In Strong v. Strong, 102 N.Y. 69, 73, an earlier proceeding to rescind was held not to be an election, because by reason of laches and lack of tender there was then no right to rescind.Summary of this case from United States v. Oregon Lumber Co.
Argued March 10, 1886
Decided March 26, 1886
A.R. Dyett for appellant. Brown Dykman for respondent.
There was evidence given on the trial, from which the referee was authorized to find that the defendant made fraudulent representations to the plaintiff as to his responsibility, which induced her to accept his note, payable at a future day, in settlement of several actions and proceedings then pending in court between them. Among other things, the defendant was permitted, by such settlement, to pass his accounts as executor of his father's estate, and obtain his discharge from liability to the plaintiff as such executor for her share therein, amounting, as was claimed by plaintiff, to a much larger sum, than that agreed to be paid in settlement. The release of the defendant from such liability, and other liabilities upon obligations alleged to have been fraudulently incurred, and the extension of time of payment of the amount agreed to be accepted in settlement, as well as of the right to prosecute her original claim, constituted such an injury to plaintiff's rights as entitled her, upon proof that they were fraudulently obtained, to maintain an action therefore, and recover such damages as she might show she had sustained. Upon a discovery of the fraud, the plaintiff had a right to pursue either one of two alternatives, viz., either to restore what she had received upon the settlement, and claim restoration to the position occupied before the agreement by her, or keep what she had received, and prosecute the defendant for the damages alleged to have been sustained by her thereby.
It is true that she could not prosecute both of these remedies as they are inconsistent with each other, and the election by her of either, precluded a resort to the other. It is a settled rule, however, that the right to rescind a contract for fraud must be exercised immediately upon its discovery, and that any delay in doing so, or the continued employment, use and occupation of the property received under the contract, will be deemed an election to affirm it. ( Schiffer v. Dietz, 83 N.Y. 300.)
It is claimed by the appellant, that the conduct of the plaintiff in moving to vacate the decree of the surrogate passing the defendant's accounts, upon the ground that the same was procured to be entered by the fraud, which is also alleged as the basis of this action, was such an election as precludes her from maintaining this action. We do not think that claim is well founded.
At the time this motion was made, over three and a half years had elapsed since the settlement had been made, and the plaintiff had during all of that time been in the occupation and enjoyment of the premises at New Rochelle, deeded to her in pursuance of the alleged fraudulent agreement, and had never offered to restore them to the defendant, either on making the motion, or previously thereto. It also appeared that she had in 1876, a year after the decree, joined in an application to the court to compel the defendant to pay to her sister the amount adjudged due to her, from her father's estate by said decree, and that such application was successful, and the defendant had paid the amount so adjudged to be due. These were unmistakable acts of election on the part of the plaintiff to affirm the agreement of settlement, and when she made her application to the surrogate, she did not then have the right of election. This constituted an absolute bar to the relief there sought, and we must assume, in the absence of any proof to the contrary, that the surrogate's decision was based either upon laches or the absence of proof of restoration, either of which grounds, being in the nature of a condition, would naturally preclude any inquiry into the merits of the controversy.
The defendant's answer to the petition to open and set aside the surrogate's decree, while denying the allegations of fraud therein contained, also set up the omission of the petitioner to make restoration of the property received on the settlement, as a bar to the relief sought. In the absence of an allegation in the petition of an offer to return the property received, or of some valid excuse for not doing so, it was demurrable and entitled the defendant to a dismissal thereof, for want of such allegation.
We are, therefore, of the opinion that such proceedings did not operate as an election precluding the plaintiff from prosecuting this action, and for the same reasons the decision of the surrogate thereon did not constitute an adjudication upon the question of fraud, barring the plaintiff's claim in this action. The allegations and proceedings show affirmatively that he had no authority to pass upon the merits of the application. The further point is made that the plaintiff could not have relied upon the alleged fraudulent representations, because she testified that she also relied upon certain representations made to her by defendant's partner, Carl. We do not think the appellant's claim in this respect can be maintained. This testimony does not necessarily overthrow the abundant evidence in the case, that the plaintiff's agents, to whom she intrusted the business of effecting the settlement, were influenced thereto, solely by the alleged fraudulent representations, or that she herself gave her assent to the settlement, relying upon such representations.
It is not essential to a recovery in such an action that the alleged representations should have been the exclusive cause inducing the plaintiff to assent to the settlement, but if she would not have made the settlement except for such representations, there is such a reliance thereon as entitles her to maintain the action.
We are, therefore, of the opinion that the judgment should be affirmed.