McCabe v. Kelleher

175 P. 608, 90 Or. 45, 1918 Ore. LEXIS 174
CourtOregon Supreme Court
DecidedOctober 15, 1918
StatusPublished
Cited by27 cases

This text of 175 P. 608 (McCabe v. Kelleher) is published on Counsel Stack Legal Research, covering Oregon Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McCabe v. Kelleher, 175 P. 608, 90 Or. 45, 1918 Ore. LEXIS 174 (Or. 1918).

Opinion

BURNETT, J.

According to 39 Cyc. 1997, quoted with approval in Kruse v. Bush, 85 Or. 394 (167 Pac. 308):

“One who has been induced by fraudulent representations to become the purchaser of property has, upon the discovery of the fraud, three remedies open to him, either of which he may elect: He may rescind the contract absolutely and sue in an action at law to recover the consideration' parted with upon the fraudulent contract; he may bring an action in equity to rescind the contract and in that action have full relief; lastly, he may retain what he has received and bring an action at law to recover the damages sustained. ’ ’

In the instant case the plaintiffs have adopted the third remedy mentioned by the text-writer. In Kruse v. Bush the plaintiff had entered into an executory contract to buy some land and had paid part of thé purchase price, after which she discovered that she had been defrauded by the vendor. Although she had [51]*51not paid in full for the property, she was sustained in her rescission of the contract and her action to recover what she had paid, because she had promptly tendered to the vendor a reconveyance of the tract and had demanded the return of what she had paid.

1-5. It is also a principle of law that if while a contract is yet wholly executory the fraud inducing it is ascertained by a party to it, he waives the deceit if he performs his portion, either wholly or partly. But the rule is otherwise if he does not discover the cheat until he has partly performed: McDonough v. Williams, 77 Ark. 261 (92 S. W. 783, 8 Ann. Cas. 452). The reason of this doctrine is that while the contract remains wholly executory upon both sides, the matter is yet at large, so that if with knowledge of the fraud either party goes forward in performance of the stipulation, he does so with his eyes open, and the damage resulting, if any, would be in a sense self-inflicted. A different situation is apparent when he innocently enters upon performance and accomplishes part of his covenants. He is then in the condition where he is entitled to keep, what he has acquired by the contract and sue for damages, although he may have his election to take either of the other remedies mentioned: In the first case put by Cyc. a rescission is necessary; in the third, none is required. As against a subsequent attempt at utter rescission and recovery of what has been paid on the purchase price, payment of installments of the money agreed to be paid, with knowledge of the fraud, will amount to such a ratification as will defeat complete rescission. The reason is that one wishing to break up the contract entirely must act promptly on the discovery that he has been deceived, and he is not allowed to speculate on whether some advance in values, or the like, will not [52]*52save him from loss: Bell v. Keepers, 39 Kan. 105 (17 Pac. 785). The principle is not controlling where the injured party elects to keep the property and sue for damages alone. In the present litigation the plaintiffs had purchased the property, had acquired the title in fee simple by the conveyance from the defendant and, according to his pleading, they had delivered their promissory notes secured by a mortgage on said real property for the remainder of the purchase price.” In other words, they had promised absolutely and at all events to pay the money, and the defendant had accepted this engagement dn lieu of such payment. In a sense, the transaction was-closed, and while it might have been utterly rescinded by a reconveyance, of the land and a demand for the return of the payments and for the cancellation of the notes and mortgage, if they were still in the control of the defendant, yet the plaintiffs were not compelled to adopt that course.

6, 7. It is said, however, in the answer to which the court sustained a demurrer, that the plaintiffs waived their claim for damages on account of having continued to pay after they discovered the fraud. The conclusion of waiver does not necessarily follow from the facts stated in the defense tendered. It is not averred therein that the plaintiffs intended to forego the right the law gave them to keep the property and sue for damages. Neither does an estoppel result, because it is not shown that the defendant was induced to change his position to his hurt on account of the payments made by the plaintiffs.

“The question of waiver is mainly a question of intention which lies at the foundation of the doctrine. Waiver must be manifested in some unequivocal manner and to operate as such it must in all eases be in[53]*53tentional. There can he no waiver unless so intended by one party and so understood by the other or one party has so acted as to mislead the other and is es-topped thereby. Since intention is an operation of the mind, it should be proven and found as a fact, and is rarely to be inferred as a matter of law”: 40 Cyc. 261.

