking to rescind. This rule is further illustrated in Pickslay v. Starr ( 149 N.Y. 432).
It does not seem necessary to multiply considerations upon a point which is so elementary and the equity of which is so evident. In view of the conclusion at which we have arrived upon the question of the delay in the rescission, it would be useless to discuss the point as to whether the evidence justified the court below in the finding of fraud or not.
The judgment should be reversed and a new trial ordered, with costs to the appellants to abide the event.
WILLIAMS, PATTERSON, O'BRIEN and INGRAHAM, JJ., concurred.
Judgment reversed and new trial ordered with, costs to appellants to abide event.