8, 9. The facts stated in the defense under consideration do not show any intention on the part of the plaintiffs to relinquish their right to keep the land and sue for damages on account of its not conforming to the representations of the defendant. The matter alleged may have some value as evidence on the question as to whether the plaintiffs were really deceived or whether their grievance is a mere afterthought growing out of dissatisfaction, but there was no error in sustaining the demurrer to it as a pleading.

10. The instructions requested by the defendant should have been given. The tenth instruction given was faulty in saying in substance that the defendant would be precluded from averring that the plaintiffs were negligent merely because he had made fraudulent statements. The rule is thus tersely laid down by Mr. Justice Bean in Beimers v. Brennan, 84 Or. 53 (164 Pac. 552):

“A purchaser must use reasonable care for his own protection and should not rely blindly upon statements made by a seller; and between parties dealing at arm’s-length where no fiduciary relation exists and no device or artifice is used to prevent an investigation, it is the general rule that a purchaser must make use of his means of knowledge, and failing to do so, he cannot recover on the ground that he was misled by the seller: 30 Cyc. 49; Allen v. McNeelan, 79 Or. 606 (156 Pac. 274); Poland v. Brownell, 131 Mass. 138 (40 Am. Rep. 215). "Where there has been an inspection by a person making an exchange of property, false rep-[54]*54reservations as to the value cannot, as a rule be made the basis of an action for damages.” (Citing authorities.)

Where no fiduciary relation exists between the contracting parties and each is sui juris dealing at arm’s-length with the other, each is required to use diligence in a reasonable degree to protect his own interest. Neither is held to be the guardian or protector of the other. Neither can inertly shut his eyes to what is manifest to a person of ordinary intelligence. In order to excuse him from reasonable care of his own interest in respect to the subject matter of the contract which is plainly before his observation, there must be some effort on the part of the other party or some condition tending to forestall or prevent investigation.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Chester v. McDaniel
504 P.2d 726 (Oregon Supreme Court, 1972)
Kuchta v. Western Oldsmobile, Inc.
355 P.2d 458 (Oregon Supreme Court, 1960)
Keller v. LONSDALE ET UX
339 P.2d 112 (Oregon Supreme Court, 1959)
Nisson v. TILLMAN ET UX
323 P.2d 329 (Oregon Supreme Court, 1958)
Gamble v. Beahm
257 P.2d 882 (Oregon Supreme Court, 1953)
Anderson v. Laws
159 P.2d 201 (Oregon Supreme Court, 1945)
Horner v. Wagy
146 P.2d 92 (Oregon Supreme Court, 1944)
Burgdorfer v. Thielemann
55 P.2d 1122 (Oregon Supreme Court, 1936)
Voellmeck v. Harding
6 P.2d 373 (Washington Supreme Court, 1931)
Holmes v. Burlingame Co.
6 P.2d 44 (Oregon Supreme Court, 1931)
Pace v. Edgemont Investment Co.
4 P.2d 633 (Oregon Supreme Court, 1931)
Cameron v. Edgemont Investment Co.
299 P. 698 (Oregon Supreme Court, 1931)
Jacobson v. Nicholas
283 P. 684 (Washington Supreme Court, 1930)
Milton v. Hare
280 P. 511 (Oregon Supreme Court, 1929)
Raasch v. Goulet
223 N.W. 808 (North Dakota Supreme Court, 1929)
Lloyd-Garretson Co. v. Marvin & Co.
274 P. 128 (Oregon Supreme Court, 1928)
Union Central Life Ins. Co. v. Kerron
264 P. 453 (Oregon Supreme Court, 1928)
Brownlee v. Thrower
300 S.W. 240 (Court of Appeals of Texas, 1927)
Cripe v. Wade
261 P. 72 (Oregon Supreme Court, 1927)

Cite This Page — Counsel Stack

Bluebook (online)
175 P. 608, 90 Or. 45, 1918 Ore. LEXIS 174, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mccabe-v-kelleher-or-1918.